Replies to post #54987 on Biotech Values

[DewDiligence]

PFE’s labs should continue trying to discover drugs, but shareholders shouldn’t be put in the position of relying on an R&D hot streak to earn a decent return on their investment. That’s why I’m beating the drug for increasing the financial leverage.

[Biopharm investor]

jbog

Not sure I can answer your question, but a couple of points...

1) I'm not sure where you're getting the sales drop that you're assuming of $15 billion by 2012. I think PFE s guiding sales to decline to about $37 billion in 2012, which will be down about $7 billion from the projected $44 billion in 2009.

So the sales decline is probably only about one-half of the number you're citing.

2) The company is not projecting any decrease in R&D. They are projecting declining EPS to about $1.77 in 2012 from $2.55 per share in 2009 on lower sales, but they're saying they're going to hold R&D flat at about $7 billion per year.

3) They have an R&D investor day in early 2008 where their new head of R&D Dr. Mackey will provide greater clarity on their pipeline and timelines.

In view of the projections for 2012, I'm not sure why investors would want to be long PFE beyond 2008 as '09 through '12 doesn't look promising.

[microcapfun]

>>What would you guys think a company like pfizer would end up doing with its research group. Here's a company that's spending 15% of sales ($7.5b / $45.0b) so if its sales drop by $15b that means a $2.5b hit to research. That's a big number to a group thats having trouble producing products right now.

Would this start pfizer down a slipperly slope? <<

Oh. I've been scooped.

micro