Dow Jones: Pfizer Shares Take Hit Amid Lawsuit, Slower Viagra Sales
October 06, 1998 4:43 PM
NEW YORK -(Dow Jones)- Shares of drug company
Pfizer Inc. dipped Tuesday amid news of a lawsuit
against the company and reports of a drop in
prescriptions for the company's blockbuster impotence
drug Viagra.
Analysts who were aware of both events seemed unable
to pinpoint a reason for the selloff. They were generally
unconcerned about the lawsuit filed by Schering-Plough
Corp. (SGP) against Pfizer (PFE) and agreed that
Viagra prescriptions, though below peak levels,
shouldn't shave 10% off the company's stock.
According to IMS Health Inc., a company that monitors
pharmaceutical sales, total U.S. prescriptions of Viagra
dispensed for the week ended Sept. 25 were 156,312,
down from 164,546 the previous week.
New prescriptions for the impotence drug were 71,509
for the week ended Sept. 25, down from 75,423 a
week earlier.
But the dropoff in prescriptions is nothing new, and
many Wall Street analysts have expected a decline in
sales after the highly successful launch of the blockbuster
drug.
"We're still searching to find out what the plateau level
will be," said Hambrecht & Quist Inc. analyst Alex
Zisson.
FDA-required labels warn that Viagra shouldn't be used
by heart patients who are taking nitroglycerin or other
nitrate drugs. The combination can cause a sudden, and
possibly lethal, drop in blood pressure.
Concerns about slowed Viagra sales emerged as early
as Sept. 4, when Morgan Stanley Dean Witter lowered
its investment rating on Pfizer after Viagra sales fell short
of the firm's expectations.
But while Viagra sales failed to meet Morgan Stanley's
estimates, the numbers didn't disappoint several other
analysts enough to prompt a downgrade in their "buy"
ratings on Pfizer. At the time, one market analyst noted
that with most new drug launches, market expectations
vary widely. A drug like Viagra would have even
broader expectations, he noted.
Aside from the drop in Viagra prescriptions, Pfizer faces
a lawsuit filed by rival drug-maker Schering-Plough. The
suit, announced Monday after market close, alleges
Pfizer broke a previous pact that resolved a dispute
between the two companies over their competing allergy
drugs.
Analysts, generally unmoved by the lawsuit, said these
kind of disputes between drug companies aren't unusual.
This lawsuit, in particular, dates back to 1996.
"I don't see it as terribly meaningful," said ABN Amro
analyst James Keeney.
Schering-Plough markets Claritin, while Pfizer markets
the rival prescription allergy medication Zyrtec. The
dispute between the two companies dates to 1996,
when they attacked each other over their marketing
practices - Schering-Plough claimed Pfizer salesmen
were falsely touting their drug as nonsedating, while
Pfizer claimed Schering-Plough salesmen put warning
stickers on Zyrtec samples in doctors' offices.
The two sides settled the litigation that resulted,
promising to back off even though they didn't admit any
wrongdoing. But in the new lawsuit, filed in federal court
in New York, Schering-Plough alleged Pfizer has
violated that settlement, by continuing to claim that
Zyrtec doesn't cause drowsiness.
Nevertheless, Pfizer's stock has taken a beating over the
last two trading sessions and is off 26% from its
52-week high of $121.75 on April 21.
Tuesday, the stock closed down $5.375, or almost 6%,
to $89.375 on volume of almost 7.5 million shares.
Average daily volume is 4.3 million.
"It's a big hit," said HKS & Co. analyst Hemant Shah.
-Melanie Trottman; 201-938-5287
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