This article about PFE mentions LLY as well:
Pfizer Stock Seen Extending Gains on Sustained Viagra Sales
DOW JONES NEWS SERVICE
April 21, 1998 3:31 PM
By Justin A. Oppelaar
NEW YORK (Dow Jones)--Pfizer Inc.'s (PFE)
impotence treatment Viagra, whose ballooning sales
have electrified the drug maker's stock, could mean
years of prosperity for the company.
The frenzy for the drug has infected investors, who over
the last week have bid the stock up 19 points - to about
116 9/16 - as Viagra elicited about 20,000 prescription
requests a day.
And the drug's reception on Wall Street added another
feather to Pfizer's cap: the company's market
capitalization overtook that of Merck & Co. (MRK) to
become the biggest of any company in the sector.
Pfizer's market cap currently is $147.24 billion, based
on Monday's closing price of 113 3/8 and shares
outstanding data from the company's latest filing with the
Securities and Exchange Commission. That's about $1.2
billion more than Merck, whose current market value is
$145.98 billion.
And while Merck is tied for the largest global share of
the drug market and its revenue is nearly twice Pfizer's,
some think the gap between the two companies' stock
prices will continue to close.
Merck and Glaxo Wellcome PLC (GLX) both have
4.6% of the world drug market, according to Mehta
Partners, while Pfizer is No. 6 with a 3.3% share.
Hemant Shah, an independent analyst covering Pfizer,
believes the stock will climb still further when updated
prescription numbers come out Monday. "I think it's
going to be huge," he said.
By comparison, Merck's prescription revenue is slowing
and in need of a blockbuster product, according to
AmeriCal analyst Charles B. Engelberg.
Sales of the company's flagship cardiovascular drugs,
Zocor and Vasotec, are steadily relinquishing precious
market share, he explained, and there is no strong
successor in sight. "It will be very hard to make up for
the decline of Zocor and Vasotec," he said.
Merck's faces still more competition from Eli Lilly & Co.
(LLY), whose osteoporosis prevention treatment Evista
potentially could become a "blockbuster," said Argus
Research analyst Barney Rosen.
Preliminary studies show Evista, which behaves like the
female hormone estrogen in helping to prevent
osteoporosis, may be less likely than estrogen to cause
breast cancer.
If the results of the study are confirmed and the Food
and Drug Administration allows Lilly to include the
cancer information in Evista's labeling, "Evista has the
potential to become a billion dollar drug," Rosen said.
The analyst cautioned, however, that Lilly has only
begun talks with the FDA about amending Evista's
labeling and that the outcome is by no means assured.
Further, even with the FDA go-ahead, Evista probably
will never reach the sales fever-pitch that Pfizer's Viagra
currently is enjoying, he added.
Drug Could Bring Up to $10B Over 5 Yrs
AmeriCal's Engelberg said Viagra's apparent
widespread appeal among the estimated 30 million men
in the U.S. who suffer from impotence could mean as
much as $10 billion in sales over the next five years.
"Personally, I don't see the frenzy wearing off anytime
soon," the analyst said.
Viagra may find a particularly lucrative market among
aging baby boomers with concerns that their sexual
potency may be on the wane, he added. Even better,
that market likely will experience steady, longer-term
growth as more such men find out about Viagra's
effects.
Middle-aged men who take blood-thinning agents or
some other medications occasionally experience
impotence as a result of the treatment. In less severe
cases, Viagra is 80% effective in treating the
dysfunction, Engelberg said.
"If a 50-year-old can have a sexual performance of a
45-year-old for $8 or $9, what's wrong with that?" he
mused rhetorically. "With the aging of the baby
boomers, that is going to drive the market to
unprecedented sales."
Another reason men may embrace Viagra over the long
term is the drug's ease of use compared to other
impotence treatments. Viagra is a pill, while other
treatments range from suppositories inserted in the
urethra to surgical implants in the penis itself.
Muse, made by Vivus Inc. (VVUS), is an example of
the suppository treatment. Engelberg said patients who
tried Muse once often refused to undertake the
procedure again because of its complexity and
intermittent effectiveness.
"There was a relatively low reuse rate in the trial," he
said. "We haven't seen that in Viagra."
Despite all the good news about the drug, however,
Engelberg does have some words of caution for Pfizer
investors, especially those who hang on for the long haul.
Although he thinks Viagra could be a big moneymaker
for up to five years, he wonders what Pfizer will do once
sales flatten. "Pfizer is going to be under a lot of pressure
to develop follow-up products," he said.
Brown Brothers Harriman & Co. analyst Michael
Krensavage has similar concerns about Eli Lilly's
prosperity in the farther-flung future.
Once the company's well-known antidepressant Prozac
comes off patent protection in 2001, Lilly's monopoly on
its profitable formula will be over. Krensavage is
worried that Lilly may be hoping too fervently that Evista
could take up the slack for the revenue loss on Prozac.
"The Evista data really has to come through for the
company to maintain its swift earnings growth," he said.
For Pfizer, another fear is the lack of thorough
documentation on Viagra's side effects, Engelberg said.
That problem will be short-lived, however, because the
sheer volume of new users should expose any side
effects very quickly.
-Justin A. Oppelaar; 201-938-5175 |
