00:00Now, drugs giant Pfizer has forecast lower than expected 2026 profits on flat sales.
00:07The company is trying to rebuild its pipeline as patents expire.
00:11Pfizer now expects total revenue of between $59.5 and $62.5 billion.
00:18Weaker COVID vaccine sales account for much of the drop.
00:23The latest outlook from the company comes as major pharma groups are facing a cliff edge
00:28as many valuable drug patents expire.
00:32Bloomberg estimates that around $314 billion in sales will be affected over the next five years.
00:39Now, one possible solution for companies looking to boost revenue as their patents expire
00:43is licensing deals with Chinese drug developers.
00:47Such deals are expected to total more than $100 billion in 2025.
00:54Now, Matt Maley is Chief Market Strategist at Militabac & Co.
00:58I asked him just how significant this patent cliff is likely to be.
01:02We're going to have, you know, $300 billion of revenue that will be at risk by 2030.
01:11And this will include more than 70 products that will be coming off patents.
01:16So, these companies are trying to make up for that in certain ways, you know, acquisitions.
01:23And, you know, they're trying to cut costs, as we saw from the announcement out of Pfizer today.
01:28But this is going to be a little bit of an uphill battle.
01:31The health care group overall looks quite good to me.
01:34But the drug stocks, the specific drug stocks, are going to have a little bit tougher road to hoe.
01:41Yeah, very interesting time.
01:43We're also seeing companies like Pfizer getting involved in licensing deals with Chinese labs and drug companies.
01:50Yale Pharma, I think, is the latest one.
01:53And a lot of that is, I suppose, about investing early in a company that shows promise.
01:58Could that mitigate some of the concerns around the patent cliff?
02:02That will certainly help.
02:04And it's definitely a transition they've been making for a while now.
02:08So, you know, it's not like these companies, you know, haven't seen this coming.
02:12So, they are definitely making some efforts to change this.
02:17And, you know, it's interesting, too, because some of these stocks, or the stocks of these companies, are interesting because they're cheap.
02:24I mean, you look at a Pfizer, I mean, that trades at, you know, eight and a half times earnings, and it's a 50% discount to its peers.
02:31And it has an unbelievably strong over 6% dividend yield.
02:35So, you have a little bit of cushion here.
02:37You know, they're going to pay you to wait a little bit with that strong dividend that you can be a little bit more patient with that name.
02:43Some of the others might be a little bit more difficult.
02:45But they're making the moves they need to be making.
02:48But there are definitely some risks.
02:49Talk to me about your assessment of the Pfizer guidance that has now just been released.
02:55All told, I mean, we're not surprised that COVID vaccinations are not as in demand as they used to be.
03:01We know about this patent cliff.
03:04So, all told, what do you make of the guidance and where the company is going?
03:08Just treading water or starting to accelerate?
03:11Well, it's funny because, you know, again, this is a stock that's been hated for a couple of years now.
03:17And it's finally found out, you know, over the summer it built a nice base.
03:21And it's finally starting to see a little bit of a rally.
03:24And the one thing is, if you look at their non-COVID sales, I mean, those were actually expected to be only 2%.
03:31I'm sorry, their non-COVID sales for next year.
03:35And they said they're going to be 4%.
03:37So, that was actually slightly better than expected.
03:40So, the fact that Pfizer isn't, you know, trading down very much, it's down only slightly, doesn't really surprise me.
03:46So, I'm actually somewhat encouraged by the company and what the efforts they're trying to make with some cost-cutting acquisitions and, you know, their work on whether it be drug loss drugs or oncology drugs.
04:00And, again, this is not something where you're going to buy this stock and hope it doubles in the next year.
04:05But it might be one that works out real well over the longer term.
04:08And, again, with this low valuation level and strong dividend yield, it will pay you to wait.
04:14Got to ask you about those obesity drugs.
04:16The company's recently acquired MetSera.
04:19They're working on a once-a-month weight loss jab.
04:23How much have the GLP-1s changed the game in the industry of weight loss drugs?
04:30Well, you know, it's certainly changed things in a major way.
04:33And, you know, it's something that, you know, looked like it too good to be true for a while there.
04:39And people were saying, you know, it kind of is because I'm injecting all the time on a daily basis, et cetera.
04:45This was something that was really cumbersome.
04:47And then, of course, people say, well, it really didn't last very long.
04:50Now, with these newer, you know, updated and improved drugs and the major push for these companies to further improve that experience and obviously keep it safe, make money for these companies in the years ahead, especially as they improve the experience.
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