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Monday, October 02, 2006

Pfizer: The Victory Of Hope Over Reason (PFE)

Pfizer should replace its CEO at least once a quarter. Over the course of the last quarter, ending September 29, Pfizer's stock rose from $23.58 to $28.36, an increase of 21.5%.

A new CEO is nice to have, but Pfizer's No. 1 foe, generics, is not going away. And, the amount of litigation over patents in the pharma business seems to increase each year. Pfizer is currently in an IP fight in federal court involving one of its flagship drugs, Lipitor. As Morningstar points out, each of Pfizers top ten drugs will lose patent protection over the next five years.

Pfizer also needs to prove that it can get its financial house in order. Over the last four quarters EPS has been down over the same quarter in the previous year. One of the other quarters in the period was flat. Revenue was down in all but one quarter, the June 06 period, when it rose 2.5%.

Pfizer's stock is now at a 52-week high. But, until it can show that it will replace some of its big drugs that are about to compete with generics, having a new CEO just isn't enough.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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