Pfizer (NYSE: PFE) It could make a good case that it has made the biggest impact in the fight against COVID-19 for any company. Comirnaty, developed by Pfizer and Biotechnology (Nasdaq: BNTX)It is the best selling COVID-19 vaccine. And now it looks like Pfizer is poised to take control of another part of the COVID-19 market.
The drug company announced very positive results last week from a clinical study of its COVID-19 pill, Paxlovid. These results were so good that Pfizer shares jumped 8.5% on Friday, a huge one-day move for the big pharma stock. But should you buy Pfizer stock now after the company’s impressive results?
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Change the rules of the game
Pretty much everyone thought so merck (NYSE: MRK) And its partner, Ridgeback Biotherapeutics, has set really high standards with their late-stage results for their COVID-19 pill, molnupiravir. On October 1, the companies announced that molnopiravir reduced the risk of hospitalization or death in COVID-19 patients by about 50%.
But Pfizer easily erased that tape. The company reported last Friday that Paxlovid reduced the risk of hospitalization by 89% compared to placebo for COVID-19 patients treated within three days of onset of symptoms. None of the patients with COVID-19, who were at risk of severe disease, died in the group that received Pfizer’s oral treatment.
These findings were “a real game-changer in the global effort to stop the devastation wrought by this pandemic,” said Albert Burla, chief executive of Pfizer. He might be right.
If Paxlovid gets permission (which is very likely), adults who have been diagnosed with COVID-19 can be prescribed the pill. Pfizer is also conducting another late-stage study to evaluate oral therapy in adults who have been exposed to SARS-CoV-2 but have not yet been diagnosed with COVID-19.
Big opportunity in the market
How big is the market opportunity for Paxlovid? After Merck reported positive results for molnupiravir, the company estimated it could generate between $5 billion and $7 billion by the end of 2022.
The number of COVID-19 cases could decline in the future thanks in large part to increased vaccination rates. However, Bernstein analyst Ronnie Gale believes that the market for COVID-19 pills could still be in the $6 billion range annually after 2022.
Gall initially believed that Merck could capture half of that market. But his appreciation came before Pfizer announced its impressive results for Paxlovid. It is probably fair to say that the higher efficacy of Paxilovid compared to Molnopiravir could enable Pfizer to claim a much larger market share than Merck.
However, market dynamics can change in the future. Ati Pharmaceuticals And rush They still have hopes that their experimental COVID-19 pill AT-527 will be a success. The candidate did not meet the primary endpoint in the Phase 2 study, but Atea and Roche plan to move forward in the Phase 3 study with potential protocol modifications.
Buying Pfizer Stock?
Investors looking to hop on the Pfizer train to cash in on COVID-19 pills may be a little late to the party. The stock’s big gains on Friday greatly open up the opportunity for a backslope in Pfizer’s stock price.
However, there are other reasons to like the stock. For one thing, Pfizer’s rating remains attractive. Its shares are trading at only 11.7 times expected earnings. There’s also the pharmaceutical company’s 3.2% dividend yield that income-seeking investors will no doubt love.
Pfizer expects Comirnaty to generate about $36 billion in sales next year. Total profits should be split with BioNTech, but Pfizer will still get you a hefty sum. With Paxlovid potentially a huge company as well, Pfizer’s cash stock should continue to grow by leaps and bounds.
Pfizer’s focus is not limited to the COVID-19 virus. But its success in fighting the pandemic should give the company more flexibility to make the acquisitions and other business development deals that fuel growth. My view is that Pfizer was a smart choice before the good news of the COVID-19 pills and remains a solid stock to buy for many investors.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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