Is Pfizer’s Breast Cancer FDA Drug Approval Enough?

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Tokyo Pfizer Headquarters Office

Tokyo, Japan – May 11, 2012: Pfizer building on May 11, 2012 in Tokyo. Pfizer is one of largest pharmaceutical companies worldwide with tremendous revenue $67.4 bn USD for 2011. It exists since 1849.

Pfizer (NYSE:PFE) has a very interesting problem. It is a giant pharmaceutical company and it is making money. There is no issue about that. It generates revenues. It produces solid earnings.

The problem is that the company has to justify its market valuation to a stock buying public. It has been painted into a corner that it has to grow at a certain rate to justify its stock price. This is the game big firms in equities markets have to play. They have to justify their market valuation. There are only two ways to do this. Either they have to grow organically by developing drugs in their research pipeline and have these approved, or they have to buy that growth.

The problem with developing your own drugs is that it takes many years to go from concept to FDA approval. Also, it takes over $1 billion to develop a new drug. The alternative, which Pfizer has been aggressively pursuing, is to simply buy up smaller companies that have drug patents and drugs in different stages of development. This is how you buy growth.

The good news is that Pfizer recently got FDA approval for Ibrance, which is a breast cancer drug. The problem is: is this enough? It seems like a relatively small market. Unless Pfizer is able to hit the ball out of the park with another Viagra or Viagra-like product, it simply is stuck with its game plan.

The shorter road ahead for Pfizer is to buy growth. This is why I suggest investors and market observers to keep a close eye on Pfizer’s movements in the market. There might be a lot of acquisition plays that you might want to buy in to, because Pfizer is always hungry to buy its way into growth. The best news is that it has the deep pockets to do so.

Jacob Maslow is our Editor, and has extensive experience with writing about global financial matters. He also runs a successful SEO consulting business, Mekomi Marketing