Download Pfizer - Fisher College of Business

November 25th, 2006
Fisher College of Business
Pfizer, Inc.
NYSE: PFE
Rating: Sell
Current Price: $26.89
Target Price (1 Year): $25.15
GICS Sector: Healthcare
Sub-Industry: Pharmaceuticals
Investment Type: Large-Cap Growth
Key Stock Statistics (Sources: Company 10-K, StockVal, Smith Barney)
52-Week Range
Trailing 12-Month EPS
Trailing 12-Month P/E
$10k Invested 5 Yrs. Ago
$20.27-$28.60
$1.72
15.8
$7186
Common Shares Outstanding (M)
Market Capitalization (B)
Institutional Ownership
S&P Credit Rating
7210.4
$196.196
66%
AAA
Dividends/Share
Yield
Beta
$0.96
3.53%
0.61
EPS Estimates
Analyst Estimate
Consensus Estimate
High
Low
2005A
$1.70
$1.70
$1.70
$1.70
2006E
$2.20
$2.02
$2.09
$1.98
2007E
$1.53
$2.14
$2.31
$2.01
2008E
$1.20
$2.21
$2.43
$1.92
Investment Thesis
With over $50 billion in annual revenue, Pfizer is the largest player in the drug industry. Given certain regulatory and
market conditions, Pfizer’s business model does not provide for sustainable growth at this level. Most of Pfizer’s revenue,
and almost all of its profit, is generated by eight prescription drugs, including the cholesterol-reducing drug Lipitor, the
male sexual enhancement pill Viagra, and the hypertension drug Norvasc. Although the demand for prescription drugs is
on the rise, pricing pressures and a challenging regulatory environment will limit Pfizer’s profitability.
Investment Summary
I have assigned Pfizer a one-year price target of $25.15 based on these key assumptions:
 The aging of America will maintain (and in some cases, increase) the demand for pharmaceuticals through 2030
 Democratic control of Congress will put pressure on profit margins for brand-name pharmaceutical companies
 Democratic control of Congress will restrict major pharmaceutical companies in a variety of ways, including
placing restrictions of the timing of advertising, the length of the FDA drug approval process, and the structure of
the current drug/compound patent process
 Healthcare companies will continue to use the massive amounts of cash on their balance sheets to pay out
dividends, make acquisitions, and buy back shares of common stock
 A discounted cash flow (DCF) method of valuation and a comparative multiple valuation both confirm that this
stock is, at best, fairly valued and, at worst, 10-20% overvalued
 Regular dividends will continue to be paid to shareholders, and there will be little change in the payout
 Technical factors confirm a long-term downtrend in the stock price of Pfizer
Price Charts
Pfizer Stock Performance (Absolute - $)
Pfizer Stock Performance vs. S&P500 Index (%)
Table of Contents
Cover Sheet …………………………………………………………………………………...…1
Investment Thesis………………………………………………………………………....1
Summary………………………………………………………………………………......1
Table of Contents………………………………………………………………………………...2
Company Overview……………………………………………………………………………...3
Macroeconomic Overview……………………………………………………………………….4
Market Outlook……………………………………………………………………………..........7
Sector Outlook……………………………………………………………………………...........8
Industry Analysis…………………………………………………………………………….....10
Company Analysis……………………………………………………………………………...11
Growth
Drivers/Catalysts/Positives/Issues………………………………………………………………11
Risks/Concerns……………………………………...…………………………………...13
Financials....……………………………………………………………………………...16
Valuation……………………………………………………………………………........17
Conclusion……………………………………………………………………………................24
Summary……………………………………………………………………………........24
Recommendation………………………………………………………………………...25
Analyst/Class Information……………………………………………………………………...26
Appendices……………………………………………………………………………...............27
Sources...............................................................................................................................31
Company Overview
General
From Pfizer’s company website, “Pfizer Inc, founded in 1849, is dedicated to better health and greater access to
healthcare for people and their valued animals. Our purpose is helping people live longer, healthier, happier
lives. Our route to that purpose is through discovering and developing breakthrough medicines; providing
information on prevention, wellness, and treatment; consistent high-quality manufacturing of medicines,
consumer products; and global leadership in corporate responsibility. Every day we help 38 million patients,
employ more than 100,000 colleagues, utilize the skills of more than 12,000 medical researchers, and work in
partnership with governments, individuals, and other payers for healthcare to treat and prevent illnesses—
adding both years to life, and life to years.”
Pfizer, Inc. is a research-based, global pharmaceutical company headquartered in New York City. It engages in
the discovery, development, manufacture, and marketing of prescription medicines for humans and animals, as
well as consumer healthcare products worldwide. Founded in 1849 (and later incorporated on June 2nd, 1942),
Pfizer operates through three business segments: Human Health, Consumer Healthcare, and Animal Health
(StockVal).
Segments
The Human Health segment offers treatments for cardiovascular and metabolic diseases, central nervous system
disorders, arthritis and pain, infectious and respiratory diseases, urogenital conditions, cancer, eye disease,
endocrine disorders, and allergies (StockVal).
The Consumer Healthcare segment markets various over-the-counter medications for oral care, upper
respiratory health, tobacco dependence, gastrointestinal health, skin care, eye care, and hair growth. Its
principal products include Listerine mouthwash, Listerine PocketPaks oral care strips, Nicorette for tobacco
dependence, Benadryl antihistamine for allergies, Sudafed for sinus congestion, Rogaine for hair growth,
Zantac for prevention and relief of heartburn, Rolaids antacid tablets, Neosporin antibiotic ointment, Visine eye
drops, Lubriderm moisturizing lotions, and Purell instant hand sanitizer (StockVal).
The Animal Health segment develops products for the prevention and treatment of diseases in livestock and
companion animals. Its products include parasiticides, anti-inflammatories, vaccines, antibiotics, and related
medicines (StockVal).
Further, Pfizer manufactures empty soft-gelatin capsules and bulk pharmaceutical chemicals, as well as engages
in contract manufacturing. It has collaboration with Nektar Therapeutics, ActivX Biosciences, Inc., TransTech
Pharma, Inc., AVANT Immunotherapeutics, Inc., and National Comprehensive Cancer Network (StockVal).
Below is a short list of some of the more common drugs that Pfizer sells. Pfizer’s product line is well
diversified, with hundreds of drugs currently being sold and hundreds more in the pipeline.
Drug Name
Lipitor
Celebrex
Viagra
Zoloft
Xanax
Exubera
Zyrtec
What It Treats
High cholesterol
Arthritis
Erectile dysfunction
Depression
Anxiety/Panic
Diabetes
Allergies
Macroeconomic Overview
Aging of America
From 1900 to 2000, the number of people in the U.S. under the age of 65 has more than tripled. During the
same period, the number of people in the U.S. over the age of 65 has increased by a factor of more than eleven.
The percentage of elderly (defined by the U.S. Census Bureau as persons over the age of 65) in the United
States has jumped from 1 out of 25 people in 1900 to 1 out of 8 people in 1994. Also, declining fertility and
mortality rates have led to a staggering increase in the median age of the U.S. population; from 20 years old in
1860 to 34 years old in 1994.
Between now and the year 2050, America’s elderly population will more than double, to over 80 million. At
that point, the Census Bureau predicts that 1 out of every 5 Americans will be elderly. As shown in Figure 3,
most of this growth will happen between 2010 and 2030. This is when the baby-boomers will be entering their
retirement and elderly years.
Within the elderly age group, the “oldest old” is defined as persons over the age of 85. The “oldest old” is the
most rapidly growing segment of the elderly age group. Between 1960 and 1994, the “oldest old” population
rose more than 274%. In contrast, the elderly population in general rose 100% and the entire U.S. population
grew only 45%. The “oldest old” numbered three million in 1994, making them 10% of the elderly and just
over 1% of the total population. In 2050, once the survivors of the baby boom generation become part of the
“oldest old”, it is expected that the “oldest old” will number 19 million. At that point, that would make them
24% of elderly Americans and 5% of all Americans.
Figure 3
The most common causes of death for the elderly in the United States are heart disease, cancer, and stroke. Of
the 2.2 million Americans who died in 1991, 1.6 million were elderly, and 70% died from at least one of the
three conditions mentioned above.
As seen in Figure 4, the elderly are most concentrated in the Northeast and Midwest, with the exception of
Florida, which is the state with the high percentage of elderly population in America.
Figure 4
Longevity
When the U.S. was founded, the average life expectancy was approximately 35 years. By 1950, it had nearly
doubled to 68 years. Since then, it has steadily risen to 76 years in 1991.
Recent preliminary data from the National Center for Health Statistics suggests that the average American life
expectancy is still increasing. In 2004, it was estimated to be 77.9 years old.
According to an article in Science Magazine, the oldest person in all of history was documented to be 122 years
old. It is estimated, but also debated, that the maximum life span of a human being is approximately 120 years
old.
Most scientists theorize that health education, research, and the subsequent medical advances will continue to
increase longevity. Eventually, the average American may live to be over 100 years old.
Democratic Control of Congress
By November 9th, 2006, the Democratic Party had officially gained control of both the United States House of
Representatives and the Senate. This shift of political power has multiple implications for the pharmaceutical
industry and for brand name drug manufacturers in particular.
The pharmaceutical industry is facing a variety of legislation that proposes to cut into profit margins, slow the
FDA approval process, shorten patent protection periods, increase the cost of R&D, and increase regulation of
product advertising and data disclosure.
Figure 6 is a summary of the major legislation that the Democratic Congress will propose during the next few
years.
Figure 6
Legislation
Medicare Reform
Drug Importation
Prescription Drug User
Fee Act Reauthorization
Patent Reform
Medicaid Reform
Drug Safety
What it is
Would remove a clause
that prevents the U.S.
government from
negotiating directly with
drug firms
A law allowing patients to
get cheap drugs from
Canada and other foreign
sources
The law that lets the drug
industry fund the FDA in
return for faster drug
approvals is up for review
Basic reforms will make it
more difficult to file
multiple patents on a drug
Impact
Allows the government to
negotiate lower brandname drug prices (thus,
destroying profit margins)
Increased competition on
all fronts, the industry
may lose face
Delays will slow all FDA
processes; drug safety and
restrictive laws will be
attached as riders
Deals between big
pharmaceutical firms and
generic drug companies
will be limited
The system purchases
Many drugs, like ones that
drugs for the poor, and it
treat schizophrenia, have
will be revamped to save nearly all of their market
money
share amongst the poor
Two bipartisan bills aim to Will force the drug
make the FDA more
industry to disclose more
powerful
data and do more studies;
drugs will carry stronger
warnings
Adapted from “Six Ways Congress Could Hurt Big Pharma”, by Matthew Herper, from Forbes.com, 11/16/2006
Market Outlook
Fundamentals
Currently, the overall U.S. stock market looks bullish. Recent Consumer Price Index and Producer Price Index
data suggests that inflation is under control, and The Federal Reserve maintains that they will keep interest rates
steady for now. Some analysts even predict a decline in interest rates over the next year. Furthermore,
company earnings are still growing at a double digit pace, and although the housing market is under pressure,
lower oil prices have offset these losses. We are not headed for a recession, as was feared 6 months ago. The
United States is currently experiencing a “soft-landing scenario”, in which the economy will gradually begin to
grow at a slower pace.
Technical Analysis
See Figure 7. Technical analysis supports a long-term bullish view of the S&P500. The S&P500 is currently
trading near the top of an upward channel. Although in the short-run, this suggests that the markets are due for
a correction, the upward bias suggests more upside in the long-run. Also, note that the market broke out of a
resistance line around $35, which is also very bullish.
Figure 7
S&P 500 COMPOSITE ADJUSTED M-Wtd (SP5A)
54
PRICE 41.45 DATE 11-24-2006
49
StockVal®
44
40
40
36
36
32
32
29
29
26
24
26
24
22
22
20
20
18
18
16
16
14
13
The Ohio State University 14
Fisher College of Business 13
1997
1998
Price Change
%
1-Day
-0.37
1999
2000
2001
Diff SP5 First Call Data
-0.00 Mean Estimate
2002
2003
2004
2005
2006
2007
2008
Data Page # 1
2006 2007 2008
2.60  2.83  3.10  Revenues ($Mil)
72,086
Sector Outlook
The Healthcare sector is defensive by nature, but also provides growth opportunities in many areas.
Healthcare’s defensive nature means that the sector performs independently of the economic cycle and other
economic factors (such as interest rates, housing data, etc.).
There are, however, significant external factors that affect the Healthcare sector. Population demographics,
government regulation, and product development cycles can affect most of the Healthcare sector.
There are two items worth note on the Healthcare sector’s financial statements. The first item can be seen on
Figure 8, the Income Statement. Revenues, EPS, and Dividends are consistent and usually increasing. The
major reason for some of the income measures not increasing at times is because of significant consolidation
(lots of mergers and acquisitions) in the Healthcare Sector. When companies buy other companies, as is
common in the Healthcare Sector, financial statements can be skewed for that year due to large charges from
the M&A transactions.
Figure 8
The second item worth noting can be found on the Healthcare Sector’s Balance Sheet, Figure 9. The Healthcare
sector has massive amounts of cash. Almost 19% of this sector’s assets are in cash. This can potentially add
significant value to the sector because cash is used for one or more of three things: stock buybacks; dividends to
shareholders; or mergers and acquisitions. Each of these three options will increase the value of the company.
Figure 9
Overall, the Healthcare sector should outperform the S&P500 over the next year. It is a solid defensive area
with some growth potential (particularly in Biotechnology and Generic Drugs).
Figure 10
S&P HEALTH CARE SECTOR COMP ADJ M-Wtd (SP-35)
64
PRICE 42.61 DATE 11-24-2006
58
StockVal ®
52
46
46
42
42
38
38
34
34
30
30
26
24
22
26
24
22
20
20
18
18
16
The Ohio State University
Fisher College of Business
14
1997
1998
1999
Price Change
%
Diff SP5
1-Day
-0.61
-0.24
1-Week
-0.55
-0.64
4-Weeks
-2.51
-3.37
QTD
-1.17
-6.05
YTD
2.64
-9.59
2005
6.23
3.23
2004
0.41
-8.59
2003
12.90
-13.48
FYE Dec 2005 EPS 2.10
2000
2001
First Call Data
Mean Estimate
Change
High
Low
Total
# Up
# Down
House Estimate
PE Ratio
2002
2003
2004
2005
2006
2.36 
+12%
2.42
2.30
20
10
2
2007
2.62 
+11%
2.80
2.45
20
7
3
2008
2.91 
+11%
3.18
2.62
14
6
2
18.0
16.3
14.6
2006
2007
16
14
2008
Data Page # 1
Revenues ($Mil)
Market Value ($Mil)
Shares Out (Mil)
Volume 60-Day Avg (Th)
Volume 60-Day Avg ($M)
Dividend Estimate
Payout Ratio
Retention Rate
Dividend Yield
59,729
104,733
2,458.2
13,302
566.7
0.68
29%
71%
1.60%
Industry Analysis
Pfizer is part of the Major Pharmaceuticals industry, with a focus on researching and developing new drugs and
compounds targeted toward humans. Just like the Healthcare Sector, this industry is defensive in nature.
Regardless of economic and market conditions, there is a strong demand for pharmaceuticals. In the future, the
demand for pharmaceuticals will increase as the elderly population grows and the average life expectancy
lengthens. There is growth potential in certain markets where very few or no effective substances/compounds
exist to treat conditions. There is also significant growth potential in the market for generic drugs. As patents
on big selling drugs expire, generic drug companies can move in and sell the same drugs for much lower prices.
Generics
One of the main threats to the Major Pharmaceutical industry is the Generic Drug industry. Each year, generic
drugs become more important to the Pharmaceutical Industry as a whole. Technically, the Generic Drug
industry is considered to be separate from the Major Pharmaceutical industry, but each industry has a significant
impact on the other. As patents expire and price competition increases, generic drug companies are becoming
more prominent. When patents expire, generic drug companies gain access to massive amounts of market share
overnight.
R&D
At its core, the pharmaceutical industry is driven by research and development. Without new products, a
pharmaceutical company cannot sustain itself. Without R&D, a pharmaceutical company cannot find new
products. R&D makes up the major expense on major pharmaceutical income statements, and it is a necessity
for any firm to survive.
Regulation
Regulation by the Food and Drug Administration (FDA) is a
major part of the product life cycle within the
pharmaceutical industry. Drugs can take up to 15 years
from the time that they are discovered to the time that they
are marketed to consumers. This time is spent testing,
evaluating, retesting, and submitting all of the information
about the drug to the FDA.
Supply and Demand
The supply of pharmaceuticals is constantly increasing as
new compounds are developed. As patents expire, more
companies begin to produce similar versions of the same
drug. The demand for pharmaceuticals will increase
significantly over the next twenty years, as a massive part of
the U.S. population becomes elderly. Overall, people are
living longer and disease treatments are becoming better,
which prolongs the amount of time each person spends
taking certain drugs.
Advertising
The pharmaceutical industry is known for excessive
spending on advertising and promotion. The chart to left
shows that a major cost for pharmaceutical companies is
product marketing. These figures are from 2001, and have
increased since.
Company Analysis
As seen in Figure 11, Pfizer’s ten-year stock chart is not impressive. It has lost a significant amount of value
since the middle of 2000, and has traded up and down since the beginning of 2005.
Figure 11
PFIZER INCORPORATED (PFE)
66
PRICE 26.89 DATE 11-24-2006
58
StockVal®
50
44
44
38
34
38
34
29
26
29
26
22
20
22
20
17
17
15
15
13
13
11
10
The Ohio State University 11
Fisher College of Business 10
1997
1998
1999
Price Change
%
Diff SP5
1-Day
-0.77
-0.41
1-Week
0.49
0.40
4-Weeks
-1.43
-2.28
QTD
-5.18
-10.06
YTD
15.31
3.08
2005
-13.28
-16.28
2004
-23.89
-32.88
2003
15.57
-10.81
FYE Dec 2005 EPS 1.70
2000
2001
First Call Data
Mean Estimate
Change
High
Low
Total
# Up
# Down
House Estimate
PE Ratio
2002
2003
2004
2005
2006
2.02 
+19%
2.09
1.98
20
13
2
2007
2.14 
+6%
2.31
2.01
20
8
3
2008
2.21 
+3%
2.43
1.92
17
9
3
13.3
12.5
12.2
2006
2007
2008
Data Page # 1
Revenues ($Mil)
50,274
Market Value ($Mil)
193,889
Shares Out (Mil)
7,210.4
Volume 60-Day Avg (Th) 31,833
Volume 60-Day Avg ($M)
856.0
Dividend Estimate
0.96
Payout Ratio
47%
Retention Rate
53%
Dividend Yield
3.57%
With a market capitalization of almost $200 billion, Pfizer is the largest pharmaceutical company in the world.
There are both positive and negative factors that will affect Pfizer in the future. These will be discussed in the
following section.
Growth Drivers, Catalysts, Positives
Demand
As stated previously in the sector and industry analyses, worldwide demand for pharmaceutical products is
strong and will continue to increase. As one of the largest pharmaceutical companies in the world, Pfizer has
the production capacity to meet this large demand. Pfizer has also demonstrated the ability to manage multiple
products with large demand, with sales of over $1 billion for eight different drugs.
Acquisitions
“Pfizer acquired Warner-Lambert Company (Warner-Lambert) in June 2000. The acquisition was accounted
for as a pooling of interests. In accordance with generally accepted accounting principles in the U.S. (GAAP),
Pfizer restated all of its consolidated financial statements for periods prior to the acquisition to include the
results of operations and financial position of Warner-Lambert as if they had always been merged” (Pfizer 10K, 2005).
“Pfizer acquired Pharmacia Corporation (Pharmacia) in April 2003. The acquisition was accounted for as a
purchase. In accordance with GAAP, Pfizer did not restate its results of operations and financial position to
reflect the historical results of operations and financial position of Pharmacia” (Pfizer 10-K, 2005).
“Pfizer acquired Esperion Therapeutics, Inc. (“Esperion”) in February 2004. The acquisition was accounted for
as a purchase. Esperion is a biopharmaceutical company focused on the development of high-density
lipoprotein (HDL) - targeted (“good cholesterol”) therapies for the treatment of cardiovascular disease” (Pfizer
10-K, 2005).
“Pfizer acquired Idun Pharmaceuticals, Inc., a biopharmaceutical company focused on the discovery and
development of therapies to control apoptosis (cell death), in April 2005. The acquisition was accounted for as
a purchase” (Pfizer 10-K, 2005).
“In September 2005, Pfizer acquired Vicuron Pharmaceuticals, Inc., a biopharmaceutical company focused on
the development of novel anti-infectives. The acquisition was also accounted for as a purchase” (Pfizer 10-K,
2005).
“On February 28, 2006, we completed the acquisition of the sanofi-aventis worldwide rights, including patent
rights and production technology, to manufacture and sell Exubera, an inhaled form of insulin for use in adults
with type 1 and type 2 diabetes, and the insulin-production business and facilities located in Frankfurt,
Germany, previously jointly owned by Pfizer and sanofi-aventis, for approximately $1.4 billion (including
transaction costs). In connection with the acquisition, as part of our final purchase price allocation, we recorded
an intangible asset for developed technology rights of approximately $1.0 billion, inventory valued at $218
million and goodwill of approximately $166 million, all of which have been allocated to our Pharmaceutical
segment. The amortization of the developed technology rights is primarily included in Cost of Sales. Prior to
the acquisition, in connection with our collaboration agreement with sanofi-aventis, we recorded a research and
development milestone due to us from sanofi-aventis of approximately $118 million ($71 million, after tax) in
the first quarter of 2006 in Research and development expenses upon the approval of Exubera in January 2006
by the Food and Drug Administration (FDA)” (Pfizer 10-K, 2005).
“On May 16, 2006, Pfizer completed the acquisition of all of the outstanding shares of Rinat Neuroscience
Corp., a biologics company with several new central-nervous-system product candidates. In connection with
the acquisition, as part of our preliminary purchase price allocation, we recorded $478 million, pre-tax, in
Merger-related in-process research and development charges” (Pfizer 10-K, 2005).
Divestitures
“In June 2006, Pfizer entered into an agreement to sell its Consumer Healthcare business for approximately
$16.6 billion in cash. This business comprises substantially all of Pfizer’s former Consumer Healthcare segment
and other associated amounts, such as purchase-accounting impacts and merger-related costs, and restructuring
and implementation costs. The divestiture of the Consumer Healthcare business is expected to close in late
2006 and is subject to customary closing conditions, including receipt of regulatory approvals” (Pfizer 10-K,
2005).
What It Means
Demand is the single best factor that Pfizer has going for it. Global demand for pharmaceuticals is constantly
increasing. As more drugs are discovered, the drug market expands.
With all of the cash that Pfizer has on its balance sheet, the acquisition of promising biotechnology and
pharmaceutical companies is an easy way to achieve growth. Below is a list of Pfizer’s most important recent
acquisitions. This list also includes the major advantages that each acquisition will bring to Pfizer.





Idun Pharmaceuticals
o Focus on the discovery and development of therapies to control apoptosis (cell death)
Bioren Incorporated
o Focus on technology for optimizing antibodies
Vicuron Pharmaceuticals
o Focus on development of anti-infectives
Patent Rights to Exubera
o An inhaled for of insulin for adults with type 1 or type 2 diabetes
 Diabetes is a $12 billion product market
Rinat Neuroscience Corporation
o Has several new central-nervous-system product candidates
Another growth driver for Pfizer is to eliminate less profitable product lines. In June 2006, Pfizer completed the
sale of its Consumer Products Division for $16.6 billion in cash to Johnson & Johnson. This division included
many big-name, but unprofitable, brands such as Visine, Curell, and Listerine. Pfizer can create growth by
putting the proceeds from this sale to more profitable uses. Reinvestment into R&D, stock buybacks,
acquisitions, and dividends are all feasible possibilities.
Risks, Concerns, Negatives
Congress
As discussed in the Sector Overview, the recent shift of power in Congress will have significant effects on
Pfizer. The biggest problem will be with Medicare. Currently, drug prices are determined by negotiations
between the pharmaceutical company and the insurance company. The Democrats propose to allow
government interventions in these negotiations in order to create lower drug prices for consumers. This will
lead to the erosion of profit margins, which will lead to an overall decrease in the profitability of brand name
drug companies.
Research and Development
Currently, Pfizer spends about $7.5 billion each year for research and development of new drugs. The result of
this R&D is that Pfizer is currently working on “235 projects in development, including 152 new molecular
entities and 83 product-line extensions” (Pfizer 10-K, 2005). In addition, Pfizer has over 400 projects currently
in discovery research, which is the earliest stage of the drug creation process.
R&D is one of the largest costs on Pfizer’s income statement. As regulations get tighter and the FDA approval
process gets longer, the overall cost of R&D will increase while the profitable life of a drug (the time that it
protected by a patent) will decrease.
Patent Expiration
Drug patents grant biotechnology and pharmaceutical companies the exclusive right to sell the covered drug for
a period of 20 years from the date of patent filing. Patents, however, must be applied for before the start of the
FDA’s clinical trial process. Since this process can take up to 15 years, the typical effective life of a drug patent
is about seven to twelve years.
Pfizer’s 2005 10-K directly states,
“The expiration of a basic product patent or loss of patent protection resulting from a legal challenge normally
results in significant competition from generic products against the originally patented product and can
result in a significant reduction in sales of that product in a very short period.”
Pfizer has eight “blockbuster” drugs that command sales of over $1 billion per year. As the patents for these
“blockbuster” drugs expire, generic drug makers will begin producing equivalents at much cheaper prices.
Below is Pfizer’s patent expiration schedule for the next 15 years. Note that the U.S. basic product patent for
Zithromax, one of Pfizer’s blockbuster drugs, expired in November of 2005.
Figure 12
Drug
Zoloft
Norvasc
Zyrtec
Camptosar
Aricept
Lipitor
Xalatan
Viagra
Detrol
Celebrex
Lyrica
Sutent
U.S. Basic
Product Patent
Expiration Year
2006
2007
2007
2008
2010
2010
2011
2012
2012
2013
2013
2021
For each patent that expires, Pfizer will automatically lose market share to competition. When the patents for
blockbuster drugs expire, Pfizer can take significant losses to their revenue and profits. See the quote from
Pfizer’s 10-K above.
Generic Drugmakers
Once a drug patent expires, generic drug companies are free to develop and market generic forms of previously
patented drugs. Pioneer drugs, such as Pfizer’s biggest seller Lipitor, can lose up to 70% of their market share
overnight with the entry of generic drugs.
Generic drug manufacturers such as Teva Pharmaceuticals can price their drugs much cheaper than the brand
name pharmaceutical company for three main reasons:
1. They avoid the costs associated with the research and development of the drug
2. They avoid the costs associated with the navigating governmental bureaucracy for getting a drug
onto the market as safe and effective (FDA Approval)
3. They avoid almost all of the marketing costs for drugs
According to a report by the Tufts Center for the Study of Drug Development, the average total research and
development cost, including all of the costs associated with FDA approval, for new drugs in the late 1990’s was
$897 million per drug. Generic manufacturers do not incur any of this R&D cost.
Also, since generic drug makers typically cannot produce a drug until after it has been on the market for some
time, they avoid marketing costs. In fact, most generic drug sales actually benefit from the marketing of the
brand name equivalent.
Lawsuits
An article in the Wall Street Journal says that, since the year 2000, more than 65,000 product liability lawsuits
have been filed against prescription drug companies. This is the most in any industry. Pfizer has had to pay out
billions of dollars in lawsuit settlements for a variety of claims related to asbestos, defective heart valves, and a
number of its brand name drugs.
Major lawsuits in the future can cost Pfizer billions of dollars. The uncertainty here is that the FDA testing
process for drugs is typically less than 15 years, so no one can be truly sure of what a drug will do to people
over a 30-, 40-, or 50-year period.
What It Means
Pfizer will face significant challenges in the future. At any point in time, Pfizer’s current suite of drug products
is constantly decreasing due to patent expiration. Once a patent expires on a drug, Pfizer will typically
discontinue the production and sale of it due to immediate unprofitability. Therefore, Pfizer’s research and
development department is in a race against time to replace expiring product lines with new, profitable products
that have patent protection. In the meantime, the government and the courts are not making this process any
easier for Pfizer. Things are getting more complicated and processes are taking longer. The combination of
margin erosion, loss of blockbuster drug exclusivity, government regulation, increasing costs, and litigation
expenses make Pfizer look much too risky for the prudent investor.
Comparatively, generic drug companies look much more attractive as an investment than Pfizer. Generic
companies have very few costs related to their products, and they are not regulated as heavily (because their
drugs have already passed FDA testing at the original brand name company) as brand name pharmaceutical
companies. On top of that, the public supports generic drug manufacturers much more than the brand names
because generic drug manufacturers deliver drugs at much lower costs. This is exemplified by Wal-Mart’s
recent decision to fill any generic drug prescription for a $4 flat fee. Generic drug makers benefit from all of
the positives discussed in this report, while they have limited exposure to the negatives.
This chart shows the cost of
R&D versus the approvals
for new chemical entities
(NCEs, or new drugs).
R&D spending is increasing
exponentially, while new
drug approvals are only
slightly increasing. Being
the largest pharmaceutical
firm in the world, Pfizer
should feel the effects of
this trend. Pfizer will have
to spend increasingly large
amounts to find new
blockbuster drugs that will
make up for the cost of their
research.
Financials
Figure 13 shows the financial ratios for Pfizer for the past 5 years (and the expected 2006 ratios). Pfizer
implemented a change in accounting principle after 2002, which is why most of the measures drastically
decrease between 2002 and 2003. The best comparative data is from 2003 onward.
Figure 13
Ratios
Items
Profitability
Gross Margin
Net Margin
Activity
Inventory Turns (using sales)
Asset Turns
PP&E Turns
A/R Turns
A/P Turns
Cap Ex/Depreciation
Credit
CA/CL
CA (ex CSH)/CL
L-T D/A
Quick Ratio
DuPont
EBIT/Sales
Sales/Assets
E/EBT (1-Tax Rate)
Assets/Equity
ROE
2005 2006 (Expected)
2001
2002
2003
2004
86.8%
26.8%
87.6%
28.3%
78.6%
8.7%
85.6%
21.6%
83.4%
15.8%
84.5%
31.6%
7.89
7.85
12.06
0.43
0.38
0.70
2.86
2.46
3.01
5.61
5.18
5.58
19.65
17.29
19.93
-1.7068 -0.653168 -0.510701
8.49
0.44
3.00
5.25
23.04
-0.37769
14.84
0.42
2.20
4.25
18.70
-0.375407286
11.68
0.74
2.97
6.05
20.57
-2.16564
1.40
1.32
6.7%
1.22
1.34
1.23
6.8%
1.19
1.28
1.22
4.9%
1.04
1.48
1.41
5.9%
1.23
1.47
1.39
5.4%
1.26
1.56
1.42
5.0%
1.44
34.4%
74.1%
78.0%
214.0%
42.6%
36.4%
69.7%
77.6%
232.4%
45.7%
7.3%
38.3%
120.5%
178.6%
6.0%
26.7%
42.7%
81.1%
180.3%
16.6%
22.5%
43.6%
70.1%
179.1%
12.3%
23.5%
41.7%
134.5%
171.6%
22.6%
Pfizer’s gross margin stayed fairly constant, while its net margin increased between 2003 and 2006. Both its net
and gross margins are significantly higher than the pharmaceutical industry averages of 65% and 4%,
respectively. This is impressive, especially since Pfizer produces so many different products. Pfizer’s high
margins are mostly fueled, however, by the sale of its eight blockbuster drugs.
Pfizer’s inventory turnover ratio is increasing, suggesting that inventory management is becoming more
efficient. This may also mean that costs related to inventory are being controlled.
Pfizer’s credit ratios all seem to be increasing, which suggest good credit and liquidity. This is fueled by
Pfizer’s massive amounts of cash on the balance sheet.
Pfizer’s return on equity has fluctuated from 2003 through 2006, most likely due to a combination of debt taken
on, share buybacks, and increasing net margins over the past few years.
Valuation
Figure 14
StockVal®
PFIZER INCORPORATED (PFE) Price 26.89
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
80
HI
LO
ME
CU
60
40
68.0
10.4
28.5
12.4
20
11-22-1996
11-24-2006
0
PRICE / YEAR-FORWARD EARNINGS
16
HI
LO
ME
CU
12
8
12.97
2.92
6.81
3.91
4
11-22-1996
11-24-2006
0
PRICE / SALES
32
HI
LO
ME
CU
24
16
24.4
2.3
11.1
2.9
8
11-22-1996
11-24-2006
0
PRICE / BOOK VALUE
80
HI
LO
ME
CU
60
40
73.9
8.5
29.5
10.4
20
11-22-1996
11-24-2006
0
PRICE / CASH FLOW ADJUSTED
At first glance, Figure 14, depicting Pfizer’s Price/Earning Ratio, Price/Sales Ratio, Price/Book Value Ratio,
and Price/Cash Flow Ratio on a historical basis, suggests that Pfizer is significantly undervalued relative to past
valuation. Mean reversion suggests that, over the long-run, the valuation measures should revert to their longterm average (abbreviated “ME” on the chart).
In reality, however, this chart is skewed due to the significant overvaluation and subsequent decline in valuation
of Pfizer during the technology bubble and subsequent “bubble pop” from 1997 through 2001. Ten years is too
large of a time horizon to comparatively analyze Pfizer.
A more relevant measure of valuation is Figure 15, which depicts the same ratios starting from 2003.
Figure 15
StockVal®
PFIZER INCORPORATED (PFE) Price 26.89
2003
2004
2005
2006
24
HI
LO
ME
CU
20
16
23.1
10.4
15.8
12.4
12
11-22-2002
11-24-2006
8
PRICE / YEAR-FORWARD EARNINGS
8
HI
LO
ME
CU
6
6.73
2.92
4.12
3.91
4
11-22-2002
11-24-2006
2
PRICE / SALES
12
HI
LO
ME
CU
9
6
10.7
2.3
3.2
2.9
3
11-22-2002
11-24-2006
0
PRICE / BOOK VALUE
24
HI
LO
ME
CU
20
16
20.9
8.5
11.8
10.4
12
11-22-2002
11-24-2006
8
PRICE / CASH FLOW ADJUSTED
Based on these valuation measures with a shorter time horizon, Pfizer looks much more fairly valued. Pfizer’s
forward P/E ratio may suggest a slight undervaluation, but P/E contraction is typical as the organic growth of a
company slows.
Pfizer’s organic growth, or internal rate of growth based solely on increasing output and enhancing sales, has
leveled off during the past 5 years. Pfizer has relied on acquisitions as a main growth driver during this period.
Figure 16 shows Pfizer’s valuation relative to the S&P Healthcare sector from 2003 through 2006. This
valuation method also suggests that Pfizer is fairly valued relative to its sector.
Figure 16
StockVal®
PFIZER INCORPORATED (PFE) Price 26.89
2003
2004
2005
2006
1.2
HI
LO
ME
CU
1.0
1.06
0.60
0.85
0.77
0.8
0.6
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P HEALTH CARE SECTOR COMP ADJ (SP-35) M-Wtd
2.7
11-22-2002
11-24-2006
HI
LO
ME
CU
2.4
2.1
2.67
1.53
2.23
2.21
1.8
11-22-2002
11-24-2006
1.5
PRICE / SALES RELATIVE TO S&P HEALTH CARE SECTOR COMP ADJ (SP-35) M-Wtd
2.0
HI
LO
ME
CU
1.6
1.2
1.85
0.58
0.76
0.75
0.8
11-22-2002
11-24-2006
0.4
PRICE / BOOK VALUE RELATIVE TO S&P HEALTH CARE SECTOR COMP ADJ (SP-35) M-Wtd
1.2
HI
LO
ME
CU
1.0
0.8
1.15
0.55
0.77
0.71
0.6
11-22-2002
11-24-2006
0.4
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P HEALTH CARE SECTOR COMP ADJ (SP-35) M-Wtd
Figure 17 depicts the valuation of Pfizer relative to the S&P500 as a whole. From this valuation, Pfizer again
looks close to being fairly valued.
Figure 17
StockVal®
PFIZER INCORPORATED (PFE) Price 26.89
2003
2004
2005
2006
1.4
HI
LO
ME
CU
1.2
1.0
1.37
0.71
1.00
0.86
0.8
11-22-2002
11-24-2006
0.6
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd
5
HI
LO
ME
CU
4
3
4.59
1.93
2.84
2.63
2
11-22-2002
11-24-2006
1
PRICE / SALES RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd
4
HI
LO
ME
CU
3
2
3.71
0.77
1.07
0.99
1
11-22-2002
11-24-2006
0
PRICE / BOOK VALUE RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd
2.0
HI
LO
ME
CU
1.6
1.2
1.96
0.72
1.00
0.89
0.8
11-22-2002
11-24-2006
0.4
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd
Another valuation method is to calculate the per share value of Pfizer by matching a target multiple to a target
measure (earnings, sales, book value, EBITDA, or cash flow). Each of these measures is based on a 4 year
historical analysis.
Pfizer – Absolute Valuation (Figure18)
Valuation
High
Low
Mean
Measure
Price/Forward
Earnings
Price/Sales
Price/Book
Price/EBITDA
Price/Cash
Flow
Current
Target
Multiple
23.1
10.4
15.8
12.4
13.5
Target
Measure
Per
Share
$2.20
6.73
10.7
36.5
20.9
2.92
2.3
7.5
8.5
4.12
3.2
11.5
11.8
3.91
2.9
8
10.4
4
3
10
11
$6.97
$9.38
$3.19
$2.05
Target
Price
$27.88
$28.14
$31.90
$22.55
$29.70
Average: $28.03
The average of these measures suggests a fairly valued price of $28.03 per share.
Summary of Relative Valuation Measures – Figure 19
Pfizer – Valuation Relative to the Healthcare Sector
Valuation
High
Low
Measure
Price/Forward
1.06
0.60
Earnings
Price/Sales
2.67
1.53
Price/Book
1.85
0.58
Price/EBITDA
2.05
0.63
Price/Cash Flow 1.15
0.55
Pfizer – Valuation Relative to the S&P500
Valuation
High
Low
Measure
Price/Forward
1.37
0.71
Earnings
Price/Sales
4.59
1.93
Price/Book
3.71
0.77
Price/EBITDA
4.06
1.02
Price/Cash Flow 1.96
0.72
Mean
Current
0.85
0.77
2.23
0.76
0.92
0.77
2.21
0.75
0.69
0.71
Mean
Current
1.00
0.86
2.84
1.07
1.36
1.00
2.63
0.99
1.07
0.89
Again, each valuation measure shows that Pfizer is currently relatively in-line with its historical averages,
especially when compared to the Healthcare Sector.
Technical Analysis
Figure 20
PFIZER INCORPORATED (PFE)
66
PRICE 26.89 DATE 11-24-2006
58
StockVal®
50
44
44
38
34
38
34
29
26
29
26
22
20
22
20
17
17
15
15
13
13
11
10
The Ohio State University 11
Fisher College of Business 10
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Data Page # 1
Price Change
% Diff SP5 First Call Data
2006
2007
2008
Pfizer
downward
channel
end of 1998.
Pfizer is($Mil)
approaching the
top
1-Dayhas been trading
-0.77 in a -0.41
Mean
Estimatesince the2.02
2.14  Currently,
2.21  Revenues
50,274

of the channel. This suggests that in the near term, Pfizer is poised to pull back. In the long term, if the
1-Week trend continues,
0.49
0.40 has
Change
+3% Market Value ($Mil)
193,889
downward
Pfizer
even more room+19%
to fall. +6%
4-Weeks
-1.43
-2.28 High
2.09
2.31
2.43 Shares Out (Mil)
7,210.4
QTD
-5.18
-10.06 Low
1.98
2.01
1.92 Volume 60-Day Avg (Th) 31,833
YTD
15.31
3.08 Total
20
20
17
Volume 60-Day Avg ($M) 856.0
2005
-13.28
-16.28 # Up
13
8
9
Dividend Estimate
0.96
2004
-23.89
-32.88 # Down
2
3
3
Payout Ratio
47%
2003
15.57
-10.81 House Estimate
Retention Rate
53%
FYE Dec 2005 EPS 1.70
PE Ratio
13.3
12.5
12.2 Dividend Yield
3.57%
Discounted Cash Flow Model
A complete DCF model can be found in Appendix B of this report. Figure 21 shows the sensitivity output of
the DCF model for Pfizer.
Figure 21
PFE Stock Price Sensitivity Analysis
Growth Rate
Discount Rate
4%
5%
6%
3%
8% $25.60 $29.25 $35.32 $47.47
9% $21.61 $23.80 $27.10 $32.59
10% $18.77 $20.19 $22.17 $25.15
11% $16.65 $17.61 $18.90 $20.69
12% $15.01 $15.69 $16.56 $17.72
7%
$83.93
$43.57
$30.12
$23.39
$19.35
Assumptions:
 Pfizer will sustain a terminal free cash flow growth rate of 6% per year
o Slightly bullish due to Pfizer’s strong cash position and aggressive acquisition strategy
 The long-term discount rate will be 10%
o Industry standard
 Pfizer’s revenue growth will be flat through 2008
o Management discussed this during the last earnings conference call
o Due to a combination of patent expirations
 Pfizer will not be able to cut costs as quickly and effectively as they would prefer
o Management discussed this during the last earnings conference call
 Aggressive cost cutting will maintain earnings even with flat revenue growth
Line of Reasoning:
It is a fact that revenue growth is slowing. It is also a fact that, in the pharmaceutical industry, new products are
needed to stimulate revenue growth. New products require either massive amounts of expensive R&D or large,
costly acquisitions. So, how does a pharmaceutical company significantly cut costs (in the long-run) without
taking away from its much needed investment into possible revenue-generating products? It is my belief that
Pfizer cannot simply “cut costs” as easily as management makes it sound. Therefore, earnings will be lower for
the next couple of years, as shown on my DCF.
Summary
Figure 22 outlines the key arguments for and against owning PFE:
Pro
1. Strong financial statements. Tons of cash on
the balance sheet, which allows for
acquisitions, share buybacks, and dividends.
Pfizer has a sustained free cash flow.
2. Market and sector outlook is positive. The
Healthcare Sector is undervalued right now on
a variety of measures.
3. Pfizer is a defensive stock with a market cap of
about $200 billion. Even if the market moves
downward, PFE is not going to lose a
significant portion of its value (>50%).
4. Pfizer is the largest pharmaceutical firm in the
world. It has the capabilities to attain huge
economies of scale and satisfy growing
demand for drugs.
5. Lots of drugs in the pipeline. Given the right
discoveries and approvals, Pfizer could
potentially expand revenues exponentially.
6. Demand for pharmaceuticals is on the rise and
will continue rising significantly for the next
40 years. This is mostly due to increasing life
spans and the Baby Boomer generation
reaching the age of 65.
Con
1. A recent binge of acquisitions and the sale of
the entire Consumer Products division make it
very difficult to forecast the company’s future
performance. It is too early to tell how these
decisions will effect the company overall.
2. Due to a change in accounting principle,
Pfizer’s financial ratios and valuation measures
changed significantly after 2002. With only a
few years of new data, interpretation and
extrapolation is very difficult.
3. Future acquisitions and divestitures are
unpredictable and are not always profitable.
4. Patent expirations are destroying Pfizer’s
revenue base. Nearly all of Pfizer’s profit can
be attributed to its 8 blockbuster drugs. During
the next 10 years, Pfizer will lose the patent
rights to all of these drugs.
5. Government regulations, especially from
Democrats in Congress, seek to destroy
Pfizer’s profit margins.
6. Generic competition is constantly stealing
market share from Pfizer.
7. R&D is simply that. It does not guarantee that
profitable drugs will be discovered. If the new
products cannot keep up with the expirations of
old products, revenues will deteriorate.
8. Technically, Pfizer is in a long-term downward
trend.
9. Current and future litigation settlements could
cost Pfizer billions of dollars.
10. Management surprised the world by stating
that revenue growth will be flat through 2008.
On November 28th, management stated that
the blockbuster-potential diabetes drug
Exubera is not selling well. What other
“surprises” are in store down the road?
Recommendation
In the present, Pfizer is a strong company on all fronts. Pfizer has great products, strong earnings, and is well
diversified. Right now, Pfizer is fairly valued and could even be considered slightly undervalued.
Unfortunately, now is not where my concerns lie. My problem with Pfizer happens in the future. I don’t have
faith that Pfizer will be able to replenish its deteriorating portfolio of products quickly or efficiently enough to
maintain earnings. R&D is becoming more costly, and government regulations will slow everything down.
The Democratic win in Congress is a massive blow to Pfizer. Congress is not just anti-big-pharmaceutical, but
it is sympathetic towards generic drugs companies and consumers. This make me lose faith in Pfizer’s betterthan-average profit margins. Margins in the pharmaceutical industry are small and contracting because of the
factors discusses in this report. The problem for Pfizer is that it can do nothing to prevent any of this.
Pfizer’s risk-return trade off is simply not worth the $0.96 annual dividend that it pays. Money invested in
Pfizer is better off invested in a generic drug company.
Stock Recommendation: Sell the entire holding of PFE
Stock Recommendation: Use the proceeds to buy TEVA
Sector Recommendation: Overweight the Healthcare Sector by 581 basis points
Analyst and Class Information
Analyst Name:
Analyst Email:
Analyst Phone Number:
Lee Wallingford
[email protected]
513-225-2029
University:
College:
Class Name:
Advisor:
Date:
The Ohio State University
Fisher College of Business
Bus-Fin 724
Royce A. West, CFA
Updated November 28th, 2006
Appendix A – Pfizer Financial Statements
Appendix B – DCF Model for Pfizer
Terminal Discount Rate =
Terminal FCF Growth =
Year
Revenue
% Growth
Operating Income
Operating Margin
Taxes
Tax Rate
Net Income
% Growth
Forecast
2007E 2008E
2006E
50,498
0.00%
50,498
0.00%
50,498
0.00%
Terminal
Value
2009E
54,033
7.00%
11,851.1 14,422.3 11,897.0 17,074.3
23.47%
28.56%
23.56%
31.60%
3,534.8
29.8%
10.0%
6.0%
2010E
2011E
57,815
7.00%
61,862
7.00%
2012E
2013E
2014E
66,192
7.00%
70,826
7.00%
18,269.5 19,548.4 20,916.8
31.60%
31.60%
31.60%
22,380.9
31.60%
3,534.8
30.0%
3,534.8
30.0%
5,122.3
30.0%
5,480.9
30.0%
5,864.5
30.0%
6,275.0
30.0%
6,714.3
30.0%
15,936.3 10,887.4
7.00% -31.68%
8,362.1
-23.19%
8,947.5
7.00%
9,573.8 10,244.0 10,961.0
7.00%
7.00%
7.00%
11,728.3
7.00%
Add Depreciation/Amort
% of Sales
% of Capex
5,966.3
11.8%
266.4%
6,384.0
12.6%
285.0%
6,830.8
13.5%
304.9%
3,900.0
7.2%
154.1%
4,134.0
7.2%
144.5%
Plus/(minus) Changes WC
% of Sales
1,004.0
-2.0%
(880.0)
(942.0)
(864.5)
-1.6%
(925.0)
-1.6%
Subtract Cap Ex
Capex % of sales
2,240.0
4.4%
2,240.0
4.4%
2,240.0
4.4%
2,531.2
4.7%
2,860.3
4.9%
3,652.3
5.5%
4,127.1
5.8%
14,151.4 12,011.0
-31.5%
-15.1%
9,451.8
-21.3%
9,922.5 10,404.1 10,894.7
5.0%
4.9%
4.7%
11,391.7
4.6%
Free Cash Flow
YOY growth
NPV of free cash flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
20,666.6
N/A
$78,723.21
$104,640.59
$183,363.80
11.3%
4,382.0
7.1%
135.6%
4,645.0
7.0%
127.2%
4,923.7
7.0%
119.3%
(989.8) (1,059.1)
-1.6%
-1.6%
(1,133.2)
-1.6%
3,232.1
5.2%
42.9%
57.1%
Implied equity value/share
Upside/(Downside) to DCF
27.21
$25.15
-7.6%
81,088
7.00%
23,947.6 25,623.9
31.60%
31.60%
7,184.3
30.0%
7,687.2
30.0%
12,549.3 13,427.7
7.00%
7.00%
5,219.1
6.9%
111.9%
5,532.2
6.8%
105.0%
(1,212.5) (1,297.4)
-1.6%
-1.6%
4,663.6
6.2%
5,269.8
6.5%
11,892.3 12,392.7
4.4%
4.2%
78,315
7290
Cash/Op's % of Sales
Current Price
75,784
7.00%
Terminal
P/E
EV/EBITDA
Free Cash Yield
'06-10 Cash/Op's
Shares Outstanding
2015E
29.7%
328,407.0
24.5
10.3
3.77%
Sources
AARP.com
Website
http://www.aarp.org/bulletin/medicare/Articles/0310_sidebar_2.html
Forbes.com
Website
“Six Ways Congress Could Hurt Big Pharma”, by Matthew Herper
11/16/2006
Pfizer 10-K, 2005
Pfizer 10-Q, September 2006
Pfizer Company Website
Website
http://mediaroom.pfizer.com/index.php?s=company_overview
Science Magazine Online
Website
http://www.sciencemag.org/cgi/content/full/309/5731/83
http://www.sciencemag.org/cgi/content/full/303/5665/1796/F2
StockVal
U.S. Census Bureau
Website
http://www.census.gov/population/socdemo/statbriefs/agebrief.html
U.S. Food and Drug Administration
Website
http://www.fda.gov/cder/ob/faqs.htm