Pfizer's New Focus: Can Cancer Drugs Become the Next Big Moneymaker for Investors?

Pfizer is prepared to move on from Covid. Following a challenging year characterized by the sharp drop of its Covid business, the company is now placing its bets on cancer medications to help it regain its footing. Just how long it takes for that wager to pay off is uncertain.

Last week, Pfizer presented its expanded efforts in cancer to investors during a four-hour session. Additionally, it ran a dramatic 60-second Super Bowl commercial highlighting its mission to "outdo cancer."

An Attempt to Boost Investor Confidence

This change occurs at a critical juncture for Pfizer. The massive pharmaceutical company has been attempting to boost investor confidence following a more than 40% decline in shares in 2023. Pfizer's market worth was wiped by almost $100 billion as a result of that share decrease.

Pfizer let Wall Street down last year with the lackluster introduction of a new RSV injection, a twice-daily weight loss drug that failed clinical studies, and a 2024 estimate that was below expectations, in addition to the declining demand for its Covid medicines. As part of a $4 billion cost-cutting initiative, the corporation has reduced its investment on research and development and laid off hundreds of workers.

Pfizer outlined its aims at the investor day, having now completely merged with the targeted cancer pharmaceutical Seagen. With the $43 billion purchase of Seagen, Pfizer's cancer medication pipeline now includes 60 distinct investigational studies.

With Seagen under its belt, Pfizer claims that by 2030, its drug pipeline-which currently produces just five blockbuster medications-could yield at least eight. However, the business did not say which medications it thinks could have such potential.

A few years may pass before several of Pfizer's cancer medications in the middle of development provide critical clinical trial results and reduce their risk, according to some analysts.

Additionally, Pfizer's current oncology portfolio is under considerable competition. Over the past year, Pfizer's and Astellas Pharma's joint sales of the prostate cancer medication Xtandi and the popular breast cancer medicine Ibrance have decreased. By 2027, the medications' monopoly on the market is anticipated to end.

Nevertheless, a few analysts were inspired after the investor day.

A New Business Division for Pfizer

During the investor event, Pfizer unveiled its new cancer research-focused business division and outlined its long-term plan for the company until the end of the decade.

That oncology section houses a broad range of treatments that both Pfizer and Seagen have been marketing for a long time, as well as experimental medications that the businesses have either discovered or acquired through acquisitions.

Chris Boshoff, a seasoned Pfizer executive who most recently oversaw the organization's cancer research and development division, is in charge of the division.

Boshoff emphasized the breadth of Pfizer's capabilities by pointing out that although Seagen only has one production facility, Pfizer had ten on three continents that produce cancer medications. Additionally, he cited Pfizer's commercial presence in over 100 countries as well as the fact that their customer-facing commercial staff is three times larger than Seagen's.

Pfizer did not specify how much money it expected to make from its cancer brand by 2030. However by the end of the decade, the firm estimates that new medications and new indications, or therapy uses, for already-available treatments would account for around two thirds of risk-adjusted oncology income.

Pfizer restated its prediction that, by 2030, sales from the Seagen purchase will total $10 billion.

However, until the end of the decade, the business gave no indication as to how Seagen's expansion will be realized, according to a note published on Thursday by UBS analyst Trung Huynh.

Pfizer announced a significant change in its drug pipeline strategy, particularly in its oncology division, as it aims to transition to biologic drugs as the primary revenue source. The company plans to increase the proportion of biologic treatments in its pipeline from 6% to 65% by 2030. Biologics, derived from living sources like animals or humans, encompass vaccines, stem cell therapies, and gene therapies, often ranking among the most expensive prescription drugs in the U.S. Prior to its deal with Seagen, Pfizer's cancer product portfolio consisted predominantly of small-molecule drugs, characterized by their chemical composition and low molecular weights.