Pfizer, world’s largest drug maker, got hammered badly in the NYSE on Monday following the disclosure that it had pulled the plug on its “to-be” blockbuster drug, torcetrapib. The stock lost 11% of its market value and wiped out USD 21 bn off its market cap.
Though some might consider this as excessive, this just goes to show what one drug can do to a company’s fortune. Pfizer banks on Lipitor for almost a quarter of its annual USD 51 bn sales and a higher percentage of its profits. With Lipitor patent coverage expiring in 2011 (thanks to Ranbaxy), torcetrapib was supposed to take its place and drive the company’s growth and profits. Pfizer had spent over a billion USD on the development of the drug and pulling it out at the last stage of development has prompted Moody to reconsider the downgrading of Pfizer’s rating from the present Aaa.
Also interesting is the increase in the share prices of its competitors, namely, Roche and Astra Zeneca. Many also expect that this failure might change the way big companies focus on blockbuster drugs to drive both topline and bottomline growth.