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During the coronavirus pandemic, investors became overly optimistic about Pfizer’s vaccine opportunity. As demand for COVID-19 vaccines cooled, the stock fell sharply and has remained weak, still down more than 50% from its 2021 high. Despite that performance, Pfizer may still be attractive for long-term investors.
Pfizer is dealing with several challenges. One is the decline in demand for COVID vaccines. Another is a series of upcoming patent “cliffs,” when generic competition is expected to drive material revenue declines for some of the company’s key drugs. The company also has not yet brought a GLP-1 weight-loss drug to market, leaving competitors to benefit from strong demand in that category.
Even so, Pfizer has been taking steps to address these issues. The company has pivoted on the GLP-1 front by buying a company with a weight-loss drug in development. It has also partnered with a Chinese company working on a GLP-1 pill, agreeing to distribute the drug if it receives approval. In addition, Pfizer is pursuing advanced efforts in oncology and migraine drug development.
Overall, the company is described as remaining highly innovative and a strong competitor in a highly competitive pharmaceutical sector, even if it is not currently operating at full strength.
The article argues that some investors may be overlooking Pfizer because attention is concentrated on companies such as Eli Lilly, which has benefited from its GLP-1 drugs. For dividend-focused investors, the contrast in income is significant: Eli Lilly’s yield is cited at 0.6% while Pfizer’s yield is cited at 6.4%.
In this view, investors are being paid to wait through near-term uncertainty while Pfizer’s research and development efforts progress. The article also suggests that if Pfizer regains momentum, it could receive a higher valuation—potentially shifting from an income-oriented investment toward a growth profile over time.
The article notes that Pfizer’s dividend is likely to face pressure until the company introduces new blockbuster drugs to replace those set to lose patent protection over the next couple of years. However, management has stated that supporting the current dividend payment is a key corporate goal.
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