Summary
- Of the 6 largest pharmaceutical companies by market cap, Pfizer is the most balanced and with the shallowest patent cliff.
- Its best selling drugs are immune to political attack on pricing, and no single drug accounts for more than 12% of top line.
- After Lyrica, Pfizer has no significant patent expiration for the next 6 years.
- Dividends are the highest of the top 6, with the exception of AbbVie.
- Pfizer's net debt is close to zero, and a gigantic 20-year inverse head and shoulders pattern could break to the upside.
The terrain in biotech and pharma is getting treacherous, and it may be Big Pharma’s time to shine after, in some cases, decades of consolidation. The two biggest headwinds for the pharmaceutical industry going forward appear to be political pressure on drug pricing and the effect of any developing debt crisis on this issue, and patent cliffs. As socialist planning in healthcare is becoming more popular with talks of Medicare for All in the United States, we should expect more and more companies to come under fire in relation to pricing practices. As government finances come under increasing pressure in the years to come all over the Western world, pharma/biotech companies with the heaviest reliance on select blockbusters will probably take the brunt of attacks on pricing schemes, while more balanced firms should escape the worst of it. Patent cliff issues I see as a distant second to the ramping up of government pressure on firms, but an important second nonetheless.
