PTE
PolarityTE, Inc. Common Stock
stock NASDAQ

**Summary of my BeAr cAsE**
* Downward momentum picking up for the past few years. Shares are down 60% since 2022.
* To turnaround the pessimism, the company needs more than cheap valuation ratios, high dividend yields, and stable FCF. Wait, whaaaaat! Think about it, if PFE looks so good on paper, why shares are down? Do you really believe that the market is overlooking these metrics? Do you really think you are among the few to be aware of its P/E, P/FCF, EV/EBITDA, Dividend Yield, Dividend Growth, etc.?
* Patent Cliff a major risk for the next 5 years. Eliquis, the top selling drug, looses its patent next year. Yeah, compounders will most likely not be able to commercialize alternatives until 2028.
* My concern with patent cliff is how the company is reacting to mitigate it. They will most likely plan acquisitions to account for the revenue loss. In fact, management is projecting $20 billion in revenue from new acquisitions for the next 5 years. The loss due to LOE (loss of exclusivity) is "just" $17B.
* More acquisitions will most likely lead to depressed net income and FCF, similarly to Seagen. Interest expenses going up, as acquisitions are usually paid with long term debt.
* Cost cutting ($4B achieved so far, with $500M planned this year) has limited upside and it reaches an asymptote after some time. After that, you can't just keep cutting without impacting sales.
* Yes. There are over 100 drugs in the pipeline. Some of them could be breakthroughs. Commercialization takes years.
* I don't see a quick turnaround in sight. The best shot was Danuglipron, an oral GLP-1. That was recently discontinued.
* I haven't bought OTM puts yet. Waiting for better price action. A retracement to $25 could be a good entry point for me.
* I may be wrong. You can loose it all. Not financial advice. Don't follow my bet.
* Roast me in the comments, baby!
**Company Overview**
Pfizer runs its commercial operations through three groups:
1. Biopharma – Its main business, focused on making and selling medicines and vaccines. $62.4B in 2024, $58.23B in 2023
2. PC1 – A unit that helps other companies develop and manufacture drug ingredients. $1.14B in 2024, $1.27B in 2023
3. Pfizer Ignite – A service that supports small biotech firms with research and development help. $82M in 2024, $44M in 2023
Biopharma has two main parts:
1. Pfizer U.S. Commercial Division
2. Pfizer International Commercial Division: In 2024, Pfizer made over $500 million in 11 countries outside the U.S. In 2022, it was 24 countries.
Chart below shows a drop in international revenue over the past two years. Most of that drop was due to lower sales of Comirnaty (COVID-19 vaccine) and Paxlovid (COVID-19 treatment) outside the U.S. In 2024, China was Pfizer’s biggest market outside the U.S., making up 4% of total company revenue. In 2023 and 2022, Japan was the largest, with 6% and 8% of total revenue, respectively.
In China, Pfizer faces strong pricing pressure from government programs encouraging use of generics.
Most revenue originated in the US:
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Bad if dollar gets weaker. Low chance. Trump chickening out from tariffs --> markets will rally
**U.S. Commercial Division Details**
1. **Primary Care** – Medicines for heart disease, diabetes, migraines, COVID-19, and vaccines
2. **Specialty Care** – Drugs for immune diseases, rare diseases, and hospital use
3. **Oncology** – Cancer treatments, including advanced drugs like antibody-drug conjugates and biosimilars
**Key Products (by Category)**
*Primary Care*
* **Internal medicine**: Eliquis
* **Migraine**: Nurtec, Zavzpret
* **Vaccines**: Prevnar, Comirnaty (COVID-19), Abrysvo, and more
* **COVID-19**: Paxlovid
*Specialty Care*
* **Inflammation & Immunology**: Xeljanz, Enbrel (outside the U.S. and Canada), Cibinqo, Velsipity, others
* **Rare Disease**: Vyndaqel, BeneFIX, Ngenla, Genotropin
* **Hospital Use**: Zithromax, Medrol, Octagam, and others
*Oncology (Cancer)*
* Includes drugs like Ibrance, Xtandi, Adcetris, Padcev, Inlyta, Elrexfio, and Tivdak
* These treat many types of cancer, including breast, lung, skin, blood, and more
**R&D**
Pfizer does most of its research in-house. But it also works with others—such as universities, biotech firms, and other companies. More on that below
In 2024, Pfizer had two main research units:
* One focused on cancer
* One covered all other diseases
The main areas of focus are:
* Cancer
* Internal medicine (like heart disease and migraines)
* Vaccines
* Inflammation and immune-related diseases
Creating a new medicine or vaccine from the ground up can take more than ten years. Pipeline of more than 115 drugs
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R&D costs are flat. Are they really betting big on R&D?
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**Key Partnerships and How They Work**
1. **Comirnaty** (COVID-19 vaccine): Partner: BioNTech. Pfizer and BioNTech **split the costs and profits 50-50**, except in China, Hong Kong, Macau, and Taiwan where Pfizer has no rights.
2. **Eliquis** (blood thinner): Partner: Bristol Myers Squibb (BMS). Pfizer pays for 50% to 60% of development costs. They split profits and losses evenly in most places.
3. **Xtandi** (prostate cancer drug): Partner: Astellas. In the U.S., both companies share profits, losses, and marketing costs equally. Pfizer earns royalties from sales outside the U.S.
4. **Orgovyx** (prostate cancer drug): Partner: Sumitomo Pharma (SMPS). In the U.S., profits and costs are split evenly. Pfizer has no rights outside the U.S. In December 2024, Pfizer and SMPS ended their deal for a related combo drug.
5. **Padcev** (bladder cancer drug): Partner: Astellas. Approved in the U.S. for use with Keytruda. Pfizer sells and distributes the drug in the U.S. Each company covers its own sales costs and splits some shared expenses and U.S. profits. Outside the U.S., Pfizer has rights in the Americas. Astellas covers the rest of the world. Profits outside the U.S. are split using a mix of shared costs and royalties to reach a near 50-50 split.
6. **Adcetris** (cancer drug): Partner: Takeda. Pfizer sells Adcetris in the U.S. and Canada. Takeda sells it elsewhere and pays Pfizer a royalty based on sales levels.
Pfizer includes money from these deals mostly under Alliance revenues. But for Comirnaty and Padcev, the money is reported under Product revenues because Pfizer handles more of the sales and distribution.
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**Formularies and Insurance**
To get its medicines covered by health insurance, Pfizer works to have its products placed on **formularies**. These are lists of approved drugs used by:
* Insurance plans
* Pharmacy Benefit Managers (PBMs)
Pfizer may offer **discounts or rebates** to get better placement on these lists, which helps increase use of its products
In the **U.S.**, Pfizer’s **vaccines** are sold to:
* The federal government (including the CDC)
* Wholesalers
* Doctor offices
* Pharmacies
* Health systems
**Patents**
Some countries allow extra time on a patent if there were delays in getting the product approved or if the patent office took too long to process the application.
This extra time is called Patent Term Extension (PTE) or Patent Term Adjustment, depending on the cause.
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Footnotes:
* **Eliquis** (blood thinner): A settlement allows some generics to launch April 1, 2028. If certain patents are overturned in court, generics could launch as early as November 21, 2026 or sooner.
* **Mektovi** (cancer drug): Patent in the U.S. extended to March 2026, with a request filed to push it to 2027.
Side note: Through its Accord for a Healthier World program, Pfizer aims to offer all of its patented and off-patent medicines and vaccines **at no profit** to 1.2 billion people in 45 lower-income countries.
**Drug Pricing and Reimbursement Rules in the US**
Pfizer’s pricing is influenced by U.S. federal and state laws, and public insurance programs like Medicare and Medicaid.
Pfizer must:
* Offer **discounts or rebates** under programs like **Medicare, Medicaid, the VA, and 340B**.
* **Report pricing data** to the government accurately or face penalties.
The **IRA** is changing how Medicare handles drug costs. Key updates:
* Starting in 2025, patients on **Medicare Part D** will have a **$2,000 out-of-pocket limit**.
* Pfizer must offer **10%–20% discounts** on drugs used by Medicare patients.
* Medicare will **set prices** for some top-selling drugs. Pfizer’s **Eliquis**, **Ibrance**, and **Xtandi** are among those selected for price setting by **2026 and 2027**.
* Pfizer expects a **$1 billion drop in revenue** in 2025 from these changes alone.
The program (called MDPNP) is facing **legal challenges**, so final outcomes are not certain.
**340B Drug Discount Program**
* Requires drug discounts to hospitals and clinics serving low-income patients.
* Pfizer’s **contract pharmacy policies** aim to prevent abuse but may face legal risks.
* New federal and state rules could **increase rebate requirements** or limit Pfizer’s ability to manage these discounts.
**Medicaid and State Rules**
* States also want lower drug costs and use preferred drug lists and rebate agreements to control spending.
* States may demand extra rebates for a drug to be included on their formularies.
**Supply Chain**
No breakdown of suppliers per country. So far, Pfizer has had no major shortages.
Map of manufacturing centers
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2023 source
Not that exposed to tariffs on imports into the US. From the TD Cown conference:
Ourselves in the U.S. we have probably the largest manufacturing network of any other company. We have 13 manufacturing sites in the U.S. right now up and running.
For manufacturing and distribution:
* Pfizer Global Supply (PGS) manages **37 manufacturing plants** worldwide.
* Key locations include **Belgium, Germany, India, Ireland, Italy, Japan, Singapore, and the U.S.**
* PGS also runs **multiple distribution centers** around the globe.
* PGS is based in **New York City** and regularly reviews its network to stay aligned with Pfizer’s needs.
For R&D:
* In the **U.S.**, Pfizer has about **9 million square feet** of R&D space, mostly owned.
* Outside the U.S., Pfizer **leases R&D labs** in:
* The **United Kingdom**
* **India**
* **Belgium**
**Performance**
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From the 10-K (yikes!)
$100 invested in PFE --> $88.8 in 6 six years (yikes!)
$100 invested in Peers --> $177.4 in 6 six years (double yikes!)
30-year chart:
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Since 2022, shares are down 60% and falling. Downward momentum picking up. RSI in oversold territory.
Recent financial metrics summary:
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Good summary of key metrics in the 10-K
**Fundamental Analysis**
**Income statement:**
Revenue picking up in Q3 and Q4 2024. Double digit growth 👀
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Operating income up in FY 2024 by 211% yoy 👀 Most of the improvement came from Q3, Q4, and also Q1. Mostly, Covid related growth.
In Q3 2024, **excluding COVID-19 products**, Pfizer's revenue grew by 14% operationally, reaching $13.6 billion. Vyndaqel, Eliquis leading the revenue. Overall Q4 revenue growth was 34%. **More than half of the growth was Covid related.**
In Q4 2024, **excluding COVID-19 products**, Pfizer achieved an 11% operational revenue growth. Overall Q4 revenue growth was 25%. **More than half of the growth was Covid related**.
Covid is still driving revenue. Highly dependable on Coivd waves.
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Coincidentally enough, Pfizer outperformed in those Covid peaks. Q1 2025 data soft -- > covid revenue will most likely show a decline
**Balance Sheet:**
Scary net debt trend.
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Legenday Seagen acquisition: In May 2023, Pfizer issued $31 billion in long-term debt across eight tranches, with maturities ranging from 2025 to 2063. This bond issuance ranks among the largest in U.S. corporate history. To cover the remaining acquisition costs, Pfizer utilized a combination of short-term financing and existing cash reserves.
Net debt / EBITDA = 2
Cash & ST Investments = $20B
Zero liquidity risks
However, interest payments are heating up:
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**Cash Flow Statement:**
$12.8 in OCF
$9.9B in FCF
Cash cow.
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CapEx Stabilized
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Dividend yield close to 8%
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That's an insane dividend yield. Payout ratio (Dividend per share / EPS) is over 100%!!!
Red flag?
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Dividends growing consistently for the past 14 years. (Dividend CAGR for the past 10 years was 5.34%)
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Compared to FCF over the past two years, the spend on dividends is concerning.
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The company can still use cash reserves to pay dividends. $20B available. That's 2 years of dividend payouts.
Not enough risk for a dividend cut. That said, I don't think dividends will go up from here.
**Valuation**
Cheap! Very cheap! Undervalued!
P/E 15.9 - below long term median (16.4)
P/S 2 - all time lows in the past decade
P/FCF 13 - below the long term median (15.4). However still higher than in the golden ages (2022, 2023)
EV/EBITDA 7.5 - below median (11.5) however, above 2023 (5.5)
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**The Narrative**
TD Cowen 45th Annual Health Care Conference: Loss of Exclusivity (LOE) Risk – $17 Billion Revenue at Risk
So starting in '26 will be smaller. The impact '27 will be much bigger, and '28 will be the biggest. So that's the cadence. And this is how the $17 billion are coming up. CEO
IRA-Driven Rebate Costs – $1.5 Billion Immediate Hit. **Probably** $500 million offset with incremental volume
Margin Recovery Uncertainty – No Firm Commitment to Targets
And relative to margins, is this next three-year period the time in, which you'll return to pre-pandemic operating margin? - Steve Scala
I don't want to give a number, because my CFO will kill me if I go too far. But it's very clear that, we have a goal to go there, and we are in a very, very good path of doing it. So as you can see already from low 60s, very high 60s, very low 70s of our gross margins, we arrived already into mid 70s and pre-pandemic was very high 70s. - Albert Bourla
Margins:
2019: 81%
2020: 80%
2021: 62%
2022: 66%
2023: 70%
2024: 74%
Gross margins are going up! Net margins, not so much:
2019: 39%
2020: 22%
2021: 27%
2022: 31%
2023: 3.6%
2024: 13%
**Danuglipron discontinuation:** this was Pfizer's best shot at brining in some GLP-1 hype.
Eli Lilly brought tons of hype with the successful phase 3 of its oral weight loss pill
Novo Nordisk followed Eli (even though phase 3 for their oral version of Wegovy was approved back in 2023!!!)
To compensate for the upcoming patent cliff (Eliquis expring next year), the company may be planning more acquisitions. That's great for revenue. Bad for net income (hint hint, wink wink, non cash expenses and interest payments from new debt).
Even though patent cliff is resolved through acquisitions, net income may remain depresesd. That will possibly impact dividend growth. More interest payments will lead to a slower growth of FCF.
The company is cooked, unless they hit the nail with a breakthrough drug and they begin commercialization, fast.
Fast is not a common word in pharma. Take it from Pfizer's 10-K:
The process of drug, vaccine and biological product discovery from initiation through development and to potential regulatory approval is lengthy and can take more than ten years.
I am a degen. I have ZERO clue of the potential of the drugs in the pipeline. The best shot for someone like me is to check the Q&As in the earnings calls. If ANY RELEVANT DRUG is about to face Phase 3 or to get approved by the FDA, it's going to be there.
From Q4 2024 earnings call, all I saw was:
\- Danuglipron: Guh! now discontinued.
\- ELREXFIO: Phase 3 data expected in 2025. Success could triple the addressable market and significantly extend treatment duration — potential mega-blockbuster?
\- Padcev + Pembrolizumab: Interim registrational data in muscle-invasive bladder cancer.Could triple the patient population and challenge cystectomy as standard of care.
\- Atirmociclib + Vepdegestrant: Vepdegestrant Phase 3 data (expected Q1 2025), and newly initiated combo trials. Pfizer is aiming to redefine endocrine therapy + CDK inhibitor regimens, potentially leapfrogging current CDK4/6 standards.
\- Prevnar PCV-25 and PCV-30+: Start of Phase 3 for PCV-25 in adults; pediatric data later in 2025; PCV-30+ entering Phase 1. These candidates are foundational for future pneumococcal market leadership, with improved coverage vs. Prevnar 20.
\- Abrysvo (RSV Vaccine): Potential ACIP decisions on revaccination and age expansion in 2025. Could re-expand the RSV vaccine market, which declined after early adoption in 2023.
\- Ponsegromab: Phase 3 study initiation in 2025. Cachexia is a major unmet need; success could create a new market segment.
As for me, I belive the biggest catalyst this year was the commercialization of Danuglipron. That could have brought tons of hype. Other drugs have potential, and their success is a risk to my bear case.
**Why I Am Not Short Yet**
Prie action, baby! The share price just broke the $25 support on LiBeRaTiOn dAy. A retracement is more than possible. I may go in with OTM puts if shares retest the $25 support.
This put contract looks juicy: PFE260116P22.5
**Disclosure**: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor.

**Summary of my BeAr cAsE**
* Downward momentum picking up for the past few years. Shares are down 60% since 2022.
* To turnaround the pessimism, the company needs more than cheap valuation ratios, high dividend yields, and stable FCF. Wait, whaaaaat! Think about it, if PFE looks so good on paper, why shares are down? Do you really believe that the market is overlooking these metrics? Do you really think you are among the few to be aware of its P/E, P/FCF, EV/EBITDA, Dividend Yield, Dividend Growth, etc.?
* Patent Cliff a major risk for the next 5 years. Eliquis, the top selling drug, looses its patent next year. Yeah, compounders will most likely not be able to commercialize alternatives until 2028.
* My concern with patent cliff is how the company is reacting to mitigate it. They will most likely plan acquisitions to account for the revenue loss. In fact, management is projecting $20 billion in revenue from new acquisitions for the next 5 years. The loss due to LOE (loss of exclusivity) is "just" $17B.
* More acquisitions will most likely lead to depressed net income and FCF, similarly to Seagen. Interest expenses going up, as acquisitions are usually paid with long term debt.
* Cost cutting ($4B achieved so far, with $500M planned this year) has limited upside and it reaches an asymptote after some time. After that, you can't just keep cutting without impacting sales.
* Yes. There are over 100 drugs in the pipeline. Some of them could be breakthroughs. Commercialization takes years.
* I don't see a quick turnaround in sight. The best shot was Danuglipron, an oral GLP-1. That was recently discontinued.
* I haven't bought OTM puts yet. Waiting for better price action. A retracement to $25 could be a good entry point for me.
* I may be wrong. You can loose it all. Not financial advice. Don't follow my bet.
* Roast me in the comments, baby!
**Company Overview**
Pfizer runs its commercial operations through three groups:
1. Biopharma – Its main business, focused on making and selling medicines and vaccines. $62.4B in 2024, $58.23B in 2023
2. PC1 – A unit that helps other companies develop and manufacture drug ingredients. $1.14B in 2024, $1.27B in 2023
3. Pfizer Ignite – A service that supports small biotech firms with research and development help. $82M in 2024, $44M in 2023
Biopharma has two main parts:
1. Pfizer U.S. Commercial Division
2. Pfizer International Commercial Division: In 2024, Pfizer made over $500 million in 11 countries outside the U.S. In 2022, it was 24 countries.
Chart below shows a drop in international revenue over the past two years. Most of that drop was due to lower sales of Comirnaty (COVID-19 vaccine) and Paxlovid (COVID-19 treatment) outside the U.S. In 2024, China was Pfizer’s biggest market outside the U.S., making up 4% of total company revenue. In 2023 and 2022, Japan was the largest, with 6% and 8% of total revenue, respectively.
In China, Pfizer faces strong pricing pressure from government programs encouraging use of generics.
Most revenue originated in the US:
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Bad if dollar gets weaker. Low chance. Trump chickening out from tariffs --> markets will rally
**U.S. Commercial Division Details**
1. **Primary Care** – Medicines for heart disease, diabetes, migraines, COVID-19, and vaccines
2. **Specialty Care** – Drugs for immune diseases, rare diseases, and hospital use
3. **Oncology** – Cancer treatments, including advanced drugs like antibody-drug conjugates and biosimilars
**Key Products (by Category)**
*Primary Care*
* **Internal medicine**: Eliquis
* **Migraine**: Nurtec, Zavzpret
* **Vaccines**: Prevnar, Comirnaty (COVID-19), Abrysvo, and more
* **COVID-19**: Paxlovid
*Specialty Care*
* **Inflammation & Immunology**: Xeljanz, Enbrel (outside the U.S. and Canada), Cibinqo, Velsipity, others
* **Rare Disease**: Vyndaqel, BeneFIX, Ngenla, Genotropin
* **Hospital Use**: Zithromax, Medrol, Octagam, and others
*Oncology (Cancer)*
* Includes drugs like Ibrance, Xtandi, Adcetris, Padcev, Inlyta, Elrexfio, and Tivdak
* These treat many types of cancer, including breast, lung, skin, blood, and more
**R&D**
Pfizer does most of its research in-house. But it also works with others—such as universities, biotech firms, and other companies. More on that below
In 2024, Pfizer had two main research units:
* One focused on cancer
* One covered all other diseases
The main areas of focus are:
* Cancer
* Internal medicine (like heart disease and migraines)
* Vaccines
* Inflammation and immune-related diseases
Creating a new medicine or vaccine from the ground up can take more than ten years. Pipeline of more than 115 drugs
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R&D costs are flat. Are they really betting big on R&D?
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**Key Partnerships and How They Work**
1. **Comirnaty** (COVID-19 vaccine): Partner: BioNTech. Pfizer and BioNTech **split the costs and profits 50-50**, except in China, Hong Kong, Macau, and Taiwan where Pfizer has no rights.
2. **Eliquis** (blood thinner): Partner: Bristol Myers Squibb (BMS). Pfizer pays for 50% to 60% of development costs. They split profits and losses evenly in most places.
3. **Xtandi** (prostate cancer drug): Partner: Astellas. In the U.S., both companies share profits, losses, and marketing costs equally. Pfizer earns royalties from sales outside the U.S.
4. **Orgovyx** (prostate cancer drug): Partner: Sumitomo Pharma (SMPS). In the U.S., profits and costs are split evenly. Pfizer has no rights outside the U.S. In December 2024, Pfizer and SMPS ended their deal for a related combo drug.
5. **Padcev** (bladder cancer drug): Partner: Astellas. Approved in the U.S. for use with Keytruda. Pfizer sells and distributes the drug in the U.S. Each company covers its own sales costs and splits some shared expenses and U.S. profits. Outside the U.S., Pfizer has rights in the Americas. Astellas covers the rest of the world. Profits outside the U.S. are split using a mix of shared costs and royalties to reach a near 50-50 split.
6. **Adcetris** (cancer drug): Partner: Takeda. Pfizer sells Adcetris in the U.S. and Canada. Takeda sells it elsewhere and pays Pfizer a royalty based on sales levels.
Pfizer includes money from these deals mostly under Alliance revenues. But for Comirnaty and Padcev, the money is reported under Product revenues because Pfizer handles more of the sales and distribution.
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**Formularies and Insurance**
To get its medicines covered by health insurance, Pfizer works to have its products placed on **formularies**. These are lists of approved drugs used by:
* Insurance plans
* Pharmacy Benefit Managers (PBMs)
Pfizer may offer **discounts or rebates** to get better placement on these lists, which helps increase use of its products
In the **U.S.**, Pfizer’s **vaccines** are sold to:
* The federal government (including the CDC)
* Wholesalers
* Doctor offices
* Pharmacies
* Health systems
**Patents**
Some countries allow extra time on a patent if there were delays in getting the product approved or if the patent office took too long to process the application.
This extra time is called Patent Term Extension (PTE) or Patent Term Adjustment, depending on the cause.
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Footnotes:
* **Eliquis** (blood thinner): A settlement allows some generics to launch April 1, 2028. If certain patents are overturned in court, generics could launch as early as November 21, 2026 or sooner.
* **Mektovi** (cancer drug): Patent in the U.S. extended to March 2026, with a request filed to push it to 2027.
Side note: Through its Accord for a Healthier World program, Pfizer aims to offer all of its patented and off-patent medicines and vaccines **at no profit** to 1.2 billion people in 45 lower-income countries.
**Drug Pricing and Reimbursement Rules in the US**
Pfizer’s pricing is influenced by U.S. federal and state laws, and public insurance programs like Medicare and Medicaid.
Pfizer must:
* Offer **discounts or rebates** under programs like **Medicare, Medicaid, the VA, and 340B**.
* **Report pricing data** to the government accurately or face penalties.
The **IRA** is changing how Medicare handles drug costs. Key updates:
* Starting in 2025, patients on **Medicare Part D** will have a **$2,000 out-of-pocket limit**.
* Pfizer must offer **10%–20% discounts** on drugs used by Medicare patients.
* Medicare will **set prices** for some top-selling drugs. Pfizer’s **Eliquis**, **Ibrance**, and **Xtandi** are among those selected for price setting by **2026 and 2027**.
* Pfizer expects a **$1 billion drop in revenue** in 2025 from these changes alone.
The program (called MDPNP) is facing **legal challenges**, so final outcomes are not certain.
**340B Drug Discount Program**
* Requires drug discounts to hospitals and clinics serving low-income patients.
* Pfizer’s **contract pharmacy policies** aim to prevent abuse but may face legal risks.
* New federal and state rules could **increase rebate requirements** or limit Pfizer’s ability to manage these discounts.
**Medicaid and State Rules**
* States also want lower drug costs and use preferred drug lists and rebate agreements to control spending.
* States may demand extra rebates for a drug to be included on their formularies.
**Supply Chain**
No breakdown of suppliers per country. So far, Pfizer has had no major shortages.
Map of manufacturing centers
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2023 source
Not that exposed to tariffs on imports into the US. From the TD Cown conference:
Ourselves in the U.S. we have probably the largest manufacturing network of any other company. We have 13 manufacturing sites in the U.S. right now up and running.
For manufacturing and distribution:
* Pfizer Global Supply (PGS) manages **37 manufacturing plants** worldwide.
* Key locations include **Belgium, Germany, India, Ireland, Italy, Japan, Singapore, and the U.S.**
* PGS also runs **multiple distribution centers** around the globe.
* PGS is based in **New York City** and regularly reviews its network to stay aligned with Pfizer’s needs.
For R&D:
* In the **U.S.**, Pfizer has about **9 million square feet** of R&D space, mostly owned.
* Outside the U.S., Pfizer **leases R&D labs** in:
* The **United Kingdom**
* **India**
* **Belgium**
**Performance**
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From the 10-K (yikes!)
$100 invested in PFE --> $88.8 in 6 six years (yikes!)
$100 invested in Peers --> $177.4 in 6 six years (double yikes!)
30-year chart:
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Since 2022, shares are down 60% and falling. Downward momentum picking up. RSI in oversold territory.
Recent financial metrics summary:
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Good summary of key metrics in the 10-K
**Fundamental Analysis**
**Income statement:**
Revenue picking up in Q3 and Q4 2024. Double digit growth 👀
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Operating income up in FY 2024 by 211% yoy 👀 Most of the improvement came from Q3, Q4, and also Q1. Mostly, Covid related growth.
In Q3 2024, **excluding COVID-19 products**, Pfizer's revenue grew by 14% operationally, reaching $13.6 billion. Vyndaqel, Eliquis leading the revenue. Overall Q4 revenue growth was 34%. **More than half of the growth was Covid related.**
In Q4 2024, **excluding COVID-19 products**, Pfizer achieved an 11% operational revenue growth. Overall Q4 revenue growth was 25%. **More than half of the growth was Covid related**.
Covid is still driving revenue. Highly dependable on Coivd waves.
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Coincidentally enough, Pfizer outperformed in those Covid peaks. Q1 2025 data soft -- > covid revenue will most likely show a decline
**Balance Sheet:**
Scary net debt trend.
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Legenday Seagen acquisition: In May 2023, Pfizer issued $31 billion in long-term debt across eight tranches, with maturities ranging from 2025 to 2063. This bond issuance ranks among the largest in U.S. corporate history. To cover the remaining acquisition costs, Pfizer utilized a combination of short-term financing and existing cash reserves.
Net debt / EBITDA = 2
Cash & ST Investments = $20B
Zero liquidity risks
However, interest payments are heating up:
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**Cash Flow Statement:**
$12.8 in OCF
$9.9B in FCF
Cash cow.
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CapEx Stabilized
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Dividend yield close to 8%
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That's an insane dividend yield. Payout ratio (Dividend per share / EPS) is over 100%!!!
Red flag?
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Dividends growing consistently for the past 14 years. (Dividend CAGR for the past 10 years was 5.34%)
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Compared to FCF over the past two years, the spend on dividends is concerning.
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The company can still use cash reserves to pay dividends. $20B available. That's 2 years of dividend payouts.
Not enough risk for a dividend cut. That said, I don't think dividends will go up from here.
**Valuation**
Cheap! Very cheap! Undervalued!
P/E 15.9 - below long term median (16.4)
P/S 2 - all time lows in the past decade
P/FCF 13 - below the long term median (15.4). However still higher than in the golden ages (2022, 2023)
EV/EBITDA 7.5 - below median (11.5) however, above 2023 (5.5)
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**The Narrative**
TD Cowen 45th Annual Health Care Conference: Loss of Exclusivity (LOE) Risk – $17 Billion Revenue at Risk
So starting in '26 will be smaller. The impact '27 will be much bigger, and '28 will be the biggest. So that's the cadence. And this is how the $17 billion are coming up. CEO
IRA-Driven Rebate Costs – $1.5 Billion Immediate Hit. **Probably** $500 million offset with incremental volume
Margin Recovery Uncertainty – No Firm Commitment to Targets
And relative to margins, is this next three-year period the time in, which you'll return to pre-pandemic operating margin? - Steve Scala
I don't want to give a number, because my CFO will kill me if I go too far. But it's very clear that, we have a goal to go there, and we are in a very, very good path of doing it. So as you can see already from low 60s, very high 60s, very low 70s of our gross margins, we arrived already into mid 70s and pre-pandemic was very high 70s. - Albert Bourla
Margins:
2019: 81%
2020: 80%
2021: 62%
2022: 66%
2023: 70%
2024: 74%
Gross margins are going up! Net margins, not so much:
2019: 39%
2020: 22%
2021: 27%
2022: 31%
2023: 3.6%
2024: 13%
**Danuglipron discontinuation:** this was Pfizer's best shot at brining in some GLP-1 hype.
Eli Lilly brought tons of hype with the successful phase 3 of its oral weight loss pill
Novo Nordisk followed Eli (even though phase 3 for their oral version of Wegovy was approved back in 2023!!!)
To compensate for the upcoming patent cliff (Eliquis expring next year), the company may be planning more acquisitions. That's great for revenue. Bad for net income (hint hint, wink wink, non cash expenses and interest payments from new debt).
Even though patent cliff is resolved through acquisitions, net income may remain depresesd. That will possibly impact dividend growth. More interest payments will lead to a slower growth of FCF.
The company is cooked, unless they hit the nail with a breakthrough drug and they begin commercialization, fast.
Fast is not a common word in pharma. Take it from Pfizer's 10-K:
The process of drug, vaccine and biological product discovery from initiation through development and to potential regulatory approval is lengthy and can take more than ten years.
I am a degen. I have ZERO clue of the potential of the drugs in the pipeline. The best shot for someone like me is to check the Q&As in the earnings calls. If ANY RELEVANT DRUG is about to face Phase 3 or to get approved by the FDA, it's going to be there.
From Q4 2024 earnings call, all I saw was:
\- Danuglipron: Guh! now discontinued.
\- ELREXFIO: Phase 3 data expected in 2025. Success could triple the addressable market and significantly extend treatment duration — potential mega-blockbuster?
\- Padcev + Pembrolizumab: Interim registrational data in muscle-invasive bladder cancer.Could triple the patient population and challenge cystectomy as standard of care.
\- Atirmociclib + Vepdegestrant: Vepdegestrant Phase 3 data (expected Q1 2025), and newly initiated combo trials. Pfizer is aiming to redefine endocrine therapy + CDK inhibitor regimens, potentially leapfrogging current CDK4/6 standards.
\- Prevnar PCV-25 and PCV-30+: Start of Phase 3 for PCV-25 in adults; pediatric data later in 2025; PCV-30+ entering Phase 1. These candidates are foundational for future pneumococcal market leadership, with improved coverage vs. Prevnar 20.
\- Abrysvo (RSV Vaccine): Potential ACIP decisions on revaccination and age expansion in 2025. Could re-expand the RSV vaccine market, which declined after early adoption in 2023.
\- Ponsegromab: Phase 3 study initiation in 2025. Cachexia is a major unmet need; success could create a new market segment.
As for me, I belive the biggest catalyst this year was the commercialization of Danuglipron. That could have brought tons of hype. Other drugs have potential, and their success is a risk to my bear case.
**Why I Am Not Short Yet**
Prie action, baby! The share price just broke the $25 support on LiBeRaTiOn dAy. A retracement is more than possible. I may go in with OTM puts if shares retest the $25 support.
This put contract looks juicy: PFE260116P22.5
**Disclosure**: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor.