Wall Street waits to hear Pfizer's story
By Christopher Bowe FT.com, 00:32 GMT Feb 10, 2006
Hank McKinnell, chief executive of Pfizer, on Friday faces the most important meeting with Wall Street analysts and investors in his six years leading the world's largest drugmaker.
The event finds Mr McKinnell and Pfizer at a critical stage. His focus will be to reassure investors that Pfizer's 10-year strategy of becoming large through acquisitions is also building a healthy company. He will also attempt to ease uncertainty over newer threats and challenges.
Pressure has intensified on Mr McKinnell and his top management after Pfizer in October withdrew its financial forecasts for this year and beyond.
The previous forecasts had been delivered early last year as part of Pfizer's $4bn cost-cutting programme. At the time, it aggressively touted its ability to continue growing in spite of the expiry of some of its biggest drugs. Its sales and earnings are expected to fall or remain flat this year.
In October, there was concern about changes that Pfizer foresaw in the US cholesterol market, which could potentially hurt growth of its biggest drug, Lipitor, the cholesterol reducer that accounts for $12bn a year in sales. After withdrawal of its forecasts, Pfizer's share price was trading near eight-year lows and still trades at a significant discount compared with some industry peers. It was mostly unchanged at $26.46 in New York on Thursday.
That performance contrasts with Mr McKinnell's pledge upon taking the job that Pfizer's "new mission" was to become "the world's most valued company".
James Kelly, analyst at Goldman Sachs, said in a report: "Pfizer's February 10 analyst day offers management the opportunity to quell investor uncertainty, begin to rebuild credibility and highlight the late-stage pipeline."
Pfizer also has tried to reassure investors that it is seeking value for them. It is expected on Friday to give more details on its considerations to either sell or spin off its consumer products unit, which has about $4bn in annual sales, and is potentially worth $7bn-$11bn. It is also expected to reveal the progress of new drugs.
The event finds Mr McKinnell and Pfizer at a critical stage. His focus will be to reassure investors that Pfizer's 10-year strategy of becoming large through acquisitions is also building a healthy company. He will also attempt to ease tension and uncertainty over newer threats and challenges, particularly in the cholesterol market.
Generic competition could begin to hurt Lipitor sales, a vital part of Pfizer's outlook.
In addition, Pfizer's future relies heavily on Torcetrapib, a new cholesterol drug that it plans to sell in combination with Lipitor.
It also is expected to show the progress of newly approved drugs and drugs awaiting regulatory approval in its pipeline.
With enormous cash reserves, Pfizer remains financially strong. But investors await Mr McKinnell's blueprint for how their investment can grow.
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