Pfizer: The Next Chapter After COVID-19 Success

Pfizer is one of the world’s largest pharmaceutical companies and a key player in developing medicines and vaccines. The company focuses on areas such as cancer, vaccines, and rare diseases, and combines large scale research with a global presence that allows it to bring products to patients around the world. With a mix of established medicines, a growing pipeline, and a strong push to expand its position in oncology while building a presence in emerging areas like obesity, Pfizer is working to drive long term growth as a more focused and efficient company. The question remains: Does this healthcare giant deserve a spot in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do not own any shares in Pfizer at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Pfizer, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Pfizer was founded in 1849 in New York and has grown into one of the world’s largest research based biopharmaceutical companies. The company operates a global business model that spans drug discovery, clinical development, manufacturing, marketing, and distribution of medicines and vaccines. This integrated structure allows Pfizer to manage the entire lifecycle of a product, from early scientific research to global commercialization, ensuring consistent quality, regulatory compliance, and large scale reach. By overseeing both the development and commercialization of its therapies, the company is able to translate scientific innovation into products that can be delivered to patients worldwide while benefiting from significant scale advantages. Pfizer’s core proposition is to develop innovative medicines and vaccines that extend and improve patients’ lives, focusing on some of the most serious and widespread diseases. This positions the company within the high value segment of the pharmaceutical industry, where innovation, clinical outcomes, and regulatory approval are the key drivers of success. By investing heavily in research and development while leveraging its global infrastructure, Pfizer addresses a broad and growing demand for advanced healthcare solutions across both developed and emerging markets. The company sells its products through a global network that includes wholesalers, hospitals, clinics, pharmacies, governments, and healthcare providers, supported by a large commercial organization and medical affairs teams. This global distribution allows Pfizer to reach patients in approximately 200 countries and territories while maintaining strong relationships with payors and healthcare systems. Pfizer organizes its business primarily around its Biopharma segment, which includes a wide range of therapeutic areas such as oncology, internal medicine, vaccines, inflammation and immunology, rare diseases, and hospital products. Its portfolio includes widely used medicines such as Eliquis, the Prevnar vaccine family, Ibrance, Xtandi, Vyndaqel, and newer therapies such as Padcev, Elrexfio, and other oncology treatments. A defining aspect of Pfizer’s business model is its reliance on continuous innovation. The company must consistently develop new medicines to replace older products that lose patent protection, which creates a constant cycle of research, development, approval, and commercialization. This innovation driven model is supported by both internal research and external partnerships, including collaborations with companies such as BioNTech, Bristol Myers Squibb, Astellas, and Genmab. These collaborations allow Pfizer to share risk, access new technologies, and accelerate the development of new therapies. The acquisition of companies such as Seagen has further strengthened its capabilities, particularly in oncology, while recent investments in areas such as obesity and cardiometabolic disease reflect its focus on future growth opportunities. Pfizer’s scale also allows it to invest in new technologies such as artificial intelligence to improve research productivity, optimize manufacturing, and enhance commercial execution. The company’s competitive moat is primarily built on its research and development scale, intellectual property, global commercial infrastructure, manufacturing capabilities, and ability to execute partnerships and acquisitions. Its R&D capabilities represent one of its most important advantages. Developing new medicines is costly, time consuming, and uncertain, often taking more than a decade, and Pfizer’s scale allows it to fund large and diverse research programs across multiple therapeutic areas. This increases the likelihood of successful drug development and reduces dependence on any single product. The company’s broad pipeline provides a foundation for future growth and helps offset the impact of patent expirations over time. Intellectual property further strengthens this position, as patents and regulatory exclusivity protect many of Pfizer’s products for a period of time, allowing the company to generate strong returns and reinvest in innovation. Another important competitive advantage lies in Pfizer’s global commercial and regulatory capabilities. The company has deep expertise in navigating complex regulatory environments, securing approvals, and gaining reimbursement across multiple markets. Its global sales force and established relationships with healthcare providers and payors enable it to launch new products at scale and drive adoption more effectively than smaller competitors. Pfizer’s manufacturing and supply chain capabilities also contribute to its moat. Producing complex medicines and vaccines at high quality and large scale requires significant expertise, infrastructure, and regulatory compliance, creating barriers to entry for new competitors. The company’s ability to manufacture and distribute products globally ensures reliability of supply and supports its commercial success. In addition, Pfizer’s strategy of combining internal innovation with external partnerships and acquisitions further strengthens its competitive position. By collaborating with other companies and acquiring promising assets, Pfizer can expand its pipeline, enter new therapeutic areas, and accelerate growth in ways that would be difficult to achieve organically alone. The pharmaceutical industry itself is highly competitive and driven by innovation, with success depending on the ability to develop effective therapies and bring them to market efficiently. In this environment, companies with scale, scientific expertise, strong pipelines, and global reach tend to outperform smaller players. Pfizer’s ability to combine these elements creates a powerful ecosystem that is difficult to replicate. However, the industry is also characterized by patent expirations and pricing pressures, which means that even strong companies must continuously innovate to maintain their position. Pfizer’s long term success therefore depends on its ability to replenish its portfolio with new products and sustain its pipeline. These structural advantages support Pfizer’s ability to generate strong cash flows, maintain competitive positioning, and continue delivering new medicines to patients worldwide while navigating the ongoing challenges of the global pharmaceutical industry.

Management

Albert Bourla serves as the CEO of Pfizer, a role he assumed in 2019 after more than 25 years with the company. He first joined Pfizer in 1993 and has held senior roles across a wide range of functions and geographies, including leadership positions in animal health, vaccines, oncology, and emerging markets. Born and raised in Greece, Albert Bourla is educated as a veterinarian and holds a Ph.D. in Reproductive Biotechnology. Throughout his career at Pfizer, he has built a reputation as a results driven executive who combines scientific understanding with strong commercial acumen. As CEO, he has played a central role in transforming Pfizer from a diversified pharmaceutical conglomerate into a focused, science led innovation company. One of his most significant strategic moves was the spin off of Pfizer’s off patent generics unit Upjohn, which merged with Mylan to form Viatris. This move reflected his long term vision of concentrating Pfizer’s resources on high value, science driven biopharma innovation. Albert Bourla led Pfizer through the global COVID 19 crisis, overseeing the development and rapid rollout of the world’s first approved mRNA vaccine in collaboration with BioNTech. His leadership during the pandemic positioned Pfizer at the forefront of global healthcare innovation and demonstrated the company’s ability to execute at unprecedented speed and scale. Beyond the pandemic, Albert Bourla has focused on repositioning Pfizer for sustainable long term growth by emphasizing pipeline productivity, disciplined capital allocation, and strategic business development. This includes major acquisitions such as Seagen, which significantly expanded Pfizer’s oncology capabilities, particularly in targeted cancer therapies, and reflects a broader strategy of strengthening the company’s position in high value therapeutic areas. Since the normalization of COVID related revenues, Albert Bourla has been clear about the need to rebuild growth through new product launches and innovation. He has outlined ambitions to deliver consistent revenue growth supported by a stronger pipeline, improved margins, and increased operational efficiency. A key part of this strategy is the focus on post 2028 growth, as Pfizer prepares for a period of patent expirations by investing in next generation medicines across oncology, obesity, vaccines, and internal medicine. He has also emphasized the importance of scaling artificial intelligence across the organization to improve research productivity, streamline clinical development, and enhance commercial execution. Albert Bourla’s leadership style is often described as purpose driven and highly execution focused, with a strong emphasis on accountability and performance. He has consistently highlighted the alignment between shareholder value and patient outcomes, arguing that innovation and access to effective treatments ultimately benefit both. Under his leadership, Pfizer has become more focused, more disciplined in capital allocation, and more committed to scientific innovation as the primary driver of long term value creation. While the company faces challenges related to patent expirations and shifting market dynamics, Albert Bourla’s strategic direction suggests a clear focus on renewing Pfizer’s growth engine through a combination of internal innovation, external partnerships, and targeted acquisitions. Given his deep experience within Pfizer, his role in one of the most significant periods in the company’s history, and his continued focus on long term growth drivers, Albert Bourla appears well positioned to guide Pfizer through its next phase. His emphasis on scientific excellence, disciplined execution, and strategic reinvestment aligns closely with the requirements for success in the pharmaceutical industry, where sustained value creation depends on the ability to continuously innovate and bring new therapies to market.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Pfizer has had a mixed decade, as it has only achieved a ROIC above 10% in a handful of years, with results fluctuating significantly depending on product cycles, acquisitions, and extraordinary events such as the pandemic. The spike in ROIC in 2021 and 2022 was driven by COVID related products, which generated unusually high profits on a relatively stable capital base. As those revenues normalized in 2023, ROIC dropped sharply, highlighting how dependent short term returns can be on a few high margin products in the pharmaceutical industry. Several structural characteristics of Pfizer’s business model explain why ROIC has historically been volatile and often below the 10% threshold. First, the company invests heavily in research and development, which is essential for long term growth but comes with long and uncertain payback periods. Developing a new drug can take more than a decade, and during that time significant capital is deployed without generating immediate returns. This creates a natural lag between investment and profitability, which can suppress ROIC in certain periods even if the long term economics are attractive. Another important factor is acquisitions. Pfizer has made several large deals over the years, including Wyeth, Medivation, Hospira, Seagen, and more recently Metsera. These deals are made to strengthen the pipeline and create future growth, but they often take time before they fully contribute to earnings. In the meantime, Pfizer has already spent the money, which can weigh on returns in the short term. Over time, if these acquisitions are successful, they can improve ROIC, but there is usually a delay. Patent expirations also play a big role. When a successful drug loses exclusivity, cheaper alternatives enter the market and sales can decline quickly. At the same time, Pfizer continues to invest in new medicines to replace those losses. This creates periods where returns are under pressure, followed by periods where new products start to contribute. The improvement in ROIC to above 10% in 2025 is encouraging. It suggests that the business is stabilizing after the sharp decline in 2023 and that newer products, cost control, and contributions from acquisitions such as Seagen are starting to have a positive impact. It also reflects a more focused strategy under Albert Bourla, where Pfizer is prioritizing higher value medicines and more disciplined execution. Looking ahead, it is reasonable to expect that ROIC can remain around or slightly above 10% if Pfizer executes well. However, it is unlikely to become consistently high every year. The pharmaceutical industry is naturally uneven, with strong years when new products perform well and weaker years when older products decline. Pfizer’s future ROIC will depend on the success of its pipeline, including newer areas such as oncology and obesity, and how well it manages upcoming patent expirations.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Pfizer’s equity has been quite volatile over the years, with periods of strong growth followed by declines. The large increase in 2021 and 2022 was mainly driven by the pandemic, where Pfizer generated exceptionally high profits from its COVID products. When a company earns a lot of money, a portion of those profits is retained in the business, which increases equity. This is why equity peaked in 2022. The decline in equity in 2023, 2024, and 2025 is not surprising when you look at what happened after the pandemic. As demand for COVID vaccines and treatments dropped, Pfizer’s earnings fell significantly compared to those peak years. Lower earnings mean less value being added to equity, which is the main reason for the decline in this period. Another important factor is Pfizer’s investments in future growth. The company has made large acquisitions, including Seagen and more recently Metsera, to strengthen its pipeline and position itself in areas such as oncology and obesity. These are long term investments that are expected to generate returns over time, but in the short term they can reduce equity because Pfizer is using cash and taking on more obligations to fund these deals. In addition, Pfizer has had to adjust the value of some of its assets when expectations for certain drugs or projects changed. While this does not involve cash leaving the business, it does reduce the reported value of the company and therefore equity. This is fairly common in the pharmaceutical industry, where not all research projects succeed as planned. Despite the recent declines, it is important to note that Pfizer’s equity remains at a relatively high level compared to most of the past decade. The fluctuations are largely explained by the unusual boost from the pandemic followed by a normalization period, combined with significant investments in the future. Looking ahead, it is reasonable to expect equity to start growing again, but likely at a more moderate and stable pace than during the pandemic years. The key driver will be Pfizer’s ability to grow earnings through new product launches and contributions from its pipeline and recent acquisitions. If the company succeeds in areas such as oncology and obesity, and manages the impact of patent expirations, it should be able to rebuild equity over time. However, equity may continue to fluctuate from year to year. The pharmaceutical industry is naturally uneven, with strong periods driven by successful products and weaker periods when older products decline. Pfizer also returns capital to shareholders through dividends, which will continue to limit how quickly equity grows. Overall, the recent decline does not necessarily indicate a weaker business, but rather reflects a transition period from pandemic driven earnings to a more normalized and forward looking growth phase.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins offer a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share.  Pfizer has historically generated solid free cash flow, but the development has been quite volatile over the past decade, especially around the pandemic years. The very high free cash flow and margins in 2021 and 2022 were driven by extraordinary demand for COVID products such as Comirnaty and Paxlovid. These products generated a significant amount of cash in a short period of time, which pushed margins to unusually high levels. As demand declined in 2023, free cash flow dropped sharply. This was not only due to lower revenue, but also because Pfizer continued to invest heavily in the business, which made the decline more pronounced. There are several reasons why Pfizer’s free cash flow margins are lower today than during the pandemic. First, the company is investing heavily in research and development to build its future pipeline. These investments are necessary to develop new medicines, but they reduce free cash flow in the short term. Second, Pfizer has made large investments in acquisitions, including Seagen and more recently Metsera, which require integration costs and ongoing spending before they fully contribute to earnings. Third, the company is investing more in launching new products and expanding its commercial capabilities, which also impacts margins in the near term. The improvement in free cash flow and margins in 2024 and 2025 is a positive sign. It suggests that the core business is recovering as newer products gain traction and the impact from COVID continues to normalize. Key medicines in areas such as cardiovascular, oncology, rare diseases, and migraines have supported this recovery, while cost-saving initiatives have helped improve efficiency. At the same time, contributions from acquisitions such as Seagen are starting to show, particularly in oncology. Looking ahead, it is reasonable to expect that free cash flow and margins can improve further, but likely not return to the unusually high levels seen during the pandemic. The key driver will be whether Pfizer can successfully grow its core business and launch new products that generate strong and consistent cash flows. Continued investment in research, new product launches, and business development will likely keep some pressure on margins in the near term, but these investments are intended to support long term growth. Pfizer uses its free cash flow in a disciplined way. A large portion is returned to shareholders through dividends, which management has emphasized as a key priority and intends to grow over time. At the same time, the company reinvests heavily in the business, particularly in research and development, where spending is expected to increase. Pfizer also uses free cash flow for business development, including acquisitions and partnerships that can strengthen its pipeline and future growth. Share buybacks are not a current priority, but management has indicated that they remain an option if the right conditions arise. The free cash flow yield suggests that Pfizer shares are trading at an attractive valuation. However, we will revisit valuation later in the analysis.

Debt

Another important aspect to consider is the level of debt. It is crucial to determine whether a business has manageable debt that can be repaid within a period of three years. We do this by dividing the total long term debt by earnings. After reviewing Pfizer's financials, I found that the company currently has 8 years of earnings in debt, which significantly exceeds the three year threshold. There are clear reasons for this higher level of debt. Pfizer has made large investments in recent years, including the acquisition of Seagen and more recently Metsera, to strengthen its pipeline and future growth. At the same time, earnings have declined from the unusually high levels seen during the pandemic. This combination of higher borrowing and lower earnings has pushed the ratio up. While the debt is higher than I would ideally like to see, it is worth noting that Pfizer has already taken steps to improve its position. The company has reduced debt over the past two years and has stated that lowering debt remains a priority. Management expects the debt level to stabilize in the near term, even as the company navigates a period where some of its older products lose exclusivity. In addition, Pfizer plans to sell certain assets, which will bring in cash and help strengthen the balance sheet further. As earnings recover and new products begin to contribute more meaningfully, I expect the debt to earnings ratio to decline over time. Therefore, while the current figure is above my preferred range, it does not necessarily keep me from considering Pfizer as an investment.

Unlock Exclusive Seeking Alpha Discounts – Level Up Your Investing With Zero Risk

If you’ve been thinking about improving your investing process, this is the easiest way to start. These offers are only available through my links, and the Premium plan even comes with a 100% risk-free 7-day trial. Try everything for a week, and if it’s not for you, just cancel. You lose nothing.

1) Seeking Alpha Premium — Try It Free for 7 Days

Access the tools I personally use every day:

• Earnings transcripts

• Stock screeners

• Deep-dive analysis

• Portfolio tracking

• Market news with context that actually matters

Special Price: $269/year (normally $299) + 7-day free trial (for new users only)

Try Premium Free for 7 Days → HERE

(Explore everything — cancel anytime during the trial and pay $0.)

2) Alpha Picks — Proven Stock Ideas

This stock-picking service has delivered +287% returns vs. the S&P 500’s +77% (July 2022–Nov 2025).Great for investors who want curated, long-term picks backed by data.

Special Price: $449/year (normally $499)

Get Alpha Picks → HERE

(Although Alpha Picks doesn’t offer a free trial, its historical outperformance means the subscription can often pay for itself quickly if results persist. For many investors, the potential return far outweighs the upfront cost).

3) Premium + Alpha Picks Bundle — Best Value

Get both services together and save $159.Perfect if you want both broad tools and high-conviction stock ideas.

Special Price: $639/year (normally $798)

Get the Bundle → HERE

(This bundle doesn’t include a free trial, but it gives you both services at a $159 discount. You get Premium’s in-depth research plus Alpha Picks’ high-performing recommendations, making it the most comprehensive option for serious investors.)

Risks

Patent expiry is a risk for Pfizer because the company relies on a number of highly profitable medicines that are protected for a limited period of time. During this period, Pfizer can sell these medicines without direct competition, which allows it to generate strong revenue and high margins. However, once a patent expires, competitors are able to launch cheaper alternatives. This typically leads to a rapid decline in sales of the original product, often within a short period of time. This risk is particularly important for Pfizer because several of its key products are approaching the end of their exclusivity within a relatively short timeframe. The period from 2026 to 2028 is expected to be especially challenging, as multiple high revenue medicines face competition at the same time. Products such as Eliquis, Ibrance, and Xtandi are among Pfizer’s most important contributors to earnings, and once they lose protection, a meaningful portion of their revenue is at risk. In addition, medicines like Vyndaqel are also expected to face increasing competition toward the end of the decade. Together, these products represent a significant share of Pfizer’s current business, which means that the impact will not be isolated to a single product but spread across several key areas. What makes this risk more challenging is the speed and scale of the decline. When cheaper alternatives enter the market, healthcare systems and insurers quickly shift toward lower priced options to reduce costs. This means that even very successful drugs can lose a large share of their revenue in a short period of time. For Pfizer, this creates a situation where billions in annual revenue can disappear relatively quickly, making it difficult to maintain stable growth. Another important aspect is that these products are not only large in revenue but also highly profitable. This means that when they decline, the impact on earnings and cash flow is often even greater than the drop in sales alone would suggest. As a result, patent expirations do not just affect growth, but can also put pressure on profitability. The timing of these expirations also increases the risk. Because several major products are losing exclusivity within a narrow window, Pfizer is facing a concentrated period where multiple revenue streams are under pressure at the same time. Management has already indicated that the years from 2026 to 2028 represent this period, and the company expects a noticeable impact on revenue as a result. This creates a temporary imbalance where older products decline before newer products are fully established. Because of this, Pfizer must continuously replace lost revenue from older medicines with new ones. This requires a steady flow of successful product launches, which is difficult given the time, cost, and uncertainty involved in developing new drugs. Even when new medicines are approved, it can take time before they reach meaningful sales levels, which adds to the pressure during this transition period.

Pricing pressure is a risk for Pfizer because the company operates in a healthcare system where many stakeholders are focused on reducing costs. While Pfizer develops innovative medicines that provide meaningful health benefits, it does not have full control over the prices it can charge. Instead, prices are often negotiated with insurers, government programs, and other large organizations that aim to keep healthcare spending as low as possible. This creates constant downward pressure on pricing, even for highly effective treatments. This risk is particularly important in the United States, which is Pfizer’s largest market. Most patients receive their medicines through insurance plans, and these plans are managed by large organizations that decide which drugs are covered and at what cost. These organizations have become larger and more powerful over time, which gives them stronger negotiating power when dealing with pharmaceutical companies. As a result, Pfizer is often required to offer significant discounts to ensure that its products are included and accessible to patients. One of the main tools used by these organizations is the creation of approved drug lists. If Pfizer’s product is not included, or if it is placed in a less favorable position, it can significantly reduce demand. Even when a drug is included, it may come with higher out of pocket costs for patients, which can discourage usage and lead patients to choose cheaper alternatives. This means that pricing pressure does not only affect how much Pfizer earns per treatment, but also how many patients ultimately use its products. Another important factor is the increasing focus on value. Insurers and healthcare systems are placing more emphasis on whether a medicine delivers clear and measurable benefits compared to existing treatments. If a new drug is not seen as significantly better, it can be difficult for Pfizer to justify a higher price. In some cases, even innovative medicines may face restrictions or require additional approvals before patients can access them, which can slow adoption and limit revenue potential. Finally, governments are also becoming more involved in controlling drug prices. Policies aimed at making medicines more affordable can limit how much Pfizer can charge, especially for widely used treatments. In some cases, the company may even offer its products at significantly reduced prices through special programs to improve access. While this supports patient access, it can also reduce overall revenue. Because of all these factors, pricing pressure is a continuous and structural risk for Pfizer. Even when the company develops successful medicines, it may not be able to fully capture their value through pricing. This means that future growth depends not only on innovation, but also on Pfizer’s ability to navigate a complex system where multiple parties influence both price and demand.

Competition is a risk for Pfizer because the company operates in one of the most competitive industries in the world, where multiple companies are constantly working to develop better, cheaper, or more convenient treatments. Even when Pfizer has a successful product on the market, it is rarely alone. There are often alternative treatments available, and new ones are continuously being developed. This means Pfizer must constantly defend its position, not only by developing new medicines, but also by ensuring its existing products remain competitive. One of the main challenges is that competing medicines can offer advantages that make them more attractive to doctors, patients, and healthcare systems. These advantages can include better effectiveness, fewer side effects, easier use, or lower cost. If a competing product is seen as superior in any of these areas, it can quickly take market share. Even small differences can matter, especially when healthcare providers are choosing between multiple treatment options for the same condition. Competition is particularly intense in the areas where Pfizer is focusing its future growth, such as oncology and obesity. These are some of the largest and fastest growing markets in healthcare, which means many companies are investing heavily to develop new treatments. As a result, Pfizer is not only competing with established pharmaceutical companies, but also with newer players that are bringing innovative approaches and technologies. This increases the risk that a competitor could introduce a product that makes one of Pfizer’s medicines less relevant or even obsolete. Competition is also increasing globally. More companies, including those in emerging markets, are expanding their research capabilities and bringing new products to market. This means Pfizer is facing a broader and more diverse set of competitors than in the past. At the same time, consolidation among large pharmaceutical companies and healthcare organizations has created stronger and more capable competitors with significant resources. Another challenge is that Pfizer relies on a relatively small number of key products for a large portion of its revenue. If one of these products faces strong competition, the impact on the overall business can be significant. For example, if a competing drug gains traction in a major therapeutic area, it can quickly reduce demand for Pfizer’s product and affect both revenue and earnings. Because of all these factors, competition is a continuous and structural risk for Pfizer. The company must constantly innovate, improve its products, and demonstrate value to maintain its position. Even then, there is no guarantee that it will succeed, as competitors are working toward the same goal and may at times move faster or develop better solutions.

Reasons to invest

Achieve world-class oncology leadership is a reason to invest in Pfizer because cancer treatment is one of the largest and fastest growing areas in healthcare, and Pfizer has made it its top strategic priority to become a leading player in this field. Oncology is often referred to as the crown jewel of the pharmaceutical industry due to the size of the market, the high unmet medical need, and the ability to generate significant revenue from innovative therapies. By focusing heavily on this area, Pfizer is positioning itself in a market where successful products can drive long-term growth and strong profitability. A key step in this strategy was the acquisition of Seagen, which significantly strengthened Pfizer’s position in cancer treatment. Instead of building capabilities slowly over time, Pfizer chose to accelerate its ambitions by acquiring a company with deep expertise in a specific type of targeted cancer therapy. These treatments are designed to deliver medicine directly to cancer cells while limiting damage to healthy cells, which can improve outcomes and reduce side effects. This gives Pfizer access to a differentiated technology platform that can be used across multiple types of cancer, creating a broad set of future opportunities. The integration of Seagen has progressed well, and Pfizer is already benefiting from both existing products and a growing pipeline of new treatments. Medicines such as Padcev are expanding into new patient groups, which can significantly increase their potential market. In some cases, new approvals can more than double the number of patients eligible for treatment, which highlights how a single successful drug can become a much larger growth driver over time. At the same time, Pfizer is continuing to invest in expanding the use of these treatments into earlier stages of disease, where the number of patients is often much larger. Another important strength is the depth of Pfizer’s oncology pipeline. The company is running a large number of clinical trials across different types of cancer, including lung cancer, breast cancer, and blood cancers. Many of these programs are being tested both as standalone treatments and in combination with other therapies, which increases the chance of success and broadens their potential use. Some of these programs are already in late-stage trials, which means there are multiple opportunities for new product launches in the coming years. Another important aspect is Pfizer’s ability to execute. Developing cancer treatments is complex, but Pfizer has the scale, experience, and resources to run large global trials, secure approvals, and bring products to market. The company is moving quickly to advance its programs, with several late-stage studies already underway across multiple tumor types. This speed of execution is critical in oncology, where being early to market can make a significant difference in capturing market share. In addition, Pfizer is building a strong presence across several key cancer areas, including breast cancer, genitourinary cancers, lung cancer, gastrointestinal cancers, and blood cancers. This broad approach reduces reliance on any single product and creates multiple growth drivers within the oncology segment. It also allows Pfizer to build relationships with oncologists and healthcare providers, which can support the adoption of new treatments.

Entering the obesity market is a reason to invest in Pfizer because obesity is one of the largest and fastest growing opportunities in healthcare. The market is still in the early stages of development, and demand is likely to remain strong for many years because obesity is linked to many serious health conditions, including diabetes, cardiovascular disease, sleep apnea, and liver disease. This means the opportunity is not just about weight loss, but also about improving broader health outcomes. For Pfizer, entering this market gives the company exposure to a major long-term growth area at a time when it needs new products to offset future patent expirations. A key step in this strategy was the acquisition of Metsera, which gave Pfizer a portfolio of obesity candidates rather than just a single product. This is important because the obesity market is unlikely to be served by one type of medicine alone. Different patients will have different needs. Some may prioritize the highest possible weight loss, others may prioritize tolerability, while others may prefer more convenient dosing. By acquiring Metsera, Pfizer gained access to injectable, oral, and combination approaches that could give the company several ways to compete in the market. The most important product in Pfizer’s obesity pipeline is PF-08653944, also known as MET-097i, an investigational GLP-1 treatment designed for long-lasting effect. The key differentiator is the potential for monthly dosing. Current leading obesity injections are typically taken weekly, so a once-monthly treatment could be more convenient for patients. This matters because obesity treatment is often long term, and simpler dosing could improve patient adherence and make it easier for people to remain on therapy. Pfizer has also suggested that monthly dosing could be useful for patients who have already achieved weight loss on weekly therapy and want a more convenient maintenance option. The early data are encouraging. In the VESPER-3 study, Pfizer showed that patients continued to lose weight after switching from weekly to monthly dosing, with no plateau observed at week 28. The planned low and medium monthly doses showed meaningful weight loss, and Pfizer expects to test a higher monthly dose in Phase III. Management believes the profile could be competitive with the current standard of care and potentially best in class among single-mechanism GLP-1 treatments. Importantly, the safety profile also appeared manageable, with side effects broadly consistent with what is normally seen in the GLP-1 class. This is important because tolerability is one of the main reasons patients stop taking obesity medicines. Pfizer’s existing commercial capabilities also make this opportunity more interesting. Obesity is not only a specialist market. It has many characteristics of a large primary care and consumer health market, where brand awareness, patient education, digital access, and broad physician reach matter. Pfizer has experience in large consumer-facing pharmaceutical categories and has the scale to reach both U.S. and international prescribers. Management has also highlighted platforms such as PfizerForAll, which could help the company reach patients more directly and reduce friction in the treatment journey. The international opportunity could also be significant. In many markets outside the United States, obesity treatments are likely to have a large out-of-pocket component, meaning patients may pay directly rather than waiting for full insurance coverage. This could allow faster launches after approval in some markets, especially if demand remains strong and patients are willing to pay for treatment. Pfizer’s global commercial infrastructure gives it the ability to pursue this opportunity across multiple regions.

Operational improvements are a reason to invest in Pfizer because the company is becoming more focused and efficient after the extraordinary growth it experienced during the pandemic. During 2021 and 2022, Pfizer benefited from unusually high demand for its COVID products, but as those revenues normalized, the company needed to adjust its cost base to fit a more normal revenue environment. This makes operational discipline especially important, because Pfizer must protect profitability while still investing heavily in its pipeline, new product launches, and long-term growth opportunities. One of the most important parts of this strategy is Pfizer’s cost realignment program. The company has already removed a significant amount of expenses from the business and remains on track to deliver the majority of its expected savings by the end of 2026. This matters because lower costs can improve margins and earnings even when revenue growth is under pressure. For a company facing patent expirations and lower COVID-related revenue, improving efficiency gives Pfizer more flexibility and helps reduce the pressure on the business. Pfizer is also improving its manufacturing network. Manufacturing is an important part of the company’s business because it produces complex medicines, vaccines, biologics, and sterile injectables at global scale. By optimizing production and supply chains, Pfizer expects to generate additional savings in the coming years. The company has already achieved meaningful savings from its manufacturing optimization program and expects further benefits in 2026 and 2027. These improvements can support stronger margins and make Pfizer more competitive over time. Importantly, Pfizer is not simply cutting costs to improve short-term earnings. The company is using part of the savings to reinvest in future growth. For example, savings from research and development are being redirected toward more advanced clinical programs. This is important because Pfizer still needs to develop new medicines to replace older products that will lose exclusivity. By becoming more efficient, the company can fund more late-stage studies without simply increasing spending across the organization. Another important part of Pfizer’s operational improvement strategy is the use of artificial intelligence. Pfizer is scaling AI across research, manufacturing, commercial operations, and patient engagement. In research, AI can help improve productivity by supporting drug discovery, clinical trial execution, regulatory work, and safety monitoring. In manufacturing, AI can help improve supply planning and reduce inefficiencies. In commercial operations, AI can support better targeting, faster launches, and more personalized communication with doctors and patients. This is especially important because Pfizer is increasing the amount of work going through its pipeline. The company plans to start a large number of late-stage studies, including programs in oncology and obesity. Normally, this would require significantly higher spending, but Pfizer believes that better processes, sharper prioritization, and AI can help the company do more with the resources it already has. This could improve the long-term return on its research investments.

Support the Blog

I want to keep the blog free and accessible for everyone. If you enjoy the content and would like to support it, you can buy me a cup of coffee through PayPal. Every little bit helps and is truly appreciated!

Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 1,36, which is from the year 2025. I have selected a projected future EPS growth rate of 10%. Finbox expects EPS to grow by 10% in the next five years. Additionally, I have selected a projected future P/E ratio of 20, which is double the growth rate. This decision is based on Pfizer's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be $17,44. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Pfizer at a price of $8,72 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 11.704, and capital expenditures were 2.629. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 1.840 in our calculations. The tax provision was -266. We have 5.686 outstanding shares. Hence, the calculation will be as follows: (11.704 – 1.840 - 266) / 5.686 x 10 = $16,88 in Ten Cap price.

The final calculation is referred to as the Payback Time price. It is a calculation based on the free cash flow per share. With Pfizer's free cash flow per share at $1,60 and a growth rate of 10%, if you want to recoup your investment in 8 years, the Payback Time price is $20,00.

Conclusion

I believe that Pfizer is an interesting company with good management. The company has built a moat through its research and development scale, intellectual property, global commercial infrastructure, manufacturing capabilities, and ability to execute partnerships and acquisitions. ROIC has been volatile over the past decade but is expected to improve moving forward. Free cash flow has also been impacted by lower sales from the COVID portfolio but is expected to grow going forward. Patent expiry is a risk for Pfizer because once its key drugs lose protection, cheaper alternatives quickly take market share, leading to a sharp decline in revenue and profitability. This risk is heightened by the fact that several of Pfizer’s largest and most profitable products are losing exclusivity within a short period, creating concentrated pressure on growth between 2026 and 2028. Pricing pressure is a risk for Pfizer because insurers, governments, and other large healthcare organizations have strong negotiating power and continuously push for lower drug prices. This not only reduces how much Pfizer can earn per treatment but can also limit patient access and demand, putting pressure on both revenue and growth. Competition is a risk for Pfizer because it operates in highly competitive markets where rival drugs can offer better effectiveness, safety, convenience, or lower cost, making it difficult to maintain market share. This risk is amplified in key growth areas such as oncology and obesity, where intense innovation means competitors can quickly reduce demand for Pfizer’s products and impact revenue and earnings. Achieving world-class oncology leadership is a reason to invest in Pfizer because cancer treatment is one of the largest and fastest growing markets in healthcare, offering significant long-term growth and profitability. Through the acquisition of Seagen and a broad, advancing pipeline, Pfizer is building a strong position with multiple potential blockbuster treatments that can drive future revenue and earnings. Entering the obesity market is a reason to invest in Pfizer because it provides exposure to one of the largest and fastest growing areas in healthcare, with strong long-term demand driven by its link to multiple serious diseases. Through the Metsera acquisition and a differentiated pipeline that includes potential monthly dosing, Pfizer is positioning itself to capture meaningful share in a market that could drive future growth and offset patent expirations. Operational improvements are also a reason to invest in Pfizer because the company is reducing costs and becoming more efficient, which can support higher margins even as revenue faces pressure. At the same time, Pfizer is reinvesting these savings into its pipeline and using tools such as AI to improve productivity, strengthening its ability to drive long-term growth. I believe there are many things to like about Pfizer, but I also believe there are better opportunities in the sector, and therefore I will not be investing in Pfizer at this time.

My personal goal with investing is financial freedom. It also means that to obtain that, I do different things to build my wealth. If you have some extra hours to spare each month, you can turn a few hours a week into a substantial amount of money in a few years. If you are interested to know how to do it, you can read this post.

I hope you enjoyed my analysis! While I can’t post about every company I analyze, you can stay updated on my trades by following me on Twitter. I share real-time updates whenever I buy or sell, so if you’re making your own investment decisions, be sure to follow along!

Some of the greatest investors in the world believe in karma, and to receive, you will have to give (Warren Buffett and Mohnish Pabrai are great examples). If you appreciated my analysis and want to get some good karma, I would kindly ask you to donate a bit to Patch's Sanctuary. The non-profit organization is a sanctuary for unwanted farm animals, while also helping wildlife such as koalas. It is an organization I donate to myself. If you have enjoyed the analysis and want some good karma, I hope that you will donate a little to Patch's Sanctuary here. Even a little will make a huge difference to save these wonderful animals. Thank you.