Pfizer Inc. (PFE) is a leading producer of pharmaceutical products. While the industry is believed to be on the rise, the company reported a decline in sales for 1Q17. What were the reasons for that and how sustainable this decrease is? Is the business effectiveness expected to improve? How is the company doing in terms of business continuity in the face of generic drug producers that are challenging its patents? Answering these questions may help to assess how stable the income to shareholders will be in the near term.
The pharmaceutical market in the United States (from which PFE derived about 52% of its revenues in 1Q17) has bright prospects. The reasons for that are favorable demographics (aging population) and high income per capita allowing people to pay for more expensive drugs. Average sales growth rate for pharmaceutical companies is estimated at 5-6% up to 2020 by PwC. Although 20% of the revenues are earned in emerging markets which are having a difficult time now, they do not have a significant negative impact onorganic revenues growth.
