Here are some key facts when it comes to Pfizer’s drug pipeline, which the company ought to be shouting from the mountaintops at every opportunity and conveying clearly with quantifiable return on invested capital metrics, not only technical scientific data.
First, the financial returns on Pfizer’s $43 billion Seagen deal have already exceeded the most optimistic internal estimates, with several oncology drugs poised to become blockbusters. Thanks to the Seagen deal paired with technological advances in drug discovery resulting from AI, Pfizer is poised to become the world’s greatest oncology company, on the forefront of solving previously unsolvable cancers representing hundreds of billions in potential revenues.
Second, the returns on invested capital from Pfizer’s $11 billion Biohaven transaction have also already exceeded the most optimistic internal estimates, with Nurtec sales growing exponentially en route to blockbuster status, after some initial challenges which are now firmly history.
Third, many investors still fail to appreciate the full potential of Pfizer’s oral GLP-1 drug candidate, danuglipron, which is on the verge of advancing to Phase 3 studies and is well positioned to become the second oral GLP-1 drug to market, years ahead of competitors—and with the potential oral GLP-1 market dwarfing even the existing injectable GLP-1 market dominated by Eli Lilly and Novo Nordisk. Fourth, contrary to the myth that Pfizer can’t do R&D and business development, Pfizer’s return on invested capital across its homegrown drugs is near the top of its peer group, and management could be more proactive in quantifying that—along with its strong capital allocation track record—for skittish investors.
Merck’s keys to the future beyond Keytruda
While Merck’s candor and honesty in pulling Chinese sales of Gardasil off the table is commendable, what was lost amidst the market sell-off is the fact that all Gardasil sales around the world represents merely ~10% of Merck’s revenues, a tiny fraction compared to Merck’s blockbuster Keytruda powerhouse, which represents approximately half of all of Merck’s sales—not to mention that Gardasil sales remain strong around the rest of the world ex-China.
Simply put, Keytruda is the far more important growth driver, and the story there is much more exciting. The continued soaring success of Keytruda speaks to the triumphant legacy of Merck’s former CEO, the legendary Ken Frazier, who delivered countless blockbusters during his tenure at the top from which Merck continues to reap billions, ranging from Keytruda to Gardasil to Bridion to Lynparza to Lenvima. But with Keytruda facing a LoE in 2028, Frazier’s successor Robert Davis has quietly but triumphantly developed an easier-to-use version of Keytruda 2. The new-and-improved version can be given through a simple needle rather than requiring an intravenous infusion, shortening the time required to administer it from 30 minutes to three minutes, and is poised to capture at least 40% the existing Keytruda market if not more—meaning the Keytruda expiry in 2028 may not be the Armageddon it appears to be.
Depressing investor value with RFK’s distressing science values
While some speculate that RFK Jr.’s most fervent anti-vaccine instincts will be curtailed, his beliefs on vaccines are not only dangerous economically—69% of Trump-friendly major CEOs told us privately that they believe RFK’s anti-vax instincts could pose a threat to public health and the American economy—but also dangerous for public health, since the pharmaceutical industry, and vaccines, have played a leading role in improving public health and have been key drivers of extending the average lifespan of American citizens to record levels over the past few decades. In 1900, average global life expectancy was just 32 years; thanks to advances in medicine, today the average life expectancy is 72 years, and still rising, with seven previously deadly diseases near eradication, ranging from scourges such as smallpox to measles to polio.
The facts are powerful when it comes to vaccines’ proven benefits. Should RFK Jr. actually try curtailing access to vaccines, he will be confronting a torrent of opposition from across civil society. Far from playing a pernicious role, drugmakers actually play a heroic role in investing in life-saving research, with trillions spent on life sciences R&D every year to advance new drug discoveries.
Even RFK Jr.’s boss, President Donald Trump, has directed ire toward not the drugmakers, but rather the middlemen, known as pharmacy benefit managers (PBMs). As President Trump declared, “we have a thing called a ‘middleman’…that makes more money than the drug companies, and they don’t do anything except they’re middlemen. We are going to knock out the middleman.”
Read the full article by Jeffrey A. Sonnenfeld and Steven Tian / Yale Insights
