Ignore Pfizer's Financials for Now

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There's a little bit of irony that Pfizer's (NYS: PFE) animal-health and nutrition businesses posted 18% and 4% year-over-year gains in the second quarter, respectively, while its mainstay pharmaceutical business recorded a 3% decline. Ironic, of course, because the pharmaceutical giant announced that it plans to shed those businesses.

But that's kind of the point of selling or spinning them off. Despite moving along solidly, their growth isn't valued because it's masked by the larger business. The only way to unleash the value is to split it off.

Investors who stick with what's left after the breakup need to be willing to ride the up-and-down movements of drugs. Drugs go off patent; that's a fact of life for biopharmaceutical companies. The consumer-health division, which Pfizer is keeping, will help deaden the blow a little, but it's less than 5% of the slimmer company's total sales. Generic competition is still going to be a problem, as we saw in the second quarter with Effexor XR and Protonix in the U.S. and Lipitor outside the States.

Fortunately, Pfizer hasn't been sitting idly by taking punches from generic-drug makers. The pharma giant is developing new drugs that should help get revenue growing again after Lipitor starts its decline in the U.S. later this year. There's tofacitinib, which should be able to compete with the megablockbuster rheumatoid arthritis drugs -- Abbott Labs' (NYS: ABT) Humira, Johnson & Johnson (NYS: JNJ) and Merck's (NYS: MRK) Remicade, and Pfizer and Amgen's (NAS: AMGN) Enbrel -- because it can be taken orally rather than be injected or infused. Eliquis, which Pfizer will sell with Bristol-Myers Squibb (NYS: BMY) , seems to have moved to the front of the race to replace warfarin for atrial fibrillation patients. There's also Pfizer's crizotinib, which will help only a subset of cancer patients with a specific mutation, but it seems to help them really well.

We'll have to wait until those drugs and others further back in the pipeline hit the market to know whether Pfizer can make a post-Lipitor revenue U-turn, but it certainly seems possible with recent clinical-trial successes. For now, rather than focusing on earning reports, investors would be better off paying attention to the pipeline.

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At the time this article was published Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson and Abbott Laboratories. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, Abbott Laboratories, and Pfizer and creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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