Lipitor Loss Looming, Pfizer Shines

Pfizer (NYS: PFE) brought in $17.2 billion in revenue in the most recent quarter. But investors shouldn't count on seeing the pharma giant matching that level anytime soon; generic Lipitor is set to hit the market at the end of this month.

Stocking stuffer, anyone?

Technically, the fourth quarter will have two months without competition, but Lipitor sales have likely already begun to fall. Wholesalers and pharmacists know the generic is coming and will shoot to have a smaller supply of the brand-name drug on hand when the generic comes onto the market.

Pfizer plans to launch an authorized generic through Watson Pharmaceuticals (NYS: WPI) , which will allow it to retain a piece of the market share, albeit at substantially lower margins.

It's also slashing prices drug-benefit plans pay and offering discounts to patients to help keep patients on the brand-name drug. Again, there go those margins.

Longer-term, Pfizer still plans on trying to launch an over-the-counter version of Lipitor, which -- like the switch from prescription to OTC that Johnson & Johnson's (NYS: JNJ) Zyrtec, Procter & Gamble's (NYS: PG) Prilosec OTC, and Merck's (NYS: MRK) Claritin underwent -- should be quite lucrative. The switch won't be that easy, though. Merck failed to get an over-the-counter version of its older statin, Mevacor, approved because the agency was worried that the patients wouldn't know whether they should be taking it or not.

The nice thing about investing in pharma is you can see the revenue drops coming. The decline in sales next quarter -- analysts are predicting a 5% year-over-year drop -- is already priced in. If you're willing to wait for growth to come back and enjoy the 4.2% dividend yield in the process, Pfizer could be a good investment even without its mega-blockbuster Lipitor.

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At the time thisarticle was published Fool contributorBrian Orelliholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Johnson & Johnson.Motley Fool newsletter serviceshave recommended buying shares of Johnson & Johnson, Pfizer, and Procter & Gamble and creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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