Earlier today Pfizer stock was halted by the New York Stock Exchange. The reason: A Virginia court had invalidated the patent on the company's drug Celebrex, which is expected to generate $2.1 billion in annual sales in 2014. In the worst case, generics of Celebrex could be available starting May 30, says Mark Schoenebaum at ISI Group, dropping earnings per share by $0.12 cents. Which sounds disastrous. Celebrex was supposed to last until early 2016, meaning that Pfizer is losing about $3 billion in revenues.
But Schoenebaum calculates that on a discounted cash flow basis, that money is worth $0.20 to $0.30 to Pfizer shares. And the stock dropped just 44 cents.
Big news? Not so much. Just another huge drug going off patent unexpectedly. (A real concern, brought up by Tim Anderson at Bernstein, is that if Celebrex is anything like Vioxx, it has 90% profit margins. That means the loss could crimp Pfizer's margins or force it to make cuts elsewhere in the business.)
