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Pfizer Inc. (PFE - Analyst Report) recently received some good news with the US Patent & Trademark Office granting a reissue patent for Pfizer’s pain drug, Celebrex. Celebrex is approved for the relief of the signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, and the management of acute pain in adults.

The reissue patent will provide coverage up to Dec 2, 2015 including 6 months of pediatric exclusivity. The basic patent was scheduled to expire on May 30, 2014 including 6 months of pediatric exclusivity.

Pfizer, which is facing patent challenges from several companies for Celebrex, immediately put into action plans to delay the entry of generic competition. The company has filed patent infringement lawsuits against generic players – Teva (TEVA - Analyst Report), Mylan (MYL - Analyst Report), Actavis (ACT - Analyst Report), Lupin and Apotex – in the US District Court for the Eastern District of Virginia.

All these companies are seeking US Food and Drug Administration (FDA) approval for their generic versions of the drug. The companies are looking to launch their generic versions after May 30, 2014 and before Dec 2, 2015.

Our Take

We are positive on the granting of the reissue patent which buys time for Pfizer to generate additional sales from Celebrex before generics enter the market. With Lipitor losing exclusivity, Celebrex was among the top contributors to US sales in 2012. Celebrex sales increased 8% to $2.7 billion in 2012. In the US alone, Celebrex sales in 2012 were $1.7 billion, up 9%.

Pfizer currently carries a Zacks Rank #3 (Hold). While near-term earnings will be driven by cost cutting efforts and share repurchases, longer-term growth will depend on the success of drug development. The company’s pipeline needs to deliver given the Lipitor loss of exclusivity and the upcoming loss of exclusivity on additional products in the next few years.

Meanwhile, both Teva and Actavis are Zacks Rank #3 stocks. However, Mylan is a Zacks Rank #2 stock (Buy).

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