Why Loss of Viagra Patent Will Not Harm Pfizer Inc. (PFE)

Levitra (vardenafil) is co-marketed and sold by GlaxoSmithKline plc (ADR) (NYSE:GSK), Bayer, and Schering-Plough. An orally disintegrating form called Staxyn is sold in Canada. It is also prescribed for premature ejaculation, along with erectile dysfunction. In 2005, GlaxoSmithKline sold most of its marketing rights to Bayer as the sales were not satisfying enough. With a PEG ratio of 3.85, GlaxoSmithKline walks in the overvalued territory. Analysts at Bryan, Garnier & Cie have a neutral rating on GlaxoSmithKline and I do not see the company posing competition to either Pfizer or Eli Lilly in the department of erectile-dysfunction drugs.

Now what?

For those of you who are worried that Pfizer will lose a large chunk of its Viagra sales in the near future, you can rest assured that it will not. Moreover, Pfizer is busy developing newer drugs and they will contribute to its revenues as well. At a 4.75 PEG ratio, Pfizer is certainly in the overvalued territory, but it has very impressive profitability numbers. With a profit margin of 27% and an operating margin of 32%, this stock will prove to be a good long-term buy.

Jaiyant Cavale has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article 6 Reasons Why Loss of Viagra Patent Will Not Harm Pfizer originally appeared on Fool.com and is written by Jaiyant Cavale.

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