The Dow’s Best Health Care Stock: Pfizer Inc. (PFE)

Boosts to international revenue, such as Prevnar-13’s expanded approval, will only help Pfizer Inc. (NYSE:PFE) overcome falling revenue in the U.S. While American and developed European sales each fell significantly in 2012, revenue in emerging markets climbed by more than 6%. Emerging market sales currently make up 20% of total revenue, but if Pfizer can increase that number and expand its exposure to developing economies – particularly markets such as China and India, where the market for pharmaceuticals is expected to explode as rising middle classes demand better health care — Pfizer will be looking at a windfall.

There are risks to this, however: Patent protection in emerging economies typically is nowhere near the level of that of advanced economies. The opportunity is massive for Pfizer, but increasing its exposure to emerging markets will bring its own set of new and challenging hurdles. Still, with the U.S. and European markets struggling, investors should expect Pfizer to turn its attention to the brightest developing economies.

Pipelines and beyond
Looking ahead to the future, Pfizer’s already laying the groundwork for growth and success.

Pfizer Inc. (NYSE:PFE) has a robust pipeline of dozens of drugs in development, spread out across a number of different therapies. With so many different medications in the works, the company can afford to strike out on some of them and not risk the business; after all, it only takes a few blockbusters to anchor the revenues of the future.

Pfizer’s recently approved blood thinner Eliquis, a drug it made alongside partner Bristol Myers Squibb Co. (NYSE:BMY), could be that blockbuster. Eliquis impressed in clinical trials, and analysts expect peak sales to climb as high as $5 billion in total for Pfizer and Bristol-Myers by 2017. Another drug further behind in development — cancer therapy PD-0332991, fresh out of mid-stage clinical trials — could rise to blockbuster status; Bank of America Corp (NYSE:BAC) analysts pegged peak sales at $1 billion if it wins regulatory approval.

On a broader level, Pfizer’s smart management decisions recently — particularly in creating new shareholder value by selling its infant nutrition business for big bucks and spinning off former animal health business Zoetis Inc (NYSE:ZTS) — inspire optimism in this company’s future. Zoetis has surged since its IPO this year, and Pfizer’s majority ownership of the company means it’ll continue to reap the rewards of Zoetis’s climb.

In all, Pfizer’s a standout health care stock, and no slouch even among its blue-chip peers on the Dow. Between a powerful pipeline preparing the blockbusters of the future to heady management willing to do what it takes to maximize value, Pfizer’s certainly a contender for the best health care stock on the index.

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Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Bank of America and Johnson & Johnson.

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