As part of the transition to a CEO, the management of Pfizer Inc. has numerous problems. But what should really bother investors is that it does not seem to put an old one to rest.

The pharmaceuticals giant announced gains in the third quarter that did not reassure investors. Pfizer missed analysts' sales estimates and lowered the mid-year full-year sales forecast. This is partly due to currency trading, but also to the lack of drugs from Hospira's injectable drug business – suggesting that the headaches that should have been eliminated are seriously persisting.

Operational issues that are severe enough to affect the company's full-year cap are not looking good for a company as big and as important as Pfizer. Investors like what the company is doing: even after the slippage on Tuesday, the company's stock has risen more than 17 percent. But if Hospira's situation adds to other existing concerns, it's questionable if Pfizer's outperformance is sustainable.

Hospira worked on issues when Pfizer acquired it in 2015, including a history of warnings from the US Food and Drug Administration and facilities that do not snuff. Whether these problems were particularly persistent or cost reductions after the takeover made the situation worse, Pfizer does not seem to have improved. Hospira has seen a number of recalls and other issues that have led to a drug shortage that has had a negative impact on both Pfizer and patients.

Hospira was supposed to be a stable cash generator for Pfizer, providing enough capital to the older drug business to make it possible to spin-off. Now it's becoming a bestseller that will require investment to repair, and Pfizer could have a harder time separating its business, even if it still wanted to. The company said in 2019 should bring a "significant" improvement in manufacturing. But this improvement is already overdue, and Hospira will be a hindrance longer than investors have expected.

Elsewhere, the company's innovative drug business generates a significantly larger share of sales, which grew quite well in the third quarter. But there is also cause for concern here. The cancer drug Ibrance, a blockbuster that makes Pfizer highly dependent on growth, missed its quarterly sales expectations. If that's a blip it's fine, but competitors have come to market, and a more sustained slowdown would be worrying. In the longer term, the generic drug competition for the blockbuster substance Lyrica in the US and other medicines is a priority and has already arrived for other medicines.

The company's pipeline it has cut is not exactly a safe bet to deliver long-term growth. Despite Pfizer's optimistic approach to its research and development projects, many of the recently approved and recently approved medicines present significant risks or enter into serious competitive markets.

Despite his claim, Tuesday repeated that there is no need for big M & A, Pfizer is always a good bet to go out and try to buy his way out of his problems. But the acquisition of Hospira and the mixed performance of Pfizer's $ 14 billion acquisition of Medivation Inc. make it clear that the company is well able to buy problems as well. Also, one of the things that was expected to help finance a business, the divestment of the company's consumer unit, took much longer than expected. Since a buyer did not show up after a year of evaluating strategic alternatives, a less lucrative initial public offering could be the only option.

Pfister CEO Albert Bourla, who will replace current CEO Ian Read earlier this year, may be surprised with brave actions, even though he is a consummate corporate insider. The Hospira situation can finally be solved. And the company's pipeline may come as a surprise. But that's an inconvenient number of Mayben for a company with a stock like Pfizer.

To contact the author of this story: Max Nisen at

To contact the publisher responsible for this story: Beth Williams at

This column does not necessarily reflect the opinion of the editors or the Bloomberg LP and its owners.

Max Nisen is a columnist for the Bloomberg Opinion on Biotechnology, Pharmaceuticals and Health. Previously, he wrote about management and corporate strategy for Quartz and Business Insider.

© 2018 Bloomberg L.P.


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