Pfizer's Lyrica approved for broader use

The FDA's OK should further boost the pain drug's sales.

By Trefis Jun 29, 2012 10:02AM
TrefisAfter receiving the CDC recommendation for its vaccine Prevnar, Pfizer (PFE) has yet another reason to smile. The U.S. FDA has approved the expanded use of its second largest selling drug, Lyrica, to treat neuropathic pain from spinal cord injury. The approval could spur the sales of Lyrica, a part of Pfizer's central nervous system (CNS) franchise.

Lyrica affects chemicals in the brain that transmit pain signals and slows down brain impulses that cause seizures. The drug is already approved to treat fibromyalgia, a diabetic nerve pain and seizures in adults having epilepsy.

Our price estimate for Pfizer stands at $25, implying a premium of 10% to the current market price.


The approval will open a huge market for the drug. The company estimates close to 40% of 240,000 patients with spinal cord injury, or about 100,000 patients, suffer from the chronic, severe pain in the U.S.


The approval comes at an opportune time and will help douse concerns raised about the company's CNS franchise after Lyrica was found ineffective for diabetes and HIV patients recently. Also, the FDA rejected the experimental CNS drug Tafamidus a week ago.


Pfizer holds a strong position in the central nervous system (CNS) drug market with nearly 10% market share mainly due to its blockbuster drug Lyrica. While the global central nervous system drug market is expected to decline at an annual rate of 2%-3% in the near future, we expect Pfizer's market share to grow gradually by the end of 2017 as the additional usage of current drugs hold the key for growth.


Lyrica is in clinical-stage trials for additional uses, including epilepsy monotherapy and peripheral neuropathic pain. According to our estimate, Lyrica and other central nervous system drugs contribute nearly 12% value to the company's value.


By tweaking the chart below, you can see how a change in Pfizer's market share in central nervous system drug market impacts our price estimate for the stock.


Pfizer Market Share of Central Nervous System

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