Healthy Skepticism Library item: 7150

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Publication type: news

Pfizer Knocked Down a Notch
The Street.com 2006 12 19
http://www.thestreet.com/_yahoo/newsanalysis/pharmaceuticals/10328749.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Abstract:

Moody’s Investors Service downgraded the long-term debt rating of Pfizer (PFE – commentary – Cramer’s Take – Rating) to Aa1 from Aaa, its highest rating, in the wake of the drugmaker’s decision to suspend development of a promising cholesterol drug.
Earlier this month, the ratings agency had put Pfizer on review for a possible downgrade. Moody’s affirmed Pfizer’s Prime-1 short-term debt rating for commercial paper. The rating outlook is now stable.

The decision primarily reflects “a significant deterioration” in Moody’s assessment of Pfizer’s late-stage pipeline.

The company recently shocked the market with word it would halt work on torcetrapib, a product that had been seen as the eventual successor to Lipitor, because of concerns about the experimental drug’s safety.

“Following the torcetrapib failure, Pfizer’s relationship between patent exposures and pipeline strength is no longer consistent with a Moody’s Aaa rating,” Michael Levesque, Moody’s vice president and senior credit officer, said in a statement Tuesday.

Levesque also said that “ [despite] the expectation of excellent cash-flow-to-debt ratios over the near term, Pfizer’s weak pipeline could lead to more aggressive in-licensing, acquisitions, or shareholder strategies that increase financial risk.”

However, shares of Pfizer were shaking off the downgrade and were lately tacking on 2 cents to $25.85.