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Pfizer stock plummets on news of Celebrex risk

The company loses $24-billion in market value as its shares fall 11 percent.

By wire services
Published December 18, 2004

NEW YORK - Shares of Pfizer Inc. tumbled 11 percent Friday to an almost seven-year low when it said a new study shows that its Celebrex painkiller has more than doubled the risk of heart attacks.

The share decline, which wiped out about $24-billion in market value, reflects concern that Pfizer might lose one of its biggest drugs. Celebrex generated $2.3-billion in sales and was Pfizer fourth-largest medicine through the first nine months of this year. Pfizer chief executive officer Hank McKinnell had said repeatedly that Celebrex is safe.

Shares of Pfizer fell $3.23, or 11.2 percent, to $25.75 - the stock's lowest close since Jan. 16, 1998, and its biggest one-day drop since October 1987.

The stock had fallen as low as $21.99 shortly after it began trading, but recovered slowly through the rest of session. More than 285-million shares of Pfizer traded hands, nearly nine times the average daily volume of 33-million shares.

Barbara Ryan, a managing director at Deutsche Bank said she expects Celebrex's sales to fall by 50 percent next year and has dropped her Pfizer 2005 earnings estimate to $2.10 a share from $2.35 a share.

"In this environment people are hysterical," Ryan said.

Moody's Investors Service revised its outlook on Pfizer to negative from stable because it believes Celebrex use might decline as the controversy about the class increases. Moreover, it said the likelihood that the drug could be pulled from the market might has risen and Pfizer's litigation might increase.

Moody's points out that this is happening when Pfizer is facing high exposure to patent expirations, with 30 percent to 35 percent of its revenues coming off patent through 2007. The combination means Pfizer might not be able to maintain its triple A rating, Moody's said.

The pharmaceutical sector has been under intense pressure since Merck & Co.'s Sept. 30 announcement that it would pull arthritis drug Vioxx from the market because of increased risk of heart attack and stroke found among its users. At the time, Pfizer maintained Celebrex was safe, but investors began to worry that hidden health problems, whether overlooked by drug companies or the U.S. Food and Drug Administration, could derail any number of top-selling prescription drugs.

Merck lost 20 cents to close at $31.59 Friday.

Information from the Associated Press and Bloomberg was used in this report.

[Last modified December 18, 2004, 00:08:20]