Financial advice I won’t be taking

We’ll set aside for a moment the fact that I don’t invest in the major drug producers nor biotechs. But even without that, this is a bit of “advice”: that I _won’t_ be taking:

bq. You’re clearly taking a chance when investing in Pfizer — legal exposure, public complaints about Big Pharma profits, potential government regulations — but if you have some contrarian tendencies, this might be the time to swallow the pill and buy.

Let’s recall what Pfizer makes:

bq. New York-based Pfizer, the world’s largest drug maker, could also face legal problems, since its competing drug, Bextra, was withdrawn from the market in April, and another similar drug, Celebrex, though still on the market, now comes with warnings about potential heart problems.

Miraculously, with all the tumult that Merck is facing, Pfizer’s stock hasn’t wavered too much. Let me back up a little bit, in case you aren’t following:

  • Merck makes a compound known as a COX-2 inhibitor. The trade name is Vioxx™.
  • The compound was withdrawn from market last fall because of a heightened risk of heart problems. To make matters worse, studies are starting to show the mechanism of its heart activity (not good) and other studies show that Vioxx™ was overprescribed. Overprescribed means that a patient was prescribed Vioxx™ when an older, cheaper drug such as aspirin would have worked just as well and wouldn’t have had the serious side effects such as ulcers.
  • Merck is facing serious legal problems over the compound, where complaintants claim they knew this vital safety information and didn’t disclose it.
  • Pfizer makes two competing compounds, Bextra™ and Celebrex™. Bextra was withdrawn earlier this year for the same reasons as Vioxx™, but Celebrex™ is still on the market.

This smells like a recipe for disaster, if you ask me. (Boring full disclosure: I have never worked on a project involving any of these compounds.)

If you read my other entries on the drug industry, you might know that I predict a shakedown. Being in the drug industry is going to hurt _bad_ in a few years. Other related industries, such as the CRO(Clinical Research Organization) industry (which I am in), are going to hurt, too, though they may not feel it as badly.

If you’re a gambling day trader, Pfizer may be a field of opportunity for you. If you are looking for long-term stability, take my amateur advice and be very careful of pharmaceuticals.

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