AQR Capital Enhances Pfizer Holdings by 33%
Detailed Coverage of AQR Capital’s 13F Filing (Part 11 of 18)
AQR Capital’s holdings in Pfizer
AQR Capital added to its position in Pfizer (PFE) by increasing the number of shares held from 10,455,382 in 3Q14 to 13,933,438 in 4Q14. This represented a 33% increase. PFE formed 0.9% of the fund’s fourth-quarter portfolio.
PFE in brief
Pfizer (PFE), a research-based biopharmaceutical company, has the five operating segments:
Primary Care
Specialty Care and Oncology
Established Products and Emerging Markets
Animal Health
Consumer Healthcare
PFE is part of the Health Care Select Sector SPDR Fund (XLV) with an exposure of 7.8%. The company also makes up 7.14% of the iShares US Healthcare ETF (IYH).
FDA approval of cancer drug IBRANCE
Pfizer recently announced that the US Food and Drug Administration (or FDA) had granted the company accelerated approval for IBRANCE and letrozole. These drugs treat a specific form of advanced breast cancer in postmenopausal women. The combination of IBRANCE and letrozole almost doubles the tumor’s progression time. This postpones the need for miscellaneous hormonal agents and chemotherapy at a later time.
European Medicines Agency’s positive opinion of Prevnar 13
In January 2015, PFE announced that the European Medicine Agency’s Committee for Medicinal Products for Human Use had expressed a positive opinion concerning Prevnar 13. The committee had recommended that the indication for the product be expanded to cover the prevention of pneumonia caused by the 13 pneumococcal serotypes present in the vaccine for people over the age of 18. At present, the product has European approval for use in the prevention of pneumococcal disease within the same target population.
Acquisition of Hospira
Pfizer announced in early February 2015 that it would be acquiring Hospira Inc., for about $17 billion. Hospira is a “leading provider of injectable drugs and infusion technologies and a global leader in biosimilars.” According to the company’s presentation, gross sales for the biosimilars marketplace will likely reach an estimated $3 billion globally for 2015. The company expects that figure to grow to $20 billion by 2020.
In the December 2009 issue of Australian Prescriber, Professor Ross McKinnon and research fellow Christine Lu of the Sansom Institute at the University of South Australia explained that “Biosimilars (in Europe) or ‘follow-on’ biologics (in USA) are biological products that are similar, but not identical, to an innovator product that is already marketed and whose patent has typically expired. Biosimilars cannot be considered ‘generic’ equivalents of innovator products as they are not necessarily clinically interchangeable and in some cases may exhibit different therapeutic effects.” Biosimilars may have the potential to broaden access to major medicines and drive innovative manufacturing.
PFE’s dividend yield is 3.1%, which is slightly above the 2.8% dividend yield of Johnson & Johnson (JNJ) and the 2.8% yield from Novartis (NVS). Pfizer’s yield is in line with the 3.1% yield of Merck (MRK).
In the next part of this series, we will discuss AQR Capital’s increased position in Merck.
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