Pfizer Inc. (PFE)’s New Model

However, if customers don’t have a middle man to inform them that a generic version of a drug is available, they might not know to switch. Essentially, complacency and a lack of information could result in Pfizer Inc. (NYSE:PFE) retaining a significant proportion of its Viagra sales when its patent protection runs out. That would be the big game changer.

Who wins/Who loses

Drug companies across the pharmaceutical industry would be clear winners from a direct to patient model. However, those selling frequently refilled drugs would be the biggest beneficiaries. For example, Novo Nordisk A/S (ADR) (NYSE:NVO) is a giant in the insulin market.

The company claims to have around a 50% market share based on volume and its diabetes business accounts for around 80% of its top line. If this company could create a direct to patient model, assuming Pfizer Inc. (NYSE:PFE)’s efforts succeed, it would notably tilt the industry’s profile and Novo Nordisk A/S (ADR) (NYSE:NVO) would clearly be leveraged to benefit.

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), meanwhile, would be an obvious loser. However, it has been using its cash-cow generics business to expand into branded pharmaceuticals, including the purchase of Cephalon’s branded drug business. That could provide a counterweight to any loss on the generic side. So, too, could the company’s efforts in the over-the-counter space, where it is partnering with consumer products giant The Procter & Gamble Company (NYSE:PG).

Still, if a direct to patient drug sales model emerges, those positives could get lost. So investors might want to keep an eye on the issue, and the market reaction, watching for a potential buying opportunity in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Novo Nordisk A/S (ADR) (NYSE:NVO), meanwhile, is worth watching regardless of Pfizer’s success, since diabetes, sadly, looks set to be a growing market.

Experimenting

This isn’t the first time that Pfizer has tried a new sales method. However, this could be an experiment that changes the entire drug industry. Investors should keep an eye on this issue. Success could mean a small near-term boost to Pfizer’s shares, but open up huge long-term growth potential for the entire drug industry.

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