3 Headwinds Facing Pfizer in 2026

Pfizer (NYSE: PFE) is 1 of the world's largest pharmaceutical companies. It has a agelong past of innovation and success. Add successful a lofty 6.6% dividend yield, and dividend investors are apt to find the banal highly attractive. Before you bargain it, however, see these 3 2026 headwinds.

Pfizer's dividend output is truthful precocious astatine slightest successful portion due to the fact that the banal has fallen much than 50% from its 2021 highs. There are a fig of reasons for this autumn from grace, but 1 precise important 1 is Pfizer's deficiency of a GLP-1 cause -- a benignant of medicine that helps negociate diabetes and beforehand value loss.

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That is not for deficiency of trying. Pfizer's interior GLP-1 campaigner was dropped, leaving it acold down GLP-1 leaders Eli Lilly and Novo Nordisk, which some person GLP-1 drugs connected the market. To Pfizer's credit, it didn't conscionable springiness up. It rapidly moved to get different institution with a promising GLP-1 cause pipeline. And it agreed to administer a GLP-1 pill for a Chinese company, if that cause gets approved.

Still, Pfizer is the also-ran successful the GLP-1 space. It needs to beryllium that it tin inactive innovate successful 2026, and bully quality connected its GLP-1 advancement volition beryllium precise important.

One crushed investors are truthful dismayed by Pfizer's GLP-1 setback is that the institution is approaching cardinal patent cliffs. That's erstwhile blockbuster drugs suffer patent protections and look generic competition. Normally, that leads to a sizable driblet successful request for the branded drug. Pfizer's oncology cause Ibrance volition apt spot generic contention successful 2027, with cardiovascular offerings Eliquis and Vyndaqel adjacent up successful 2028.

To beryllium fair, caller cause improvement and patent expirations usually don't perfectly enactment up. So Pfizer is truly conscionable facing mean manufacture pressures regarding its patent cliffs. However, investors inactive person a close to beryllium worried, since 2026 is fundamentally the past twelvemonth earlier revenues from cardinal drugs could commencement to decline.

Pfizer's dividend payout ratio is hovering astir 100%. That's a worrying level generally. However, you person to adhd the company's setbacks successful the GLP-1 abstraction and its upcoming patent cliffs into the story. Do that, and the payout ratio becomes precise worrying.

Dividends aren't really paid retired of earnings; they are paid retired of currency flow. So a dividend payout ratio tin stay supra 100% for a small portion without triggering a dividend cut. That said, Pfizer precocious made a ample acquisition, and the pharmaceutical assemblage is capital-intensive owed to the changeless request for probe and development.