Pfizer (PFE) Faces Wave of Lawsuits Over Lipitor
New York City based Pfizer Inc. is the largest pharmaceutical company in the world by revenue.
Shares of Pfizer Inc. (PFE) were trading down -0.15 or -0.53 percent to $27.89 per share in Friday's premarket, after news that lawsuits against the company had surged by women in the United States getting type-2 diabetes after taking Lipitor. Pfizer stock closed at $28.04, down -0.24 or -0.85 percent in Thursday's regular trading session.
Lipitor was developed by Warner Lambert in 1996, which was eventually taken over by Pfizer. The drug has generated more than $130 billion in sales for Pfizer before becoming available in generic form in 2011. Lipitor is known as a "statin , which works by preventing the liver from creating an enzyme that aids the body in the production of cholesterol.
By preventing the production of the enzyme, the drug helps the body reduce the levels of lipoprotein (LDL) cholesterol, otherwise known as "bad cholesterol . Statins are prescribed primarily to reduce the risk of heart attacks and to prevent strokes and other cardiovascular problems by reducing LDL cholesterol levels.
An estimated 200 million people worldwide have been prescribed and take the medication regularly. The use of statins has been linked to a number of health issues including memory loss, diabetes, muscle injury (rhabdomyolysis) and kidney problems.
Lawsuits against Pfizer began in 2012, when the U.S. Food and Drug Administration warned of memory loss and a "small increased risk of diabetes after the use of Lipitor and other statins, forcing Pfizer to include a warning in its labeling of the drug. Women are more at risk than men taking Lipitor and gain fewer benefits from the drug, according to lawyers for the plaintiffs.
Due to the amount of lawsuits against Pfizer, a federal judicial panel decided to consolidate all of the Lipitor lawsuits for diabetes from all over the country to one Federal court in Charleston, South Carolina. So far, there are over 1,000 lawsuits representing 4,000 women. The number could grow, however, since Lipitor has been prescribed to almost 30 million people in the United States.
The lawsuits pending against Pfizer - with the first case expected to go to trial by July of 2015 -allege that the pharmaceutical giant knew or should have known about the risk of diabetes as a side effect of Lipitor. The company allegedly withheld this knowledge and warnings about the drug's side effects in order to avoid a negative impact on the drug's sales.
Pfizer stock has yet to significantly react to the news. The stock is trading just above its yearly low of $27.76 in the premarket and could trade lower after the opening bell due to news of the litigation. Nevertheless, the company still has an EPS of 1.59 and a 3.7% dividend yield, which continue to make Pfizer stock an attractive investment.
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