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Wide Moat Surrounds Pfizer's Solid Foundation

Cost-saving plans and product launches should offset patent losses and drive growth.

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 Pfizer's (PFE) foundation is built on strong cash flows generated from a basket of diverse drugs. The company's large size confers significant competitive advantages in developing new drugs. This unmatched heft, combined with a broad portfolio of patent-protected drugs, has helped Pfizer build a wide economic moat around its business.

Pfizer's size establishes one of the largest economies of scale in the pharmaceutical industry. In a business where drug development needs a lot of shots on goal to be successful, Pfizer has the financial resources and the established research power to support the development of more new drugs. Also, after many years of struggling to bring out important new drugs, the company is now launching several potential blockbusters in cancer, heart disease, and immunology.

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Damien Conover does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.