Jim Jubak thinks Pfizer is worth a look now because of its pipeline buildup, but he also cautioned that there is risk involved in the Liptor suit. (Disclosure: Pfizer has been on my watch list for some time now.)

Now in early 2005, investors are starting to get the first glimmer of hope that Pfizer might be able to fill that gap. And the hope is coming from an unlikely source. Pfizer is known as a great acquirer of other drug companies, as a great marketer of drugs discovered by other companies, and as a great cost-cutter after acquisitions. But it doesn't have a reputation as a great drug discovery house. That's Merck (MRK, news, msgs)'s reputation.

But it looks like Pfizer's salvation will come out of its research and development pipeline. At the end of 2004 the company was working on 130 new molecular entities identified as possible drugs and 95 projects to find new uses for existing drugs. The company has committed itself to a punishing schedule of submitting one new drug application a quarter to the U.S. Food and Drug Administration through 2006 and initiating one new licensing deal or development alliance every two weeks.

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Given this set of pros and cons, I don't think investors should think of Pfizer as a blue-chip drug stock at all at the moment. Rather, think of it as a risky development-stage company with some very promising drugs in the pipeline -- a company that happens to be attached to a cash cow that can fund these drugs without having to raise outside capital that will dilute investors. And a company that happens to be attached to the world's greatest drug-marketing apparatus, so that if the drugs succeed the revenues won't have to be split with some marketing partner.