To understand the current troubling news, forget Pfizer for a second. Imagine that you own a small drug company with 5 products. These products are all profitable but some more so than others. It’s enough to live a good life. The company profits $410,000 each year and you use that profit to live off of. It’s a good life! When looking at the products, 4 of them generate $100,000 profit on $1,000,000 in revenues. A 10% profit margin. Now imagine that the 5th only generates $10,000 on $1,000,000 in revenues for a 1% profit margin. But this 5th product can save lives and you are the only FDA approved provider in the US. As the only owner, would you stop making that drug out of convenience?
Well, Pfizer was proposed a similar question and decided that low profit margins are not worth the bother. Pfizer stopped making the drug. An anti-venom for coral snakes actually. Pfizer made money on this anti-venom (acquired via the recent Wyeth acquisition) but not a lot of money, so it was dropped.
The question of whether you own a company in its entirety or only a small part via stock should not matter. Before investing in what could be an undervalued stock there are many questions to ask yourself. With Pfizer, a question needs to be, would you own a company that puts profits before lives?
So, now your only safe guard is to see the snake first (hopefully) and remember the famous rhyme:
“Red on yellow, kill a fellow; red on black, friend of Jack”
Just be sure that it’s not of the covered oil variety. The coral snake is found in Louisiana where oil clean up crews are working. 12 vials of antivenom are needed to treat a bad bite. Louisiana currently has 6 vials left in the state.
As an investor, would you want to own a company lacking a moral compass? As a business owner, you often have to make the right moral decision. Not just the right business decision. The fact that you only own a tiny fraction of a company when investing in stocks should not matter. (In my experience, this is just another bad example of Pfizer culture)