By Sally Hardcastle
BBC World Service business reporter
Pfizer says analysts are underestimating its potential
These are uncertain times for the global drugs industry.
Last year, US pharmaceutical giant Merck was forced to withdraw Vioxx, its top selling painkiller for arthritis sufferers, after the drug was linked to heart attacks and strokes in some patients.
Meanwhile, the world's largest drug company, Pfizer, has also been hit by fears about the safety of its own arthritis drug, Celebrex.
Pfizer's share price has fallen by 25% in the last five years, and the company has warned that its performance in 2005 could be affected by stiffer competition.
However, Pfizer believes that investors have failed to understand the company properly.
Celebrex became a billion dollar earner for Pfizer in the final three months of 2004.
That was after Merck's rival pill Vioxx was taken off the market, and before the damaging allegations about Celebrex.
Analysts are now warning that sales of the drug could halve in 2005. In October, Pfizer said sales of its best known anti-impotency drug, Viagra, fell 15%, although the company last month reported fourth quarter profits of $2.82bn (£1.5bn).
But future profits may be endangered by the expiry of patents on some of its leading drugs.
The spiralling cost of prescriptions in the US is also pushing patients towards alternative sources of medication, such as counterfeit versions of drugs available over the internet.
Only last week, the cost of some of Pfizer's drugs went up by 5% - despite recent bumper profits at the company.
Stuart Adkins, an analyst at Lehmann Brothers, says drug companies use price increases to fill earnings gaps left when the patent on a successful drug expires.
It is a policy that draws criticism in certain quarters, he says. "There are populations - and I'm not just talking about the Third World - but within the US, who cannot afford these medicines."
Pfizer maintains that its prices are lower, on the whole, than much of its competition.
Sales of Pfizer's anti-impotency drug Viagra have been falling
Other analysts believe that Pfizer simply does not have enough new drugs in the pipeline to keep earnings up.
That is a view refuted by Pfizer's chief executive, Hank McKinnell.
"I think the public and many of the analysts are underestimating the productivity of our pipelines," he says. "I think we are going to see a return to the introduction of more important medicines in the years ahead."
However, Mr McKinnell acknowledges that the company faces some difficulties in the near future.
"We do have a particular problem over the next few years of some very large selling medicines going off patent, but it looks like the products we partner with other companies, plus the products we are developing in our own laboratories, will serve us very well through a long period of time," he says.
The safety of Celebrex is currently under investigation by the US Food and Drug Administration and the European Medicines Agency.
Initial reports questioning the safely of Celebrex caused a 50% drop in prescriptions, Mr McKinnell says, but the company hopes that both the US and European agencies will eventually vindicate his product.
He also defends Pfizer from criticism that it is interested in satisfying the needs of its shareholders over the needs of patients and customers.
"The perception by many is that we are greedy, that we put our shareholders interests ahead of the interests of patients. But it's crystal clear, at least to those of us at Pfizer, that we can only succeed if the patient succeeds, we can only prosper if health care systems prosper."