Here’s Why I Won’t Touch Amarin With A 10‑Foot Pole Given Its Patent And Competitive Threats

Amarin (NASDAQ: AMRN) it is a drug company in dire straits. This fact is highlighted by the company’s recent move to restructure its operations in an effort to reduce costs. And Vascepa, the only drug it has to sell, is already facing competition from generics in the United States. Most investors would be better off with a large drug company.

Perhaps the best thing about Amarin is its balance. The company has no long-term debt, cash balances of approximately $135 million, and short-term investments worth less than $168 million. In short, it is in a very strong financial position and can sustain its business for many years to come.

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Meanwhile, despite the headwinds Vascepa is facing in the US market, it is a profitable product. In 2025, Amarin had product sales of about $183 million. And the restructuring effort in 2025 helped the company reduce costs. Management believes the restructuring will help it generate free cash flow by 2026. A pharmaceutical company with no debt and free cash flow can often be hard to complain about.

Often times, the good news ends there. The biggest risk is that the company’s sales stood at $285 million two years ago. So there has been a decline in things on the top line. The fact that its only drug faced generic competition in the US market has a lot to do with the decline in revenue. With no other product to depend on, Amarin has no choice but to withdraw from spending or its strong financial position could begin to deteriorate rapidly.

In fact, the company is doing the right thing by trying to milk every dollar from the only medicine it has to sell. But it doesn’t work in the field of work force. The biggest risk is that the decline in the company’s income continues, the company simply reduces its business in order to stabilize. That will not lead to a good outcome for the shareholders.

To be honest, the drug cycle that Amarin is dealing with is completely normal in the field of pharmacy. The problem is that the company has only one drug to sell. If it was a large company with a broad drug portfolio, it would have a strong base to work from. If you’re willing to take the risk associated with Amarin, you’d probably be better off buying an unpopular drug maker like Pfizer (NYSE: PFE) in turn.

Pfizer has a patent expiration coming up and has had a setback for the GLP-1 drug. However, it has a broad drug portfolio, and management was able to quickly pivot and find a new GLP-1 drug candidate. Pfizer has proven, once again, that it can pivot as needed. Actually, unlike Amarin, Pfizer is working in the area of ​​strength.

Before buying Amarin Plc shares, consider the following:

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Pfizer. The Motley Fool has a policy of disclosure.

Here’s Why I Wouldn’t Touch Amarin With a 10‑Foot Pole Given Its Patent and Competitive Risks was first published by The Motley Fool.