NEW YORK (Bloomberg) — Pfizer Inc.’s shares fell as much as 15.7 percent after the world’s biggest drugmaker ended development of its most important new treatment, a cholesterol medicine designed to replace Lipitor when its patent expires.Pfizer ended studies of the cholesterol pill torcetrapib on December 2 because deaths among patients taking it were 60 percent higher than in the group who didn’t get the drug. The stock declined $3.34, or 12 percent, to $24.52 at 12.39 a.m. in New York Stock Exchange composite trading. The shares earlier touched $23.50, wiping out $31 billion in market value.

The loss of torcetrapib thrust chief executive officer Jeffrey Kindler, a 51-year-old former McDonald’s Corp. executive who took the Pfizer helm in July, into one of the biggest financial crises in the New York-based company’s 157-year history. Pfizer invested $1 billion in developing the medicine and needed it to replace Lipitor, the source of a quarter of its $51 billion in annual revenue and almost half of net income.

“The bet the ranch on one drug approach was in place before Kindler got there, so now he has a chance to change course,” said Les Funtleyder, an analyst with Miller Tabak & Co. in New York, in a telephone interview. “This announcement offers him political cover to make really radical changes.”

Lipitor, the world’s biggest-selling drug at $12.2 billion last year, is one of six Pfizer products losing patent protection by 2011 that combined generated almost half the company’s 2005 revenue.

Pfizer said during a meeting with analysts and investors last week it planned to seek U.S. marketing approval in the second half of 2007. Orbimed Advisors LLC analyst Trevor Polischuk last week estimated annual sales of torcetrapib might have reached $20 billion.

“The new CEO basically will have to buy his way out of trouble,” Navid Malik, an analyst with Collins Stewart Holdings Plc, said in a telephone interview yesterday from London. “When you get to 2010 and 2011, you are facing a cliff where Pfizer sales are going to drop quite dramatically.”

Shares of Pfizer had gained 19.5 percent in 2006 prior to today. Analysts at JPMorgan, Lehman Brothers and Morgan Stanley all cut their ratings on Pfizer shares today.

“It’s very disappointing,” said James Stein, director of preventive cardiology at the University of Wisconsin, in a telephone interview yesterday. “Torcetrapib was the first in a new class and if successful, it’s one that would have filled an important niche in our armamentarium.”

The focus will remain on finding new ways to boost good cholesterol, doctors said, because statin drugs like Lipitor only prevent about 35 percent of heart attacks, strokes and deaths from heart disease. It remains the No. 1 killer.

“In terms of this terribly important disease, we’ve really hit a dry patch,” said Steven Nissen, head of cardiology at the Cleveland Clinic, the top heart hospital in the U.S. News & World Report ranking, and president of the American College of Cardiology. “It’s profoundly important that we continue to work on these things because statins just aren’t good enough.”

While most investors were selling Pfizer shares, some were buying on the notion that the stock is unlikely to go lower. The price could be driven up over the next year if Pfizer increase its dividend, makes some attractive acquisitions, and significantly cuts costs, analysts and investors said.

“This is the floor so the stock will come back from this whether that is if three months, six months, or 12 months isn’t clear,” said Orbimed Advisors analyst Trevor Polischuk, whose fund increased the number of Pfizer shares it owns today. “There is not another shoe to drop.”

The setback may immediately benefit AstraZeneca Plc and Abbott Laboratories. AstraZeneca’s Crestor is the most potent drug to cut bad cholesterol. Abbott is purchasing Kos Pharmaceuticals Inc. to get access to its Niaspan drug, the most effective way to raise good cholesterol.