Pfizer's fourth-quarter sales rise 1 percent, as profit surges on $11.3-billion tax gain

Pfizer announced Tuesday that fourth-quarter sales rose 1 percent year-over-year to $13.7 billion, broadly meeting analyst estimates. Net income in the three-month period reached $12.3 billion, up from $775 million in the prior-year quarter, boosted by an $11.3-billion gain due to new US tax laws.

In the quarter, sales in Pfizer's Innovative Health unit lifted 6 percent to $8.2 billion, while revenue in the Established Health division slipped 7 percent to $5.5 billion. CEO Ian Read remarked that "Innovative Health was driven by continued strength from several anchor brands, including Ibrance, Eliquis and Xeljanz." Sales of Ibrance climbed 11 percent to $716 million, with revenue from Eliquis surging 46 percent to $710 million and sales of Xeljanz jumping 47 percent to $410 million.

Pfizer noted that in the Essential Health unit, quarterly sales in emerging markets rose 11 percent year-over-year to $1.9 billion, while revenue from biosimilars lifted 72 percent to $165 million, primarily from Inflectra in the US and some markets in Europe. However, Read noted that the division was "negatively impacted by the [Hospira Infusion Systems] divestiture, the expected impact of product losses of exclusivity and legacy Hospira product shortages in the US."

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For 2017, the company's sales declined 1 percent to $52.5 billion, with revenue from the Innovative Health unit up 8 percent at $31.4 billion. Meanwhile, annual sales in the Essential Health segment dropped 11 percent to $21.2 billion. Further, net income in the 12-month period reached $21.3 billion, versus $7.2 billion in 2016.

"In 2017, we received 10 approvals from the FDA, significantly more than Pfizer has achieved in any year in the past decade," Read noted. Approvals last year included the US clearance of the anti-PD-L1 drug Bavencio (avelumab), which is partnered with Merck KGaA, as well as European authorisation of the antibody-drug conjugate Besponsa (inotuzumab ozogamicin).

For the current year, Pfizer indicated that it expects revenues of between $53.5 billion and $55.5 billion, with earnings per share in the range of $2.90 to $3.00. Analysts predict annual sales of $53.9 billion, on earnings of $2.78 per share. Chief financial officer Frank D'Amelio noted that the midpoint of the guidance "implies revenue growth of 4 percent...which absorbs an anticipated $2 billion revenue headwind due to products that recently lost marketing exclusivity."

D'Amelio added that Pfizer's effective tax rate this year is predicted to be approximately 17 percent, significantly lower than the approximately 23 percent that was previously anticipated for 2017, prior to the enactment of US tax reform. The executive said that the company "anticipates a repatriation tax liability of approximately $15 billion payable to the US Treasury over 8 years as a result of the passage of the [Tax Cuts and Jobs Act]." Pfizer also said Tuesday that over the next five years, it plans to invest around $5 billion in capital projects in the US, including the strengthening of its manufacturing presence in the country.

Read added that the drugmaker remains on track to make a decision regarding its consumer healthcare unit this year, "which could include everything from a full or partial separation to ultimately deciding to retain the business." The company announced in October last year that it is reviewing strategic options for the division, with parties interested in purchasing it said to include GlaxoSmithKline, Nestlé and Reckitt Benckiser.

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