Pfizer's first-quarter sales up 1 percent, but fall short of estimates

Pfizer reported Tuesday that sales in the first quarter rose 1 percent year-over-year to $12.9 billion, coming in below analyst estimates of $13.1 billion. The company noted that revenue in its innovative health unit climbed 6 percent to $7.8 billion, boosted by Eliquis and Ibrance, while sales in its essential health segment dropped 5 percent year-over-year to $5.1 billion. 

Chief financial officer Frank D'Amelio remarked "first-quarter…results were in-line with our expectations," adding "we reaffirmed all components of our 2018 financial guidance." In the quarter, net income jumped 14 percent to $3.6 billion. 

CEO Ian Read called the results "solid," noting that growth was "driven by continued strength from our anchor brands, primarily Ibrance, Eliquis and Xeljanz." Read explained that "the essential health business delivered strong growth in emerging markets and biosimilars, but was negatively impacted by continued legacy Hospira product supply shortages in the US as well as product losses of exclusivity."  

Concerning individual products, revenue from Prevnar 13 reached $1.4 billion, down 1 percent versus the year-ago period, while sales of Lyrica were flat at $1.1 billion. Revenue from Ibrance jumped 37 percent to $933 million, falling short of forecasts of $956.6 million. 

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Additionally, sales of Eliquis climbed 35 percent versus the year-ago quarter to $765 million, with revenue from Enbrel falling 14 percent to $506 million. Meanwhile, sales of Xeljanz rose by 30 percent to $326 million, although missing expectations of $398.5 million. 

Moreover, Pfizer recorded sales of $905 million for its consumer health division, reflecting year-on-year growth of 7 percent. The company indicated that it will decide later this year whether to divest the unit after undertaking a strategic review of the business last year. In March, GlaxoSmithKline said it was withdrawing from the bidding process for the division after failing to reach an agreement on price. The UK firm had been considered a favourite to purchase the business after Reckitt Benckiser similarly exited the process. 

For the full year, Pfizer reaffirmed its previously disclosed guidance, expecting revenues of between $53.5 billion and $55.5 billion, with earnings per share in the range of $2.90 to $3.00. John Boris, an analyst at Sun Trust Robinson Humphrey, remarked it was disappointing that the drugmaker did not raise its forecasts for the year as did some competitors, with shares in the company falling as much as 5.4 percent on the results.

Commenting on the news, Edward Jones & Co. analyst Ashtyn Evans said there's some "frustration" that Pfizer needs to drive long-term growth. "The disappointment today was on overall strategy and what's going to be the growth driver for Pfizer over the long term, and what they're going to do with their cash," Evans noted.

Meanwhile, Read said that although "we never say never on big deals...I don’t believe that we need to do a transformative acquisition." Read added "our own pipeline is extremely strong and investing in our own pipeline looks to me today to be the best return possible for our capital. It's as simple as that."

For related analysis, read ViewPoints: Investors rattled over Pfizer's lack of M&A interest.

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