Pfizer boosts annual earnings guidance as third-quarter biopharma sales grow, led by Ibrance

Headline results for the third quarter:

Biopharma unit

$10.1 billion

+7%

Upjohn unit

$2.2 billion

-28%

Overall revenue

$12.7 billion (forecasts of $12.3 billion)

-5%

Profit

$7.7 billion

+87%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We reported strong third-quarter 2019 financial results, driven by 9% volume-driven operational revenue growth in our biopharma business, including growth from key brands such as Ibrance, Xeljanz, Eliquis, Vyndaqel and Inlyta as well as in emerging markets," remarked CEO Albert Bourla. The company explained that profit was boosted by an $8.1-billion gain after closing the consumer healthcare joint venture (JV) with GlaxoSmithKline during the quarter.

The executive noted that revenues from the Upjohn off-patent drug business, which is in the process of merging with Mylan, were "negatively impacted primarily by the July 2019 loss of exclusivity of Lyrica in the US, while consumer healthcare revenues declined as a result of the completion of the JV with GlaxoSmithKline.

Bourla also indicated that Pfizer would become a "smaller, science-based company" following the Mylan deal, which is expected to be finalised next year. He added that Pfizer will "[continue] to allocate significant capital directly to shareholders, primarily through dividends," while chief financial officer Frank D'Amelio noted that through the first nine months of 2019, the company returned $14.9 billion directly to shareholders through dividends and share repurchases. 

Other results:

  • Prevnar 13/Prevenar 13: $1.6 billion, down 3%, as US sales fell 7%, largely due to lower government purchases for the paediatric indication, as well as the continued decrease in sales for the adult indication as a result of a declining "catch up" opportunity
  • Ibrance: $1.3 billion, up 25%, topping estimates of $1.2 billion, with 18% higher sales in the US, driven in part by its continued CDK market share leadership in approved metastatic breast cancer indications
  • Eliquis alliance revenue and direct sales: $1 billion, up 18%, driven by continued adoption in non-valvular atrial fibrillation, as well as oral anti-coagulant market share gains, partially offset by a higher Medicare "coverage gap" discount provision on US revenues
  • Xeljanz: $599 million, up 38%, beating analyst estimates of $537 million, with US sales gaining 34% due to continued growth in rheumatoid arthritis (RA), while international markets saw sales jump 61% on RA uptake plus the recent launch in certain areas of the ulcerative colitis indication
  • Lyrica: $527 million, down 57%, mainly due to US loss of exclusivity in July
  • Lipitor: $476 million, down 6%
  • Enbrel (outside the US and Canada): $415 million, down 22%, primarily reflecting continued biosimilar competition in most developed European markets
  • Chantix/Champix: $276 million, up 6%
  • Xtandi alliance revenue: $225 million, up 25%
  • Vyndaqel: $156 million, versus $37 million in the prior year and above estimates of $82 million, boosted by the US launch in May for the treatment of the transthyretin amyloid cardiomyopathy and continued uptake in international markets for the transthyretin amyloid polyneuropathy indication
  • Inflectra/Remsima: $155 million, down 7%
  • Inlyta: $139 million, up 95%, primarily driven by increased uptake as a result of FDA approvals in the second-quarter for use with certain checkpoint inhibitors for the first-line treatment of patients with advanced renal cell carcinoma  
  • Emerging markets: $2 billion, up 9%
  • Consumer healthcare: $377 million, down 55%

Looking ahead:

Pfizer now expects sales of between $51.2 billion and $52.2 billion this year, narrowed from a prior estimate of $50.5 billion to $52.5 billion. Meanwhile, annual earnings per share are predicted to be between $2.94 and $3.00, boosted from an earlier forecast of $2.76 to $2.86, with analysts estimating earnings of $2.82 per share.

What analysts said:

J.P.Morgan analyst Chris Schott remarked that the "solid" performance from Pfizer's core products during the quarter shifts focus to the long-term sustainability of profit margins. UBS analyst Navin Jacob added "importantly, Ibrance is back to strong growth after a period of slowing...(and) the Vyndaqel number in particular is impressive."

Pipeline updates:

Pfizer indicated that during the quarter, it halted work on two drugs under development for psoriasis, including the TYK2/JAK1 inhibitor PF-06700841, which was in Phase II, and the transcription factor inhibitor PF-06763809, which was in Phase I. The company also halted Phase I development of the cytokine modulator PF-06817024 for atopic dermatitis.

Meanwhile, in oncology, Pfizer ended early-stage work on the pan-PI3K/mTOR inhibitor gedatolisib, also known as PF-05212384, the OX40 receptor agonist PF-04518600 and a bispecific antibody targeting P-cadherin and CD3, dubbed PF-06671008, that was developed as part of a deal with MacroGenics. The first patient was dosed in a Phase I study of PF-06671008 in 2016.

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