PFE Pfizer Inc

By Jared S. Hopkins and Dave Sebastian 

New drugs powered Pfizer Inc.'s fourth-quarter sales, a sign the drugmaker's effort to remake itself as a smaller company relying on its own laboratories for growth is starting to emerge.

Sales of the New York-based company's patent-protected medicines rose 7% to $10.5 billion. Among the products notching big gains were blood-thinner Eliquis, which posted a 21% increase in quarterly sales to $1.1 billion, and breast-cancer therapy Ibrance, whose sales increased 13% to $1.3 billion. Newly approved rare-disease drug Vyndaqel topped analyst expectations with $213 million in sales.

The company recorded a net loss of $337 million, or 6 cents a share, compared with a loss of $394 million, or 7 cents a share, a year earlier. Excluding one-time items, the company reported earnings of 55 cents a share, missing the 58 cents a share analysts were expecting.

Shares in Pfizer were down 5.2% on Tuesday afternoon. Analysts attributed the stock's decline to the earnings miss and a sales forecast that investors hoped would be higher.

Pfizer, one of the world's biggest drugmakers by sales, is trying to turn into a smaller but faster-growing drugmaker focused more on novel, patent-protected medicines for diseases such as cancer with bigger sales-growth upside.

To further the overhaul, Pfizer agreed last July to combine its Upjohn off-patent drugs business with Mylan NV. The deal, which would create a company called Viatris, is expected to close in the middle of this year.

If its strategy pays off, Pfizer could see sales rise faster than they have in years. Yet the plan is risky, especially without the safety net that the steady cash flow from off-patent drugs provided.

Many experimental therapies don't make it to market, and their development requires heavy investment. Pfizer spent $2.8 billion on research and development in the fourth quarter, up 15% from the same period a year earlier.

"I'm very, very pleased with the way things are evolving," Chief Executive Albert Bourla said in an interview. "We have taken steps -- very deliberate steps -- to transform Pfizer."

For 2020, Pfizer targets adjusted earnings of $2.82 to $2.92 a share on revenue of $48.5 billion to $50.5 billion. Reflecting Upjohn's coming combination with Mylan, Pfizer forecasts adjusted earnings of $2.25 a share to $2.35 a share on revenue of $40.7 billion to $42.3 billion. Pfizer said it doesn't plan to make any share repurchases this year.

Overall, the drugmaker on Tuesday posted $12.7 billion in fourth-quarter sales, off 9.3% from $14 billion a year earlier.

The drop occurred in part because of the absence of revenue from the consumer health-care business, which was combined with GlaxoSmithKline PLC's in a joint venture last August.

It was also tied to a sales decline of nearly one-third in Pfizer's Upjohn segment. Pain pill Lyrica began to face generic competition last year, and sales fell 67% to $433 million for the quarter.

Chief Financial Officer Frank D'Amelio said during a conference call Pfizer is negotiating with Mylan for it to also take on two additional Pfizer subsidiaries when the merger closes: one that manufactures auto-injector products such as EpiPen, and a partnership with Mylan that makes generic drugs for the Japanese market.

The segments posted combined sales of nearly $600 million last year.

After the deal closes, Pfizer will be more dependent on its pipeline of experimental therapies. This year, the company expects to announce results from as many as five late-stage studies and to begin as many as 10 late-stage studies.

Pfizer has targeted 2022 for U.S. approval of 15 new drugs or indications that have the potential to generate $1 billion in annual sales.

The company said Tuesday that this year it hopes to start late-stage studies testing its gene therapies for blood disease hemophilia, and Duchenne muscular dystrophy, a disease that weakens muscles and organ function.

Mr. Bourla identified gene therapies as a Pfizer priority. "They are very, very crucial for us," he said. "We believe they are the future of science right now."

He added that the company continues to look for small and midsize deals for drugs in mid-to-late-stage development to complement its laboratory deals, but anything larger could be destructive to its strategy.

Pfizer executives said they also expect growth from biosimilars, lower-price copies of branded biologic drugs. Sales of Pfizer's biosimilars totaled $911 million last year, up 19%. Pfizer in recent weeks brought to market two cancer biosimilars, with plans to launch another next month.

Write to Jared S. Hopkins at jared.hopkins@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

January 28, 2020 15:20 ET (20:20 GMT)

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