- First-Quarter 2019 Revenues of $13.1
Billion, Reflecting 5% Operational Growth Driven by 7% Operational
Growth from Pfizer Biopharmaceuticals Group and 1% Operational
Growth From Upjohn
- First-Quarter 2019 Reported Diluted
EPS(1) of $0.68, Adjusted Diluted EPS(2) of $0.85
- Raised Midpoint of 2019 Adjusted
Diluted EPS(2) Guidance Range by $0.01 to $2.83 to $2.93, Primarily
Reflecting Adjusted Other Income(2) Recorded During First-Quarter
2019, Partially Offset by the Unfavorable Impact of Foreign
Exchange
- Reaffirmed 2019 Financial Guidance for
Revenues
Pfizer Inc. (NYSE: PFE) reported financial results for
first-quarter 2019 and raised the midpoint of its 2019 financial
guidance for adjusted diluted EPS(2).
At the start of the 2019 fiscal year(3), Pfizer reorganized its
commercial operations into three businesses:
- Pfizer Biopharmaceuticals Group
(Biopharma), a science-based innovative medicines business, which
includes all of the previous Innovative Health business units
(except Consumer Healthcare) as well as a new Hospital business
unit that commercializes Pfizer’s global portfolio of sterile
injectable and anti-infective medicines and includes Pfizer’s
contract manufacturing operation, Pfizer CentreOne. Pfizer also
incorporated its biosimilar portfolio into its Oncology and
Inflammation & Immunology business units and certain legacy
established products into the Internal Medicine business unit.
- Upjohn, a global, off-patent branded
and generic established medicines business, which includes 20
off-patent solid oral dose legacy brands including Lyrica, Lipitor,
Norvasc, Viagra and Celebrex, as well as certain generic
medicines.
- Consumer Healthcare(4), which includes
Pfizer’s over-the-counter medicines.
Results for the first quarter of 2019 and 2018(3) are summarized
below.
OVERALL
RESULTS
($ in millions, except
per share amounts)
First-Quarter 2019 2018 Change Revenues $ 13,118 $
12,906 2 % Reported Net Income(1) 3,884 3,561 9 % Reported Diluted
EPS(1) 0.68 0.59 15 % Adjusted Income(2) 4,891 4,555 7 % Adjusted
Diluted EPS(2) 0.85 0.75 13 %
REVENUES ($
in millions) First-Quarter 2019 2018 % Change Total
Oper. Biopharma $ 9,185 $ 8,881 3 % 7 % Upjohn 3,075 3,120
(1 %) 1 % Consumer Healthcare(4) 858 905
(5 %) (2 %)
Total Company $ 13,118
$ 12,906 2
% 5 %
Some amounts in this press release may not add due to rounding.
All percentages have been calculated using unrounded amounts.
References to operational variances pertain to period-over-period
growth rates that exclude the impact of foreign exchange(5).
2019 FINANCIAL GUIDANCE(6)
Pfizer’s updated 2019 financial guidance is presented below.
Financial guidance continues to reflect a full year of revenue and
expense contributions from Consumer Healthcare(4).
- Guidance for Adjusted Other
(Income)/Deductions(2) was increased by $100 million, primarily due
to milestone income recorded in first-quarter 2019.
- The midpoint of the guidance range for
Adjusted diluted EPS(2) was increased by $0.01 to an updated range
of $2.83 to $2.93, reflecting a $0.03 operational improvement,
primarily due to the aforementioned increase to Adjusted other
income(2), partially offset by unfavorable changes in foreign
exchange rates since mid-January 2019, which had an incremental
negative impact of $0.02.
Revenues $52.0 to $54.0
billion Adjusted Cost of Sales(2) as a Percentage of Revenues
20.8% to 21.8% Adjusted SI&A Expenses(2)
$13.5 to $14.5 billion Adjusted R&D Expenses(2)
$7.8 to $8.3 billion Adjusted Other (Income)/Deductions(2)
Approximately $200 million of
income(previously approximately $100 million of income)
Effective Tax Rate on Adjusted Income(2)
Approximately 16.0% Adjusted Diluted EPS(2) $2.83 to $2.93
(previously $2.82 to $2.92)
Financial guidance for Adjusted diluted EPS(2) reflects share
repurchases totaling $8.9 billion in 2019. Dilution related to
share-based employee compensation programs is currently expected to
offset the reduction in shares associated with these share
repurchases by approximately half.
CAPITAL ALLOCATION
- During first-quarter 2019, Pfizer
returned $10.9 billion directly to shareholders, through a
combination of:
- $2.0 billion of dividends, or $0.36 per
share of common stock; and
- $8.9 billion of share repurchases,
composed of $2.1 billion of open-market share repurchases and a
$6.8 billion accelerated share repurchase agreement executed in
February 2019.
- As of April 30, 2019, Pfizer’s
remaining share repurchase authorization was $5.3 billion.
EXECUTIVE COMMENTARY
Dr. Albert Bourla, Pfizer’s Chief Executive Officer, stated,
“Our first-quarter 2019 financial results were strong, driven by
continued strength from certain Biopharma brands, primarily
Eliquis, Ibrance, Prevnar 13/Prevenar 13 and Xeljanz, as well as
strong operational growth from certain Upjohn brands, primarily in
China. Our new commercial structure is designed to maximize today’s
revenue growth opportunities while transitioning the company to a
period post-2020 where we expect sustained mid-single-digit
operational revenue growth through 2025. We remain focused on
executing on our commercial strategies, managing expenses,
advancing our pipeline and prudently allocating our capital to
position Pfizer for sustainable success.
“Our pipeline continues to deliver differentiated therapies that
have the potential to improve the standard of care for patients
across multiple therapeutic areas. In the first four months of
2019, we have received five regulatory approvals and presented
Phase 3 data for Xtandi in metastatic hormone-sensitive prostate
cancer as well as Phase 2 immunogenicity data in adults for our
20-valent pneumococcal vaccine candidate. Over the rest of 2019, we
are looking forward to potential U.S. regulatory approvals for
tafamidis in transthyretin cardiomyopathy, our Bavencio-Inlyta
combination for the treatment of first-line renal cell carcinoma as
well as for our biosimilar rituximab, bevacizumab and adalimumab
molecules. We also expect Phase 3 read outs in 2019 for
PF-04965842, our Janus kinase-1 (JAK1) inhibitor in development for
moderate-to-severe atopic dermatitis, and rivipansel, in
development for vaso-occlusive crisis from sickle cell disease. I
believe our pipeline today represents an unprecedented opportunity
to deliver a life-changing impact for millions of patients while
enhancing value for all of our stakeholders,” Dr. Bourla
concluded.
Frank D’Amelio, Chief Financial Officer and Executive Vice
President, Business Operations and Global Supply, stated, “Overall,
I was pleased with our first-quarter 2019 financial performance. We
were able to achieve 5% operational revenue growth and delivered
Adjusted diluted EPS(2) growth of 13%, primarily reflecting the
strong performance of certain key products and the net impact of
our share repurchases. We reaffirmed our 2019 financial guidance
for revenues. Additionally, we raised the midpoint of our guidance
range for Adjusted diluted EPS(2) by $0.01, reflecting a $0.03
operational improvement, primarily due to approximately $100
million of incremental Adjusted other income(2) that was recorded
in first-quarter 2019, partially offset by a $0.02 negative impact
reflecting unfavorable changes in foreign exchange rates since
mid-January 2019. Finally, in first-quarter 2019, we returned $10.9
billion directly to shareholders through share repurchases and
dividends.”
QUARTERLY FINANCIAL HIGHLIGHTS (First-Quarter 2019 vs.
First-Quarter 2018)
First-quarter 2019 revenues totaled $13.1 billion, an increase
of $211 million, or 2%, compared to the prior-year quarter,
reflecting operational growth of $664 million, or 5%, partially
offset by the unfavorable impact of foreign exchange of $453
million, or 4%.
Pfizer Biopharmaceuticals Group (Biopharma) Revenue
Highlights
First-quarter 2019 Biopharma revenues totaled $9.2 billion, up
7% operationally, primarily driven by:
- Eliquis globally, up 36% operationally,
primarily driven by continued increased adoption in non-valvular
atrial fibrillation as well as oral anti-coagulant market share
gains;
- Ibrance globally, up 25% operationally,
primarily driven by:
- 107% operational growth in
international markets, reflecting continued strong uptake following
launches in developed Europe, Japan and certain emerging markets;
and
- 2% growth in the U.S., reflecting
continued moderating volumes in approved metastatic breast cancer
indications;
- Prevnar 13/Prevenar 13 globally, up 10%
operationally, primarily driven by:
- 31% operational growth in emerging
markets, reflecting the favorable overall impact of timing and
increased volume associated with government purchases for the
pediatric indication and increased shipments associated with Gavi,
the Vaccine Alliance, partially offset primarily by the
non-recurrence of volumes associated with an adult national
immunization program in first-quarter 2018; and
- 6% growth in the U.S., reflecting
increased government purchases in first-quarter 2019 for the
pediatric indication, partially offset by the continued decline in
revenues for the adult indication due to a declining “catch up”
opportunity compared to the prior-year quarter; and
- Xeljanz globally, up 34% operationally,
driven by:
- 89% operational growth in international
markets, primarily reflecting continued uptake in the rheumatoid
arthritis indication as well as from the recent launch of the
ulcerative colitis indication in certain developed markets;
and
- 18% growth in the U.S., reflecting
continued strong volume growth in the rheumatoid arthritis
indication and from the launches of the psoriatic arthritis and
ulcerative colitis indications, partially offset by expected higher
rebating and unfavorable channel mix in first-quarter 2019,
partially offset primarily by lower revenues for:
- the Hospital business in the U.S., down
8%, primarily due to the continued expected negative impact from
generic competition for products that have previously lost
marketing exclusivity; and
- certain rare disease products,
including the hemophilia franchises primarily due to competitive
pressures, and Genotropin in the U.S., primarily due to unfavorable
channel mix.
Upjohn Revenue Highlights
First-quarter 2019 Upjohn revenues totaled $3.1 billion, up 1%
operationally, reflecting:
- 25% operational growth in emerging
markets, driven by strong, volume-driven operational growth in
China, primarily from Lipitor, Norvasc and Celebrex; and
- 10% operational growth in Japan,
primarily driven by strong volume growth from Lyrica and
Celebrex,
partially offset by:
- 13% operational decline in developed
markets excluding Japan, primarily driven by lower revenues
for:
- Viagra and Upjohn’s authorized generic
for Viagra in the U.S. resulting from increased generic competition
following Viagra’s December 2017 patent expiration;
- Lyrica, primarily due to lower volumes
in the U.S., reflecting wholesaler destocking in advance of
anticipated generic competition beginning on June 30, 2019, and in
developed Europe, reflecting continued generic competition;
and
- Greenstone, Upjohn’s authorized generic
subsidiary, primarily due to continued industry-wide pricing
challenges in the U.S.
Consumer Healthcare(4) Revenue
Highlights
First-quarter 2019 Consumer Healthcare(4) revenues totaled $858
million, down 2% operationally, reflecting an 8% decline in the
U.S., partially offset by 4% operational growth in international
markets.
GAAP Reported(1) Income Statement
Highlights
SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES(1)
($ in millions)
(Favorable)/Unfavorable
First-Quarter 2019 2018 % Change Total Oper.
Cost of Sales(1) $ 2,433 $ 2,563 (5%) 3% Percent of Revenues 18.5 %
19.9 % N/A N/A SI&A Expenses(1) 3,339 3,412 (2%) — R&D
Expenses(1) 1,703 1,743
(2%) (1%)
Total $ 7,474
$ 7,718 (3%) 1%
Other (Income)/Deductions––net(1) $ 92 ($ 178 ) * *
Effective Tax Rate on Reported Income(1) 10.0 % 13.5 %
* Indicates calculation not
meaningful.
Pfizer recorded other deductions––net(1) in first-quarter 2019
compared with other income––net(1) in the prior-year quarter,
primarily driven by:
- higher net losses on the early
retirement of certain outstanding debt securities;
- higher business and legal entity
alignment costs;
- higher asset impairments charges;
- higher net interest expense; and
- lower income from collaborations,
out-licensing and sale of compound/product rights,
partially offset primarily by:
- a favorable change in the fair value of
contingent consideration.
Adjusted(2) Income Statement Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES(2)
($ in millions)
(Favorable)/Unfavorable
First-Quarter 2019 2018 % Change Total Oper.
Adjusted Cost of Sales(2) $ 2,415 $ 2,536 (5%) 4% Percent of
Revenues 18.4 % 19.7 % N/A N/A Adjusted SI&A Expenses(2) 3,311
3,286 1% 3% Adjusted R&D Expenses(2) 1,693
1,739 (3%) (2%)
Total $
7,419 $ 7,561
(2%) 2% Adjusted Other
(Income)/Deductions––net(2) ($135 ) ($204 ) (34%) (39%) Effective
Tax Rate on Adjusted Income(2) 15.2 % 16.7 %
First-quarter 2019 diluted weighted-average shares outstanding
used to calculate Reported(1) and Adjusted(2) diluted EPS declined
by 307 million shares compared to the prior-year quarter primarily
due to Pfizer’s ongoing share repurchase program, reflecting the
impact of share repurchases during 2018 and in first-quarter 2019,
partially offset by dilution related to share-based employee
compensation programs.
A full reconciliation of Reported(1) to Adjusted(2) financial
measures and associated footnotes can be found starting on page 18
of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since January 29,
2019)
Product Developments
- In March 2019, Merck KGaA, Darmstadt,
Germany, which operates its biopharmaceutical business as EMD
Serono in the U.S. and Canada (Merck KGaA), and Pfizer announced
that the European Medicines Agency (EMA) validated for review the
Type II variation application for Bavencio in combination with
Inlyta (axitinib) for the treatment of patients with advanced renal
cell carcinoma (RCC).
- In March 2019, Merck KGaA and Pfizer
announced the discontinuation of the ongoing Phase 3 JAVELIN
Ovarian PARP 100 study evaluating the efficacy and safety of
avelumab in combination with chemotherapy followed by maintenance
therapy of avelumab in combination with talazoparib, a poly
(ADP-ribose) polymerase (PARP) inhibitor, versus an active
comparator in treatment-naïve patients with locally advanced or
metastatic ovarian cancer.
- In February 2019, Merck KGaA and Pfizer
announced that the U.S. Food and Drug Administration (FDA) has
accepted for priority review the supplemental Biologics License
Application (BLA) for Bavencio in combination with Inlyta
(axitinib) for patients with advanced RCC. The Prescription Drug
User Fee Act goal date for a decision by the FDA is in June
2019.
- Eliquis (apixaban) -- In March
2019, the Bristol-Myers Squibb-Pfizer Alliance announced results
from the Phase 4 AUGUSTUS trial evaluating Eliquis versus
vitamin K antagonists (VKAs) in patients with non-valvular atrial
fibrillation and recent acute coronary syndrome and/or undergoing
percutaneous coronary intervention. Results showed that in patients
receiving a P2Y12 inhibitor with or without aspirin (antiplatelet
therapies), the proportion of patients with major or clinically
relevant non-major bleeding at six months was significantly lower
for those treated with Eliquis compared to those treated
with a VKA. These data were featured as a late-breaking oral
presentation at the American College of Cardiology’s 68th Annual
Scientific Session 2019 and simultaneously published in
the New England Journal of Medicine.
- Ibrance (palbociclib) -- In
April 2019, Pfizer announced that the FDA approved a supplemental
New Drug Application to expand the indications for Ibrance in
combination with an aromatase inhibitor or fulvestrant to include
men with hormone receptor-positive (HR+), human epidermal growth
factor receptor 2 (HER2)-negative advanced or metastatic breast
cancer. The approval is based on data from electronic health
records and postmarketing reports of the real-world use of Ibrance
in male patients sourced from three databases: IQVIA Insurance
database, Flatiron Health Breast Cancer database and the Pfizer
global safety database.
- Lorbrena/Lorviqua (lorlatinib)
-- In March 2019, Pfizer announced that the Committee for Medicinal
Products for Human Use (CHMP) of the European Medicines Agency
(EMA) adopted a positive opinion for Lorviqua (approved in the
U.S., Canada, and Japan under the brand name Lorbrena), an
anaplastic lymphoma kinase (ALK) tyrosine kinase inhibitor (TKI),
recommending conditional marketing authorization in the European
Union (EU) as a monotherapy treatment for adult patients with
ALK-positive advanced non-small cell lung cancer (NSCLC) whose
disease has progressed after alectinib or ceritinib as the first
ALK TKI therapy, or crizotinib and at least one other ALK TKI.
Conversion to normal approval is contingent on provisions of
comprehensive data confirming that the benefit-risk balance is
positive. The CHMP’s opinion will be reviewed by the European
Commission (EC), with a decision expected in the coming
months.
- Talzenna (talazoparib) -- In
April 2019, Pfizer announced that the CHMP of the EMA adopted a
positive opinion for Talzenna recommending marketing authorization
in the EU as a monotherapy treatment for adult patients with
germline breast cancer susceptibility gene (gBRCA)1/2-mutations,
who have HER2-negative locally advanced or metastatic breast
cancer. Patients should have been previously treated with an
anthracycline and/or a taxane in the (neo)adjuvant, locally
advanced or metastatic setting unless patients were not suitable
for these treatments. Patients with HR+ breast cancer should have
been treated with a prior endocrine-based therapy, or be considered
unsuitable for endocrine-based therapy. The CHMP’s opinion will be
reviewed by the EC, with a decision expected in the coming
months.
- Trazimera (trastuzumab-qyyp) --
In March 2019, Pfizer announced that the FDA approved Trazimera, a
biosimilar to Herceptin®(7), for the treatment of HER2
overexpressing breast cancer and HER2 overexpressing metastatic
gastric or gastroesophageal junction adenocarcinoma. Trazimera is
Pfizer’s first oncology monoclonal antibody biosimilar and its
fifth biosimilar to be approved by the FDA. Trazimera was
approved for use in the EU in July 2018 for the same
indications.
- Vizimpro (dacomitinib) -- In
April 2019, Pfizer announced that the EC approved Vizimpro in the
EU as monotherapy for the first-line treatment of adult patients
with locally advanced or metastatic NSCLC with epidermal growth
factor receptor-activating mutations.
- Xeljanz (tofacitinib) -- In
February 2019, Pfizer announced that it modified an ongoing
post-marketing requirement study evaluating the safety of Xeljanz
at two doses, 10 mg twice daily (BID) and 5 mg BID, versus a tumor
necrosis factor inhibitor (TNFi) control group in patients with
rheumatoid arthritis. Following notification from the tofacitinib
rheumatology Data Safety Monitoring Board (DSMB) of a safety signal
regarding the Xeljanz 10 mg BID treatment group, Pfizer
transitioned all patients in the Xeljanz 10 mg BID treatment group
to the Xeljanz 5 mg BID treatment group. The DSMB observed that
patients in this study that were treated with Xeljanz 10 mg BID had
a statistically and clinically important difference in the
occurrence of pulmonary embolism, compared with patients who were
treated with a TNFi. The DSMB also noted an increase in overall
mortality in the Xeljanz 10 mg BID treatment group compared to the
Xeljanz 5 mg BID and TNFi treatment groups. The DSMB also stated it
firmly believes that the risk-benefit profile of Xeljanz 5 mg BID
in comparison to the TNFi group remains appropriately balanced in
this study. The Xeljanz 5 mg BID dose is the FDA approved dose for
adult patients with moderate to severe rheumatoid arthritis. This
study was designed to assess the risk of cardiovascular (CV) events
and therefore in contrast to previous Xeljanz studies, patients
were required to be at least 50 years of age and have at least one
CV risk factor to be eligible for participation in this study. All
patients entered the study on stable doses of background
methotrexate. Pfizer will work with the FDA and other regulatory
agencies to review the full results upon completion of this
study.
- Xtandi (enzalutamide) -- In
February 2019, Astellas Pharma Inc. and Pfizer announced results
from the Phase 3 ARCHES trial in men with metastatic
hormone-sensitive prostate cancer (mHSPC). The results showed that
Xtandi plus androgen deprivation therapy (ADT) met the primary
endpoint by significantly reducing the risk of radiographic
progression or death by 61% versus ADT alone. Adverse events in the
ARCHES clinical trial were generally consistent with those reported
in enzalutamide clinical trials in patients with
castration-resistant prostate cancer. These data were presented in
an oral session at the 2019 Genitourinary Cancers Symposium.
- Zirabev (PF-06439535, biosimilar
bevacizumab) -- In February 2019, Pfizer announced the EC
approved Zirabev, a biosimilar to Avastin®(8), for the treatment of
metastatic carcinoma of the colon or rectum, metastatic breast
cancer, unresectable advanced, metastatic or recurrent NSCLC,
advanced and/or metastatic RCC and persistent, recurrent or
metastatic carcinoma of the cervix.
Pipeline Developments
A comprehensive update of Pfizer’s development pipeline was
published today and is now available at
www.pfizer.com/science/drug-product-pipeline. It includes an
overview of Pfizer’s research and a list of compounds in
development with targeted indication and phase of development, as
well as mechanism of action for some candidates in Phase 1 and all
candidates from Phase 2 through registration.
- PF-06482077 (20-Valent Pneumococcal
Conjugate Vaccine) -- In April 2019, Pfizer presented data from
a Phase 2 proof-of-concept study for its 20-valent pneumococcal
conjugate vaccine (20vPnC) candidate, PF-06482077, which is being
investigated for the prevention of invasive disease and pneumonia
caused by Streptococcus pneumoniae serotypes contained in the
vaccine in adults aged 18 years and older. The presentation was
delivered at the 29th European Congress of Clinical Microbiology
and Infectious Diseases. Pfizer’s 20vPnC candidate includes the 13
serotypes contained in Prevnar 13 plus seven additional serotypes
serotypes (8, 10A, 11A,12F, 15B, 22F, and 33F). Pfizer is enrolling
three Phase 3 studies evaluating 20vPnC in adults. Combined, these
three studies will enroll more than 6,000 adult subjects, including
populations of vaccine-naïve adults and adults with prior
pneumococcal vaccination. Pfizer expects to submit a BLA to the FDA
by the end of 2020, subject to the successful completion of Phase 3
studies in adults.
- PF-07055480 (SB-525) -- In April
2019, Sangamo Therapeutics, Inc. (Sangamo) and Pfizer announced
interim data from the Phase 1/2 Alta study evaluating
investigational SB-525 gene therapy for severe hemophilia A. Data
indicate that SB-525 was generally well-tolerated and demonstrated
a dose-dependent increase in Factor VIII levels across the four
dosage cohorts. Eight patients in total were dosed. Based on these
results, the Safety Monitoring Committee (SMC) recommended cohort
expansion at the 3e13 vg/kg dose. Longer-term follow-up data will
be presented at an upcoming scientific meeting. Per the SMC
recommendation and study protocol, the fourth cohort will be
expanded by up to five patients. Patient enrollment is underway.
SB-525 is being developed as part of a global collaboration between
Sangamo and Pfizer.
- Tanezumab (PF-4383119)
- In April 2019, Pfizer and Eli Lilly and
Company (Lilly) announced top-line results from a Phase 3 study
evaluating tanezumab 2.5 mg and 5 mg. The objective of the study
was to compare the long-term joint safety and 16-week efficacy of
tanezumab relative to nonsteroidal anti-inflammatory drugs (NSAIDs)
in patients with moderate-to-severe osteoarthritis (OA) of the hip
or knee. The tanezumab 5 mg treatment arm met two of the three
co-primary efficacy endpoints, demonstrating a statistically
significant improvement in pain and physical function compared to
NSAIDs at the 16-week analysis, while patients’ overall assessment
of their OA was not statistically different than NSAIDs. Patients
who received tanezumab 2.5 mg did not experience a statistically
significant improvement in pain, physical function or patients’
overall assessment of their OA at 16 weeks compared to NSAIDs. In
the safety analysis, there was a higher rate of joint safety events
in the tanezumab arms compared to NSAIDs at 80 weeks; the
difference was statistically significant. Pfizer and Lilly continue
to analyze these results and are assessing potential next steps for
tanezumab. The full results from this study will be submitted for
future scientific publication or presentation.
- In February 2019, Pfizer and Lilly
announced positive top-line results from a Phase 3 study evaluating
tanezumab in patients with moderate-to-severe chronic low back
pain. In the study, treatment with tanezumab 10 mg met the primary
endpoint, demonstrating a statistically significant improvement in
pain at 16 weeks compared to placebo. The tanezumab 5 mg arm
demonstrated a numerical improvement in pain, but did not reach
statistical significance compared to placebo at the week 16
analysis. The full results from this study will be submitted for
future scientific publication or presentation.
Corporate Developments
- In March 2019, Vivet Therapeutics
(Vivet), a privately held gene therapy biotech company dedicated to
developing gene therapy treatments for inherited liver disorders
with high unmet medical need, and Pfizer announced that Pfizer has
acquired a 15% equity interest in Vivet and secured an exclusive
option to acquire all outstanding shares. Pfizer and Vivet will
collaborate on the development of VTX-801, Vivet’s proprietary
treatment candidate for Wilson disease. Under the terms of the
transaction, Pfizer paid approximately €45 million ($51 million)
upon signing and will pay an additional €20 million ($23 million)
upon achievement of a development milestone. If Pfizer exercises
its option to acquire the remaining outstanding shares, it may pay
up to €540 million ($613 million) inclusive of the option exercise
payment and subject to the achievement of certain post-acquisition
clinical, regulatory and commercial milestones. Pfizer can exercise
its option to acquire 100% of Vivet following the company’s
delivery of certain data from the Phase 1/2 clinical trial for
VTX-801. As part of the transaction, Pfizer senior executive Monika
Vnuk, M.D., Vice President, Worldwide Business Development, will
join Vivet’s Board of Directors. Other terms of the transaction
were not disclosed.
Pfizer's first-quarter 2019 earnings conference call with
investment analysts is scheduled for Tuesday, April 30, 2019 at
10:00 a.m. EDT. For instructions on how to join the conference call
or the webcast, please refer to the previously-issued press release
located on the company’s investor website
(www.pfizer.com/investors). Slides that will accompany today’s
webcast were posted to the company’s investor website at 6:45 a.m.
EDT, concurrent with the issuance of this press release. Pfizer
intends to continue this practice for future earnings
announcements.
Please find Pfizer’s press release and associated financial
tables, including reconciliations of certain GAAP reported to
non-GAAP adjusted information, at the following hyperlink:
https://investors.pfizer.com/files/doc_financials/Quarterly/2019/q1/Q1-2019-PFE-Earnings-Release.pdf
(Note: If clicking on the above link does not open up a new web
page, you may need to cut and paste the above URL into your
browser's address bar.)
For additional details, see the associated financial
schedules and product revenue tables attached to the press release
located at the hyperlink referred to above and the attached
disclosure notice.
(1) Revenues is defined as revenues in accordance with U.S.
generally accepted accounting principles (GAAP). Reported net
income is defined as net income attributable to Pfizer Inc. in
accordance with U.S. GAAP. Reported diluted earnings per share
(EPS) are defined as diluted EPS attributable to Pfizer Inc. common
shareholders in accordance with U.S. GAAP. (2)
Adjusted income and its components and
Adjusted diluted EPS are defined as reported U.S. GAAP net
income(1) and its components and reported diluted EPS(1) excluding
purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items (some of
which may recur, such as restructuring charges, legal charges or
net gains and losses on investments in equity securities, but which
management does not believe are reflective of ongoing core
operations). Adjusted cost of sales, Adjusted selling,
informational and administrative (SI&A) expenses, Adjusted
research and development (R&D) expenses and Adjusted other
(income)/deductions are income statement line items prepared on the
same basis as, and therefore components of, the overall Adjusted
income measure. As described in the Financial Review––Non-GAAP
Financial Measure (Adjusted Income) section of Pfizer’s 2018
Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2018,
management uses Adjusted income, among other factors, to set
performance goals and to measure the performance of the overall
company. Because Adjusted income is an important internal
measurement for Pfizer, management believes that investors’
understanding of our performance is enhanced by disclosing this
performance measure. Pfizer reports Adjusted income, certain
components of Adjusted income, and Adjusted diluted EPS in order to
portray the results of the company’s major operations––the
discovery, development, manufacture, marketing and sale of
prescription medicines, vaccines and consumer healthcare
products––prior to considering certain income statement elements.
See the accompanying reconciliations of certain GAAP Reported to
Non-GAAP Adjusted information for the first quarter of 2019 and
2018. The Adjusted income and its components and Adjusted diluted
EPS measures are not, and should not be viewed as, substitutes for
U.S. GAAP net income and its components and diluted EPS.
(3) Pfizer’s fiscal year-end for international subsidiaries
is November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries
is December 31. Therefore, Pfizer’s first quarter for U.S.
subsidiaries reflects the three months ending on March 31, 2019 and
April 1, 2018 while Pfizer’s first quarter for subsidiaries
operating outside the U.S. reflects the three months ending on
February 24, 2019 and February 25, 2018. (4) In December
2018, Pfizer entered into a definitive agreement with GSK under
which the two companies have agreed to combine their respective
consumer healthcare businesses into a new consumer healthcare joint
venture that will operate globally under the GSK Consumer
Healthcare name. In exchange for contributing its Consumer
Healthcare business, Pfizer will receive a 32% equity stake in the
new company and GSK will own the remaining 68% of the new company.
Upon the closing of the transaction, which is expected to occur in
the second half of 2019, subject to customary closing conditions
including GSK shareholder approval and required regulatory
approvals, Pfizer anticipates deconsolidating its Consumer
Healthcare business and will begin to receive its pro rata share of
the joint venture’s earnings and dividends, which will be paid on a
quarterly basis. (5) References to operational variances in
this press release pertain to period-over-period growth rates that
exclude the impact of foreign exchange. The operational variances
are determined by multiplying or dividing, as appropriate, the
current period U.S. dollar results by the current period average
foreign exchange rates and then multiplying or dividing, as
appropriate, those amounts by the prior-year period average foreign
exchange rates. Although exchange rate changes are part of Pfizer’s
business, they are not within Pfizer’s control. Exchange rate
changes, however, can mask positive or negative trends in the
business; therefore, Pfizer believes presenting operational
variances provides useful information in evaluating the results of
its business. (6) The 2019 financial guidance reflects the
following:
•
Pfizer does not provide guidance for GAAP
Reported financial measures (other than revenues) or a
reconciliation of forward-looking non-GAAP financial measures to
the most directly comparable GAAP Reported financial measures on a
forward-looking basis because it is unable to predict with
reasonable certainty the ultimate outcome of pending litigation,
unusual gains and losses, acquisition-related expenses, net gains
or losses on investments in equity securities and potential future
asset impairments without unreasonable effort. These items are
uncertain, depend on various factors, and could have a material
impact on GAAP Reported results for the guidance period.
•
Does not assume the completion of any
business development transactions not completed as of March 31,
2019, including any one-time upfront payments associated with such
transactions.
•
Reflects a full year of revenue and
expense contributions from Consumer Healthcare(4).
•
Reflects an anticipated negative revenue
impact of $2.6 billion due to recent and expected generic and
biosimilar competition for certain products that have recently lost
or are anticipated to soon lose patent protection.
•
Exchange rates assumed are a blend of the
actual exchange rates in effect through first-quarter 2019 and
mid-April 2019 rates for the remainder of the year. Reflects the
anticipated unfavorable impact of approximately $1.1 billion on
revenues and approximately $0.08 on Adjusted diluted EPS(2) as a
result of changes in foreign exchange rates relative to the U.S.
dollar compared to foreign exchange rates from 2018.
•
Guidance for Adjusted diluted EPS(2)
assumes diluted weighted-average shares outstanding of
approximately 5.7 billion shares, which reflects the
weighted-average impact of share repurchases totaling $8.9 billion
executed in first-quarter 2019. Dilution related to share-based
employee compensation programs is currently expected to offset the
reduction in shares associated with these share repurchases by
approximately half.
(7) Herceptin® is a registered U.S. trademark of Genentech,
Inc. (8) Avastin® is a registered U.S. trademark of
Genentech, Inc.
DISCLOSURE NOTICE: Except where otherwise noted, the information
contained in this earnings release and the related attachments is
as of April 30, 2019. We assume no obligation to update any
forward-looking statements contained in this earnings release and
the related attachments as a result of new information or future
events or developments.
This earnings release and the related attachments contain
forward-looking statements about our anticipated future operating
and financial performance, business plans and prospects,
expectations for in-line products and product candidates, including
anticipated regulatory submissions, data read-outs, study starts,
approvals, revenue contribution, growth, performance, timing of
exclusivity and potential benefits, strategic reviews, capital
allocation objectives, business-development plans, benefits
anticipated from the reorganization of our commercial operations
into three businesses which became effective at the beginning of
our 2019 fiscal year, our acquisitions and other business
development activities, our proposed transaction with GSK to
combine our respective consumer healthcare businesses into a new
consumer healthcare joint venture, our ability to successfully
capitalize on growth opportunities or prospects, manufacturing and
product supply and plans relating to share repurchases and
dividends, among other things, that involve substantial risks and
uncertainties. You can identify these statements by the fact
that they use future dates or use words such as “will,” “may,”
“could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “assume,” “target,”
“forecast,” “guidance,” “goal,” “objective,” “aim,” “seek” and
other words and terms of similar meaning. Among the factors that
could cause actual results to differ materially from past results
and future plans and projected future results are the
following:
- the outcome of research and development
activities, including, without limitation, the ability to meet
anticipated pre-clinical or clinical endpoints, commencement and/or
completion dates for our pre-clinical or clinical trials,
regulatory submission dates, regulatory approval dates and/or
launch dates, as well as the possibility of unfavorable
pre-clinical and clinical trial results, including the possibility
of unfavorable new clinical data and further analyses of existing
clinical data;
- the risk we may not be able to
successfully address all of the comments received from regulatory
authorities such as the U.S. Food and Drug Administration (FDA) or
the European Medicines Agency (EMA), or obtain approval from
regulators, which will depend on myriad factors, including such
regulator making a determination as to whether a product’s benefits
outweigh its known risks and a determination of the product’s
efficacy; regulatory decisions impacting labeling, manufacturing
processes, safety and/or other matters; and recommendations by
technical or advisory committees, such as the Advisory Committee on
Immunization Practices, that may impact the use of our
vaccines;
- the speed with which regulatory
authorizations, pricing approvals and product launches may be
achieved;
- the outcome of post-approval clinical
trials, which could result in the loss of marketing approval,
changes in product labeling, and/or new or increased concerns about
the side effects or efficacy of, a product that could affect its
availability or commercial potential;
- the success of external
business-development activities, including the ability to identify
and execute on potential business development opportunities, the
ability to satisfy the conditions to closing of announced
transactions in the anticipated time frame or at all, the ability
to realize the anticipated benefits of any such transactions, and
the potential need to obtain additional equity or debt financing to
pursue these opportunities which could result in increased leverage
and impact our credit ratings;
- competitive developments, including the
impact on our competitive position of new product entrants, in-line
branded products, generic products, private label products,
biosimilars and product candidates that treat diseases and
conditions similar to those treated by our in-line drugs and drug
candidates;
- the implementation by the FDA and
regulatory authorities in certain countries of an abbreviated legal
pathway to approve biosimilar products, which could subject our
biologic products to competition from biosimilar products, with
attendant competitive pressures, after the expiration of any
applicable exclusivity period and patent rights;
- risks related to our ability to develop
and launch biosimilars, including risks associated with “at risk”
launches, defined as the marketing of a product by Pfizer before
the final resolution of litigation (including any appeals) brought
by a third party alleging that such marketing would infringe one or
more patents owned or controlled by the third party, and access
challenges for our biosimilar products where our product may not
receive appropriate formulary access or remains in a disadvantaged
position relative to the innovator product;
- the ability to meet competition from
generic, branded and biosimilar products after the loss or
expiration of patent protection for our products or competitor
products;
- the ability to successfully market both
new and existing products domestically and internationally;
- difficulties or delays in
manufacturing, including delays caused by natural events, such as
hurricanes; supply shortages at our facilities; and legal or
regulatory actions, such as warning letters, suspension of
manufacturing, seizure of product, injunctions, debarment,
voluntary recall of a product or failure to secure product
approvals;
- trade buying patterns;
- the impact of existing and future
legislation and regulatory provisions on product exclusivity;
- trends toward managed care and
healthcare cost containment, and our ability to obtain or maintain
timely or adequate pricing or favorable formulary placement for our
products;
- the impact of any significant spending
reductions or cost controls affecting Medicare, Medicaid or other
publicly funded or subsidized health programs or changes in the tax
treatment of employer-sponsored health insurance that may be
implemented;
- the impact of any U.S. healthcare
reform or legislation, including any replacement, repeal,
modification or invalidation of some or all of the provisions of
the U.S. Patient Protection and Affordable Care Act, as amended by
the Health Care and Education Reconciliation Act;
- U.S. federal or state legislation or
regulatory action and/or policy efforts affecting, among other
things, pharmaceutical product pricing, reimbursement or access,
including under Medicaid, Medicare and other publicly funded or
subsidized health programs; patient out-of-pocket costs for
medicines, manufacturer prices and/or price increases that could
result in new mandatory rebates and discounts or other pricing
restrictions; general budget control actions; the importation of
prescription drugs from outside the U.S. at prices that are
regulated by governments of various foreign countries; revisions to
reimbursement of biopharmaceuticals under government programs;
restrictions on U.S. direct-to-consumer advertising; limitations on
interactions with healthcare professionals; or the use of
comparative effectiveness methodologies that could be implemented
in a manner that focuses primarily on the cost differences and
minimizes the therapeutic differences among pharmaceutical products
and restricts access to innovative medicines; as well as pricing
pressures for our products as a result of highly competitive
insurance markets;
- legislation or regulatory action in
markets outside the U.S. affecting pharmaceutical product pricing,
reimbursement or access, including, in particular, continued
government-mandated reductions in prices and access restrictions
for certain biopharmaceutical products to control costs in those
markets;
- the exposure of our operations outside
the U.S. to possible capital and exchange controls, economic
conditions, expropriation and other restrictive government actions,
changes in intellectual property legal protections and remedies, as
well as political unrest, unstable governments and legal systems
and inter-governmental disputes;
- contingencies related to actual or
alleged environmental contamination;
- claims and concerns that may arise
regarding the safety or efficacy of in-line products and product
candidates;
- any significant breakdown, infiltration
or interruption of our information technology systems and
infrastructure;
- legal defense costs, insurance expenses
and settlement costs;
- the risk of an adverse decision or
settlement and the adequacy of reserves related to legal
proceedings, including patent litigation, such as claims that our
patents are invalid and/or do not cover the product of the generic
drug manufacturer or where one or more third parties seeks damages
and/or injunctive relief to compensate for alleged infringement of
its patents by our commercial or other activities, product
liability and other product-related litigation, including personal
injury, consumer, off-label promotion, securities, antitrust and
breach of contract claims, commercial, environmental, government
investigations, employment and other legal proceedings, including
various means for resolving asbestos litigation, as well as tax
issues;
- the risk that our currently pending or
future patent applications may not result in issued patents, or be
granted on a timely basis, or any patent-term extensions that we
seek may not be granted on a timely basis, if at all;
- our ability to protect our patents and
other intellectual property, both domestically and
internationally;
- interest rate and foreign currency
exchange rate fluctuations, including the impact of possible
currency devaluations in countries experiencing high inflation
rates;
- governmental laws and regulations
affecting domestic and foreign operations, including, without
limitation, tax obligations and changes affecting the tax treatment
by the U.S. of income earned outside the U.S. that may result from
pending and possible future proposals, including further
clarifications and/or interpretations of the Tax Cuts and Jobs Act
enacted in 2017;
- any significant issues involving our
largest wholesale distributors, which account for a substantial
portion of our revenues;
- the possible impact of the increased
presence of counterfeit medicines in the pharmaceutical supply
chain on our revenues and on patient confidence in the integrity of
our medicines;
- the end result of any negotiations
between the U.K. government and the EU regarding the terms of the
U.K.’s exit from the EU, which could have implications on our
research, commercial and general business operations in the U.K.
and the EU, including the approval and supply of our products;
- any significant issues that may arise
related to the outsourcing of certain operational and staff
functions to third parties, including with regard to quality,
timeliness and compliance with applicable legal or regulatory
requirements and industry standards;
- any significant issues that may arise
related to our joint ventures and other third-party business
arrangements;
- changes in U.S. generally accepted
accounting principles;
- further clarifications and/or changes
in interpretations of existing laws and regulations, or changes in
laws and regulations, in the U.S. and other countries;
- uncertainties related to general
economic, political, business, industry, regulatory and market
conditions including, without limitation, uncertainties related to
the impact on Pfizer, our customers, suppliers and lenders and
counterparties to our foreign-exchange and interest-rate agreements
of challenging global economic conditions and recent and possible
future changes in global financial markets; the related risk that
our allowance for doubtful accounts may not be adequate; and the
risks related to volatility of our income due to changes in the
market value of equity investments;
- any changes in business, political and
economic conditions due to actual or threatened terrorist activity
in the U.S. and other parts of the world, and related U.S. military
action overseas;
- growth in costs and expenses;
- changes in our product, segment and
geographic mix;
- the impact of purchase accounting
adjustments, acquisition-related costs, discontinued operations and
certain significant items;
- the impact of acquisitions,
divestitures, restructurings, internal reorganizations, including
the reorganization of our commercial operations into three
businesses effective at the beginning of the company’s 2019 fiscal
year, any other corporate strategic initiatives, and cost-reduction
and productivity initiatives, each of which requires upfront costs
but may fail to yield anticipated benefits and may result in
unexpected costs or organizational disruption;
- the impact of product recalls,
withdrawals and other unusual items;
- the risk of an impairment charge
related to our intangible assets, goodwill or equity-method
investments;
- risks related to internal control over
financial reporting;
- risks and uncertainties related to
acquisitions, including, among other things, the ability to realize
the anticipated benefits of those acquisitions, including the
possibility that the expected cost savings and/or accretion from
certain of those acquisitions will not be realized or will not be
realized within the expected time frame; the risk that the
businesses will not be integrated successfully; disruption from the
transactions making it more difficult to maintain business and
operational relationships; risks related to our ability to grow
revenues for certain acquired products; significant transaction
costs; and unknown liabilities; and
- risks and uncertainties related to our
proposed transaction with GSK to combine our respective consumer
healthcare businesses into a new consumer healthcare joint venture,
including, among other things, risks related to the satisfaction of
the conditions to closing the transaction (including the failure to
obtain necessary regulatory and GSK shareholder approvals) in the
anticipated timeframe or at all and the possibility that the
transaction does not close, risks related to the ability to realize
the anticipated benefits of the transaction, including the
possibility that the expected benefits and cost synergies from the
proposed transaction will not be realized or will not be realized
within the expected time period, the risk that the businesses will
not be integrated successfully, the possibility that a future
separation of the joint venture may not occur, disruption from the
transaction making it more difficult to maintain business and
operational relationships, negative effects of the announcement or
the consummation of the proposed transaction on the market price of
Pfizer’s common stock and on Pfizer’s operating results,
significant transaction costs, unknown liabilities, the risk of
litigation and/or regulatory actions related to the proposed
transaction, other business effects, including the effects of
industry, market, economic, political or regulatory conditions,
future exchange and interest rates, changes in tax and other laws,
regulations, rates and policies, future business combinations or
disposals and competitive developments.
We cannot guarantee that any forward-looking statement will be
realized. Achievement of anticipated results is subject to
substantial risks, uncertainties and inaccurate assumptions. Should
known or unknown risks or uncertainties materialize or should
underlying assumptions prove inaccurate, actual results could vary
materially from past results and those anticipated, estimated or
projected. Investors should bear this in mind as they consider
forward-looking statements, and are cautioned not to put undue
reliance on forward-looking statements. A further list and
description of risks, uncertainties and other matters can be found
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2018 and in our subsequent reports on Form 10-Q,
in each case including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future
Results” and “Item 1A. Risk Factors”, and in our subsequent reports
on Form 8-K.
The operating segment information provided in this earnings
release and the related attachments does not purport to represent
the revenues, costs and income from continuing operations before
provision for taxes on income that each of our operating segments
would have recorded had each segment operated as a standalone
company during the periods presented.
This earnings release may include discussion of certain clinical
studies relating to various in-line products and/or product
candidates. These studies typically are part of a larger body of
clinical data relating to such products or product candidates, and
the discussion herein should be considered in the context of the
larger body of data. In addition, clinical trial data are subject
to differing interpretations, and, even when we view data as
sufficient to support the safety and/or effectiveness of a product
candidate or a new indication for an in-line product, regulatory
authorities may not share our views and may require additional data
or may deny approval altogether.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190430005196/en/
MediaJoan Campion
212.733.2798InvestorsChuck Triano 212.733.3901Ryan
Crowe 212.733.8160Bryan Dunn 212.733.8917
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