- Third-Quarter 2018 Revenues of $13.3
Billion, Reflecting 2% Operational Growth
- Third-Quarter 2018 Reported Diluted
EPS(1) of $0.69, Adjusted Diluted EPS(2) of $0.78
- Narrowed Certain 2018 Financial
Guidance Ranges; Midpoint of Updated Adjusted Diluted EPS(2)
Guidance Range of $2.98 to $3.02 is Unchanged from July 2018
- Repurchased $1.1 Billion of Common
Stock in Third-Quarter 2018 and $9.0 Billion to Date in 2018; Now
Expect to Repurchase Approximately $12 Billion of Shares in
2018
Pfizer Inc. (NYSE:PFE) reported financial results for
third-quarter 2018 and narrowed certain 2018 financial guidance
ranges.
Results for the third quarter and first nine months of 2018 and
2017(3) are summarized below.
OVERALL RESULTS
($ in millions, except
per share amounts)
Third-Quarter Nine Months 2018 2017
Change 2018 2017 Change Revenues $ 13,298
$ 13,168 1% $ 39,670 $
38,843 2% Reported Net Income(1) 4,114 2,840 45% 11,546
9,034 28% Reported Diluted EPS(1) 0.69 0.47 46% 1.92 1.49 29%
Adjusted Income(2) 4,661 4,059 15% 14,156 12,313 15% Adjusted
Diluted EPS(2) 0.78 0.67 16% 2.36 2.03 16%
REVENUES
($ in millions)
Third-Quarter
Nine Months
2018
2017
% Change
2018
2017
% Change
Total
Oper.
Total
Oper.
Innovative Health $ 8,471 $ 8,118 4%
5% $ 24,573 $ 23,204 6%
4% Essential Health 4,826 5,050
(4%) (4%)
15,097 15,639
(3%)
(6%)
Total Company $
13,298 $ 13,168
1% 2% $
39,670 $ 38,843
2% —
On February 3, 2017, Pfizer completed the sale of its global
infusion therapy net assets, Hospira Infusion Systems (HIS).
Therefore, financial results for the first nine months of 2018 do
not reflect any contribution from legacy HIS operations, while the
first nine months of 2017 reflect approximately one month of legacy
HIS domestic operations and approximately two months of legacy HIS
international operations(3).
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(4).
2018 FINANCIAL GUIDANCE(5)
Pfizer’s updated 2018 financial guidance is presented below.
The guidance range for Revenues was narrowed from a range of
$53.0 to $55.0 billion to a range of $53.0 to $53.7 billion,
primarily reflecting:
- lower-than-anticipated Essential Health
revenues, primarily due to continued legacy Hospira Sterile
Injectable Pharmaceuticals (SIP) product shortages in the U.S.;
and
- recent unfavorable changes in foreign
exchange rates in relation to the U.S. dollar from mid-July 2018 to
mid-October 2018, primarily the weakening of certain emerging
markets currencies and the euro.
Revenues
$53.0 to $53.7 billion
(previously $53.0 to $55.0 billion) Adjusted Cost of
Sales(2) as a Percentage of Revenues 20.8% to 21.3%
(previously 20.5% to 21.5%) Adjusted SI&A Expenses(2) $14.0 to
$14.5 billion (previously $14.0 to $15.0 billion) Adjusted
R&D Expenses(2) $7.7 to $8.1 billion Adjusted Other
(Income)/Deductions(2) Approximately $1.3 billion of income
(previously approximately $1.0 billion of income) Effective Tax
Rate on Adjusted Income(2),(6) Approximately 16.0% Adjusted
Diluted EPS(2) $2.98 to $3.02 (previously $2.95 to $3.05)
Financial guidance for Adjusted diluted EPS(2) reflects
anticipated share repurchases totaling approximately $12 billion in
2018, including $9.0 billion of share repurchases already completed
to date in 2018. Dilution related to share-based employee
compensation programs is expected to offset the reduction in shares
associated with these share repurchases by approximately half.
CAPITAL ALLOCATION
- During the first nine months of 2018,
Pfizer returned $13.2 billion directly to shareholders, through a
combination of:
- $6.0 billion of dividends, composed of
$0.34 per share of common stock in each of the first, second and
third quarters of 2018; and
- $7.2 billion of share repurchases,
composed of $3.2 billion of open-market share repurchases and a
$4.0 billion accelerated share repurchase agreement executed in
March 2018 and completed in September 2018.
- As of October 30, 2018, Pfizer’s
remaining share repurchase authorization was $7.4 billion.
EXECUTIVE COMMENTARY
Ian Read, Chairman and Chief Executive Officer, stated, “We
reported solid third-quarter 2018 financial results, with total
company revenues up 2% operationally, driven by the continued
growth of key brands such as Eliquis, Ibrance, Prevnar 13, Xeljanz
and Xtandi, as well as biosimilars and emerging markets. The
performance of these growth drivers was partially offset by product
losses of exclusivity, a decline in Legacy Established Products in
developed markets and ongoing legacy Hospira sterile injectable
supply shortages.
“We believe we are well-positioned to develop and commercialize
differentiated new medicines, creating sustainable value for
shareholders and patients. Our new organizational structure allows
us to focus on maximizing the opportunity of our in-market
products, advancing key pipeline programs and accelerating growth
in emerging markets.
“Earlier this month, we announced that Albert Bourla will
succeed me as CEO starting in January 2019. Albert’s extensive
knowledge of our business, firm grasp of the issues, and deep
caring for patients will help Pfizer continue to build on the
outstanding foundation we have put in place. I am confident that he
is implementing a structure and building a leadership team that
will maximize the company’s growth opportunities,” Mr. Read
concluded.
Frank D’Amelio, Executive Vice President, Business Operations
and Chief Financial Officer, stated, “I am pleased with our results
over the first nine months of 2018, which keep us on track to
deliver a solid financial performance this year. We updated our
2018 financial guidance to reflect our performance to date as well
as our outlook for the remainder of the year. Importantly, the
midpoint of our guidance range for Adjusted diluted EPS(2), which
implies 13% growth compared to last year, is unchanged from our
July 2018 guidance update. Additionally, to date in 2018, we
returned $15.0 billion directly to shareholders through dividends
and share repurchases, demonstrating our continued commitment to
returning capital to our shareholders.”
QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2018 vs.
Third-Quarter 2017)
Third-quarter 2018 revenues totaled $13.3 billion, an increase
of $130 million, or 1%, compared to the prior-year quarter,
reflecting operational growth of $243 million, or 2%, partially
offset by the unfavorable impact of foreign exchange of $113
million, or 1%.
Innovative Health (IH) Highlights
Essential Health (EH) Highlights
GAAP Reported(1) Income Statement
Highlights
SELECTED TOTAL COMPANY REPORTED COSTS
AND EXPENSES(1)
($ in millions)
(Favorable)/Unfavorable
Third-Quarter
Nine Months
2018
2017
% Change
2018
2017
% Change
Total
Oper.
Total
Oper.
Cost of Sales(1) $ 2,694 $ 2,844 (5%)
2% $ 8,173 $ 7,972 3% 1%
Percent of Revenues 20.3 % 21.6 % N/A N/A 20.6 % 20.5 % N/A N/A
SI&A Expenses(1) 3,494 3,504 — — 10,448 10,249
2%
— R&D Expenses(1) 2,008
1,865 8% 8%
5,549 5,367
3% 3%
Total $
8,197 $ 8,213
— 3%
$ 24,170 $
23,588 2%
1% Other (Income)/Deductions––net(1) ($414 ) $
79 * * ($1,143 ) $ 65 * * Effective Tax Rate on Reported
Income(1),(6) 1.6 % 20.3
%
9.9 % 20.1 %
* Indicates calculation not meaningful or result is equal to or
greater than 100%.
Pfizer recorded other income––net(1) in third-quarter 2018
compared with other deductions––net(1) in the prior-year quarter,
primarily due to:
- a non-cash gain associated with a
transaction with Bain Capital Private Equity and Bain Capital Life
Sciences to create a new biopharmaceutical company, Cerevel
Therapeutics, LLC, to continue development of a portfolio of
clinical and preclinical stage neuroscience assets primarily
targeting disorders of the central nervous system;
- lower charges for certain legal
matters; and
- lower asset impairment charges.
Pfizer’s effective tax rate on Reported income(1) for
third-quarter 2018 was favorably impacted by:
- the adoption of a territorial tax
system and the lower U.S. tax rate as a result of the December 2017
enactment of the TCJA(6), as well as favorable adjustments to the
provisional estimate of the legislation;
- the favorable change in the
jurisdictional mix of earnings as a result of operating
fluctuations in the normal course of business; and
- an increase in benefits associated with
the resolution of certain tax positions pertaining to prior years
primarily with various foreign tax authorities, and the expiration
of certain statutes of limitations.
Adjusted(2) Income Statement Highlights
SELECTED TOTAL COMPANY ADJUSTED COSTS
AND EXPENSES(2)
($ in millions)
(Favorable)/Unfavorable
Third-Quarter
Nine Months
2018
2017
% Change
2018
2017
% Change
Total
Oper.
Total
Oper.
Adjusted Cost of Sales(2) $ 2,673 $ 2,696 (1%)
7% $ 8,086 $ 7,720 5%
3% Percent of Revenues 20.1 % 20.5 % N/A N/A 20.4 % 19.9 %
N/A N/A Adjusted SI&A Expenses(2) 3,471 3,482 — — 10,264 10,167
1% (1%) Adjusted R&D Expenses(2) 1,998
1,857 8%
8% 5,526
5,348 3% 3%
Total $ 8,143 $
8,036 1%
4% $ 23,876
$ 23,235 3%
1% Adjusted Other
(Income)/Deductions––net(2) ($302 ) ($268 ) 13% 34% ($1,143 ) ($547
) * * Effective Tax Rate on Adjusted Income(2),(6)
13.3 % 23.7 %
15.2
% 22.9 %
* Indicates calculation not meaningful or result is equal to or
greater than 100%.
Pfizer’s effective tax rate on Adjusted income(2) for
third-quarter 2018 was favorably impacted by the aforementioned
December 2017 enactment of the TCJA(6).
Third-quarter 2018 diluted weighted-average shares outstanding
used to calculate Reported(1) and Adjusted(2) diluted EPS declined
by 54 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, 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 22
of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since July 31,
2018)
Product Developments
- Ibrance (palbociclib) -- In
October 2018, Pfizer announced detailed overall survival (OS) data
from the PALOMA-3 trial, which evaluated Ibrance in combination
with fulvestrant compared to placebo plus fulvestrant in women with
hormone receptor-positive (HR+), human epidermal growth factor
receptor 2-negative (HER2-) metastatic breast cancer whose disease
progressed on or after prior endocrine therapy. In the study, there
was a numerical improvement in OS of nearly seven months with
Ibrance plus fulvestrant compared to placebo plus fulvestrant
(median OS: 34.9 months [95% CI: 28.8, 40.0] versus 28.0 months
[95% CI: 23.6, 34.6]), although this difference did not reach the
pre-specified threshold for statistical significance (HR=0.814; 95%
CI: 0.644, 1.029; 1-sided p=0.0429). These data were presented as a
late-breaking oral abstract during the Presidential Symposium at
the 2018 Congress of the European Society for Medical Oncology and
simultaneously published in The New England Journal of Medicine
(NEJM). The difference in OS demonstrated in this analysis (6.9
months) is consistent with the improvement previously demonstrated
for the primary endpoint of progression-free survival (PFS) in
PALOMA-3. In the updated, non-pre-specified PFS analysis, the
combination of Ibrance plus fulvestrant showed a statistically
significant and clinically meaningful 6.6-month PFS improvement
compared to placebo plus fulvestrant (11.2 vs. 4.6 months; HR=0.50
[95% CI, 0.40-0.62]; P<0.0001).
- Lyrica (pregabalin) -- In August
2018, Pfizer completed its submission to the U.S. Food and Drug
Administration (FDA) seeking pediatric exclusivity for Lyrica.
Pfizer anticipates a decision from the FDA by December 30, 2018,
the current anticipated loss of market exclusivity date. If
granted, pediatric exclusivity would extend the period of U.S.
market exclusivity for Lyrica by an additional six months, to June
30, 2019.
- Talzenna (talazoparib) -- In
October 2018, Pfizer announced that the FDA approved Talzenna, a
once-daily, oral poly ADP ribose polymerase inhibitor for the
treatment of adult patients with deleterious or suspected
deleterious germline BRCA-mutated, HER2- locally advanced or
metastatic breast cancer. Patients are selected for therapy based
on an FDA-approved companion diagnostic.
- Vizimpro (dacomitinib) -- In
September 2018, Pfizer announced that the FDA approved Vizimpro, a
kinase inhibitor for the first-line treatment of patients with
metastatic non-small cell lung cancer with epidermal growth factor
receptor exon 19 deletion or exon 21 L858R substitution mutations
as detected by an FDA-approved test.
- Vyndaqel (tafamidis)
- In September 2018, Pfizer announced
that additional sensitivity and post-hoc analyses from the Phase 3
Transthyretin Amyloid Cardiomyopathy (ATTR-ACT) study provide
further detail on the effect of tafamidis across wild-type,
hereditary, and New York Heart Association (NYHA) class sub-groups
of patients with transthyretin amyloid cardiomyopathy (ATTR-CM).
Tafamidis reduced the risk of all-cause mortality across all
sub-groups (wild-type, hereditary and NYHA I, II and III functional
class) versus placebo. This included a 29% and 31% reduction in the
risk of death observed in wild-type (HR 0.71; 95% CI [0.474,
1.052]) and hereditary (HR 0.69; 95% CI [0.408,1.167]) sub-groups,
respectively. The findings were presented during the Heart Failure
Society of America Annual Scientific Meeting.
- In August 2018, Pfizer announced the
primary results from the ATTR-ACT study, which showed tafamidis
significantly reduced the hierarchical combination of both
all-cause mortality and frequency of cardiovascular-related
hospitalizations compared to placebo over a 30-month period
(P=0.0006) in patients with wild-type or variant (hereditary)
ATTR-CM. The ATTR-ACT study showed tafamidis significantly reduced
all-cause mortality (29.5% vs. 42.9%; hazard ratio = 0.70, 95%
confidence interval [CI] 0.51-0.96, P=0.0259) and
cardiovascular-related hospitalizations (0.48 vs 0.70 annualized
rate; relative risk ratio = 0.68, 95% CI 0.56-0.81, P<0.0001),
compared to placebo. This represents a 30% reduction in the risk of
mortality and 32% reduction in the rate of cardiovascular-related
hospitalization. The late-breaking findings were presented during
the European Society of Cardiology Congress 2018 and simultaneously
published online in NEJM. The NEJM manuscript, titled “Tafamidis
Treatment for Patients with Transthyretin Amyloid Cardiomyopathy,”
was also published in the September 13 printed issue of NEJM.
- Xeljanz (tofacitinib) -- In
August 2018, Pfizer announced that the European Commission (EC)
approved Xeljanz 10 mg twice-daily (BID) for at least eight weeks,
followed by Xeljanz 5 mg BID or 10 mg BID, for the treatment of
adult patients with moderately to severely active ulcerative
colitis (UC) who have had an inadequate response, lost response, or
were intolerant to either conventional therapy or a biologic agent.
Xeljanz is the first and only oral therapy and Janus kinase (JAK)
inhibitor to be approved for this patient population. In approving
Xeljanz for UC, the European Medicines Agency’s Committee for Human
Medicinal Products has, as part of its assessment, determined
Xeljanz to be of significant clinical benefit for patients with UC
in comparison with existing therapies.
- Xtandi (enzalutamide)
- In October 2018, the EC approved Xtandi
for the treatment of adult men with high-risk non-metastatic CRPC.
Xtandi was previously approved by the EC for the treatment of adult
men with metastatic CRPC.
- In August 2018, Pfizer and Astellas
announced amendments to the protocols for two registrational Phase
3 trials, ARCHES and EMBARK, designed to evaluate the safety and
efficacy of Xtandi in men with hormone-sensitive prostate cancer.
These amendments accelerate timelines for the anticipated primary
completion dates of both trials. Changes to the ARCHES protocol
include revision of the planned analyses of the primary and
secondary endpoints. Enrollment was completed earlier this year.
The companies now anticipate the primary completion date for the
ARCHES clinical trial to be in late 2018. The previously expected
primary completion date was April 2020. The main purpose of the
amendment to the EMBARK protocol is to revise the planned analyses
of the primary and several secondary endpoints, which reduced the
target sample size. Enrollment was completed earlier this year.
With these changes, the estimated primary completion date for the
EMBARK clinical trial is mid-2020. Previously, the expected primary
completion date for EMBARK was March 2021.
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.
- Domagrozumab (PF-06252616) -- In
August 2018, Pfizer announced that it is terminating two ongoing
clinical studies evaluating domagrozumab for the treatment of
Duchenne muscular dystrophy (DMD): a Phase 2 safety and efficacy
study (B5161002) and an open-label extension study (B5161004). The
Phase 2 study (B5161002) did not meet its primary efficacy
endpoint, which was to demonstrate a difference in the mean change
from baseline in 4 Stair Climb (in seconds) following one year of
treatment with domagrozumab as compared to placebo in patients with
DMD. Further evaluation of the totality of evidence including
secondary endpoints did not support a significant treatment effect.
The decision comes after a thorough review of data available at the
time of the primary analysis, which evaluated all study
participants after one year of treatment, as well as those
participants who were in the trial beyond one year. The studies
were not terminated for safety reasons. Pfizer will continue to
review the data to better understand any insights they may provide,
and will share results with the scientific and patient
community.
- PF-05280014 (proposed biosimilar
trastuzumab) -- In October 2018, the FDA acknowledged for
review a Biologics License Application (BLA) resubmission for
PF-05280014, a proposed biosimilar to Herceptin(7). This
resubmission addressed information requested by the FDA in an April
2018 Complete Response Letter. The expected Biosimilar User Fee Act
(BsUFA) goal date for a decision by the FDA is in first-quarter
2019. In July 2018, Pfizer announced that the EC approved
Trazimera, the brand name for PF-05280014 in Europe.
- PF-05280586 (proposed biosimilar
rituximab) -- In September 2018, the FDA accepted for review a
BLA for PF-05280586, a proposed biosimilar to Rituxan/MabThera(8).
The BsUFA goal date for a decision by the FDA is in third-quarter
2019.
- PF-06439535 (proposed biosimilar
bevacizumab) -- In August 2018, the FDA accepted for review a
BLA for PF-06439535, a proposed biosimilar to Avastin(9). The BsUFA
goal date for a decision by the FDA is in second-quarter 2019.
- PF-06482077 -- In September
2018, Pfizer announced that its 20-Valent Pneumococcal Conjugate
Vaccine (20vPnC) candidate, PF-06482077, received Breakthrough
Therapy designation from the FDA for the prevention of invasive
disease and pneumonia caused by Streptococcus pneumoniae serotypes
in the vaccine in adults aged 18 years and older. Pfizer expects to
start Phase 3 trials in a few months.
- PF-06651600
- In September 2018, Pfizer announced
results from its Phase 2a study of PF-06651600, an oral JAK3
inhibitor, and PF-06700841, a tyrosine kinase (TYK) 2/JAK1
inhibitor, compared to placebo, in patients with moderate to severe
alopecia areata (AA), an autoimmune disease characterized by hair
loss and often associated with profound psychological consequences.
Both JAK inhibitors met the primary efficacy endpoint in improving
hair regrowth on the scalp relative to baseline at week 24 (33.6
points and 49.5 points for JAK3 and TYK2/JAK1, respectively) as
measured by the Severity of Alopecia Tool score (100 point scale).
The findings were presented during a Late-Breaking News session at
the European Academy of Dermatology and Venereology Congress. Based
on the totality of the data and the emerging clinical profiles,
Pfizer decided to advance PF-06651600 to the next phase of
development for moderate to severe AA and will continue to be
evaluated for rheumatoid arthritis, Crohn’s disease (CD) and UC.
PF-06700841 will continue to be evaluated for psoriasis, CD and
UC.
- In September 2018, Pfizer announced
PF-06651600 received Breakthrough Therapy designation from the FDA
for the treatment of patients with AA.
- Tanezumab (PF-4383119, RN624) --
In October 2018, Pfizer and Eli Lilly and Company (Lilly) presented
results from a Phase 3 study evaluating the efficacy and safety of
subcutaneous administration of tanezumab, an investigational
humanized monoclonal antibody, in patients with osteoarthritis (OA)
pain treated for 16 weeks. The study met all three co-primary
efficacy endpoints, demonstrating that among patients with
moderate-to-severe OA pain of the knee or hip, both dosing regimens
of tanezumab were associated with a statistically significant
improvement in pain, physical function and patient’s global
assessment of their OA, compared to placebo.The Phase 3 OA study
evaluated changes from baseline to 16 weeks for three co-primary
efficacy endpoints of pain intensity and physical function,
assessed using the Western Ontario and McMaster Universities
Osteoarthritis Index subscale and patient’s overall assessment of
their OA. At 16 weeks of treatment, patients receiving tanezumab
reported significantly greater pain relief compared to those taking
placebo, with more than half of patients reporting a reduction in
their pain of 50% or more, and approximately 35% reporting a 70% or
greater improvement.Tanezumab was generally well tolerated, with
0.4% and 1.3% of patients in the tanezumab 2.5 mg and 2.5/5 mg
arms, respectively, discontinuing treatment due to adverse events
(AEs); 1.3% of patients in the placebo arm discontinued treatment
due to AEs. No cases of osteonecrosis were observed in the study.
Rapidly progressive osteoarthritis (RPOA) was observed with
tanezumab-treated patients at a frequency of 1.3% and was not
observed in the placebo arm. The incidence of RPOA Type 1
(accelerated joint space narrowing) in the tanezumab 2.5 mg and
2.5/5 mg arms was 1.3% and 0.4%, respectively, and the incidence of
RPOA Type 2 (damage or deterioration of the joint) was 0.9% and 0%,
respectively. In the study, 3.5% and 6.9% of patients receiving
tanezumab 2.5 mg and 2.5/5 mg, respectively, had total joint
replacement surgery, compared to 1.7% receiving placebo. The
majority of surgeries (68%) took place after treatment was
completed, during or shortly after the 24-week safety follow up
period of the study. All surgeries in this study took place among
patients with more severe OA at screening (Kellgren-Lawrence grade
3-4). These data were presented during a late-breaking oral session
at the 2018 American College of Rheumatology Annual Meeting.
Corporate Developments
- In October 2018, Pfizer announced that
it entered into a non-exclusive clinical development agreement with
Novartis to investigate one or more combination therapies for the
treatment of non-alcoholic steatohepatitis (NASH). The companies
will conduct both non-clinical and Phase 1 clinical studies of
Pfizer’s investigational therapies, including an Acetyl
CoA-Carboxylase inhibitor (PF-05221304, currently in Phase 2), a
Diacylglycerol O-Acyltransferase 2 inhibitor (PF-06865571, Phase 1)
and a Ketohexokinase inhibitor (PF-06835919, Phase 2), together
with Novartis’s tropifexor, a non-bile acid, Farnesoid X receptor
agonist. With three assets in development and several
first-in-class pre-clinical candidates under investigation, Pfizer
is building a robust NASH program, which was entirely developed
in-house and targets NASH through multiple, diverse pathways of the
disease. The collaboration with Novartis helps Pfizer to explore
combination approaches at an early stage.
- In October 2018, Bain Capital, LP and
Pfizer announced the creation of Cerevel Therapeutics, LLC
(Cerevel), a new biopharmaceutical company focused on developing
drug candidates to treat disorders of the central nervous system
(CNS). Pfizer is contributing a portfolio of pre-commercial
neuroscience assets to Cerevel, which include three clinical-stage
compounds and several pre-clinical compounds designed to target a
broad range of CNS disorders including Parkinson’s, Alzheimer’s,
epilepsy, schizophrenia and addiction. Funds affiliated with Bain
Capital Private Equity and Bain Capital Life Sciences have
committed $350 million with the ability to provide additional
capital should it be needed in the future. Bain Capital and Pfizer
will support Cerevel in building a dedicated team of CNS scientists
and life sciences executives with extensive experience in clinical
development of potential therapies for patients who have
neurological and neuropsychological diseases. The most advanced
assets in the portfolio are a D1 partial agonist which will likely
enter Phase 3 in 2019 to treat the symptoms of Parkinson’s disease,
and a Phase 2 ready selective GABA 2/3 agonist which will initially
be studied for epilepsy. The company also has active programs in
early development, discovery and a research program in
neuroinflammation. Pfizer felt that placing this set of
neuroscience assets, after its decision to curtail research within
the area, in a company with dedicated focus and expertise in CNS
was the optimal next step. Pfizer will retain a 25% equity position
in Cerevel. Two senior Pfizer executives, Morris Birnbaum, MD, PhD,
Senior Vice President, Chief Scientific Officer of Internal
Medicine, and Doug Giordano, Senior Vice President of Worldwide
Business Development will serve on the Cerevel Board of Directors,
along with Adam Koppel and Chris Gordon, Managing Directors of Bain
Capital. The company will be based in the Greater Boston area.
- In October 2018, Pfizer announced its
Board of Directors unanimously elected Dr. Albert Bourla, Pfizer
Chief Operating Officer, to succeed Ian Read as CEO effective
January 1, 2019. Ian Read will transition from his current role as
Chairman and CEO to Executive Chairman of Pfizer’s Board of
Directors.The executive team that will report to Dr. Bourla,
coincident with the commencement of his new role, will be as
follows:
- Frank D’Amelio – Chief Financial
Officer and Executive Vice President, Global Supply and Business
Operations, will also assume the leadership for our manufacturing
operations, Pfizer Global Supply.
- Mikael Dolsten – Global President,
Worldwide Research and Development and Medical, will also assume
oversight of the Chief Medical Officer’s role.
- Michael Goettler – Global President,
Established Medicines. As previously announced, Michael will lead
the Established Medicines business that will operate as an
autonomous, stand-alone unit within Pfizer.
- Angela Hwang – Group President, Pfizer
Innovative Medicines, will become the Group President of Pfizer’s
science-based Innovative business responsible for the entire
portfolio of innovative medicines.
- Rady Johnson – Executive Vice
President, Chief Compliance, Quality and Risk Officer, will
continue in his role as the company’s Chief Compliance
Officer.
- Doug Lankler – Executive Vice
President, General Counsel, will continue in his role as the
company’s General Counsel.
- Freda Lewis-Hall – Executive Vice
President, Chief Patient Officer, will assume a new role as
Pfizer’s Chief Patient Officer, deploying the resources of the
company to advocate on behalf of all patients who rely on Pfizer to
deliver new therapies and vaccines.
- Rod MacKenzie – Executive Vice
President, Chief Development Officer, will expand his
responsibilities to include Pfizer’s regulatory affairs function in
addition to all late stage development activities.
- Dawn Rogers – Executive Vice President,
Chief Human Resources Officer, will continue to lead the Human
Resources team.
- Sally Susman – Executive Vice
President, Chief Corporate Affairs Officer, will continue to lead
the Corporate Affairs function.
- John Young – Group President, Chief
Business Officer, will assume a new role, responsible for strategy,
business development, portfolio management and valuation
activities; business analytics; global commercial operations; and
Patient and Health Impact, among others. Pfizer’s Consumer
Healthcare business will also report to John.
Additionally, given the growing strategic
importance of deploying digital technologies in research, discovery
and business processes, Pfizer is appointing a Chief Digital
Officer responsible for creating and implementing a strategy that
accelerates and improves our digital capabilities so we can deliver
more value to patients. Lidia Fonseca will join Pfizer’s Executive
Leadership Team in January 2019, as Executive Vice President, Chief
Digital and Technology Officer.
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/2018/q3/Q3-2018-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.
- 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) is defined as
diluted EPS attributable to Pfizer Inc. common shareholders in
accordance with U.S. GAAP.
- 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 or legal charges, 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 2017
Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2017,
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 (OTC)
products––prior to considering certain income statement
elements. See the accompanying reconciliations of certain GAAP
Reported to Non-GAAP Adjusted information for the third quarter and
first nine months of 2018 and 2017. 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.
- 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
third quarter and first nine months for U.S. subsidiaries reflect
the three and nine months ending on September 30, 2018 and
October 1, 2017 while Pfizer’s third quarter and first nine
months for subsidiaries operating outside the U.S. reflect the
three and nine months ending on August 26, 2018 and
August 27, 2017.
- 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.
- The 2018 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 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
September 30, 2018, including any one-time upfront payments
associated with such transactions.
- Guidance for Adjusted other
(income)/deductions(2) does not attempt to forecast unrealized net
gains or losses on equity securities. Pfizer is unable to predict
with reasonable certainty unrealized gains or losses on equity
securities in a given period. Net unrealized gains and losses on
equity securities are now recorded in Adjusted other
(income)/deductions(2) during each quarter, reflecting the adoption
of a new accounting standard in the first quarter of 2018. Prior to
the adoption of the new standard, net unrealized gains and losses
on virtually all equity securities with readily determinable fair
values were reported in Accumulated other comprehensive
income.
- Exchange rates assumed are a blend of
the actual exchange rates in effect through third-quarter 2018 and
mid-October 2018 exchange rates for the remainder of the year.
- Reflects an anticipated negative
revenue impact of $1.8 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. Assumes no
generic competition for Lyrica in the U.S. until June 2019, which
is contingent upon a six-month patent-term extension granted by the
FDA for pediatric exclusivity, which the company is currently
pursuing.
- Reflects a full year contribution from
Consumer Healthcare. Pfizer continues to expect that any decision
regarding strategic alternatives for Consumer Healthcare will be
made during 2018.
- Reflects the anticipated favorable
impact of approximately $350 million on revenues and approximately
$0.02 on Adjusted diluted EPS(2) as a result of favorable changes
in foreign exchange rates relative to the U.S. dollar compared to
foreign exchange rates from 2017.
- Guidance for Adjusted diluted EPS(2)
assumes diluted weighted-average shares outstanding of
approximately 6.0 billion shares, which reflects anticipated share
repurchases totaling approximately $12 billion in 2018, including
$9.0 billion of share repurchases already completed to date in
2018. Dilution related to share-based employee compensation
programs is expected to offset the reduction in shares associated
with these share repurchases by approximately half.
- Given the significant changes resulting
from and complexities associated with the Tax Cuts and Jobs Act
(TCJA), the estimated financial impacts associated with the TCJA
that were recorded in fourth-quarter 2017 are provisional and
subject to further analysis, interpretation and clarification of
the TCJA, which could result in further changes to these estimates
during the fourth quarter of 2018.
- Herceptin® is a registered U.S.
trademark of Genentech, Inc.
- Rituximab is marketed in the U.S. under
the brand name Rituxan® and marketed in the E.U. and other regions
under the brand name MabThera®. Rituxan® is a registered trademark
of Biogen MA Inc. MabThera® is a registered trademark of F.
Hoffman-La Roche AG.
- 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 October 30, 2018. 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, in-line
products and product candidates, including anticipated regulatory
submissions, data read-outs, study starts, approvals, performance,
timing of exclusivity and potential benefits of Pfizer’s products
and product candidates, strategic reviews, capital allocation,
business-development plans, the benefits expected from our plans to
organize our commercial operations into three businesses effective
at the beginning of the company's 2019 fiscal year, our
acquisitions and other business development activities, our ability
to successfully capitalize on growth opportunities, 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” 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 and clinical trial commencement and
completion dates, regulatory submission and approval dates, and
launch dates for product candidates, as well as the possibility of
unfavorable pre-clinical and clinical trial results, including
unfavorable new clinical data and additional analyses of existing
clinical data;
- decisions by regulatory authorities
regarding whether and when to approve our drug applications, which
will depend on the assessment by such regulatory authorities of the
benefit-risk profile suggested by the totality of the efficacy and
safety information submitted; decisions by regulatory authorities
regarding labeling, ingredients and other matters that could affect
the availability or commercial potential of our products;
uncertainties regarding our ability to address the comments
received by us from regulatory authorities such as the U.S. Food
and Drug Administration (FDA) and the European Medicines Agency
with respect to certain of our drug applications to the
satisfaction of those authorities; 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 for a
product or changes in the labeling for, and/or increased or new
concerns about the safety or efficacy of, a product that could
affect its availability or commercial potential;
- risks associated with preliminary,
early stage or interim data, including the risk that final results
of studies for which preliminary, early stage or interim data have
been provided and/or additional clinical trials may be different
from (including less favorable than) the preliminary, early stage
or interim data results and may not support further clinical
development of the applicable product candidate or indication;
- 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 other 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, debarment, injunctions or
voluntary recall of a product;
- 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 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; the importation of prescription drugs from outside
the U.S. at prices that are regulated by governments of various
foreign countries; restrictions on 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, 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 recently passed Tax
Cuts and Jobs Act;
- 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 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
our plans to organize our commercial operations into three
businesses effective at the beginning of the company’s 2019 fiscal
year, 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 our
acquisitions of Hospira, Inc. (Hospira), Anacor Pharmaceuticals,
Inc. (Anacor), Medivation, Inc. (Medivation) and AstraZeneca’s
small molecule anti-infectives business, including, among other
things, the ability to realize the anticipated benefits of those
acquisitions, including the possibility that expected cost savings
related to the acquisition of Hospira and accretion related to the
acquisitions of Hospira, Anacor and Medivation 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 Xtandi; significant transaction costs; and unknown
liabilities; and
- risks and uncertainties related to our
evaluation of strategic alternatives for our Consumer Healthcare
business, including, among other things, the ability to realize the
anticipated benefits of any strategic alternatives we may pursue
for our Consumer Healthcare business, the potential for disruption
to our business and diversion of management’s attention from other
aspects of our business, the possibility that such strategic
alternatives will not be completed on terms that are advantageous
to Pfizer, the possibility that we may be unable to realize a
higher value for Pfizer Consumer Healthcare through strategic
alternatives, and unknown liabilities.
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, 2017 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/20181030005339/en/
Pfizer Inc.MediaJoan Campion,
212.733.2798orInvestorsChuck Triano, 212.733.3901Ryan
Crowe, 212.733.8160Bryan Dunn, 212.733.8917
Pfizer (NYSE:PFE)
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