Pfizer posts big 2Q profit jump, announces deal with Mylan
Pfizer is spinning off a big chunk of the company, culminating a rare tear of major deals aimed at reshaping the drugmaker into a slimmed-down version with faster, more-sustainable growth.
The biggest U.S.-based drugmaker announced the latest move on Monday — combining its Upjohn business, which sells off-patent former blockbuster drugs, with generic drugmaker Mylan into a new company to be created next year — as it reported a 30% jump in second-quarter profits.
“These are deliberate steps that we are taking to make Pfizer a very different company,” new Chief Executive Dr. Albert Bourla told analysts during a conference call to discuss the Mylan deal and the latest financial results.
Among Pfizer’s steps since January are the just-completed acquisition of biotech company Therachon Holding AG, to gain an experimental drug that could be the first treatment for a type of dwarfism called achondroplasia; the pending $11.4 billion acquisition of Array BioPharma Inc., which sells two melanoma drugs and is developing additional medicines for cancer and other conditions with limited treatments; and the Aug. 1 start of a joint venture combining Pfizer’s consumer health products with those of British drugmaker GlaxoSmithKline Plc.
Bourla, formerly Pfizer’s chief operating officer until he took over as CEO in January, said in an interview that as he prepared for the promotion over the prior year, he helped put all those moves in motion while developing Pfizer’s strategy for the next decade along with predecessor Ian Read.
Pfizer just created the Upjohn business at the beginning of this year, by peeling off carefully selected off-patent drugs that were part of Pfizer’s established products division. Upjohn now sells many of Pfizer’s greatest hits from the past quarter-century that have generic competition but still sell well in many countries: Viagra, painkillers Celebrex and Lyrica, Norvasc for high blood pressure, Effexor for severe heartburn, Xanax for anxiety and Zoloft for depression. Those drugs contributed about 23% of Pfizer’s total sales last year.
“We believe that this transaction checks all the boxes,” Bourla said, by setting up a new company with an attractive dividend, strong management, and a huge portfolio and network of factories around the world.
He added that Mylan has limited presence in the huge China market, while Pfizer has about 5,000 workers there, including the “best sales force” in the country, which can expand sales of Mylan products in China.
Mylan sells a broad mix of generic pills and shots for infectious diseases and heart conditions, plus the EpiPen auto-injector for stopping allergic reactions, a product Pfizer manufactures for Mylan.
Bourla said Mylan also has a strong pipeline of drugs in development, mainly complex generics that are difficult to manufacture and biosimilars, near-copies of expensive biologic drugs.
Meanwhile, Pfizer reported second-quarter net income of $5.05 billion, or 89 cents per share, up from $3.87 billion, or 65 cents per share, a year earlier. Earnings, adjusted for non-recurring gains and gains related to mergers and acquisitions, amounted to 80 cents per share in the latest quarter, 3 cents better than Wall Street analysts expected.
The New York-based drugmaker posted revenue of $13.26 billion, down 2% from $13.47 billion in the year-ago quarter.
Sales were led by Lyrica, breast cancer drug Ibrance, the Prevnar 13 vaccine against pneumococcal infections and stroke preventer Eliquis. The new Upjohn business posted revenue of $2.81 billion, down 11%. The newly organized biopharmaceuticals business, which sells Pfizer’s brand-name prescription drugs and vaccines, brought in $9.6 billion, up 2%, while the consumer health business had revenue of $862 million, down 3%.
Pfizer said it now expects full-year earnings in the range of $2.76 to $2.86 per share, down 7 cents from its prior forecast, and revenue in the range of $50.5 billion to $52.5 billion, down $1.5 billion from its earlier forecast.
Pfizer Inc. shares were down $1.15, or 2.7%, at $41.94 in afternoon trading.
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