Pfizer swings to loss due to restructuring, asset writedowns
NEW YORK (AP) — Pfizer lost $394 million in the fourth quarter as it booked billions in charges for layoffs and losses related to the acquisition of a trouble-plagued business that makes sterile injectable medicines.
Pfizer edged past Wall Street’s profit expectations, but its 2019 financial forecast was far below what analysts anticipated. Shares were under pressure in early trading, but rose 2 percent by Tuesday afternoon.
The biggest U.S. drugmaker posted a $12.3 billion profit in the same period last year thanks to a $10.7 billion benefit from the U.S. tax overhaul.
Tuesday’s weak forecast, the first under new Chief Executive Albert Bourla, caught some off guard after Pfizer’s impressive streak of getting four new cancer drugs, all likely billion-dollar sellers, approved in the final 14 weeks of last year.
Bourla said in an interview that Pfizer’s revenue will return to growth starting in 2021, driven by its cancer treatment franchise, drugs including stroke-preventer Eliquis and Xeljanz for rheumatoid arthritis and colitis, and anticipated approvals of new vaccines and a non-opioid pain reliever targeting roughly 50 million Americans with chronic back pain and osteoarthritis.
Bourla said drug price increases, which have brought Pfizer intense criticism along with billions in extra revenue, will no longer drive growth. He expects net drug prices — what Pfizer receives after discounts and rebates to insurers — to be down about 1 percent in the U.S. this year. The list price increases Pfizer took on about 40 medicines earlier this month were 5 percent or less, well below Pfizer’s typical levels.
Given Pfizer’s strong pipeline of new drugs growth will accelerate, wrote Edward Jones analyst Ashtyn Edwards, adding, “Pfizer has the financial flexibility to add to its pipeline through both internal drug development and acquisitions.”
The maker of Viagra and nerve pain treatment Lyrica said it expects full-year earnings in the range of $2.82 to $2.92 per share. Industry analysts had expected $3.04.
The company is projecting revenue of between $52 billion and $54 billion, also short of the $54.3 billion Wall Street had anticipated.
Pfizer expects competition from cheaper generics to cut revenue by $2.6 billion this year, partly because Lyrica, a top seller, gets U.S. generic competition on July 1, cutting into the $5 billion it brought in last year.
Meanwhile, Pfizer has been struggling to upgrade sterile injectable drug factories it bought from Hospira in September 2015. Those sites were in such bad shape that repairs are still ongoing. Production shutdowns have reduced sales and caused lingering nationwide shortages of crucial injected painkillers, antibiotics and other medicines needed by hospitals.
Chief Financial Officer Frank D’Amelio said he expects supply issues to be mostly resolved early next year.
The New York company lost 7 cents per share in the latest quarter. Adjusted for all the one-time charges, earnings amounted to 64 cents per share, a penny better than expected.
Pfizer posted revenue of $13.98 billion in the quarter, up 2 percent.
Sales of cancer drugs jumped 27 percent to $1.91 billion. Pfizer, known for drugs for the masses like Viagra, cholesterol fighter Lipitor and pain reliever Celebrex, didn’t get its first cancer drug — kidney and stomach cancer medicine Sutent — approved until 2006. Now Pfizer sells 17 cancer drugs.
Eliquis sales jumped 28 percent to $910 million, while sales of Prevnar 13, a vaccine against pneumococcal infections, dipped 1 percent, to $1.5 billion.
Sales of consumer health products such as ChapStick and Centrum vitamins rose 3 percent to $974 million. Pfizer is forming a joint venture combining that business with GlaxoSmithKline’s consumer business.
For all of 2018, Pfizer Inc. reported sales of $53.65 billion, up 2 percent from a year earlier, and net income of $11.15 billion, or $1.87 per share.
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