The following excerpt is from the company's
SEC filing.
and Reported Diluted EPS
, Which Includes One Month of Legacy Hospira U.S. Operations
Third-Quarter
Reported Revenues
for Pfizer-Standalone (Excluding Legacy Hospira) Increased
Operationally; Innovative Products Business Grew
Operationally, Primarily Driven by Prevnar 13 Adult and
Ibrance
Raised Midpoint of 2015 Financial Guidance Ranges for Reported
Revenues
Billion and Adjusted Diluted EPS
, Primarily Reflecting Strong Performance to Date and Improved
Business Outlook
NEW YORK, N.Y.,
Tuesday, October 27, 2015
– Pfizer Inc . (NYSE: PFE) reported financial results for
third-quarter
and announced increases to the midpoints of its 2015 financial
guidance ranges for reported revenues
and adjusted diluted EPS
On September 3, 2015, Pfizer acquired Hospira, Inc. (Hospira).
Consequently, and in accordance with Pfizer's domestic and
international reporting periods
, financial results for third-quarter 2015 and the nine months
ended September 27, 2015 reflect Pfizer's operations as well as one
month of legacy Hospira U.S. operations but do not include any
financial results from legacy Hospira international operations.
The company manages its commercial operations through two
distinct businesses: an Innovative Products business and an
Established Products business. The Innovative Products business is
composed of two operating segments: the Global Innovative
Pharmaceutical segment (GIP)
and the Global Vaccines, Oncology and Consumer Healthcare
segment (VOC)
. The Established Products business consists of the Global
Established Pharmaceutical segment (GEP)
, which includes all legacy Hospira commercial operations.
Financial results for each of these segments are presented in
the
Operating Segment Information
section.
Some amounts in this press release may not add due to rounding.
All percentages have been calculated using unrounded amounts.
Results for the third quarter and first nine months of 2015 and
2014 are summarized below.
OVERALL RESULTS
($ in millions, except
per share amounts)
Nine Months
Change
$ 12,087
$ 12,361
$ 34,804
$ 36,487
Adjusted Income
10,449
11,088
Reported Net Income
REVENUES
($ in millions)
% Change
$ 6,752
$ 6,001
$ 19,120
$ 17,377
10,093
10,114
Global Oncology
$ 5,219
$ 6,239
$ 15,323
$ 18,742
Standalone
14,993
* Indicates calculation not meaningful.
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES
(Favorable)/Unfavorable
Cost of Sales
$ 2,108
$ 2,244
$ 6,037
$ 6,550
Percent of Revenues
SI&A Expenses
3,276
3,299
9,726
9,804
R&D Expenses
1,725
1,788
5,334
5,114
$ 7,109
$ 7,330
$ 21,097
$ 21,468
Effective Tax Rate
2015 FINANCIAL GUIDANCE
Financial guidance ranges for reported revenues
and reported
diluted EPS were updated on September 30, 2015 solely to reflect
the anticipated impact of legacy Hospira operations in Pfizer's
financial results from September 3, 2015 through fiscal year-end
2015
The ranges for certain components of Pfizer's 2015 financial
guidance have been updated today as set forth below, primarily
reflecting the following:
operational factors impacting Pfizer-standalone (excluding
legacy Hospira) operations, including strong performance to date
coupled with an improved business outlook for the remainder of the
year;
the anticipated impact of legacy Hospira operations from
September 3, 2015 through fiscal year-end 2015
on financial guidance components other than reported
revenues
a minimal favorable impact from foreign exchange rates since
mid-July 2015.
$47.5 to $48.5 billion
(previously $46.5 to $47.5 billion)
Adjusted Cost of Sales
as a Percentage of Reported Revenues
18.7% to 19.2%
(previously 18.0% to 18.5%)
Adjusted SI&A Expenses
$13.6 to $14.1 billion
(previously $12.8 to $13.8 billion)
Adjusted R&D Expenses
$7.5 to $7.8 billion
(previously $7.3 to $7.6 billion)
Adjusted Other (Income)/Deductions
Approximately ($500 million) of income
Effective Tax Rate on Adjusted Income
Approximately 25.0%
$1.37 to $1.43
(previously $1.29 to $1.38)
$2.16 to $2.20
(previously $2.04 to $2.10)
A reconciliation of certain components of Pfizer's 2015
financial guidance provided on July 28, 2015 to Pfizer's 2015
financial guidance provided on October 27, 2015 is below.
2015 Financial Guidance Provided on July 28, 2015
$45.0 to $46.0 billion
$1.38 to $1.47
$2.01 to $2.07
Guidance Update Provided on September 30, 2015 Reflecting
Anticipated Impact of Legacy Hospira Operations from September 3,
2015 -- Midpoint of range impacted by:
$1.5 billion
($0.09)
Guidance Update Provided on October 27, 2015 Reflecting
Incremental Impact of R
estructuring Charges Associated with
the Hospira Acquisition -- Midpoint of range impacted by:
($0.02)
Guidance Update Provided on October 27, 2015 Reflecting
Operational Factors Impacting Pfizer-Standalone (excluding legacy
Hospira) Operations as well as Changes in FX Rates Since mid-July
2015 -- Midpoint of range impacted by:
$1.0 billion
2015 Financial Guidance Provided on October 27, 2015
EXECUTIVE COMMENTARY
Ian Read, Chairman and Chief Executive Officer, stated, “Our
business continues to demonstrate strength across key product lines
and geographies which has resulted in another quarter of strong
financial performance. We have been intently focused on seeking to
generate a greater portion of our earnings from increased revenues
and I see our product portfolio, product pipeline and recent
business development activity as supporting this objective.
Importantly, our research pipeline continues to advance with a
focus on therapeutic areas of high unmet need where we also have
seen advances in biology which could support the development of
potential important new therapies to further strengthen our
Innovative Products business. The recent addition of the Hospira
business nicely augments our Established Products business, which
has a strong presence in both sterile injectables and biosimilars.
Overall, I see Pfizer as well positioned both financially and
strategically to continue delivering value to patients and
shareholders.”
Frank D’Amelio, Chief Financial Officer, stated, “Overall, I am
very pleased with our financial results to date in 2015. During
third-quarter 2015, we were able to grow revenues by
operationally, excluding the impact of foreign exchange and
legacy Hospira operations, despite the continued significant
negative impact from product losses of exclusivity, primarily
Celebrex and Zyvox in the U.S. and Lyrica in certain developed
Europe markets.
“We raised our 2015 financial guidance for reported revenues
to reflect the strong performance to date of Pfizer-standalone
(excluding legacy Hospira) operations coupled with an improved
business outlook for Pfizer-standalone
for the remainder of the year. Changes in foreign exchange rates
since mid-July 2015 did not materially impact our updated guidance.
Additionally, we updated our 2015 financial guidance ranges for
adjusted cost of sales
as a percentage of reported revenues
, adjusted SI&A expenses
adjusted R&D expenses
and reported diluted EPS
to reflect the anticipated impact of legacy Hospira operations
from September 3, 2015 through fiscal year-end 2015
as well as the impact of Pfizer-standalone operations. For the
remainder of 2015 and into 2016, we expect to continue to advance
the Hospira integration while remaining focused on delivering
strong operating results.”
QUARTERLY FINANCIAL HIGHLIGHTS (
Reported revenues
decreased
$274 million
, which reflects operational growth of
$795 million
, more than offset by the unfavorable impact of foreign exchange
of
$1.1 billion
. Excluding the impact of legacy Hospira operations and foreign
exchange, Pfizer-standalone reported revenues
increased by
$465 million
operationally, or
Operational revenue growth in developed markets was driven
primarily by the performance of several key products, including
Prevnar 13 in adults, Ibrance and Eliquis -- all products that are
early in their life cycles -- as well as from Lyrica primarily in
the U.S., and the inclusion of one month of legacy Hospira U.S.
operations.
In emerging markets, revenues increased
operationally, reflecting continued strong operational growth,
primarily from the Innovative Products business.
Operational revenue growth was partially offset primarily by the
loss of exclusivity and associated generic competition for Celebrex
in the U.S., Zyvox in the U.S. and Lyrica in certain developed
Europe markets.
Innovative Products Business Highlights
Revenues for the Innovative Products business increased
operationally, reflecting the following:
primarily due to the strong operational performance of Eliquis
globally, Lyrica primarily in the U.S., Enbrel in most
international markets as well as Xeljanz and Viagra, both primarily
in the U.S.
Operational growth was partially offset by generic competition
for Rapamune in the U.S., which began in October 2014.
operationally.
Revenues in the U.S. increased
driven by continued strong uptake of Prevnar 13 among adults due
to the success of commercial programs and increased demand in
preparation for the upcoming flu season. International revenues
increased
operationally, primarily driven by Prevenar 13, which grew
operationally, primarily in emerging markets compared with the
year-ago quarter
primarily due to Nexium 24HR
in the U.S. driven by increased demand and lower revenues in
third-quarter 2014 as retailers reduced initial stocking levels
following the May 2014 launch
operationally, primarily driven by continued strong momentum
following the February 2015 U.S. launch of Ibrance for advanced
breast cancer and, to a lesser extent, stronger demand for Sutent,
Xalkori and Inlyta in most markets
Established Products Business Highlights
primarily due to the loss of exclusivity and associated launch
of multi-source generic competition for Celebrex in the U.S. in
December 2014
, for Zyvox in the U.S. beginning in first-half 2015
and for Lyrica in certain developed Europe markets beginning in
first-quarter 2015.
These declines were partially offset by the inclusion of one
month of legacy Hospira U.S. operations, which contributed
$330 million
, and growth in emerging markets, where revenues increased
Income Statement Highlights
Adjusted cost of sales
and adjusted R&D expenses
in the aggregate increased
$380 million
, reflecting the following operational factors:
higher adjusted cost of sales
, primarily reflecting the inclusion of one month of legacy
Hospira U.S. operations in
and an increase in sales volume, partially offset by a decrease
in royalty expense and manufacturing efficiencies;
higher adjusted SI&A expense
, primarily reflecting increased investments to support recently
launched products and certain other in-line products as well as the
inclusion of one month of legacy Hospira U.S. operations in
, partially offset by lower expenses associated with certain
products that have recently lost marketing exclusivity, as well as
continued benefits from cost-reduction and productivity
initiatives; and
lower adjusted R&D expense
, primarily due to the non-recurrence of upfront payments
associated with certain agreements entered into during
third-quarter 2014, partially offset by higher clinical trial spend
for certain oncology and GIP
pipeline programs as well as the inclusion of one month of
legacy Hospira U.S. operations in
The effective tax rate on adjusted income
declined
percentage point to
. This decline was primarily due to an increase in tax benefits
associated with the resolution of certain tax positions pertaining
to prior years with various foreign tax authorities, partially
offset by an unfavorable change in the jurisdictional mix of
earnings.
The diluted weighted-average shares outstanding declined by
160 million
shares compared to the prior-year quarter due to Pfizer’s share
repurchase program, including the impact of the $5 billion
accelerated share repurchase agreement executed in February 2015
and completed in July 2015.
In addition to the aforementioned factors,
reported earnings were primarily impacted by the following:
Unfavorable impacts:
higher purchase accounting adjustments, restructuring charges
and acquisition-related costs primarily associated with the
acquisition of Hospira in
higher asset impairment charges in
, including an impairment loss related to Pfizer's 49%-owned
equity-method investment with Zhejiang Hisun Pharmaceuticals Co.,
Ltd. (Hisun) in China.
Favorable impacts:
the non-recurrence of a charge incurred in the prior-year
quarter for an additional year of the Branded Prescription Drug Fee
in accordance with final regulations issued in third-quarter 2014
by the U.S. Internal Revenue Service; and
a lower effective tax rate, primarily due to an increase in tax
benefits associated with the resolution of certain tax positions
pertaining to prior years with various foreign tax authorities and
the non-recurrence in 2015 of the non-tax deductible charge for the
aforementioned additional year of the Branded Prescription Drug Fee
incurred in the prior-year quarter, partially offset by the
unfavorable change in the jurisdictional mix of earnings.
RECENT NOTABLE DEVELOPMENTS
Product Developments
Ibrance (palbociclib)
Pfizer announced in August 2015 that the European Medicines
Agency (EMA) validated for review the Marketing Authorization
Application (MAA) for palbociclib in combination with endocrine
therapy for the treatment of hormone receptor-positive, human
epidermal growth factor receptor 2-negative advanced or metastatic
breast cancer. The submission was based on the final results of the
PALOMA-1 and PALOMA-3 trials in metastatic breast cancer. Both
trials demonstrated that palbociclib in combination with an
endocrine therapy improved progression-free survival compared to
endocrine therapy alone.
Pfizer, with Alliance Foundation Trials, LLC and the Austrian
Breast & Colorectal Cancer Study Group, announced in August
2015 the launch of the Palbociclib Collaborative Adjuvant Study, or
PALLAS. This global Phase 3 clinical trial for patients with
early-stage breast cancer is being conducted in conjunction with
Breast International Group, German Breast Group, National Surgical
Adjuvant Breast and Bowel Project and PrECOG, LLC. The PALLAS trial
is designed to evaluate whether the addition of palbociclib to
standard therapy will improve disease-free survival and prevent the
disease from recurring. Approximately 4,600 people are expected to
enroll in the trial.
Trumenba (rLP2086, Meningococcal Serogroup B Bivalent
Recombinant Lipoprotein vaccine)
Pfizer announced in August 2015 positive topline results of two
Phase 3 studies of Trumenba. One study included approximately 3,600
healthy individuals 10 through 18 years of age, and the other study
included approximately 3,300 healthy individuals 18 through 25
years of age. Both studies met all primary immunogenicity
endpoints, demonstrating robust immune responses against
certain
invasive meningococcal B strains after the vaccine dose series.
Safety and tolerability data from both studies were also consistent
with data from previous studies.
Pfizer presented in October 2015 data from a randomized,
controlled Phase 2 study of Trumenba, coadministered with routine
meningococcal (groups A, C, Y and W) (MCV4) and tetanus, diphtheria
and pertussis (Tdap) vaccines in adolescents. The data, which were
released in an oral presentation at IDWeek 2015 in San Diego, are
based on a study conducted in more than 2,600 healthy individuals
10 through 12 years of age that evaluated the safety, tolerability
and immunogenicity of Trumenba when coadministered with MCV4 and
Tdap. Data demonstrated that immune responses following Trumenba,
MCV4 and Tdap vaccines given concomitantly were noninferior to
immune responses to MCV4 and Tdap alone or Trumenba alone.
Xeljanz (tofacitinib citrate)
Pfizer announced in October 2015 that it received a Complete
Response Letter from the U.S. Food and Drug Administration (FDA)
for its supplemental New Drug Application (sNDA) for Xeljanz
(tofacitinib citrate) for the treatment of adult patients with
moderate to severe chronic plaque psoriasis. The FDA's
recommendations are specific to the moderate to severe chronic
plaque psoriasis sNDA.
Pfizer regularly reviews the Xeljanz development portfolio and
recently decided not to advance indications for Crohn’s disease and
ankylosing spondylitis. Pfizer will focus its future investments
and development programs on indications for rheumatoid arthritis
(RA), psoriatic arthritis and ulcerative colitis (UC). Pfizer also
has a broad developmental portfolio of other Janus kinase (JAK)
inhibitors and new mechanisms of action in inflammation and
immunology.
Pfizer intends to re-submit a MAA to the EMA for Xeljanz for the
treatment of moderate to severe active RA by first-quarter 2016.
The re-submission will include additional safety results and
analyses requested by the Agency following the initial review and
subsequent discussions, intended to strengthen the characterization
of the benefit-risk profile.
Pfizer announced in September 2015 positive top-line results
from two of its four Phase 3 studies of Xeljanz (tofacitinib 10 mg,
twice daily tablets) for the treatment of adults with moderate to
severe UC. Both studies met their primary endpoints as measured by
the proportion of patients receiving Xeljanz in remission at week 8
compared to patients receiving placebo. No new or unexpected safety
findings for Xeljanz were observed in the studies. Detailed
analyses of these induction studies, including additional efficacy
and safety data, will be submitted for presentation at a future
scientific meeting. The two remaining studies in the Phase 3 UC
program are ongoing.
Pfizer announced in July 2015 that the FDA accepted for review
Pfizer’s new drug application (NDA) for Xeljanz 11 mg once daily
modified release tablets for the treatment of patients with
moderate to severe RA who have had an inadequate response or
intolerance to methotrexate. The FDA has provided an anticipated
Prescription Drug User Fee Act (PDUFA) action date in February
2016.
Xalkori (crizotinib)
-- In October 2015, the Committee for Medicinal Products for
Human Use (CHMP) of the EMA adopted a positive opinion recommending
extension of the current indication of Xalkori to include
first-line treatment of adults with anaplastic lymphoma kinase
(ALK)-positive advanced non-small cell lung cancer (NSCLC). The
CHMP recommendation will now be reviewed by the European
Commission, which has the authority to approve medicines for the
European Union. This recommendation is based on efficacy and safety
data from the Phase 3 PROFILE 1014 trial that supports Xalkori as a
standard of care in the first-line setting for patients with
ALK-positive advanced NSCLC. In Europe, Xalkori is currently
indicated for the treatment of adults with previously treated
ALK-positive advanced NSCLC.
Eliquis (apixaban)
Bristol-Myers Squibb Company (BMS) and Pfizer presented new data
for Eliquis at the ESC Congress 2015 in August and September 2015.
The new data reinforce the commitment of the BMS-Pfizer alliance to
the ongoing evaluation of Eliquis in both the nonvalvular atrial
fibrillation (NVAF) and venous thromboembolism patient populations.
In addition, data from the AEGEAN (Assessment of an Educational and
Guidance Programme for Eliquis Adherence in Nonvalvular Atrial
Fibrillation) study evaluating adherence among NVAF patients
further extends the BMS-Pfizer alliance’s commitment to patient
care.
BMS and Pfizer announced in September 2015 that the first
patient has been enrolled into a Phase 4 clinical trial, AUGUSTUS,
designed to evaluate the safety of Eliquis versus warfarin or other
vitamin K antagonists in patients with NVAF and a recent acute
coronary syndrome or undergoing percutaneous coronary intervention,
also known as a stent. AUGUSTUS is anticipated to enroll 4,600
patients from 30 countries, and is one of several new clinical
trials that will help provide additional information on the safe
and appropriate use of Eliquis for certain types of patients within
currently approved indications.
Pipeline Developments
A comprehensive update of Pfizer's development pipeline,
including assets from the recently-completed Hospira acquisition,
was published today and is now available at
www.pfizer.com/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 candidates from Phase 2 through registration.
Avelumab
(MSB0010718C)
Merck KGaA, Darmstadt, Germany (Merck KGaA) and Pfizer announced
in October 2015 that the FDA granted avelumab
, an investigational fully human anti-PD-L1 IgG1 monoclonal
antibody, Fast Track designation for the treatment of metastatic
Merkel cell carcinoma (MCC), a rare and aggressive type of skin
cancer. The designation relates to the clinical development program
for avelumab
in metastatic MCC, which includes the Phase 2 study, JAVELIN
Merkel 200, to assess the safety and efficacy of avelumab
in patients with metastatic MCC who have progressed after at
least one prior chemotherapy regimen.
Merck KGaA and Pfizer announced in September 2015 that the FDA
granted orphan drug designation for avelumab
for the treatment of MCC.
Merck KGaA and Pfizer presented in September 2015 data from six
studies evaluating the...
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