Earnings Preview: Pfizer to report 1Q results
Pfizer Inc., the world's top drugmaker with well over $60 billion in annual revenue, reports its first-quarter results before the stock market opens Tuesday.
WHAT TO WATCH FOR: Company executives are sure to discuss progress integrating Wyeth, which Pfizer bought in October for $68 billion. The move solidified Pfizer's position as the industry's leader and diversified it overnight from a blockbuster pillmaker to a conglomerate also making vaccines, biotech drugs and animal and consumer health products.
The combined company is cutting roughly 20,000 jobs and has pared its research programs from about 600 to 500, with its priorities including Alzheimer's disease, diabetes, pain, cancer, inflammatory disorders and mental illnesses. Investors will be hoping for updates on testing of some of those experimental drugs, looking for signs of when some might reach the market.
Executives are likely to mention that Pfizer plans 38 presentations of new research data at a big conference of top cancer specialists in early June. Those cover more than 10 experimental medicines being tested against more than 15 different types of tumors.
Meanwhile, Pfizer is one of the last major drug companies that hasn't disclosed how the health care overhaul will affect its finances. Some companies have recently forecast revenue hits in the $500 million range, driving down their stock temporarily, so investors will want to know where Pfizer stands.
Executives likely will also discuss how the launch is going for children's vaccine Prevnar 13, approved in the U.S. on Feb. 24 and in Europe on Dec. 11. Compared to the original vaccine, it protects against twice as many strains of pneumococcal disease, which causes childhood ear infections, pneumonia and meningitis. The original Prevnar is the top-selling vaccine in history, at roughly $2.8 billion in annual sales.
Federal experts have added the new Prevnar to the routine vaccine schedule, but analysts wonder whether parents will have children who got the original vaccine get shots of Prevnar 13. The four-shot series is pricey for uninsured families who don't qualify for free kids vaccines from the government: about $430 out of pocket.
Analysts will want to know Pfizer's latest plans for Sutent, approved for advanced kidney cancer and gastrointestinal cancer. This month, Pfizer halted a late-stage Sutent study early because more liver cancer patients getting it were dying or suffering serious side effects than those getting rival drug Nexavar. And in March, Pfizer said Sutent missed its main goals in two late-stage studies in patients with advanced breast cancer.
Analysts may also ask the New York company about a warning letter sent by the Food and Drug Administration this month saying Pfizer did not properly monitor physicians testing a drug for bipolar disorder on children. That could affect whether Geodon gets approved for use in children.
Earlier this month, Pfizer dodged a bullet when a jury ruled for it and against two generic drugmakers, saying a company patent is valid for severe heartburn drug Protonix, a blockbuster made by the Wyeth unit.
WHY IT MATTERS: Pfizer's performance is always a barometer for the industry. Meanwhile, analysts will want to see whether it can continue rapid, successful integration of Wyeth, given that Pfizer suffered disruptions in absorbing some prior major acquisitions in the past decade.
Investors also want to know what new drugs might be coming soon, given that cholesterol fighter Lipitor, the world's top-selling drug with roughly $12 billion in annual sales, loses patent protection after November 2011. Its sales already have been declining as cash-strapped patients try cheap generic versions of similar drugs.
Few drug companies have such a large percentage of their revenue — 25 percent — coming from one product these days, and Chief Executive Jeff Kindler has been promising that in the near future no drug will account for more than 10 percent of Pfizer revenue.
WHAT'S EXPECTED: Analysts polled by Thomson Reuters expect, on average, earnings per share of 53 cents and revenue of $16.58 billion — a big jump from a year earlier because Pfizer will have its first full quarter including revenue from Wyeth products.
LAST YEAR'S QUARTER: Pfizer reported profit of 40 cents per share on revenue of $10.87 billion.