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Pfizer (PFE) Q1 Earnings Beat, COVID Jab Sales Down as Expected
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Pfizer (PFE - Free Report) reported first-quarter 2023 adjusted earnings per share of $1.23, which beat the Zacks Consensus Estimate of $1.00 per share as well as our estimate of $1.05 per share. Earnings declined 24% year over year.
Revenues came in at $18.28 billion, down 29% from the year-ago quarter on a reported basis, reflecting an operational decline of 26% and currency headwinds of 3%. The decline, as expected, in direct sales and alliance revenues from its partner, BioNTech, for the COVID-19 vaccine, Comirnaty hurt total revenues in the quarter.
However total revenues beat the Zacks Consensus Estimate of $16.96 billion, mainly due to higher-than-expected revenues from Paxlovid, Pfizer’s oral antiviral pill for COVID.
Excluding revenues from COVID products, Comirnaty and Paxlovid, sales rose 5% operationally. Higher sales of key brands like Vyndaqel/Vyndamax globally and Eliquis in the United States were partially offset by weaker sales of Xeljanz and Ibrance globally. Newly acquired products like Nurtec ODT/Vydura for migraine and Oxbryta for sickle cell disease also contributed to the top line.
International revenues declined 37% to $9.78 billion. U.S. revenues declined 5% to $8.51 billion.
Adjusted selling, informational and administrative (SI&A) expenses rose 37% (operationally) in the quarter to $3.35 billion due to increased spending for Paxlovid, new products and recently acquired products. Adjusted R&D expenses rose 10% to $2.49 billion due to costs to develop recently acquired programs and some vaccine candidates.
Segment Discussion
Pfizer reports its revenues under three broad sub-segments of its Biopharma operating segment, Primary Care, Specialty Care and Oncology. Sales in the Primary Care segment declined 37% operationally to $11.51 billion. The Specialty Care unit recorded sales of $3.6 billion, up 8%. Sales of Oncology declined 1% to $2.86 billion.
Primary Care
In Primary Care, direct sales and alliance revenues from BioNTech for Comirnaty were $3.06 billion in the quarter, down 75% year over year. Comirnaty sales declined 86% in the United States due to lower contracted deliveries to the U.S. government. Comirnaty sales declined 73% outside U.S. markets due to lower demand and contracted deliveries. Comirnaty sales missed our estimate of $3.51 billion.
Paxlovid contributed $4.07 billion to sales in the first quarter, compared with $1.47 billion in the year-ago quarter. Paxlovid sales beat our estimate of $2.57 billion. Favorable timing of final deliveries to the U.S. government, strong demand in China due to increased COVID-19 infections and some international launches boosted Paxlovid’s sales.
Alliance revenues from Bristol-Myers (BMY - Free Report) for Eliquis and direct sales rose 7% to $1.87 billion. Continued oral anti-coagulant adoption and market share gains in non-valvular atrial fibrillation benefited alliance revenues from Bristol-Myers for Eliquis sales in the United States. However, generic competition in some international markets hurt sales. Alliance revenues from Bristol-Myers for Eliquis missed the Zacks Consensus Estimate of $1.93 billion
Global Prevnar family revenues rose 4% to $1.59 billion. The Prevnar family includes revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20 (adult). Prevnar revenues beat the Zacks Consensus Estimate of $1.45 billion.
Prevnar sales rose 6% in the United States. Prevnar revenues were flat in international markets.
Specialty Care
Rare disease drug, Vyndaqel/Vyndamax recorded sales of $686 million in the quarter, up 16% year over year but missed the Zacks Consensus Estimate of $711 million.
Xeljanz sales declined 33% to $237 million due to lower prices and prescription volumes as doctors’ prescribing patterns shifted away from JAK inhibitors following label warnings.
Enbrel revenues declined 22% to $199 million due to continued biosimilar competition in key European markets and Japan. Pfizer has exclusive rights to Amgen’s (AMGN - Free Report) blockbuster RA drug, Enbrel, outside the United States and Canada.
Amgen markets Enbrel in North America. Enbrel is Amgen’s largest product, accounting for around 30% of product sales.
Newly acquired product Nurtec ODT/Vydura contributed $167 million in the first quarter compared with $211 million in the previous quarter. Nurtec ODT/Vydura was added to Pfizer’s portfolio with the acquisition of Biohaven in 2022.
Pfizer acquired Global Blood Therapeutics in 2022, adding Oxbryta for hemolytic anemia due to sickle cell disease to its portfolio. Oxbryta generated sales of $71 million in the first quarter of 2023 compared with $73 million in the fourth quarter of 2022.
Oncology
In Oncology, Ibrance revenues declined 5% year over year to $1.14 billion. Ibrance sales in the past few quarters have been hurt due to planned price decreases in some international developed markets and a continued increase in the proportion of patients accessing Ibrance through the U.S. Patient Assistance Program. Sales missed the Zacks Consensus Estimate of $1.20 billion.
Xtandi recorded alliance revenues of $258 million in the quarter, down 4% year over year. Inlyta revenues were $259 million in the quarter, up 14%.
2023 Guidance
Pfizer maintained its previously issued financial guidance for 2023.
Revenues are expected in the range of $67.0 to $71.0 billion, indicating an operational decline of 29%-33% from the 2022 level. The Zacks Consensus Estimate for revenues is pegged $68.41 billion.
The revenue guidance includes approximately $13.5 billion in sales from Comirnaty, down 64% from the 2022 level, and Paxlovid sales of approximately $8 billion, down 58%.
Pfizer expects to launch both Comirnaty and Paxlovid products in traditional commercial markets in the United States in the second half of 2023 as the company transitions away from the government market due to lower demand.
Adjusted earnings per share are expected to be in the range of $3.25 to $3.45, implying an operational decline of 47%-50% from the 2022 level. The Zacks Consensus Estimate for earnings is pegged at $3.33 per share.
Adjusted cost of sales, as a percentage of sales, is expected in the range of 28%-30% of total revenues. Research and development expense is expected in the range of $12.4-$13.4 billion. SI&A spending is expected in the range of $13.8-$14.8 billion. Both SI&A and R&D expenses are expected to be significantly higher in 2023 versus 2022 to support the launch of potential new products as well as recently acquired assets.
Acquired IPR&D expenses are expected to be approximately $0.1 billion. The adjusted tax rate is expected to be approximately 15.0% in 2023. Adjusted other (income)/deductions are expected to be approximately $1.5 billion of income.
Our Take
Pfizer’s first-quarter results were better than expected as it beat estimates for both earnings and sales.
The stock was down slightly in pre-market trading. In the past year, Pfizer’s stock has declined 19.6% against an increase of 11.2% for the industry.
Image Source: Zacks Investment Research
Pfizer’s 2023 revenues are expected to decline due to steep expected declines in revenues from its COVID-19 products on lower demand. Pfizer expects sales of its COVID products to reach the lowest point in 2023, before potentially rising again in 2024.
The expected decline in adjusted earnings is due to lower revenues from COVID products coupled with higher spending for near-term launches and late-stage pipeline candidates.
There are concerns about Pfizer’s long-term growth drivers beyond its COVID-related products due to competitive pressure and the receding impact of the pandemic.
Nonetheless, excluding COVID-19 products, Pfizer expects its revenues to rise 7% to 9% on an operational basis in 2023.
The operational revenue growth in 2023 is expected to be driven by Pfizer’s in-line products, potential new launches like the RSV vaccine for older adults and for pregnant women as well as newly acquired products, including etrasimod for ulcerative colitis, Nurtec and zavegepant for migraine, and Oxbryta for SCD. Pfizer has the largest number of new product and indication launches planned for 2023, mostly in the second half of the year.
In March, Pfizer offered to buy cancer drugmaker, Seagen for $229 per share in cash, which adds up to a total enterprise value of approximately $43 billion.
Seagen’s acquisition is expected to strengthen Pfizer’s portfolio of cancer drugs by adding a class of antibody-drug conjugates (ADCs). Seagen currently markets four cancer drugs — Adcetris, Padcev, Tukysa and Tivdak. Pfizer expects Seagen to contribute more than $10 billion in risk-adjusted revenues in 2030. The Pfizer/Seagen transaction is expected to close in late 2023 or early 2024, pending approval by Seagen shareholders and regulatory authorities.
Image: Bigstock
Pfizer (PFE) Q1 Earnings Beat, COVID Jab Sales Down as Expected
Pfizer (PFE - Free Report) reported first-quarter 2023 adjusted earnings per share of $1.23, which beat the Zacks Consensus Estimate of $1.00 per share as well as our estimate of $1.05 per share. Earnings declined 24% year over year.
Revenues came in at $18.28 billion, down 29% from the year-ago quarter on a reported basis, reflecting an operational decline of 26% and currency headwinds of 3%. The decline, as expected, in direct sales and alliance revenues from its partner, BioNTech, for the COVID-19 vaccine, Comirnaty hurt total revenues in the quarter.
However total revenues beat the Zacks Consensus Estimate of $16.96 billion, mainly due to higher-than-expected revenues from Paxlovid, Pfizer’s oral antiviral pill for COVID.
Excluding revenues from COVID products, Comirnaty and Paxlovid, sales rose 5% operationally. Higher sales of key brands like Vyndaqel/Vyndamax globally and Eliquis in the United States were partially offset by weaker sales of Xeljanz and Ibrance globally. Newly acquired products like Nurtec ODT/Vydura for migraine and Oxbryta for sickle cell disease also contributed to the top line.
International revenues declined 37% to $9.78 billion. U.S. revenues declined 5% to $8.51 billion.
Adjusted selling, informational and administrative (SI&A) expenses rose 37% (operationally) in the quarter to $3.35 billion due to increased spending for Paxlovid, new products and recently acquired products. Adjusted R&D expenses rose 10% to $2.49 billion due to costs to develop recently acquired programs and some vaccine candidates.
Segment Discussion
Pfizer reports its revenues under three broad sub-segments of its Biopharma operating segment, Primary Care, Specialty Care and Oncology. Sales in the Primary Care segment declined 37% operationally to $11.51 billion. The Specialty Care unit recorded sales of $3.6 billion, up 8%. Sales of Oncology declined 1% to $2.86 billion.
Primary Care
In Primary Care, direct sales and alliance revenues from BioNTech for Comirnaty were $3.06 billion in the quarter, down 75% year over year. Comirnaty sales declined 86% in the United States due to lower contracted deliveries to the U.S. government. Comirnaty sales declined 73% outside U.S. markets due to lower demand and contracted deliveries. Comirnaty sales missed our estimate of $3.51 billion.
Paxlovid contributed $4.07 billion to sales in the first quarter, compared with $1.47 billion in the year-ago quarter. Paxlovid sales beat our estimate of $2.57 billion. Favorable timing of final deliveries to the U.S. government, strong demand in China due to increased COVID-19 infections and some international launches boosted Paxlovid’s sales.
Alliance revenues from Bristol-Myers (BMY - Free Report) for Eliquis and direct sales rose 7% to $1.87 billion. Continued oral anti-coagulant adoption and market share gains in non-valvular atrial fibrillation benefited alliance revenues from Bristol-Myers for Eliquis sales in the United States. However, generic competition in some international markets hurt sales. Alliance revenues from Bristol-Myers for Eliquis missed the Zacks Consensus Estimate of $1.93 billion
Global Prevnar family revenues rose 4% to $1.59 billion. The Prevnar family includes revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20 (adult). Prevnar revenues beat the Zacks Consensus Estimate of $1.45 billion.
Prevnar sales rose 6% in the United States. Prevnar revenues were flat in international markets.
Specialty Care
Rare disease drug, Vyndaqel/Vyndamax recorded sales of $686 million in the quarter, up 16% year over year but missed the Zacks Consensus Estimate of $711 million.
Xeljanz sales declined 33% to $237 million due to lower prices and prescription volumes as doctors’ prescribing patterns shifted away from JAK inhibitors following label warnings.
Enbrel revenues declined 22% to $199 million due to continued biosimilar competition in key European markets and Japan. Pfizer has exclusive rights to Amgen’s (AMGN - Free Report) blockbuster RA drug, Enbrel, outside the United States and Canada.
Amgen markets Enbrel in North America. Enbrel is Amgen’s largest product, accounting for around 30% of product sales.
Newly acquired product Nurtec ODT/Vydura contributed $167 million in the first quarter compared with $211 million in the previous quarter. Nurtec ODT/Vydura was added to Pfizer’s portfolio with the acquisition of Biohaven in 2022.
Pfizer acquired Global Blood Therapeutics in 2022, adding Oxbryta for hemolytic anemia due to sickle cell disease to its portfolio. Oxbryta generated sales of $71 million in the first quarter of 2023 compared with $73 million in the fourth quarter of 2022.
Oncology
In Oncology, Ibrance revenues declined 5% year over year to $1.14 billion. Ibrance sales in the past few quarters have been hurt due to planned price decreases in some international developed markets and a continued increase in the proportion of patients accessing Ibrance through the U.S. Patient Assistance Program. Sales missed the Zacks Consensus Estimate of $1.20 billion.
Xtandi recorded alliance revenues of $258 million in the quarter, down 4% year over year. Inlyta revenues were $259 million in the quarter, up 14%.
2023 Guidance
Pfizer maintained its previously issued financial guidance for 2023.
Revenues are expected in the range of $67.0 to $71.0 billion, indicating an operational decline of 29%-33% from the 2022 level. The Zacks Consensus Estimate for revenues is pegged $68.41 billion.
The revenue guidance includes approximately $13.5 billion in sales from Comirnaty, down 64% from the 2022 level, and Paxlovid sales of approximately $8 billion, down 58%.
Pfizer expects to launch both Comirnaty and Paxlovid products in traditional commercial markets in the United States in the second half of 2023 as the company transitions away from the government market due to lower demand.
Adjusted earnings per share are expected to be in the range of $3.25 to $3.45, implying an operational decline of 47%-50% from the 2022 level. The Zacks Consensus Estimate for earnings is pegged at $3.33 per share.
Adjusted cost of sales, as a percentage of sales, is expected in the range of 28%-30% of total revenues. Research and development expense is expected in the range of $12.4-$13.4 billion. SI&A spending is expected in the range of $13.8-$14.8 billion. Both SI&A and R&D expenses are expected to be significantly higher in 2023 versus 2022 to support the launch of potential new products as well as recently acquired assets.
Acquired IPR&D expenses are expected to be approximately $0.1 billion. The adjusted tax rate is expected to be approximately 15.0% in 2023. Adjusted other (income)/deductions are expected to be approximately $1.5 billion of income.
Our Take
Pfizer’s first-quarter results were better than expected as it beat estimates for both earnings and sales.
The stock was down slightly in pre-market trading. In the past year, Pfizer’s stock has declined 19.6% against an increase of 11.2% for the industry.
Image Source: Zacks Investment Research
Pfizer’s 2023 revenues are expected to decline due to steep expected declines in revenues from its COVID-19 products on lower demand. Pfizer expects sales of its COVID products to reach the lowest point in 2023, before potentially rising again in 2024.
The expected decline in adjusted earnings is due to lower revenues from COVID products coupled with higher spending for near-term launches and late-stage pipeline candidates.
There are concerns about Pfizer’s long-term growth drivers beyond its COVID-related products due to competitive pressure and the receding impact of the pandemic.
Nonetheless, excluding COVID-19 products, Pfizer expects its revenues to rise 7% to 9% on an operational basis in 2023.
The operational revenue growth in 2023 is expected to be driven by Pfizer’s in-line products, potential new launches like the RSV vaccine for older adults and for pregnant women as well as newly acquired products, including etrasimod for ulcerative colitis, Nurtec and zavegepant for migraine, and Oxbryta for SCD. Pfizer has the largest number of new product and indication launches planned for 2023, mostly in the second half of the year.
In March, Pfizer offered to buy cancer drugmaker, Seagen for $229 per share in cash, which adds up to a total enterprise value of approximately $43 billion.
Seagen’s acquisition is expected to strengthen Pfizer’s portfolio of cancer drugs by adding a class of antibody-drug conjugates (ADCs). Seagen currently markets four cancer drugs — Adcetris, Padcev, Tukysa and Tivdak. Pfizer expects Seagen to contribute more than $10 billion in risk-adjusted revenues in 2030. The Pfizer/Seagen transaction is expected to close in late 2023 or early 2024, pending approval by Seagen shareholders and regulatory authorities.
Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pfizer Inc. Price, Consensus and EPS Surprise
Pfizer Inc. price-consensus-eps-surprise-chart | Pfizer Inc. Quote