Pfizer Inc. (NYSE: PFE) reported financial results for third-quarter 2013. Reported revenues decreased $310 million, or 2%, which reflects an operational decline of $38 million, or less than 1%, and the unfavorable impact of foreign exchange of $272 million, or 2%. The operational decrease was primarily the result of the continued erosion for branded Lipitor in the U.S., developed Europe and certain other markets. Additionally, revenues were negatively impacted by other product losses of exclusivity, the ongoing expiration of the Spiriva collaboration in certain countries, decreased government purchases of Prevnar and Enbrel in certain emerging markets, and various other events. Revenues were positively impacted by the overall growth of Lyrica, Enbrel, Inlyta and Xalkori, as well as Celebrex and Xeljanz in the U.S. In addition, reported revenues included $67 million from the transitional manufacturing and supply agreements with Zoetis.
Ian Read, Chairman and Chief Executive Officer, stated, "Overall, I am very pleased with our continued and steady progress, on many fronts, to drive greater value for our shareholders. We continue to generate solid financial results on an operational basis, despite the impact of product losses of exclusivity and the ongoing expiration of the Spiriva collaboration in certain countries as well as the challenging operating environment. Within our innovative businesses, during third-quarter 2013, revenues from our Oncology business increased 26% operationally due to the continued strong performance of new products, primarily Inlyta and Xalkori in several major markets. In addition, other key patent-protected products performed well operationally, notably Lyrica, which grew 11%, and Celebrex, which grew 13%. With regard to recently launched products, Eliquis prescription trends continue to improve, and we recently began our direct-to-consumer campaign in the U.S.; in addition, Xeljanz continues to perform in line with our expectations."
"Over the next several months, we expect to report key clinical data read-outs that will more clearly characterize the strength of our late-stage pipeline. These data read-outs will be across a broad range of both additional indications for currently marketed products and novel compounds, including Prevnar 13 in adults, Xeljanz (psoriasis), dacomitinib, palbociclib, and the staphylococcus aureus vaccine, among others. In addition, we have just initiated a phase 3 program for bococizumab (RN316), our PCSK9 inhibitor for LDL cholesterol reduction, and are initiating a phase 3 program with our collaboration partner Merck for ertugliflozin, our SGLT2 inhibitor for the treatment of type 2 diabetes. We also plan to begin a phase 3 program for our biosimilar of Herceptin for metastatic breast cancer in the next few months. In addition, we are planning to continue development of tanezumab for the treatment of osteoarthritis, chronic low back pain and cancer pain, and have just entered into a collaboration agreement with Eli Lilly & Company to jointly develop and globally commercialize tanezumab," Mr. Read concluded.
Frank D'Amelio, Chief Financial Officer, stated, "For the first nine months of 2013, our financial performance has been in line with our expectations. Given these results and our continued confidence in the business, we are narrowing the ranges for certain components of our 2013 financial guidance. Also, with our continued strong operating cash flow and proceeds generated from the separations of our Nutrition and Animal Health businesses, we continue to expect to repurchase in the mid-teens of billions of dollars of our common stock this year, with $13.1 billion repurchased through October 28. Additionally, we will pay approximately $6.5 billion in dividends."
Business unit revenues were impacted by the following:
- Specialty Care: Revenues declined 1% operationally, primarily due to the shift in the reporting of Geodon and Revatio revenues in the U.S. and Xalabrands revenues in developed Europe and Australia to the Established Products unit beginning January 1, 2013, which was largely offset by the growth of Enbrel, as well as Prevnar and Xeljanz in the U.S.
- Primary Care: Revenues decreased 8% operationally, primarily due to the shift in the reporting of Lipitor revenues in developed Europe and Australia to the Established Products unit beginning January 1, 2013, as well as certain other product losses of exclusivity in various markets, including Viagra in most major markets in Europe in June 2013 and Lyrica in Canada in February 2013, and the termination of the co-promotion agreement for Aricept in Japan in December 2012. Additionally, in the U.S. and certain European countries, the co-promotion collaboration for Spiriva is in its final year, which, per the terms of the collaboration agreement, has resulted in a decline in Pfizer’s share of Spiriva revenues; and in Australia, Canada and certain other European countries, the Spiriva collaboration has terminated. These declines were partially offset by the strong performance of Celebrex, Chantix, EpiPen, Premarin and Pristiq in the U.S. as well as Lyrica.
- Emerging Markets: Revenues grew 5% operationally, primarily due to volume growth in China, most notably Lipitor, which was partially offset by the impact of the transfer of certain product rights to the Pfizer-Hisun joint venture in first-quarter 2013. Revenues were also negatively impacted by decreased government purchases of Prevnar and Enbrel, as well as government cost-containment measures, in certain other emerging markets. Full-year 2013 operational revenue growth in emerging markets is expected to be a mid-single-digit percentage.
- Established Products: Revenues decreased 1% operationally. This performance was driven by the benefit of revenues from products in certain markets that were shifted to the Established Products unit from other business units beginning January 1, 2013, including Lipitor in developed Europe and Australia, as well as the contribution from the collaboration with Mylan Inc. to market generic drugs in Japan. Revenues were unfavorably impacted by the continued erosion of branded Lipitor in the U.S. and Japan.
- Consumer Healthcare: Revenues increased 1% operationally, primarily due to strong international growth for Centrum as a result of several recent product launches and increased promotional activities in key markets, as well as growth of Emergen-C in the U.S. due to expanded distribution and promotional activities. This growth was partially offset by declines in sales of respiratory and other products in certain international markets due to unfavorable seasonal conditions compared with the year-ago quarter.
- Oncology: Revenues increased 26% operationally, driven by the continued solid uptake of new products, most notably Inlyta and Xalkori in several major markets. Inlyta’s market share continues to increase as patient feedback has been positive both in terms of efficacy and tolerability, and as pricing and reimbursement are being granted in developed Europe. Xalkori prescriptions and new patient starts also continue to increase, driven by initiatives established to improve molecular testing and identify the appropriate patients for this medicine.
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