PFIZER REPORTS STRONG FIRST-QUARTER 2021 RESULTS

Wednesday, May 5, 2021 - 09:00AM Asia/Singapore

 

First-Quarter 2021 Revenues of $14.6 Billion, Reflecting 42% Operational Growth; Excluding Revenues for BNT162b2 of $3.5 Billion, Revenues Grew 8% Operationally Including a Negative 5% Impact from Pricing

First-Quarter 2021 Reported Diluted EPS(1) of $0.86, Adjusted Diluted EPS(2) of $0.93

Raises Full-Year 2021 Guidance(3) for Revenues to a Range of $70.5 to $72.5 Billion and Adjusted Diluted EPS(2)to a Range of $3.55 to $3.65, Primarily Reflecting Updates to Anticipated Contributions from BNT162b2 Partially Offset by Additional R&D Expenses for Vaccines to Protect Against COVID-19 as Well as Other mRNA-Based Development Programs and COVID-19 Antivirals

  • Now Anticipates Revenues of Approximately $26 Billion for BNT162b2, Reflecting 1.6 Billion Doses Expected to be Delivered in 2021 Under SignedContracts as of Mid-April 2021
  • Raises Revenue Guidance Range Excluding BNT162b2 by $200 Million, Reflecting Continued Strong Performance of the Business
     

Enters Into Contracts to Supply BNT162b2 to Canada and Israel for Periods Beyond 2021; Currently Negotiating Similar Potential Contracts with Multiple Other Countries

Maintains Quarterly Dividend for Second-Quarter 2021 at $0.39/Share; Dividend Will Not Be Reduced as a Result of the Initiation of a Quarterly Dividend by Viatris Inc. (Viatris)(4)

 

NEW YORK, NY, Tuesday, May 4, 2021 – Pfizer Inc. (NYSE: PFE) reported financial results for first-quarter 2021 and raised 2021 guidance(3) for revenues and Adjusted diluted EPS(2) driven by the updated expectations for contributions to 2021 performance from BNT162b2, the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine, as well as the strong performance of the business excluding BNT162b2, partially offset by anticipated additional R&D investments into vaccines to protect against COVID-19, as well as other mRNA-based development programs and COVID-19 antivirals.

Additionally, Pfizer published this morning on its website the first-quarter 2021 earnings presentation and accompanying prepared remarks from management.

 

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “I am extremely proud of the way we have begun 2021, delivering strong financial results in the first quarter. Even excluding the growth provided from BNT162b2, our revenues grew 8% operationally, which aligns with our stated goal of delivering at least a 6% compound annual growth rate through 2025. In addition, we have achieved important clinical, regulatory and commercial milestones across our pipeline and portfolio while also continuing to increase our capacity to supply urgently-needed doses of BNT162b2 to the world. Each of these accomplishments further demonstrates our commitment to Pfizer’s purpose: Breakthroughs that change patients’ lives.”

Frank D’Amelio, Chief Financial Officer and Executive Vice President, Global Supply, stated: “I am very happy with the performance of all of our therapeutic areas this quarter. Multiple innovative and biosimilar products across our portfolio delivered growth, demonstrating the strength of our business and the depth and breadth of our growth drivers. I am also pleased with our recent announcement that we will maintain our dividend for second-quarter 2021 at the current level, even after Viatris begins paying its dividend. This will make 2021 the 12th year in a row with a dividend increase. I remain confident in Pfizer’s ability to continue to deliver on our commitments to our patients and shareholders in 2021 and beyond.”

Results for the first quarter of 2021 and 2020(5) are summarized below.

OVERALL RESULTS
($ in millions, except per share amounts) First-Quarter
  2021 2020 Change
Revenues $14,582 $10,083 45%
Reported Net Income(1) 4,877 3,355 45%
Reported Diluted EPS(1) 0.86 (0.06) 44%
Adjusted Income(2) 5,262 3,546 48%
Adjusted Diluted EPS(2) 0.93 0.63 47%

 

REVENUES
($ in millions) First-Quarter
  2021 2020 % Change
Total Oper.
Vaccines $4,894 $ 1,611 * *
Oncology 2,862 2,445 18% 16%
Internal Medicine 2,594 2,332 11% 10%
Hospital 2,343 2,088 12% 10%
Inflammation & Immunology 1,065 978 9% 7%
Rare Disease 824 639 29% 25%
Total Revenue $ 14,582 $ 10,083 45% 42%

* Indicates calculation not meaningful.

 

Following the completion of the spin-off of the Upjohn Business(4) in the fourth quarter of 2020, Pfizer now operates as a focused innovative biopharmaceutical company engaged in the discovery, development, manufacturing, marketing, sales and distribution of biopharmaceutical products worldwide.

Revenues and expenses associated with the Upjohn Business(4) for first-quarter 2020 have been recategorized as discontinued operations and excluded from Adjusted(2) results. Pfizer’s Meridian subsidiary, the manufacturer of EpiPen and other auto-injector products, which had been reported within the results of the Upjohn Business(4) in the first three quarters of 2020, is now included within the Hospital therapeutic area for all periods presented.

Business development activities completed in 2020 and 2021 impacted financial results in the periods presented(4). Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates(6).

 

2021 FINANCIAL GUIDANCE(3)

Financial guidance reflects management’s current expectations for operational performance, foreign exchange rates and management’s current projections as to the severity, duration and global macroeconomic impact of the COVID-19 pandemic.

Key guidance assumptions included in these projections broadly reflect a continued recovery in macroeconomic and healthcare activity throughout 2021 as more of the population becomes vaccinated against COVID-19. These assumptions are guided by the trajectory of current infection rates in many parts of the world and the expected timeline for broad access to effective vaccines.

Pfizer is raising its guidance ranges for revenues, Adjusted cost of sales(2) as a percentage of revenues, Adjusted R&D expenses(2) and Adjusted diluted EPS(2) to reflect the updated expectations for contributions to 2021 performance from BNT162b2 and the continued strong performance of the business excluding BNT162b2, partially offset by anticipated additional R&D investments into vaccines to protect against COVID-19, as well as early research investments into other mRNA-based development programs and COVID-19 antivirals.

Current 2021 financial guidance is presented below.

Revenues

$70.5 to $72.5 billion
(previously $59.4 to $61.4 billion)

Adjusted Cost of Sales(2) as a Percentage of Revenues

38.0% to 39.0%
(previously 32.0% to 33.0%)

Adjusted SI&A Expenses(2)

$11.0 to $12.0 billion

Adjusted R&D Expenses(2)
$9.8 to $10.3 billion
(previously $9.2 to $9.7 billion)
 
Adjusted Other (Income)/Deductions(2)

Approximately $2.2 billion of income

Effective Tax Rate on Adjusted Income(2)

Approximately 15.0%

Adjusted Diluted EPS(2)

$3.55 to $3.65
(previously $3.10 to $3.20)

 

The midpoint of the guidance range for revenues represents 71% growth from 2020 revenues, including an expected $1.3 billion, or 3%, favorable impact from changes in foreign exchange rates. The midpoint of the updated guidance range for Adjusted diluted EPS(2) reflects a 59% increase over 2020 actual results, including an expected $0.09, or 4%, benefit due to favorable changes in foreign exchange rates.

Financial guidance for Adjusted diluted EPS(2) is calculated using approximately 5.7 billion weighted average shares outstanding, and does not currently assume any share repurchases in 2021.

 

Update to Assumptions Related to BNT162b2 Within Guidance

Due to additional supply agreements that have been signed since the previous guidance release, Pfizer is updating the revenue assumptions related to BNT162b2 incorporated within the above guidance ranges. The updated assumptions are summarized below.

Revenues for BNT162b2 Approximately $26 billion(previously approximately $15 billion)
Adjusted Income(2) Before Tax (IBT) Margin for BNT162b2 High-20s as a Percentage of Revenues

 

The BNT162b2 revenue projection incorporated within Pfizer’s 2021 financial guidance includes 1.6 billion doses that are expected to be delivered in 2021 under contracts that have been signed through mid-April 2021. This guidance may be adjusted in the future as additional contracts are executed.

Adjusted(2) IBT margin guidance for BNT162b2 incorporates the current expectation for revenues for the product, less anticipated Adjusted(2) costs to manufacture, market and distribute BNT162b2, including applicable royalty expenses and a 50% gross margin split with BioNTech, as well as shared R&D expenses related to BNT162b2 and costs associated with other assets currently in development for the prevention and treatment of COVID-19. It also includes R&D expenses related to other mRNA-based development programs which are excluded from the collaboration with BioNTech. It does not include an allocation of corporate or other overhead costs.

 

Selected Financial Guidance Ranges Excluding BNT162b2

Pfizer is increasing its previous 2021 financial guidance for revenues and is reaffirming guidance ranges for Adjusted cost of sales(2) as a percentage of revenues and Adjusted diluted EPS(2) with BNT162b2 contributions excluded.

Revenues $44.6 to $46.6 billion
(previously $44.4 to $46.4 billion)
Adjusted Cost of Sales(2) as a Percentage of Revenues 21% to 22%
Adjusted Diluted EPS(2) $2.50 - $2.60

 

The midpoint of the revenue guidance range above reflects approximately 6% operational growth compared to 2020 when all revenue impacts related to BNT162b2 are excluded from both periods, which is in line with the company’s stated goal of at least a 6% revenue compound annual growth rate through 2025. The midpoint of Pfizer’s Adjusted diluted EPS(2) guidance range excluding BNT162b2 reflects approximately 11% operational growth compared to the prior year.

 

CAPITAL ALLOCATION

▪ During the first three months of 2021, Pfizer paid $2.2 billion of cash dividends, or $0.39 per share of common stock.

▪ In April 2021, Pfizer announced that its board of directors declared a $0.39 second-quarter 2021 dividend. The board decided to maintain Pfizer’s quarterly dividend at its current level despite the planned declaration of a dividend payment by Viatris that would be payable to those Pfizer shareholders that have elected to continue holding Viatris shares received from the combination of Upjohn and Mylan(4). The decision to maintain the dividend was made based on Pfizer’s strong financial performance and will result in increased dividend income to those shareholders continuing to own shares of both Pfizer and Viatris(4).

▪ No share repurchases have been completed to date in 2021. As of May 4, 2021, Pfizer’s remaining share repurchase authorization is $5.3 billion. Current 2021 financial guidance does not reflect any share repurchases in 2021.

▪ First-quarter 2021 diluted weighted-average shares outstanding used to calculate Reported(1) and Adjusted(2) diluted EPS was 5,662 million shares, an increase of 49 million shares compared to the prior-year quarter primarily due to shares issued for employee compensation programs.

 

Please find Pfizer’s press release and associated financial tables, including reconciliations of certain GAAP reported to non-GAAP adjusted information, at the following hyperlink:

https://s21.q4cdn.com/317678438/files/doc_financials/2021/q1/Q1-2021-PFE-Earnings-Release.pdf

(Note: If clicking on the above link does not open up a new web page, you may need to cut and paste the above URL into your browser's address bar.)

 

For additional details, see the attached financial schedules, product revenue tables and disclosure notice.

(1) Revenues is defined as revenues in accordance with U.S. generally accepted accounting principles (GAAP). Reported net income and its components are defined as net income attributable to Pfizer Inc. and its components in accordance with U.S. GAAP. Reported diluted earnings per share (EPS) is defined as diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.

(2) Adjusted income and its components and Adjusted diluted EPS are defined as reported U.S. GAAP net income(1) and its components and reported diluted EPS(1) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as actuarial gains and losses from pension and postretirement plan remeasurements, gains on the completion of joint venture transactions, restructuring charges, legal charges or gains and losses from equity securities, but which management does not believe are reflective of ongoing coreoperations). Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A) expenses, Adjusted research and development (R&D) expenses and Adjusted other (income)/deductions are income statement line items prepared on the same basis as, and therefore components of, the overall Adjusted income measure.

As described in the Non-GAAP Financial Measure: Adjusted Incomesection of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Pfizer’s 2020 Annual Report on Form 10-K, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Because Adjusted income is an important internal measurement for Pfizer, management believes that investors’ understanding of our performance is enhanced by disclosing this measure. Pfizer reports Adjusted income, certain components of Adjusted income, and Adjusted diluted EPS in order to present the results of the company’s major operations––the discovery, development, manufacture, marketing and sale of prescription medicines and vaccines––prior to considering certain income statement elements. See the accompanying reconciliations of certain GAAP Reported to Non-GAAP Adjusted information for the first quarter of 2021 and 2020. The Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS(1).

(3) Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses, gains and losses from equity securities, actuarial gains and losses from pension and postretirement plan remeasurements and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.

Financial guidance for full-year 2021 reflects the following:

  • Does not assume the completion of any business development transactions not completed as of April 4, 2021, including any one-time upfront payments associated with such transactions.
  • Includes Pfizer’s pro rata share of the Consumer Healthcare joint venture anticipated earnings, which is recorded in Adjusted other (income)/deductions(2) on a one-quarter lag.
  • Reflects an anticipated negative revenue impact of $0.9 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or are anticipated to soon lose patent protection.
  • Exchange rates assumed are as of mid-April 2021. Financial guidance reflects the anticipated favorable impact of approximately $1.3 billionon revenues and approximately $0.09 on Adjusted diluted EPS(2) as a result of changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2020.
  • Guidance for Adjusted diluted EPS(2) assumes diluted weighted-average shares outstanding of approximately 5.7 billion shares, which currently assumes no share repurchases in 2021.
  • Guidance for Adjusted other (income)/deductions(2) includes an estimated benefit of approximately $300 million resulting from a change in accounting principle to a more preferable policy under U.S. GAAP to immediately recognize actuarial gains and losses arising from the remeasurement of our pension and postretirement plans. This change went into effect in the first quarter of 2021 and prior period amounts have been recast to conform to the new accounting policy.

 

(4) The following business development activity, among others, impacted financial results for the periods presented:

  • On November 16, 2020, Pfizer completed the transaction to spin off its Upjohn Business and combine it with Mylan N.V. (Mylan) to form Viatris Inc. (Viatris). On December 21, 2020, which falls in Pfizer’s international first-quarter 2021, Pfizer and Viatris completed the termination of a pre-existing strategic collaboration between Pfizer and Mylan for generic drugs in Japan (Mylan-Japan collaboration) and Pfizer transferred related operations that were part of the Mylan-Japan collaboration to Viatris. As a result of the spin-off of the Upjohn Business and the termination of the Mylan-Japan collaboration, the results of operations of the Upjohn Business and the Mylan-Japan collaboration are presented as discontinued operations for all periods presented.
  • On April 9, 2020, Pfizer signed a global agreement with BioNTech to co-develop a first-in-class, mRNA-based coronavirus vaccine program, BNT162, aimed at preventing COVID-19 infection. In connection with the agreement, Pfizer paid BioNTech an upfront cash payment of $72 million in second-quarter 2020. Pfizer also made an equity investment of $113 million in BioNTech common stock. Pfizer made an additional investment of $50 million in common stock of BioNTech as part of an underwritten equity offering by BioNTech, which closed in July 2020. On January 29, 2021, Pfizer and BioNTech signed an amended version of the April 2020 agreement. Under the January 2021 agreement, BioNTech paid Pfizerits 50 percent share of prior development costs in a lump sum payment during the first quarter of 2021. Further R&D costs are being shared equally.

 

(5) Pfizer’s fiscal year-end for international subsidiaries is November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries is December 31. Therefore, Pfizer’s first quarter for U.S. subsidiaries reflects the three months ended on April 4, 2021 and March 29, 2020 while Pfizer’s first quarter for subsidiaries operating outside the U.S. reflects the three months ended on February 28, 2021 and February 23, 2020.

(6) References to operational variances in this press release pertain to period-over-period growth rates that exclude the impact of foreign exchange rates. Although exchange rate changes are part of Pfizer’s business, they are not within Pfizer’s control and since they can mask positive or negative trends in the business, Pfizer believes presenting operational variances excluding these foreign exchange changes provides useful information to evaluate Pfizer’s results.

(7) BNT162b2 has not been approved or licensed by the U.S. Food and Drug Administration (FDA), but has been authorized for emergency use by the FDA under an Emergency Use Authorization (EUA) to prevent Coronavirus Disease 2019 (COVID-19) for use in individuals 16 years of age and older. The emergency use of this product is only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of the medical product under Section 564 (b) (1) of the FD&C Act unless the declaration is terminated or authorization revoked sooner. Please see the EUA Fact Sheet for Healthcare Providers Administering Vaccine (Vaccination Providers) including full EUA prescribing information available at www.cvdvaccine.com.

(8)The U.S. birth rate decline was 5% compared to 2020 levels, according to Demographic Intelligence.