PFIZER REPORTS THIRD-QUARTER 2020 RESULTS
PFIZER REPORTS THIRD-QUARTER 2020 RESULTS
- Third-Quarter 2020 Revenues of $12.1 Billion; Reported Diluted EPS(1) of $0.39, Adjusted Diluted EPS(2) of $0.72
- 4% Operational Growth from Biopharma, Primarily Driven by the Ongoing Strong Performance of Vyndaqel/Vyndamax, Growth from our Leading Portfolio of Biosimilars, as Well as Continued Strength from Key Brands Including Eliquis, Ibrance, Xeljanz, Inlyta and Xtandi
- Updated and Tightened Ranges for Certain Components of Total Company(3) 2020 Financial Guidance, Including a Slight Increase to the Midpoint of Adjusted Diluted EPS(2) Guidance Range
- Reaffirmed All 2020 Financial Guidance Components for New Pfizer(4) and Upjohn(5) and the Projected Revenue CAGR of At Least 6% for New Pfizer(4) Through 2025
- COVID Vaccine Phase 2/3 Clinical Trial has Enrolled More Than 42,000 Participants, with Nearly 36,000 Having Received their Second Vaccination, as of October 26
- Continue to Expect to Close the Upjohn Transaction with Mylan N.V. (Mylan) in the Fourth Quarter of 2020
NEW YORK, NY, Tuesday, October 27, 2020 – Pfizer Inc. (NYSE: PFE) reported financial results for third-quarter 2020 and updated and tightened certain components of Total Company(3) 2020 financial guidance, which continues to reflect actual and anticipated business impacts from the novel coronavirus disease of 2019 (COVID-19) pandemic.
Dr. Albert Bourla, Chairman and Chief Executive Officer, stated, “As we enter the final stretch of what has been a historically challenging year for the world, I could not be more proud of the extraordinary effort, dedication and resolve shown by Pfizer colleagues to address the COVID-19 pandemic with unprecedented speed, while never compromising on their commitment to the patient-centered, science-driven standards that guide everything we do. I am more confident than ever in Pfizer’s future as we transition to a smaller, more agile, science-based pharmaceutical company with what we believe is an industry-leading innovative pipeline, a portion of which we were pleased to highlight at our recent investor day event.”
Frank D’Amelio, Chief Financial Officer and Executive Vice President, Global Supply, stated: “I am pleased with our performance so far this year, including our ability to maintain a steady supply of medicines to the patients who rely on them around the world during these uniquely challenging times. In the first nine months of the year, our Biopharma business grew 7% operationally, despite a COVID-19-related negative impact of approximately 2%, driven by the strong performance of many of our key brands. This performance adds to our confidence in our ability to achieve our expectation of at least a 6% compound annual revenue growth rate through 2025 for New Pfizer(4).”
Results for the third quarter and the first nine months of 2020 and 2019(6) are summarized below.
|($ in millions, except per share amounts)||Third-Quarter||Nine Months|
|Reported Net Income(1)||2,194||7,680||(71%)||9,022||16,609||(46%)|
|Reported Diluted EPS(1)||0.39||1.36||(71%)||1.60||2.92||(45%)|
|Adjusted Diluted EPS(2)||0.72||0.75||(3%)||2.31||2.39||(4%)|
|($ in millions)||Third-Quarter||Nine Months|
Beginning in 2020, Upjohn began managing Pfizer’s Meridian subsidiary, the manufacturer of EpiPen and other auto-injector products, and a pre-existing strategic collaboration between Pfizer and Mylan for generic drugs in Japan (Mylan-Japan). To facilitate comparison across periods, revenues and expenses associated with Meridian and Mylan-Japan are reported in Pfizer’s Upjohn business in all periods presented.
Acquisitions and other business development activities completed in 2019 and in the first nine months of 2020 impacted financial results in the periods presented(7). 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 growth rates that exclude the impact of foreign exchange(8).
2020 FINANCIAL GUIDANCE(9)
Financial guidance reflects management’s current expectations for operational performance, foreign exchange rates as well as various COVID-19-related uncertainties, primarily those related to the severity, duration and global macroeconomic impact of the pandemic.
Key guidance assumptions regarding these uncertainties broadly reflect an ongoing, gradual global recovery from the macroeconomic and healthcare impacts of the COVID-19 pandemic. These assumptions are guided by the trajectory of the pandemic’s impact on Pfizer’s business to date, which was less severe at its peak than originally anticipated, but is recovering at a somewhat slower pace than originally expected. Current guidance continues to assume no revenue contributions from a potential COVID-19 vaccine.
Pfizer updated and tightened the ranges for certain components of Total Company(3) 2020 financial guidance, including a slight increase to the midpoint of the Adjusted Diluted EPS(2) guidance range, and reaffirmed all 2020 financial guidance components for New Pfizer(4) and Upjohn(5). Updated 2020 financial guidance for Total Company(3) is presented below.
|Revenues||$48.8 to $49.5 billion
(previously $48.6 to $50.6 billion)
|Adjusted Cost of Sales(2) as a Percentage of Revenues||20.2% to 20.7%
(previously 19.5% to 20.5%)
|Adjusted SI&A Expenses(2)||$11.5 to $12.0 billion
(previously $11.5 to $12.5 billion)
|Adjusted R&D Expenses(2)||$8.8 to $9.1 billion
(previously $8.6 to $9.0 billion)
|Adjusted Other (Income)/Deductions(2)||Approximately $1.0 billion of income
(previously approximately $800 million of income)
|Effective Tax Rate on Adjusted Income(2)||Approximately 15.0%|
|Adjusted Diluted EPS(2)||$2.88 to $2.93
(previously $2.85 to $2.95)
Financial guidance for Adjusted diluted EPS(2) continues to assume no share repurchases in 2020.
2020 Financial Guidance for New Pfizer(4)
Pfizer’s reaffirmed 2020 financial guidance for New Pfizer(4) is presented below. New Pfizer(4) financial guidance reflects the Biopharma business as it is presently being managed and assumes the pending Upjohn combination with Mylan was completed at the beginning of 2020.
|Revenues||$40.8 to $42.4 billion|
|Adjusted IBT Margin(10)||Approximately 37.0%|
|Adjusted Diluted EPS(2)||$2.28 to $2.38|
|Operating Cash Flow||$10.0 to $11.0 billion|
2020 Financial Guidance for Upjohn(5)
Pfizer’s reaffirmed 2020 financial guidance for Upjohn(5) is presented below. Upjohn(5) financial guidance reflects a full-year 2020 contribution from the Upjohn business as it is presently being managed.
|Revenues||$8.0 to $8.5 billion|
|Adjusted EBITDA(11)||$3.8 to $4.2 billion|
- During the first nine months of 2020, Pfizer paid $6.3 billion of dividends, composed of dividends of $0.38 per share of common stock in each of the first, second and third quarters of 2020.
- No share repurchases have been completed to date in 2020. As of October 27, 2020, Pfizer’s remaining share repurchase authorization was $5.3 billion. No share repurchases are currently planned in 2020.
- Third-quarter 2020 diluted weighted-average shares outstanding used to calculate Reported(1) and Adjusted(2) diluted EPS was 5,633 million shares, a reduction of 16 million shares compared to the prior-year quarter primarily due to Pfizer’s share repurchase program, reflecting the impact of share repurchases during 2019, partially offset by shares issued for employee compensation programs.
QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2020 vs. Third-Quarter 2019)
Third-quarter 2020 revenues totaled $12.1 billion, a decrease of $549 million, or 4%, compared to the prior-year quarter, reflecting an operational decline of $444 million, or 4%, as well as the unfavorable impact of foreign exchange of $104 million, or 1%. Excluding the impact of Consumer Healthcare(7), revenues declined 1% operationally compared to the prior-year quarter.
Impact of COVID-19 on Third-Quarter 2020 Revenues
Third-quarter 2020 revenues included an estimated unfavorable impact of approximately $500 million, or 4%, due to COVID-19, primarily driven by lower demand for certain products in China and unfavorable disruptions to wellness visits for patients in the U.S., which negatively impacted prescribing patterns for certain products, partially offset by increased adult uptake for Prevenar 13 in certain international markets resulting from greater vaccine awareness for respiratory illnesses, as well as the recovery of a portion of the missed doses of Prevnar 13 in the U.S. from second-quarter 2020.
Biopharma Revenue Highlights
Third-quarter 2020 Biopharma revenues totaled $10.2 billion, up 4% operationally, primarily driven by:
- Vyndaqel/Vyndamax global revenues of $351 million, up 125% operationally, driven by:
- 101% growth in the U.S., driven by the launches of Vyndaqel in May 2019 and Vyndamax in September 2019 for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM); and
- 150% operational growth in international markets, primarily driven by the March 2019 launch of the ATTR-CM indication in Japan and the February 2020 approval of the ATTR-CM indication in the European Union (EU);
- Biosimilars global revenues of $424 million, up 80% operationally, primarily driven by recent oncology biosimilar launches of Ruxience (rituximab), Zirabev (bevacizumab) and Trazimera (trastuzumab) in the
- U.S. and other global markets, as well as continued growth from Retacrit (epoetin zeta), primarily in the U.S.;
- Eliquis globally, up 9% operationally, primarily driven by continued increased adoption in non-valvular atrial fibrillation as well as oral anti-coagulant market share gains. In the U.S., strong volume growth was partially offset by a lower net price due to an increased impact from the Medicare “coverage gap” and unfavorable channel mix;
- Prevenar 13 internationally, up 14% operationally, primarily reflecting continued strong pediatric uptake in China, as well as increased adult uptake in certain international markets resulting from greater vaccine awareness for respiratory illnesses, including specifically pneumococcal disease, due to the COVID-19 pandemic;
- Ibrance in the U.S., up 9%, primarily driven by increased cyclin-dependent kinase (CDK) class penetration and Ibrance’s continued CDK market share leadership in metastatic breast cancer;
- Xeljanz globally, up 10% operationally, primarily driven by:
- 6% growth in the U.S., reflecting higher volumes within the rheumatoid arthritis (RA) and psoriatic arthritis (PsA) indications driven by continued improvements in formulary access, partially offset by increased discounts from recently-signed contracts which were entered into in order to unlock access to additional patient lives; and
- 23% operational growth in international markets, primarily reflecting continued uptake in the RA indication and, to a lesser extent, the ulcerative colitis (UC) indication in certain developed markets;
- Inlyta globally, up 41% operationally, primarily reflecting increased demand in the U.S. and certain developed international markets following the approvals in 2019 for combinations of certain immune checkpoint inhibitors and Inlyta for the first-line treatment of patients with advanced renal cell carcinoma; and
- Xtandi in the U.S., up 18%, primarily driven by continued strong demand in the metastatic and non-metastatic castration-resistant prostate cancer indications, as well as the metastatic castration-sensitive prostate cancer indication, which was approved in the U.S. in December 2019,
partially offset primarily by lower revenues for:
- Prevnar 13 in the U.S., down 14%, primarily reflecting the unfavorable impact of timing associated with government purchases for the pediatric indication and the impact of the revised Advisory Committee on Immunization Practices (ACIP) recommendation for the adult indication to shared clinical decision making, which was published by the Centers for Disease Control and Prevention (CDC) in the Morbidity and Mortality Weekly Report in the fourth quarter of 2019, partially offset by the recovery of a portion of the missed doses from second-quarter 2020 resulting from COVID-19;
- Enbrel internationally, down 21% operationally, primarily reflecting continued biosimilar competition in most developed Europe markets as well as in Japan and Brazil;
- the Hospital business in emerging markets, down 11% operationally, primarily driven by lower demand for certain anti-infective products in China due to lower infection rates driven by fewer elective surgical procedures, shorter in-patient hospital stays and improved infection control compared to the prior-year quarter;
- Ibrance in developed Europe, down 17% operationally, primarily reflecting continued strong volume growth, more than offset by pricing pressures in certain developed Europe markets; and
- Chantix in the U.S., down 19%, primarily reflecting expected lower demand resulting from reduced doctor visits, including wellness visits when Chantix is typically prescribed, due to COVID-19.
Upjohn Revenue Highlights
- Third-quarter 2020 Upjohn revenues totaled $1.9 billion, down 18% operationally, primarily driven by the following negative drivers, each of which was expected:
- Significant volume declines for Lyrica in the U.S. due to multi-source generic competition that began in July 2019;
- Lower revenues for Lipitor and Norvasc in China due to the impact of the volume-based procurement (VBP) program which was initially implemented in March 2019 and expanded nationwide in December 2019; and
- Lower volume for Celebrex in Japan, resulting from generic competition which began in June 2020.
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:
(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 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 core operations). 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 Financial Review––Non-GAAP Financial Measure (Adjusted Income) section of Pfizer’s 2019 Financial Report, which was filed as Exhibit 13 to Pfizer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, 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 performance measure. Pfizer reports Adjusted income, certain components of Adjusted income, and Adjusted diluted EPS in order to portray 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 third quarter and first nine months of 2020 and 2019. 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.
(3) Financial guidance for Total Company reflects a full-year 2020 contribution from Biopharma and Upjohn, the current construct of the company, and excludes any impact from the pending Upjohn combination with Mylan. In addition, Total Company 2020 financial guidance reflects the following:
- Does not assume the completion of any business development transactions not completed as of September 27, 2020, including any one-time upfront payments associated with such transactions.
- Includes Pfizer’s pro rata share of the Consumer Healthcare JV(7) anticipated earnings, which is recorded in Adjusted other (income)/deductions(2) on a one-quarter lag.
- Reflects an anticipated negative revenue impact of $2.4 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 a blend of actual exchange rates in effect through third-quarter 2020 and mid-October 2020 rates for the remainder of the year. Financial guidance reflects the anticipated unfavorable impact of approximately $0.5 billion on revenues and approximately $0.04 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 2019.
- Guidance for Adjusted diluted EPS(2) assumes diluted weighted-average shares outstanding of approximately 5.6 billion shares, which assumes no share repurchases in 2020.
(4) New Pfizer reflects contributions from the Biopharma business as it is presently being managed, which excludes contributions from Pfizer’s Meridian subsidiary and the Pfizer-Mylan strategic collaboration in Japan (Mylan-Japan). Pfizer’s Meridian subsidiary and Mylan-Japan were managed by Pfizer’s Biopharma business in 2019 but were moved to Upjohn in 2020. Financial guidance for New Pfizer also includes the full-year effect of the following items that assume the Upjohn combination with Mylan was completed at the beginning of 2020:
- $12 billion of net proceeds from Upjohn to be retained by Pfizer, which Pfizer will use to repay its own existing indebtedness; and
- other transaction-related items, such as income from transition services agreements between Pfizer and Viatris, the new company to be formed by the planned combination of Mylan and Upjohn.
2020 financial guidance for New Pfizer Adjusted IBT Margin(10) and Adjusted diluted EPS(2) reflects Pfizer’s share of the earnings generated by the GSK Consumer Healthcare joint venture(7) in the fourth quarter of 2019 and in the first and second quarters of 2020 (recorded by Pfizer in the first nine months of 2020), as well as Pfizer’s share of the joint venture’s projected earnings during the third quarter of 2020 (to be recorded by Pfizer in the fourth quarter of 2020).
Financial guidance for New Pfizer operating cash flow includes a $1.25 billion voluntary contribution to the U.S. qualified pension plans, which was made in third-quarter 2020.
(5) Financial guidance for Upjohn reflects a full-year 2020 contribution from the Upjohn business as it is presently being managed, which includes contributions from Pfizer’s Meridian subsidiary and the Pfizer- Mylan strategic collaboration in Japan (Mylan-Japan). Pfizer’s Meridian subsidiary and Mylan-Japan were managed by Pfizer’s Biopharma business in 2019 but were moved to Upjohn in 2020.
(6) 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 third quarter and first nine months for U.S. subsidiaries reflects the three and nine months ending on September 27, 2020 and September 29, 2019 while Pfizer’s third quarter and first nine months for subsidiaries operating outside the U.S. reflects the three and nine months ending on August 23, 2020 and August 25, 2019.
(7) The following acquisitions and other business development activity impacted financial results for the periods presented:
- On June 8, 2020, Valneva SE (Valneva) announced that the antitrust-related condition precedent was met and, consequently, the agreement between Valneva and Pfizer that was previously announced in April 2020 became effective. Under the terms of the agreement, the companies will co-develop and commercialize Valneva’s Lyme disease vaccine candidate VLA15, which is currently in Phase 2 clinical studies. In connection with the agreement, Pfizer paid Valneva an upfront cash payment of
- $130 million in second-quarter 2020.
- On April 9, 2020, Pfizer signed a global agreement with BioNTech to co-develop a potential 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 July 31, 2019, Pfizer and GlaxoSmithKline plc (GSK) completed a transaction that combined the two companies’ respective consumer healthcare businesses into a joint venture (JV), operating under the GSK Consumer Healthcare name. In exchange for contributing its Consumer Healthcare business to the JV, Pfizer received a 32% equity stake in the JV and GSK owns the remaining 68% of the JV. Upon the closing of the transaction, Pfizer deconsolidated its Consumer Healthcare business and began recording its share of earnings from the Consumer Healthcare JV on a quarterly basis on a one- quarter lag in Other (income)/deductions––net commencing from August 1, 2019. Therefore, Pfizer recorded its share of the JV’s earnings generated in second-quarter 2020 in its third-quarter 2020 operating results. Likewise, Pfizer recorded its share of the JV’s earnings generated in fourth-quarter 2019, first-quarter 2020 and second-quarter 2020 in its operating results for the first nine months of 2020.
- On July 30, 2019, Pfizer announced the successful completion of its acquisition of Array BioPharma Inc. (Array). Array’s portfolio included two approved products, Braftovi (encorafenib) and Mektovi (binimetinib).
- On July 1, 2019, Pfizer announced the successful completion of its acquisition of the privately held clinical-stage biotechnology company, Therachon Holding AG.
(8) References to operational variances in this press release pertain to period-over-period growth rates that exclude the impact of foreign exchange. The operational variances are determined by multiplying or dividing, as appropriate, the current period U.S. dollar results by the current period average foreign exchange rates and then multiplying or dividing, as appropriate, those amounts by the prior-year period average foreign exchange rates. Although exchange rate changes are part of Pfizer’s business, they are not within Pfizer’s control. Exchange rate changes, however, can mask positive or negative trends in the business; therefore, Pfizer believes presenting operational variances provides useful information in evaluating the results of its business.
(9) 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 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.
(10) Adjusted income(2) before tax margin (Adjusted IBT margin) is defined as revenue less the sum of Adjusted cost of sales(2), Adjusted SI&A expenses(2), Adjusted R&D expenses(2), Adjusted amortization of intangible assets(2) and Adjusted other (income)/deductions(2) as a percentage of revenue. Adjusted IBT margin is presented because management believes this performance measure supplements investors’ and other readers’ understanding and assessment of the financial performance of New Pfizer(4). Adjusted IBT margin is not, and should not be viewed as, a substitute for U.S. GAAP income before tax margin.
(11) Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) is defined as reported U.S. GAAP net income(1), and its components, adjusted for interest expense, provision for taxes on income and depreciation and amortization, further adjusted to exclude purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as 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 core operations). Adjusted EBITDA is presented because management believes this performance measure supplements investors’ and other readers’ understanding and assessment of the financial performance of Upjohn. Adjusted EBITDA as defined is not a measurement of financial performance under GAAP, and should not be considered as an alternative to net income(1) or cash flow from operations determined in accordance with GAAP.