- Second-Quarter 2015 Reported
Revenues(1) of $11.9 Billion
- Second-Quarter 2015 Adjusted Diluted
EPS(2) of $0.56, Reported Diluted EPS(1) of $0.42
- Raised Midpoints of 2015 Financial
Guidance(3) Ranges for Reported Revenues(1) by $500 Million and
Reported(1) and Adjusted(2) Diluted EPS by $0.03 and $0.04,
Respectively, Due to Strong Performance to Date and Improved
Business Outlook
- Second-Quarter 2015 Reported
Revenues(1) for the Innovative Products Business Grew 17%
Operationally, Primarily Driven by U.S. Launches of Prevnar 13
Adult and Ibrance
Pfizer Inc. (NYSE: PFE) reported financial results for
second-quarter 2015 and announced increases to the midpoints of its
2015 financial guidance(3) ranges for reported revenues(1) and
reported(1) and adjusted(2) diluted EPS.
The company manages its commercial operations through two
distinct businesses: an Innovative Products business and an
Established Products business. The Innovative Products business is
composed of two operating segments: the Global Innovative
Pharmaceutical segment (GIP)(4) and the Global Vaccines,
Oncology and Consumer Healthcare segment (VOC)(4). The
Established Products business consists of the Global Established
Pharmaceutical segment (GEP)(4). Financial results for each of
these segments are presented in the Operating Segment Information
section.
Some amounts in this press release may not add due to rounding.
All percentages have been calculated using unrounded amounts.
Results for the second quarter and first six months of 2015 and
2014 are summarized below.
OVERALL RESULTS ($ in millions, except
per share amounts)
Second-Quarter Six Months 2015 2014 Change 2015 2014 Change
Reported Revenues(1) $ 11,853 $ 12,773 (7 %) $ 22,717 $ 24,126 (6
%) Adjusted Income(2) 3,525 3,769 (6 %) 6,721 7,434 (10 %) Adjusted
Diluted EPS(2) 0.56 0.58 (3 %) 1.07 1.15 (7 %) Reported Net
Income(1) 2,626 2,912 (10 %) 5,002 5,241 (5 %) Reported Diluted
EPS(1) 0.42 0.45 (7 %)
0.80 0.81 (1 %)
REVENUES
($ in millions) Second-Quarter Six Months 2015 2014 %
Change 2015 2014 % Change Total Oper. Total Oper.
Innovative
Products $ 6,630 $ 6,126 8
% 17 % $ 12,368 $
11,376 9 % 17 % GIP(4) 3,497
3,547 (1 %) 8 % 6,572 6,623 (1 %) 7 % Global Vaccines(4) 1,580
1,097 44 % 52 % 2,908 2,022 44 % 52 % Consumer Healthcare(4) 840
912 (8 %) (2 %) 1,648 1,673 (1 %) 4 % Global Oncology(4) 713
570 25 % 36 % 1,240 1,058
17 % 27 %
Established Products $ 5,090
$ 6,513 (22 %) (14 %)
$ 10,104 $ 12,503 (19 %)
(12 %) GEP(4) 5,090 6,513
(22 %) (14 %) 10,104 12,503 (19 %) (12
%) Other(5) 133 134 — 2 %
244 247 (1 %) 1 %
Total $
11,853 $ 12,773 (7
%) 1 % $ 22,717 $
24,126 (6 %) 2 %
SELECTED TOTAL COMPANY ADJUSTED
COSTS AND EXPENSES(2) ($ in millions)
(Favorable)/Unfavorable
Second-Quarter Six Months 2015 2014 % Change 2015 2014 % Change
Total Oper. Total Oper. Cost of Sales(2) $ 2,123 $ 2,320 (8 %) 2 %
$ 3,930 $ 4,306 (9 %) 4 % Percent of Revenues(1) 17.9 % 18.2 % N/A
N/A 17.3 % 17.8 % N/A N/A SI&A Expenses(2) 3,372 3,486 (3 %) 3
% 6,449 6,506 (1 %) 5 % R&D Expenses(2) 1,732
1,714 1 % 3 % 3,609 3,326
9 % 10 %
Total $ 7,226 $
7,520 (4 %) 3 % $
13,988 $ 14,138 (1
%) 6 % Effective Tax Rate(2)
25.6 % 27.9 % 25.0 %
26.5 %
2015 FINANCIAL GUIDANCE(3)
The ranges for certain components of Pfizer's 2015 financial
guidance have been updated as set forth below:
Reported Revenues(1) $45.0 to $46.0 billion
(previously $44.0 to $46.0 billion) Adjusted Cost of Sales(2) as a
Percentage of Reported Revenues(1) 18.0% to 18.5% (previously 18.5%
to 19.5%) Adjusted SI&A Expenses(2) $12.8 to $13.8 billion
Adjusted R&D Expenses(2) $7.3 to $7.6 billion (previously $6.9
to $7.4 billion) Adjusted Other (Income)/Deductions(2)
Approximately ($500 million) of income Effective Tax Rate on
Adjusted Income(2) Approximately 25.0% Reported Diluted EPS(1)
$1.38 to $1.47 (previously $1.32 to $1.47) Adjusted Diluted EPS(2)
$2.01 to $2.07 (previously $1.95 to $2.05)
EXECUTIVE COMMENTARY
Ian Read, Chairman and Chief Executive Officer, stated, “Our
second-quarter and year-to-date financial performance is the result
of continued business momentum, driven by solid execution of recent
product launches in our Innovative Products business, notably
Ibrance and Prevnar 13 in adults in the U.S., along with continued
growth from Eliquis and Xeljanz, increased focus on and support of
growth initiatives within our Established Products business as well
as shareholder-friendly capital allocation. For the remainder of
2015, we look forward to completing the pending acquisition of
Hospira, Inc. (Hospira), which we expect will meaningfully enhance
our Established Products business, particularly in sterile
injectables and biosimilars, and continuing to advance our
late-stage pipeline in important areas such as oncology and
immuno-oncology, vaccines, rare disease, cardiovascular disease and
biosimilars. I continue to see both of our businesses as highly
focused, well managed and competitively positioned in their key
markets.”
Frank D’Amelio, Chief Financial Officer, stated, “Overall, I am
very pleased with our second-quarter 2015 financial results. We
were able to grow revenues by 1% excluding the impact of foreign
exchange, marking the third consecutive quarter of operational
revenue growth, despite the continued significant negative impact
from product losses of exclusivity, primarily Celebrex and Zyvox in
the U.S. and Lyrica in certain developed Europe markets.
“As a result of our strong operational performance to date
coupled with an improved operational outlook for the remainder of
the year, we are raising the midpoint of our 2015 financial
guidance(3) range for reported revenues(1) by $500 million and the
midpoint of our guidance range for adjusted diluted EPS(2) by
$0.04. Changes in foreign exchange rates since mid-April 2015 did
not materially impact our latest guidance,” Mr. D'Amelio
concluded.
QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2015 vs.
Second-Quarter 2014)
Reported revenues(1) decreased $920 million, or 7%, which
reflects operational growth of $125 million, or 1%, more than
offset by the unfavorable impact of foreign exchange of $1.0
billion, or 8%. Excluding the impact of foreign exchange, adjusted
diluted EPS(2) increased by approximately 6%.
Operational revenue growth in developed markets was driven by
the performance of several key products, including Prevnar 13 in
adults, Eliquis, Ibrance and Xeljanz -- all products that are early
in their life cycles -- as well as from vaccines acquired last year
from Baxter International Inc. (Baxter). In emerging markets,
revenues increased 6% operationally, reflecting continued strong
operational growth, primarily from Lipitor and Prevenar 13.
Operational revenue growth was partially offset primarily by the
loss of exclusivity and immediate multi-source generic competition
for Celebrex in the U.S. as well as Zyvox in the U.S. and Lyrica in
certain developed Europe markets.
Innovative Products Business Highlights
Revenues for the Innovative Products business increased 17%
operationally, reflecting the following:
- GIP(3) revenues increased 8%
operationally, primarily due to strong operational performance of
recently launched products, including Eliquis globally and Xeljanz
in the U.S., in addition to the continued strong performances of
Lyrica in the U.S. and Japan and Viagra in the U.S. Operational
growth was partially offset by generic competition for Rapamune in
the U.S., which began in October 2014, and by increased competition
for BeneFIX in the U.S.
- VOC(3) revenues increased 29%
operationally, reflecting the following:
- Global Vaccines(3) revenues increased
52% operationally. Prevnar 13 revenue in the U.S. increased 87%,
primarily driven by continued strong uptake among adults.
International revenues increased 25% operationally, driven by
Prevenar 13, which grew 10% operationally, primarily reflecting
increased shipments associated with Gavi, the Vaccine Alliance, the
favorable impact of Prevenar's inclusion in additional national
immunization programs in certain emerging markets compared with the
year-ago quarter, as well as the inclusion in second-quarter 2015
of revenues associated with the acquisition of Baxter’s portfolio
of marketed vaccines in Europe.
- Consumer Healthcare(3) revenues
decreased 2% operationally, primarily due to the non-recurrence of
initial retailer stocking associated with the launch of Nexium 24HR
in the U.S. in the prior-year quarter. Excluding Nexium 24HR, the
Consumer Healthcare business in the U.S. increased 5%, driven by
increased promotional support for key brands. Additionally,
revenues from emerging markets increased 11% operationally,
primarily driven by China and Venezuela.
- Global Oncology(3) revenues increased
36% operationally, primarily driven by strong momentum following
the February 2015 U.S. launch of Ibrance for advanced breast cancer
and, to a lesser extent, stronger demand for Sutent, Inlyta and
Xalkori in most markets.
Established Products Business Highlights
- GEP(3) revenues decreased 14%
operationally, primarily due to the loss of exclusivity and
immediate launch of multi-source generic competition for Celebrex
in the U.S. in December 2014 as well as generic competition for
Zyvox in the U.S. beginning in first-half 2015 and for Lyrica in
certain developed Europe markets beginning in first-quarter 2015.
Revenues for Lipitor in developed markets declined as a result of
continued generic competition. Additionally, the co-promotion
collaboration for Spiriva has terminated in most countries,
including in the U.S. in April 2014. These declines were partially
offset by growth in emerging markets, where revenues increased 2%
operationally, primarily driven by Lipitor.
Income Statement Highlights
- Adjusted cost of sales, adjusted
SI&A expenses and adjusted R&D expenses(2) in the aggregate
increased $225 million operationally, or 3%, reflecting the
following operational factors:
- higher adjusted cost of sales(2),
primarily reflecting an increase in sales volume partially offset
by a decrease in royalty expense;
- higher adjusted SI&A expense(2),
primarily reflecting increased investments to support recently
launched products and other in-line products, largely offset by
continued benefits from cost-reduction and productivity
initiatives; and
- higher adjusted R&D expense(2),
primarily due to incremental investment in the late-stage pipeline,
primarily bococizumab, partially offset by lower clinical trial
spend for Trumenba, Prevnar 13 adult, and certain oncology
products, as well as the completion of postmarketing commitments
for certain in-line products.
- The effective tax rate on adjusted
income(2) declined 2.3 percentage points to 25.6% from 27.9%. This
decline was primarily due to a favorable change in the
jurisdictional mix of earnings partially offset by a decline in tax
benefits associated with the resolution of certain tax positions
pertaining to prior years, with various foreign tax
authorities.
- The diluted weighted-average shares
outstanding declined by 201 million shares compared to the
prior-year quarter due to Pfizer’s share repurchase program,
including the impact of the $5 billion accelerated share repurchase
agreement executed in February 2015 and completed in July
2015.
- In addition to the aforementioned
factors, second-quarter 2015 reported earnings were primarily
impacted by the following:Unfavorable impacts:
- higher legal charges and
acquisition-related costs associated with the pending acquisition
of Hospira in second-quarter 2015 compared to the prior-year
quarter; and
- higher charges incurred in
second-quarter 2015 for business and legal entity alignment
activities.
Favorable impacts:
- lower restructuring and other charges
associated with cost-reduction and productivity initiatives and
lower purchase accounting adjustments in second-quarter 2015
compared to the prior-year quarter; and
- a lower effective tax rate, primarily
due to a favorable change in the jurisdictional mix of earnings
partially offset by a decline in tax benefits associated with the
resolution of certain tax positions pertaining to prior years, with
various foreign tax authorities.
RECENT NOTABLE DEVELOPMENTS
Product Developments
- Ibrance (palbociclib) -- Pfizer
announced in May 2015 study results demonstrating palbociclib in
combination with fulvestrant was superior to treatment with a
standard of care, fulvestrant, by significantly extending
progression-free survival (PFS) in women with hormone
receptor-positive, human epidermal growth factor receptor
2-negative (HER2-) metastatic breast cancer whose disease has
progressed during or after endocrine therapy (Hazard Ratio: 0.42,
median PFS: 9.2 vs. 3.8 months, in their respective arms,
p<0.000001). Results from the Phase 3 PALOMA-3 study were
presented as a late-breaker at the 51st Annual Meeting of the
American Society of Clinical Oncology (ASCO) in June 2015. The
PALOMA-3 study met its primary endpoint of PFS at the interim
analysis and was stopped early in April 2015 due to efficacy based
on an assessment by an independent Data Monitoring Committee.
Benefit from palbociclib was demonstrated across all pre-specified
subgroups, including both pre/perimenopausal and postmenopausal
patients. At the time of the PFS analysis, overall survival (OS)
data were immature. The adverse events observed with palbociclib in
combination with fulvestrant in PALOMA-3 were consistent with their
respective labeled adverse event profiles. Pfizer plans to
submit a supplemental New Drug Application to the U.S. Food and
Drug Administration (FDA) in fourth-quarter 2015 for potential
inclusion of data from the PALOMA-3 study in the U.S. label.
Additionally, Pfizer intends to file a Marketing Authorisation
Application for palbociclib with the European Medicines Agency
(EMA) in third-quarter 2015. The planned EMA submission will
include data from the PALOMA-1 study, which evaluated palbociclib
plus letrozole in women with estrogen receptor positive, HER2-
locally advanced or newly diagnosed metastatic breast cancer, as
well as data from the PALOMA-3 study.
- Trumenba -- Pfizer announced in
June 2015 that the U.S. Centers for Disease Control and
Prevention's (CDC) Advisory Committee on Immunization Practices
(ACIP) voted to recommend that decisions to vaccinate adolescents
and young adults 16 through 23 years of age against serogroup B
meningococcal (MenB) disease should be made at the individual level
with healthcare providers. Specifically, the ACIP voted that a MenB
vaccine series may be administered to adolescents and young adults
16 through 23 years of age to provide short-term protection against
most strains of MenB disease. The preferred age for MenB
vaccination is 16 through 18 years of age. This recommendation
expands the CDC’s ACIP February 2015 recommendation for MenB
vaccination.
- Xeljanz (tofacitinib)
- Pfizer presented in June 2015 more than
20 abstracts at the European League Against Rheumatism Annual
Congress (EULAR), including over six years of safety and efficacy
data from two long-term extension studies, real-world experience
analyses, and clinical, patient-reported and radiographic efficacy
outcomes with Xeljanz monotherapy, as well as health economics
outcomes research that include patient-preference data for Xeljanz
in patients with rheumatoid arthritis (RA). Additionally, results
from the Xeljanz 11 mg once daily clinical pharmacology program
were presented during the Congress, demonstrating equivalence in
key pharmacokinetic parameters to Xeljanz 5 mg twice daily.
- Pfizer presented in June 2015 twelve
presentations, including new data on tofacitinib for chronic plaque
psoriasis and atopic dermatitis, at the 23rd World Congress of
Dermatology meeting. Among the highlights were three late-breaking
presentations, including 52-week pooled results from the Oral
treatment Psoriasis Trials (OPT) pivotal studies, an integrated
safety summary across the OPT development program for oral
tofacitinib, and the first presentation of two-year results from
OPT Extend, the ongoing long-term extension study of tofacitinib in
moderate to severe chronic plaque psoriasis.
- Pfizer announced in July 2015 that the
FDA accepted for review Pfizer’s new drug application for Xeljanz
11 mg once daily modified release tablets for the treatment of
moderate to severe RA in patients who have had an inadequate
response or intolerance to methotrexate. The FDA has provided an
anticipated Prescription Drug User Fee Act (PDUFA) action date in
February 2016.
- Xalkori -- Pfizer announced in
April 2015 that Xalkori (crizotinib) received Breakthrough Therapy
designation by the FDA for the potential treatment of patients with
ROS1-positive non-small cell lung cancer (NSCLC). Occurring in
approximately one percent of NSCLC cases, ROS1-positive NSCLC
represents a particular molecular subgroup of NSCLC. Xalkori
currently is approved in the U.S. for the treatment of patients
with metastatic NSCLC whose tumors are anaplastic lymphoma kinase
(ALK)-positive as detected by a FDA-approved test. Pfizer will work
closely with the FDA on the development of Xalkori for
ROS1-positive NSCLC and provide the information needed to support a
potential regulatory submission.
Pipeline Developments
A comprehensive update of Pfizer's development pipeline was
published today and is now available at www.pfizer.com/pipeline. It
includes an overview of Pfizer's research and a list of compounds
in development with targeted indication and phase of development,
as well as mechanism of action for candidates from Phase 2 through
registration.
- At ASCO 2015, Pfizer Oncology presented
data showcasing the clinical progress of several marketed products
and investigational compounds spanning multiple tumor types,
including breast cancer, NSCLC and non-Hodgkin’s lymphoma (NHL).
Pfizer abstracts included data for two investigational agents,
highlighting the depth of Pfizer’s immunotherapy pipeline and
heritage in lung cancer and personalized medicine: PF-05082566, a
fully humanized monoclonal antibody that stimulates signaling
through 4-1BB in patients with CD20+ NHL and the first ever
clinical data for PF-06463922, a novel adenosine triphosphate
competitive small molecule inhibitor of ALK/ROS1, in patients with
advanced ALK+ or ROS1+ NSCLC. Pfizer also presented new
analyses from the pivotal Phase 2 PALOMA-1 trial for Ibrance
(palbociclib), providing additional data on patient subgroups of
interest. The Merck KGaA-Pfizer Alliance also presented 10
abstracts on avelumab, providing the latest preliminary clinical
results across various tumor types, including NSCLC and ovarian
cancer.
- PF-06290510 (Staphylococcus aureus
(S. aureus) vaccine candidate) -- In July 2015, Pfizer
announced enrollment of the first patient in a Phase 2b clinical
trial of its investigational S. aureus multi-antigen vaccine in
adults undergoing elective spinal fusion surgery. The purpose of
the study, named STRIVE (STaphylococcus aureus SuRgical Inpatient
Vaccine Efficacy), is to evaluate the safety and efficacy of the
vaccine to determine if it prevents postoperative invasive S.
aureus infections in patients undergoing elective spinal surgery.
The trial is expected to enroll approximately 2,600 patients with
final results expected in 2017. PF-06290510 was granted Fast Track
designation by the FDA in February 2014.
- PF-06425090 (Clostridium difficile
(C. difficile) vaccine candidate) -- In November 2014, Pfizer
disclosed that in a previous Phase 2 study, enrollment and
vaccination of further subjects was halted due to several observed
cases of severe local reactogenicity (redness). Pfizer has since
identified a new path forward using an alternate formulation. In
July 2015, Pfizer initiated a new Phase 2 study to evaluate the
safety, tolerability and immunogenicity of its investigational C.
difficile vaccine in healthy adults 65 to 85 years of age. The
trial is expected to enroll approximately 850 patients with final
results expected in 2017. PF-06425090 was granted Fast Track
designation by the FDA in August 2014.
- Lipitor Over-the-Counter (OTC)
-- A Phase 3 "actual use" trial intended to simulate the OTC use of
Lipitor (atorvastatin calcium) 10 mg was completed in December
2014. The study did not meet its primary objectives of
demonstrating patient compliance with the direction to check their
low-density lipoprotein cholesterol (LDL-C) level and, after
checking their LDL-C level, take appropriate action based on their
test results. Based on dialogue with the FDA about the program and
analysis of this data, the program was terminated.
- PF-06410293 -- In July 2015,
Pfizer began dosing patients in a multinational Phase 3 clinical
trial of PF-06410293, a potential biosimilar to Humira®(6)
(adalimumab). The Phase 3 clinical trial will evaluate the
efficacy, safety, and immunogenicity of PF-06410293 plus
methotrexate and adalimumab sourced from the EU plus methotrexate
in subjects with moderately to severely active rheumatoid arthritis
who have had an inadequate response to methotrexate
monotherapy.
- Rivipansel -- Pfizer announced
in June 2015 that the first patient has been enrolled in the RESET
(Rivipansel: Evaluating Safety, Efficacy and Time to Discharge)
study, a Phase 3 clinical trial assessing the efficacy and safety
of rivipansel for the treatment of vaso-occlusive crisis in
hospitalized individuals with sickle cell disease who are six years
of age or older. This multicenter, randomized, double-blind,
placebo-controlled, parallel-group study is expected to enroll at
least 350 people. Rivipansel has received Orphan Drug and Fast
Track status from the FDA, and this study is being conducted under
a Special Protocol Assessment, in agreement with the FDA.
- Avelumab (MSB0010718C) -- Merck
KGaA and Pfizer announced in April 2015 the initiation and first
patient treated in a Phase 3 study designed to assess the efficacy
and safety of the investigational cancer immunotherapy avelumab,
compared with docetaxel, in patients with stage IIIb/IV NSCLC who
have experienced disease progression after receiving a prior
platinum-containing doublet therapy. The Phase 3 study is an
open-label, multicenter, 1:1 randomized clinical trial where
patients with stage IIIb/IV NSCLC will receive either avelumab or
docetaxel, regardless of programmed death-ligand 1 (PD-L1) status.
Approximately 650 patients will participate across 290 sites in
more than 30 countries in North America, South America, Asia,
Africa and Europe. The study is part of the JAVELIN clinical trial
program for avelumab.
- PF-06439535 -- In May 2015,
Pfizer began dosing patients in a multinational Phase 3 clinical
trial of PF-06439535, a potential biosimilar to Avastin®(7)
(bevacizumab). The Phase 3 clinical trial will evaluate the
efficacy and safety of PF-06439535 plus paclitaxel and carboplatin
against Avastin sourced from the EU plus paclitaxel and carboplatin
by comparing the best confirmed objective response rate by week 19
in first-line treatment for patients with advanced (unresectable,
locally advanced, recurrent or metastatic) non-squamous NSCLC.
- Inotuzumab Ozogamicin -- Pfizer
announced in April 2015 that the Phase 3 INO-VATE ALL study
investigating the treatment of inotuzumab ozogamicin met the
primary endpoint of complete response or complete response with
incomplete blood count recovery (CR/CRi) demonstrating a higher
complete hematologic remission rate in adult patients with relapsed
or refractory CD22-positive acute lymphoblastic leukemia compared
to that achieved with standard of care chemotherapy. Pfizer is
discussing these data with the FDA and other regulatory agencies.
Pfizer is continuing the study to allow for the data on OS, a
separate primary endpoint, to mature.
Corporate Developments
- Pfizer announced in June 2015 that it
has entered into an agreement with GlaxoSmithKline to acquire its
quadrivalent meningitis ACWY vaccines, Nimenrix and Mencevax, for a
total consideration of approximately $130 million (€115 million).
This transaction will add two high-quality and complementary
vaccines to Pfizer’s portfolio, allowing the company to reach a
broader global population. This transaction is not expected to have
any significant impact on Pfizer's 2015 financial performance. The
transaction is subject to customary closing conditions as well as
regulatory approvals in several markets, and is expected to close
in the second half of 2015.
- Pfizer announced in May 2015 that it
received a request for additional information from the U.S. Federal
Trade Commission (FTC) with respect to its previously announced
pending acquisition of Hospira. The request for information from
the FTC, often referred to as a “second request,” was anticipated
as part of the regulatory process under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Pfizer continues to work
cooperatively and expeditiously with the FTC in connection with its
review. The transaction is subject to customary closing conditions,
including regulatory approvals in several jurisdictions. On May 13,
2015, Hospira shareholders voted in favor of the proposal to adopt
the merger agreement, which was also a condition to closing the
transaction. Pfizer and Hospira continue to expect the transaction
to close in the second half of 2015.
- In April 2015, Pfizer acquired a
minority equity interest in AM-Pharma B.V., a privately held Dutch
biopharmaceutical company focused on the development of recombinant
human Alkaline Phosphatase for inflammatory diseases, and secured
an exclusive option to acquire the remaining equity in the company.
Under the terms of the agreement, Pfizer paid $87.5 million for
both the exclusive option and the minority equity interest and
Pfizer may make additional payments of up to $512.5 million upon
exercise of the option and potential launch of any product that may
result from this investment.
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:
http://www.pfizer.com/system/files/presentation/Q2_2015_PFE_Earnings_Press_Release_asdfenlfi.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 associated financial
schedules and product revenue tables attached to the press release
located at the hyperlink referred to above and the attached
disclosure notice.
(1) Reported revenues is defined as revenues in accordance
with U.S. generally accepted accounting principles (GAAP). Reported
net income is defined as net income attributable to Pfizer Inc. in
accordance with U.S. GAAP. Reported diluted earnings per share
(EPS) is defined as reported 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. Adjusted
revenues, 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 under Adjusted income in the
Management’s Discussion and Analysis of Financial Condition and
Results of Operations section of Pfizer’s Quarterly Report on Form
10-Q for the fiscal quarter ended March 29, 2015, management uses
Adjusted income, among other factors, to set performance goals and
to measure the performance of the overall company. We believe that
investors’ understanding of our performance is enhanced by
disclosing this measure. See the accompanying reconciliations of
certain GAAP Reported to non-GAAP Adjusted information for the
second quarter and first six months of 2015 and 2014, as well as
reconciliations of full-year 2015 guidance for Adjusted income and
Adjusted diluted EPS to full-year 2015 guidance for Reported net
income(1) and Reported diluted EPS(1). 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) The 2015 financial guidance reflects the following:
- Does not assume the completion of any
business development transactions not completed as of
June 28, 2015, including any one-time upfront payments
associated with such transactions. 2015 financial guidance does not
reflect any impact from the pending acquisition of Hospira. The
transaction is expected to close during the second half of
2015.
- Excludes the potential effects of the
resolution of litigation-related matters not substantially resolved
as of June 28, 2015.
- Exchange rates assumed are a blend of
the actual exchange rates in effect through second-quarter 2015 and
the mid-July 2015 exchange rates for the remainder of the year.
Excludes the impact of a potential devaluation of the Venezuelan
bolivar.
- Guidance for reported revenues(1)
reflects the anticipated negative impact of $3.4 billion due to
recent and expected generic competition for certain products that
have recently lost or are anticipated to soon lose patent
protection, partially offset by anticipated revenue growth from
certain other products.
- Guidance for reported revenues(1) also
reflects the anticipated negative impact of $3.3 billion as a
result of unfavorable changes in essentially all foreign exchange
rates relative to the U.S. dollar compared to foreign exchange
rates from 2014. The anticipated negative impact on reported(1) and
adjusted(2) diluted EPS resulting from unfavorable changes in
foreign exchange rates compared to foreign exchange rates from 2014
is approximately $0.19.
- Guidance for the effective tax rate on
adjusted income(2) does not assume the renewal of the U.S. R&D
tax credit. The renewal of the R&D tax credit is not
anticipated to have a material impact on the effective tax rate on
adjusted income(2).
- Guidance for reported(1) and adjusted
diluted EPS(2) assumes diluted weighted-average shares outstanding
of approximately 6.25 billion shares, inclusive of share
repurchases in 2015. Share repurchases in 2015 were composed of
$1.0 billion of shares repurchased through January 30, 2015, a $5.0
billion accelerated share repurchase agreement executed in February
2015 and a $0.2 billion cash payment in July 2015 to satisfy the
settlement terms of the accelerated share repurchase agreement.
Pfizer elected to settle the terms of the accelerated share
repurchase agreement with cash as opposed to the commensurate value
in shares. Actual and projected dilution related to employee
compensation programs is expected to partially offset these share
repurchases.
- Reconciliation of the 2015 Adjusted
income(2) and Adjusted diluted EPS(2) guidance to the 2015 Reported
net income attributable to Pfizer Inc. and Reported diluted EPS
attributable to Pfizer Inc. common shareholders guidance:
($ in
billions, except per share amounts) Income/(Expense) Net
Income Diluted EPS Adjusted income/diluted EPS(2) guidance
$12.6 - $13.0 $2.01 - $2.07 Purchase accounting impacts of
transactions completed as of June 28, 2015 (2.6) (0.41)
Restructuring and implementation costs (0.7) - (0.9) (0.11) -
(0.14) Business and legal entity alignment costs (0.3) (0.05)
Certain other items incurred through June 28, 2015 (0.2)
(0.03) Reported net income attributable to Pfizer Inc./diluted
EPS(1) guidance $8.6 - $9.2 $1.38 - $1.47 (4)
For a description of the revenues in each
business, see the “Our Strategy–Commercial Operations” sub-section
in the Overview of Our Performance, Operating Environment, Strategy
and Outlook section of Pfizer's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 29, 2015.
(5) Other includes revenues generated from Pfizer
CentreSource, our contract manufacturing and bulk pharmaceutical
chemical sales organization, and revenues related to our
transitional manufacturing and supply agreements with Zoetis, Inc.
(6) Humira® is a registered U.S. trademark of Abbvie
Biotechnology Ltd. (7) Avastin® is a registered U.S.
trademark of Genentech, Inc.
DISCLOSURE NOTICE: The information contained in this earnings
release and the attachments is as of July 28, 2015. We assume
no obligation to update forward-looking statements contained in
this earnings release and the attachments as a result of new
information or future events or developments.
This earnings release and the attachments contain
forward-looking statements about our anticipated future operating
and financial performance, business plans and prospects, in-line
products and product candidates, strategic reviews, capital
allocation, business-development plans, and plans relating to share
repurchases and dividends, among other things, that involve
substantial risks and uncertainties. You can identify these
statements by the fact that they use future dates or use words such
as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,”
“estimate,” “expect,” “project,” “intend,” “plan,” “believe,”
“target,” “forecast,” “goal,” “objective,” “aim” and other words
and terms of similar meaning. Among the factors that could cause
actual results to differ materially from past results and future
plans and projected future results are the following:
- the outcome of research and development
activities, including, without limitation, the ability to meet
anticipated clinical trial commencement and completion dates,
regulatory submission and approval dates, and launch dates for
product candidates, as well as the possibility of unfavorable
clinical trial results, including unfavorable new clinical data and
additional analyses of existing clinical data;
- decisions by regulatory authorities
regarding whether and when to approve our drug applications, which
will depend on the assessment by such regulatory authorities of the
benefit-risk profile suggested by the totality of the efficacy and
safety information submitted; and decisions by regulatory
authorities regarding labeling, ingredients and other matters that
could affect the availability or commercial potential of our
products;
- the speed with which regulatory
authorizations, pricing approvals and product launches may be
achieved;
- the outcome of post-approval clinical
trials, which could result in the loss of marketing approval for a
product or changes in the labeling for, and/or increased or new
concerns about the safety or efficacy of, a product that could
affect its availability or commercial potential;
- risks associated with interim data,
including the risk that final results of studies for which interim
data have been provided and/or additional clinical trials may be
different from (including less favorable than) the interim data
results and may not support further clinical development of the
applicable product candidate or indication;
- the success of external
business-development activities, including the ability to satisfy
the conditions to closing of announced transactions in the
anticipated timeframe or at all, including our and Hospira’s
ability to satisfy the conditions to closing our merger
agreement;
- competitive developments, including the
impact on our competitive position of new product entrants, in-line
branded products, generic products, private label products and
product candidates that treat diseases and conditions similar to
those treated by our in-line drugs and drug candidates;
- the implementation by the FDA of an
abbreviated legal pathway to approve biosimilar products, which
could subject our biologic products to competition from biosimilar
products in the U.S., with attendant competitive pressures, after
the expiration of any applicable exclusivity period and patent
rights;
- the ability to meet generic and branded
competition after the loss of patent protection for our products or
competitor products;
- the ability to successfully market both
new and existing products domestically and internationally;
- difficulties or delays in
manufacturing;
- trade buying patterns;
- the impact of existing and future
legislation and regulatory provisions on product exclusivity;
- trends toward managed care and
healthcare cost containment;
- the impact of any significant spending
reductions affecting Medicare, Medicaid or other publicly funded or
subsidized health programs or changes in the tax treatment of
employer-sponsored health insurance that may be implemented, and/or
any significant additional taxes or fees that may be imposed on the
pharmaceutical industry as part of any broad deficit-reduction
effort;
- the impact of U.S. healthcare
legislation enacted in 2010—the Patient Protection and Affordable
Care Act, as amended by the Health Care and Education
Reconciliation Act—and of any modification or repeal of any of the
provisions thereof;
- U.S. federal or state legislation or
regulatory action affecting, among other things, pharmaceutical
product pricing, reimbursement or access, including under Medicaid,
Medicare and other publicly funded or subsidized health programs;
the importation of prescription drugs from outside the U.S. at
prices that are regulated by governments of various foreign
countries; direct-to-consumer advertising and interactions with
healthcare professionals; and the use of comparative effectiveness
methodologies that could be implemented in a manner that focuses
primarily on the cost differences and minimizes the therapeutic
differences among pharmaceutical products and restricts access to
innovative medicines; as well as pricing pressures as a result of
highly competitive insurance markets;
- legislation or regulatory action in
markets outside the U.S. affecting pharmaceutical product pricing,
reimbursement or access, including, in particular, continued
government-mandated price reductions for certain biopharmaceutical
products and government-imposed access restrictions in certain
countries;
- the exposure of our operations outside
the U.S. to possible capital and exchange controls, expropriation
and other restrictive government actions, changes in intellectual
property legal protections and remedies, as well as political
unrest and unstable governments and legal systems;
- contingencies related to actual or
alleged environmental contamination;
- claims and concerns that may arise
regarding the safety or efficacy of in-line products and product
candidates;
- any significant breakdown, infiltration
or interruption of our information technology systems and
infrastructure;
- legal defense costs, insurance
expenses, settlement costs, the risk of an adverse decision or
settlement and the adequacy of reserves related to product
liability, patent protection, government investigations, consumer,
commercial, securities, antitrust, environmental and tax issues,
ongoing efforts to explore various means for resolving asbestos
litigation, and other legal proceedings;
- our ability to protect our patents and
other intellectual property, both domestically and
internationally;
- interest rate and foreign currency
exchange rate fluctuations, including the impact of possible
currency devaluations in countries experiencing high inflation
rates;
- governmental laws and regulations
affecting domestic and foreign operations, including, without
limitation, tax obligations and changes affecting the tax treatment
by the U.S. of income earned outside the U.S. that may result from
pending and possible future proposals;
- any significant issues involving our
largest wholesaler customers, which account for a substantial
portion of our revenues;
- the possible impact of the increased
presence of counterfeit medicines in the pharmaceutical supply
chain on our revenues and on patient confidence in the integrity of
our medicines;
- any significant issues that may arise
related to the outsourcing of certain operational and staff
functions to third parties, including with regard to quality,
timeliness and compliance with applicable legal requirements and
industry standards;
- any significant issues that may arise
related to our joint ventures and other third-party business
arrangements;
- changes in U.S. generally accepted
accounting principles;
- uncertainties related to general
economic, political, business, industry, regulatory and market
conditions including, without limitation, uncertainties related to
the impact on us, our customers, suppliers and lenders and
counterparties to our foreign-exchange and interest-rate agreements
of challenging global economic conditions and recent and possible
future changes in global financial markets; and the related risk
that our allowance for doubtful accounts may not be adequate;
- any changes in business, political and
economic conditions due to actual or threatened terrorist activity
in the U.S. and other parts of the world, and related U.S. military
action overseas;
- growth in costs and expenses;
- changes in our product, segment and
geographic mix; and
- the impact of acquisitions,
divestitures, restructurings, internal reorganizations, product
recalls and withdrawals and other unusual items, including our
ability to realize the projected benefits of our cost-reduction and
productivity initiatives, including those related to our research
and development organization, of the internal separation of our
commercial operations into our new operating structure and of our
pending acquisition of Hospira.
A further list and description of risks, uncertainties and other
matters can be found in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2014 and in our subsequent
reports on Form 10-Q, in each case including in the sections
thereof captioned “Forward-Looking Information and Factors That May
Affect Future Results” and “Item 1A. Risk Factors”, and in our
subsequent reports on Form 8-K.
The operating segment information provided in this earnings
release and the attachments does not purport to represent the
revenues, costs and income from continuing operations before
provision for taxes on income that each of our operating segments
would have recorded had each segment operated as a standalone
company during the periods presented.
This earnings release may include discussion of certain clinical
studies relating to various in-line products and/or product
candidates. These studies typically are part of a larger body
of clinical data relating to such products or product candidates,
and the discussion herein should be considered in the context of
the larger body of data. In addition, clinical trial data are
subject to differing interpretations, and, even when we view data
as sufficient to support the safety and/or effectiveness of a
product candidate or a new indication for an in-line product,
regulatory authorities may not share our views and may require
additional data or may deny approval altogether.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150728005829/en/
Pfizer Inc.MediaJoan Campion,
212-733-2798orInvestorsChuck Triano, 212-733-3901Ryan
Crowe, 212-733-8160Bryan Dunn, 212-733-8917
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