Oncology & Biosimilars To Be Growth Engines For Pfizer

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Pfizer (NYSE:PFE) reported its Q2 results on Tuesday, August 2th, with 11% increase in revenue and 14% increase in EPS as compared to last year. We believe oncology and biosimilars to be growth engines for Pfizer in coming quarters. The oncology division should grow due to its flagship drug Ibance and strong phase 3 pipeline. In addition, Pfizer could grow its legacy business by depending on biosimilars. The approval of first biosimilar in the U.S., Zarxio, opened up new opportunities for biosimilar development. We expect biosimilars to show meaningful impact in Pfizer’s revenue by 2019.

The company kept the discussion of splitting the company into two businesses: innovative health and emerging health. However, we expect more clarity on this issue by the end of the year.

Oncology Division To Drive Future Growth

We believe oncology division of the company, to grow at a CAGR of 20% by 2020. It could be a powerful growth engine for future. The metastatic breast cancer drug, Ibrance, and the strong phase 3 oncology pipeline will be  key drivers of this tremendous growth.

1) Why Ibrance Could Grow?

  • Estimated peak sales of $4 billion
  • Probable EU approval by the end of 2016
  • Still immense potential as only 43% market penetration in first line treatment, while the same number is 46% and 24% for second and third line treatment respectively.
  • Only approved in 15 countries till now
  • 35,000 patients treated till now, while in the U.S alone 300,000 new breast cancer cases are reported each year (U.S. Breast Cancer Statistics, Breast Cancer Organisation, June 23,2016)

2) Strong Phase 3 Oncology Pipeline

Total estimated $12.5 billion in peak sales from 10 potential phase 3 drugs of PFE. Out of these, 3 Oncology drugs have an estimated peak sales $5.9 billion. We believe these three drugs could be in the market by 2019.

  • Avelumab, which is co-developed by Merck KGaA Darmstadt Germany and PFE, could be filed for FDA approval by the end of 2016 for Merkel Cell Carcinoma
  • Estimated peak sales of $1.9 billion.
  • Phase 3 study to test its efficiency in treating bladder and ovarian cancer have already begun.

                           

                                                               

Biosimilars Could Be the New Oncology For Pfizer

In order to support stable growth in its essential health business Pfizer is focusing on biosimilars. Other pharma and consumer accounts for 35% of the valuation of the company. After the acquisition of Hospira it became quite clear that biosimilar would be the new focus for Pfizer in order to support its ailing legacy business. Currently, the company has three biosimilars – Inflectra, Nivestim and Retract.  While Inflectra has already received FDA approval. Pfizer is building a manufacturing facility for biosimilar production in China which should be operational by 2018. The biosimilars market is expected to grow at a CAGR of 22% by 2020. We believe biosimilars should start showing meaningful impact in Pfizer’s revenues by 2019.

Source:

[1] Pfizer (PFE) Ian C. Read on Q2 2016 Results – Earnings Call Transcript, Seeking Alpha, August 02,2016

[2] Sec Filings

Have more questions about Pfizer? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Pfizer
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