Expect Oncology And Biosimilars To Drive Pfizer’s Future Growth

by Trefis Team
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Pfizer (NYSE:PFE) recently posted its Q1 results, which were below street estimates. The company’s overall sales grew 1% while adjusted earnings grew 12%. While the Oncology segment did well, led by a ramp up in Ibrance sales, most of the other pharmaceuticals segments saw revenue declines. Looking forward, we continue to believe that the company’s Oncology portfolio will lead growth, along with its biosimilars, such as Inflectra, which will likely gain market share from Johnson & Johnson’s blockbuster drug Remicade. We have created an interactive dashboard on Pfizer’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s performance.

Expect Oncology To Drive Near Term Growth

Pfizer’s Oncology segment posted a 23% jump (y-o-y) in Q1 sales, primarily led by a ramp up in Ibrance sales. Ibrance has been approved for the treatment of breast cancer, which is the most prevalent cancer type in women. An estimated 266,120 new cases of invasive breast cancer, and 63,960 new cases of non-invasive breast cancer, are expected to be diagnosed in women in the U.S. this year. The majority of breast cancers are HER2 (human epidermal growth factor receptor 2), which means that Ibrance targets a very broad set of breast cancer patients. Apart from Ibrance, Pfizer’s Xalkori is doing well, targeting a certain type of non-small cell lung cancer (NSCLC). While Xalkori’s patient pool is limited, its strong pricing is aiding the segment growth. The drug saw a high-single-digit growth in Q1 with sales of over $150 million, and we expect it to generate revenues of over $1 billion in peak sales.

Beyond Oncology, many of Pfizer’s other segments will likely see declines in the near term, and beyond, as many of its drugs have either lost patent exclusivity or are about to lose it over the next couple of years. Having said that, the company’s cardiovascular drug Eliquis has been on a strong run for a while now, and we expect this trend to continue in the near term, as the drug continues to increase its market share. The company’s management stated that Eliquis sales jumped 30% in Q1 to $765 million. We also expect the company to benefit from its biosimilars in the coming years. Currently, Pfizer has 6 biosimilars in phase 3 trials, which it is testing for blockbuster drugs, Avastin, Rituxan/MabThera, Herceptin, and Humira. While Pfizer’s Q1 results were below the street estimates, we continue to remain positive on the company’s future prospects, and maintain our price target of $41, which is roughly 18% ahead of the current market price.


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