What To Expect From Pfizer’s Q1?

Pfizer (NYSE:PFE) is expected to publish its Q1 2019 results on April 30. This note details Trefis’ forecasts for Pfizer, as well as some of the key trends we will be watching when the company reports earnings. You can view our interactive dashboard analysis ~ How Is Pfizer Likely To Have Fared In Q1? for more details on the key drivers of the company’s expected performance in Q1. In addition, you can see more of our data for Healthcare companies here.

How have Pfizer’s revenues changed over recent quarters, and what’s the forecast for Q1 2019?

• Total Revenues for Pfizer have largely remained in the range of $13 billion to $14 billion over the past few quarters.
• Revenues stood at $13.98 billion in Q4 2018, as compared to $13.34 billion in Q4 2017.
• The growth in some of the key drugs was partly offset by a decline in other drugs, which have lost marketing exclusivity in the recent years.
• We estimate the company’s revenues to be a little under $13 billion for Q1; a figure 0.5% higher than what it reported a year ago, and 7% lower from the previous quarter.

What are Pfizer’s key sources of revenue?

• Pfizer reports its revenues under two segments ~ Innovative Health and Essential Health.
• Innovative Health includes revenues from sales of drugs for several indications in five therapeutic areas:
  • Internal Medicine
  • Vaccines
  • Oncology
  • Inflammation & Immunology, and
  • Rare Diseases
• Essential Health includes revenues from the company’s established brands, biosimilars, and sterile injectable pharmaceuticals, among others.

What to expect from the Innovative Health segment?

• Innovative Health revenue has increased from $8.22 billion in Q4 2017 to $8.85 billion in Q4 2018. This can largely be attributed to strong sales growth of Ibrance, Xeljanz, and Eliquis. We expect this trend to continue in the near term, and forecast mid-single-digit segment revenue growth in Q1.
• Eliquis is witnessing increased acceptance, and it is the leader in the oral anticoagulants (OAC) market (total prescriptions) in the U.S.  The overall anticoagulants market is also expanding, and Eliquis will likely benefit from the market growth.
• Ibrance is one of the top selling breast cancer drugs with annual sales exceeding $4 billion, and it should continue to see sales growth, given its leadership in CDK 4/6 (cyclin-dependent kinase) inhibitor class in the U.S., with 90% share in terms of new prescription volume.
• Xeljanz growth can be attributed to an overall increase in rheumatoid arthritis prescriptions. The drug’s recent expansion into psoriatic arthritis and ulcerative colitis should further aid the sales growth.

What To Expect From Essential Health Segment?

• Essential Health segment revenues have remained flat (y-o-y) at $5.12 billion in Q4 2018.
• This can be attributed to lower sales of some of the drugs, including Viagra, which lost marketing exclusivity in the U.S. in late 2017.
• We expect this trend to continue in the near term, and forecast a mid-single-digit decline for the segment.
• However, the company’s biosimilars sales are ramping up, and they will likely drive future segment sales growth.

What will be the impact of the above on Pfizer’s EPS?

• We expect the earnings to be $0.76 per share on an adjusted basis in Q1. This reflects a modest decline over the prior year quarter.
• The expected modest decline in earnings can largely be attributed to lower revenues.
• The company could see slight decline in margins, led by higher R&D costs, given it has a strong phase 3 pipeline.

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