Pfizer’s Neuroscience Drugs Sales To Plunge 45% In 2020?

by Trefis Team
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Pfizer’s (NYSE:PFE) Neuroscience Drugs have seen revenues shrink from $6.4 billion in 2017 to $4.1 billion in 2019, and we expect these revenues to decline further in 2020 to around $2.3 billion, reflecting a whopping 44% y-o-y decline, as we detail in our interactive dashboard, PFE Revenues: How Does Pfizer Make Money?

The primary factor behind the revenue decline is lower drug sales of Lyrica. Lyrica is the leader in the anti-epileptic drugs market.
Epilepsy is a condition in which a person has recurrent seizures. The drug’s sales stood at $5.0 billion in 2017 but declined to $3.3 billion in 2019. Things are likely to only get worse over the coming years, and Lyrica could see its sales decline below $500 million, as cheaper generics gain market share. Apart from Lyrica, all other neuroscience drugs combined generate sales of less than $1 billion.

It is not only Lyrica, Pfizer will face generic or biosimilar competition for Chantix and Sutent in the near term. Though it must be noted that Pfizer is in the process of merging its mature drugs business with Mylan, and Pfizer will focus only on the high-growth drugs portfolio, such as oncology, where the revenue grew from $5.4 billion in 2017 to $7.6 billion in 2019.

Pfizer in its SEC filings reported revenues under three segments, Biopharma, Upjohn, and Consumer Healthcare in 2019. The Consumer Healthcare is already merged with GSK, while the Upjohn merger with Mylan is in-process, and it will likely be completed in the second half of 2020. Now Lyrica, along with some other popular drugs, including Viagra, Celebrex, and Lipitor are part of Upjohn, and will no longer be part of Pfizer once the merger with Mylan is completed. Though Pfizer will owna  57% stake in the new entity. Pfizer is now focused on key drugs in its oncology, cardiovascular, anti-infectives, and biosimilars portfolio, as we detail in our interactive dashboard on Pfizer Revenues.

Company Overview

Pfizer primarily serves the pharmaceutical markets. The company discovers, develops, and sells pharmaceutical products globally. Its drugs are used for the treatment of various types of diseases, including cancer, heart-related, and infectious, among others. Its customers include, chain stores (Walgreens, CVS, Rite-Aid, Walmart), clinics, long-term care facilities, health maintenance organizations, federal facilities, non-federal institutions, mail order pharmacies, and retail stores. Healthcare is a very large market, and Pfizer faces intense competition from several other players. Within pharmaceuticals, other alternatives are Bristol-Myers Squibb, Johnson & Johnson, Roche, Merck, Abbvie, GlaxoSmithKline, and Teva, among others. Outside of pharmaceuticals, other alternatives are acupuncture, aromatherapy, ayurvedic medicine, chiropractic care, homeopathy, and nutritional counseling, among others.

Pfizer reported $51.8 billion in Total Revenues for full-year 2019. This includes 8 operating segments, of which the key 5 segments are:

  • Oncology Drugs: Oncology is a branch of medicine that deals with tumors. It is concerned with the diagnosis, therapy (surgery, chemotherapy, radiotherapy and other modalities), palliative care of patients with terminal cancers, screening efforts of populations (for hereditary cancers like breast cancer) and follow-up care for successful cancer treatments.
  • Cardiovascular Drugs: Cardiovascular drugs are meant to deal with disorders of the heart. The field includes diagnosis and treatment of congenital heart defects, coronary artery diseases, heart failure, and other types of heart diseases. Cardiovascular diseases are diseases that affect the heart or blood vessels.
  • Anti-Infective Drugs: Anti-Infectives are substances that counteract infection, including antiseptics, disinfectants, antibiotics, antifungal, and virucidal agents. We considered Anti-virals, Cephalosporins (Anti-Bacterial), and vaccines to be a part of this segment for the purpose of this report.
  • Musculoskeletal Drugs: Musculoskeletal system is also known as the Locomotor system. It is an organ system that provides animals and human beings the ability to move. It consists of the body’s bones, muscles, cartilage, tendons, ligaments, joints, and other connective tissues.
  • All Others: This division includes legacy pharma drugs which are not reported separately, growth drugs which do not have sufficient revenues yet to be reported separately, consumer healthcare business, sterile injectables, biosimilars, infusion systems, and revenue from alliances.

Pfizer’s oncology drugs sales are on a rise and it is key to the revenue growth over the coming years

Oncology Drugs revenue has increased from $5.4 billion in 2017 to $7.6 billion in 2019 and we expect it to grow 15% to $8.8 billion in 2020. Oncology Drugs will likely continue to see strong growth, led by Ibrance’s market share gains, as well as from relatively newer drugs, including Bavencio. Ibrance generates around $5 billion in annual sales. It has been approved for the treatment of breast cancer, and is currently being tested in phase 3 for three other variants of breast cancer. The drug’s peak sales are expected to be as high as $8 billion. It thus is an important drug for Pfizer’s future growth. Though another drug, Sutent, in the oncology portfolio, will lose its U.S. patent next year, and this could impact the overall segment sales growth.

Pfizer’s biosimilars could be the next big growth driver

We have clubbed Pfizer’s revenues from consumer healthcare, biosimilars, alliance revenues, and others, in All Others segment. All Others revenue has increased slightly from $18.3 billion in 2017 to $18.8 billion in 2019, and we expect it to decline to $18.5 billion in 2020. This can be attributed to the separation of the consumer healthcare products business. However, the segment revenues will likely trend higher from 2021, led by its biosimilars business. Pfizer has secured regulatory approvals for biosimilars for some of the blockbuster drugs, including, Herceptin ($6.1 Bil 2019 sales), Avastin ($7.1 Bil 2019 sales), and Humira ($14.9 Bil 2019 sales), among others. Why do we believe Pfizer’s biosimilars have huge potential? Usually biosimilars are priced 15-30% lower than the drug’s price. While there are other pharmaceutical companies’ biosimilars also approved, if Pfizer manages to capture even 20% market share, it will result in incremental revenues of over $5 billion in the coming years.

Overall, the Neuroscience Drugs segment is expected to face headwinds in the near term, though some of the key drugs in that portfolio will no longer be part of Pfizer going forward. Pfizer’s growth over the next few years will largely be driven by Oncology Drugs and biosimilars, in our view. Additional details about how other components of Pfizer’s Revenues have changed over the years and are likely to trend going forward are available in our interactive dashboard.

Care about Pfizer’s growth? Merck’s is even better.

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