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Same-Day Analysis
Pfizer Reports 4% Rise in FY 2009, Outlook Estimates Disappoint
Published: 2/4/2010
IHS Global Insight Perspective | |
Significance | Operating income for the fourth-quarter and full-year period showed mixed impact from the acquisition. Net income, however, remained positive throughout, gaining from the non-recurrence of the US$640-million after-tax charge related to certain litigation in the third quarter of 2008. |
Implications | The new business structure and the addition of Wyeth's products provided momentum to topline growth, with speciality care, established products, and emerging markets registering double-digit growth in the fourth quarter. Revatio, Lyrica, and Sutent were the main contributors to revenues. |
Outlook | Pfizer has provided a cautious forecast for 2010 and 2012, expecting to reach revenues of less than US$70 billion in four years' time. Next year will see the full integration of Wyeth and merged financials. |
U.S. pharma major Pfizer has reported fourth-quarter and full-year ended 31 December 2009 financial results, with revenue growth at 34% year-on-year and 4% respectively. The revenue split between the U.S. and international markets for the periods under review show that the United States still edges slightly ahead of international markets in terms of gains given the overall impact of foreign exchange on total revenues. In the fourth quarter particularly, the U.S. market ended with 42% year-on-year (y/y) growth, representing 45% of total revenues in comparison to 42% in the year ago period. The costs structure for Pfizer was not restricted at all, with four-quarter cost of sales increasing by 130% y/y, and selling, informational, administrative, as well as research and development (R&D) costs experiencing high two-digit growth rates. The full-year period expenditure was much more modest in its rise, with only cost of sales rising by 10%, and R&D registering a 1% drop. The figures represent increased promotion and marketing efforts that Pfizer employed with the addition of Wyeth's products into its fold. Net income remained positive at 188% y/y in the fourth quarter, and 7% in the full-year period. But this rise is representative of the favourable impact of increased revenues, as well as the non-recurrence of the pre-tax and after-tax charge of US$2.3 billion in the year-ago quarter related to the resolution of investigations concerning Bextra (valdecoxib), and various other products, in addition to the favourable impact of lower costs incurred in connection with cost-reduction initiatives in 2009. These factors were largely offset by significant purchase accounting adjustments and acquisition-related costs associated with the Wyeth acquisition, Pfizer said in a statement.
Pfizer: Selected Results | ||||
Q4 2009 | 2009 | |||
US$ mil. | % Growth Y/Y | US$ mil. | % Growth Y/Y | |
Revenues | 16,537 | 34 | 50,009 | 4 |
BioPharmaceutical revenues | 14,606 | 30 | 45,448 | 3 |
U.S. total revenues | 7,400 | 42 | 21,700 | 7 |
International total revenues | 9,100 | 28 | 28,300 | 1 |
Cost of sales | 3,935 | 130 | 8,888 | 10 |
Selling, informational, administrative expenses | 5,367 | 47 | 14,875 | 2 |
R&D | 2,813 | 22 | 7,845 | -1 |
Acquisition-related in-process R&D charges | 48 | -26 | 68 | -89 |
R&D (including in-process R&D) as % of sales* | 17.3% | 1.8 pp lower | 15.8% | 1.87 pp lower |
Operating income* | 4,347 | -5.56 | 18,333 | 7.40 |
Operating margin* | 26.2% | 10.91 pp lower | 36.6% | 1.35 pp higher |
Net income | 767 | 188 | 8,635 | 7 |
Source: Pfizer/IHS Global Insight *IHS Global Insight calculations | ||||
The new commercial operational structure at Pfizer is now divided into Biopharmaceuticals and Diversified, with the former dedicated to customer-focused product-based units such as Primary and Specialty Care, and Oncology, amongst others. The Biopharmaceuticals unit replaced Pharmaceuticals revenue in the financial particulars, wherein products from Wyeth such as Effexor (venlafaxine) and Prevnar (pneumococcal conjugate vaccine) were also included. In terms of revenues, primary care dominated, registering US$6.5 billion revenues, followed by speciality care and established products, including off-patent products. The emerging markets division reported a 25% rise in growth in the fourth quarter, reflecting the firm's increased efforts to widen its presence in developing countries.
The product-wise performance witnessed some sharp declines in both the periods under review for key products such as Lipitor (atorvastatin calcium), Norvasc (amlodipine besylate), Chantix/Champix (varenicline), Zoloft (sertraline hydrochloride), Aricept (donepezil), and Detrol (tolterodine). These drugs primarily suffered due to increased generic competition in the market segment. The firm's cardiovascular portfolio was the hardest hit in terms declining growth. Positive growth was reported by Lyrica (pregabalin), Geodon (ziprasidone), Zyvox (linezolid), and Sutent (sunitinib), which helped mitigate some of the negative impact of the drugs going off patent. Wyeth's drugs Effexor, Prevnar 7, Enbrel (etanercept), the Premarin family, and Zosyn (piperacillin and tazobactam) were included in the new product list, providing some much-needed boost to overall sales contributions.
Pfizer Product Results | ||||||||
Q4 2009 | 2009 | |||||||
Worldwide | U.S. | Worldwide | U.S. | |||||
US$ mil. | % Growth Y/Y | US$ mil. | % Growth Y/Y | US$ mil. | % Growth Y/Y | US$ mil. | % Growth Y/Y | |
Cardiovascular/Metabolic | ||||||||
Lipitor | 3,175 | 1 | 1,522 | -6 | 11,434 | -8 | 5,667 | -10 |
Norvasc | 486 | -10 | 15 | -4 | 1,973 | -12 | 64 | -11 |
Chantix/Champix | 176 | -2 | 83 | -9 | 700 | -17 | 386 | -21 |
Caduet | 156 | 5 | 100 | -14 | 548 | -7 | 394 | -16 |
Cardura | 127 | 6 | 3 | 120 | 457 | -8 | 7 | 25 |
Revatio | 131 | 38 | 81 | 34 | 450 | 34 | 293 | 35 |
Central Nervous System | ||||||||
Lyrica | 820 | 17 | 410 | 7 | 2,840 | 10 | 1,504 | 4 |
Geodon/Zeldox | 289 | 5 | 239 | 5 | 1,002 | -1 | 836 | 2 |
Zoloft | 148 | 13 | 20 | -12 | 516 | -4 | 82 | -31 |
Aricept* | 121 | -5 | - | - | 432 | -10 | - | - |
Arthritis/Pain | ||||||||
Celebrex | 669 | 1 | 467 | -4 | 2,383 | -4 | 1,697 | -7 |
Infectious/Respiratory | ||||||||
Zyvox | 330 | 16 | 175 | - | 1,141 | 2 | 634 | -5 |
Vfend | 243 | 24 | 73 | 15 | 798 | 7 | 250 | 9 |
Zithromax/Z Max | 131 | 21 | 8 | n/m | 430 | - | 18 | 121 |
Urology | ||||||||
Viagra | 549 | 9 | 265 | 11 | 1,892 | -2 | 962 | 7 |
Detrol/Detrol LA | 309 | -1 | 211 | -3 | 1,154 | -5 | 811 | -1 |
Oncology | ||||||||
Sutent | 293 | 33 | 81 | 22 | 964 | 14 | 273 | 7 |
Aromasin | 136 | 10 | 42 | 8 | 483 | 4 | 163 | 11 |
Ophthalmology | ||||||||
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