PFIZER REPORTS SECOND-QUARTER 2020 RESULTS
Second-Quarter 2020 Revenues of $11.8 Billion, Reflecting 9% Operational Decline; Excluding the Impact from
Consumer Healthcare(1), Revenues Declined 3% Operationally
– 6% Operational Growth from Biopharma, Primarily Driven by Vyndaqel/Vyndamax, Eliquis, Ibrance, Inlyta and Xtandi
– 31% Operational Decline from Upjohn, Primarily Due to U.S. Loss of Exclusivity of Lyrica in 2019, Partially Offset by 17% Operational Growth in China, Primarily Due to Lipitor and Norvasc Second-Quarter 2020 Reported Diluted EPS(2) of $0.61, Adjusted Diluted EPS(3) of $0.78
Raised Midpoint of 2020 Financial Guidance for Revenues by $0.1 Billion to $48.6 to $50.6 Billion and Adjusted Diluted EPS(3) by $0.03 to $2.85 to $2.95; Reaffirmed All Other 2020 Financial Guidance Components
Initiated Four Different Registration-Enabling Vaccine Candidate Programs Since May 2020, Including for Pneumococcal 20-Valent in Infants, Meningococcal Pentavalent, Respiratory Syncytial Virus and for COVID-19,
Which Started Dosing Patients in the U.S. Yesterday
NEW YORK, NY, Tuesday, July 28, 2020 – Pfizer Inc. (NYSE: PFE) reported financial results for second-quarter 2020, increased its 2020 financial guidance for revenues and Adjusted diluted EPS(3) and reaffirmed all other
components of its 2020 financial guidance, which continues to reflect actual and anticipated business impacts from the novel coronavirus disease of 2019 (COVID-19) pandemic.
Results for the second quarter and the first six months of 2020 and 2019(4) are summarized below.
($ in millions, except
per share amounts) Second-Quarter Six Months
2020 2019 Change 2020 2019 Change
Revenues $ 11,801 $ 13,264 (11%) $ 23,829 $ 26,382 (10%)
Reported Net Income(2) 3,426 5,046 (32%) 6,828 8,929 (24%)
Reported Diluted EPS(2) 0.61 0.89 (31%) 1.22 1.56 (22%)
Adjusted Income(3) 4,403 4,520 (3%) 8,917 9,410 (5%)
Adjusted Diluted EPS(3) 0.78 0.80 (2%) 1.59 1.65 (4%)
($ in millions) Second-Quarter Six Months
2020 2019 % Change 2020 2019 % Change
Total Oper. Total Oper.
Biopharma $ 9,795 $ 9,432 4% 6% $ 19,802 $ 18,477 7% 9%
Upjohn 2,006 2,970 (32%) (31%) 4,027 6,184 (35%) (34%)
Consumer Healthcare(1) — 862 (100%) (100%) — 1,721 (100%) (100%)
Total Company $ 11,801 $ 13,264 (11%) (9%) $ 23,829 $ 26,382 (10%) (8%)
Beginning in 2020, Upjohn began managing Pfizer’s Meridian subsidiary, the manufacturer of EpiPen and other auto-injector products, and a pre-existing strategic collaboration between Pfizer and Mylan N.V. (Mylan) for generic drugs in Japan (Mylan-Japan). To facilitate comparison across periods, revenues and expenses associated with Meridian and Mylan-Japan are reported in Pfizer’s Upjohn business in all periods presented.
Acquisitions and other business development activities completed in 2019 and in the first half of 2020 impacted financial results in the periods presented(1). Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to periodover-period growth rates that exclude the impact of foreign exchange(5)
IMPACT OF COVID-19 ON BUSINESS ACTIVITIES AND FINANCIAL RESULTS
As a result of the COVID-19 pandemic, Pfizer continues to take proactive steps intended to protect the health and safety of colleagues, to maintain supply of Pfizer medicines and vaccines to patients and to continue to advance Pfizer’s pipeline.
Colleague Health and Safety
At this time, Pfizer colleagues in most locations who are able to perform their job functions outside of a Pfizer facility continue to work remotely. Certain Pfizer colleagues, primarily those in the Pfizer Global Supply and Worldwide Research and Development organizations, have roles whose physical presence at Pfizer facilities is required to perform their job functions. These colleagues continue to report to work and are subject to strict protocols intended to reduce the risk of transmission, including social distancing, maintaining contact logs, increased cleaning and use of personal protective equipment as necessary.
To date, Pfizer has not seen a significant disruption in its supply chain, and all of its manufacturing sites around the world have continued to operate at or near normal levels. In addition, Pfizer has taken steps to scale up manufacturing operations at risk to accelerate its ability to supply a potential novel treatment or vaccine for COVID-19.
After a brief pause to the recruitment portion of certain ongoing clinical studies and a delay to most new study starts, in late-April 2020, Pfizer restarted recruitment across the development portfolio, including new study starts. Pfizer continues to work closely with clinical trial sites to understand their needs and is performing remote monitoring where appropriate to oversee study conduct. In addition, processes to enable tele-health and home healthcare are being utilized where appropriate to continue the data collection process and support patient safety.
Sales and Marketing
Pfizer has experienced an impact on its sales and marketing activities due to widespread restrictions on in-person meetings with healthcare professionals and the refocused attention of the medical community on fighting COVID-19. Access to prescribers for sales force colleagues during second-quarter 2020 was mixed, with those in most international markets able to meet with healthcare professionals for most of the quarter, while those in the U.S. were unable to meet in-person with doctors for nearly all of the quarter. At this time, no U.S. sales force colleagues are meeting in-person with healthcare professionals due to COVID-19-related safety concerns. Pfizer is actively reviewing and assessing epidemiological data and colleagues remain ready to resume in-person engagements with healthcare professionals on a location-by-location basis as soon as it is safe to do so.
As a result of the lower number of in-person meetings with prescribers and restrictions on patient movements due to government-mandated work-from-home or shelter-in-place policies, the rate of new prescriptions for certain products and of vaccination rates for most vaccines slowed in certain markets, including the U.S., which negatively impacted second-quarter 2020 financial results. These declines were partially offset by certain Pfizer medicines and vaccines that saw increased demand in certain markets compared to the prior-year quarter, including Prevenar 13 for streptococcus pneumoniae in adults in international markets as well as certain sterile injectable products utilized in the intubation and ongoing treatment of mechanically-ventilated COVID-19 patients.
Financial Condition and Access to Capital Markets
Due to Pfizer’s significant operating cash flows, as well as its financial assets, access to capital markets and revolving credit agreements, Pfizer believes it has, and will maintain, the ability to meet liquidity needs for the foreseeable future.
Pfizer will continue to pursue efforts to maintain the continuity of its operations while monitoring for new developments related to the COVID-19 pandemic, which are unpredictable. Future COVID-19 developments could result in additional favorable or unfavorable impacts on Pfizer’s business, operations or financial condition.
2020 FINANCIAL GUIDANCE(6)
Pfizer increased its 2020 financial guidance for Total Company(7) and New Pfizer(8) revenues and Adjusted diluted EPS(3) and reaffirmed all other financial guidance components.
Financial guidance reflects management’s current expectations for operational performance, foreign exchange rates as well as various COVID-19-related uncertainties, primarily those related to the severity, duration and global macroeconomic impact of the pandemic. Key guidance assumptions regarding these uncertainties broadly reflect an ongoing, gradual global recovery from the first-half 2020 macroeconomic and healthcare impacts of the COVID-19 pandemic. Specific COVID-19-related assumptions include:
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Patient visits with physicians, vaccination rates and the number of elective surgical procedures will gradually increase from second-quarter 2020 levels, beginning in third-quarter 2020;
New-to-brand prescription trends for certain key products will gradually improve from second-quarter 2020
levels, beginning in third-quarter 2020;
Gradual improvement in access to U.S. healthcare professionals for sales force colleagues;
Clinical trial enrollment, including new study starts, continues throughout the remainder of 2020;
Pfizer’s manufacturing and supply chain activities continue to not be materially disrupted; and Pfizer’s investments in potential treatments and a potential vaccine for COVID-19 continue throughout 2020.
However, updated financial guidance does not include any revenues from a potential COVID-19 vaccine.
Based on results to date and these assumptions for the remainder of the year, Pfizer increased its 2020 financial guidance for Total Company(7) and New Pfizer(8) revenues and Adjusted diluted EPS(3) and reaffirmed all other financial guidance components. Total Company(7) financial guidance reflects a full year of revenue and expense contributions from Biopharma and Upjohn and is presented below.
$48.6 to $50.6 billion
(previously $48.5 to $50.5 billion)
Adjusted Cost of Sales(3) as a Percentage of Revenues 19.5% to 20.5%
Adjusted SI&A Expenses(3) $11.5 to $12.5 billion
Adjusted R&D Expenses(3) $8.6 to $9.0 billion
Adjusted Other (Income)/Deductions(3) Approximately $800 million of income
Effective Tax Rate on Adjusted Income(3) Approximately 15.0%
Adjusted Diluted EPS(3) $2.85 to $2.95
(previously $2.82 to $2.92)
Financial guidance for Adjusted diluted EPS(3) continues to assume no share repurchases in 2020.
2020 Financial Guidance for New Pfizer(8)
Pfizer’s updated 2020 financial guidance for New Pfizer(8) is presented below. New Pfizer(8) financial guidance reflects the Biopharma business as it is presently being managed and assumes the pending Upjohn combination
with Mylan was completed at the beginning of 2020.
$40.8 to $42.4 billion
(previously $40.7 to $42.3 billion)
Adjusted IBT Margin(9) Approximately 37.0%
Adjusted Diluted EPS(3) $2.28 to $2.38
(previously $2.25 to $2.35)
Operating Cash Flow $10.0 to $11.0 billion
2020 Financial Guidance for Upjohn(10)
Pfizer’s reaffirmed 2020 financial guidance for Upjohn(10) is presented below. Upjohn(10) financial guidance reflects a full-year 2020 contribution from the Upjohn business as it is presently being managed.
Revenues $8.0 to $8.5 billion
Adjusted EBITDA(11) $3.8 to $4.2 billion
During the first six months of 2020, Pfizer paid $4.2 billion of dividends, composed of dividends of $0.38 per share of common stock in each of the first and second quarters of 2020.
No share repurchases have been completed to date in 2020. As of July 28, 2020, Pfizer’s remaining share repurchase authorization was $5.3 billion. No share repurchases are currently planned in 2020.
The second-quarter 2020 diluted weighted-average shares used to calculate earnings per common share was 5,619 million shares, a reduction of 53 million shares compared to second-quarter 2019.
Dr. Albert Bourla, Pfizer’s Chairman and Chief Executive Officer, stated, “We remain fully committed to confronting the public health challenge posed by the COVID-19 pandemic by collaborating with industry partners and academic institutions to develop potential approaches to prevent and treat COVID-19. Our researchers and scientists have made important progress toward developing an effective vaccine though significant additional work remains. I want to thank all of our R&D colleagues who continue to work tirelessly to find a potential vaccine and treatments that could bring an end to this pandemic. I would also like to acknowledge the remarkable job that our manufacturing team has done throughout this crisis to ensure our medicines continue to reach patients in need.
“Our strong performance in the first half of the year highlights the resiliency of our business even during the most challenging times. The Biopharma business grew 9% operationally in the first six months of the year, driven by strong performances from many key brands. Upjohn faced the expected headwind of generic competition for Lyrica in the U.S. that was partially offset by strong performance in China in second-quarter 2020. We continue to progress toward a successful close of our transaction with Mylan, now expected in the fourth quarter of 2020,” Dr. Bourla concluded.
Frank D’Amelio, Chief Financial Officer and Executive Vice President, Business Operations and Global Supply,
stated, “We raised the midpoint of our 2020 financial guidance range for revenues and Adjusted diluted EPS(3) for Total Company(7) and for New Pfizer(8) while reaffirming the ranges for all other financial guidance components.
While our near-term outlook has greater macroeconomic uncertainty than usual due to COVID-19, we are confident that the long-term outlook for our businesses remains solid. Overall, I was pleased with our financial performance in second-quarter 2020, which demonstrated the durability of our business despite the challenges that the COVID-19 pandemic has presented.
“Despite the ongoing impact of COVID-19, 2020 is still expected to be a transformational year for Pfizer.
Following the pending close of the Upjohn-Mylan transaction, now expected in fourth-quarter 2020, New Pfizer will be positioned to deliver revenue and Adjusted diluted EPS(3) growth that is expected to be among the industry leaders. New Pfizer will be a smaller, science-based company with a singular focus on innovation while also continuing to allocate significant capital directly to shareholders, primarily through dividends,” Mr. D’Amelio concluded.
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