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Pfizer posts fourth-quarter revenue decline

Published on 28/01/15 at 11:52am
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Pfizer posted a 3% decline in revenue in the last quarter of 2014, the company’s latest financial results show.

The US pharma giant says its Q4 revenues decreased by $440 million, or by 3% compared to the same period in 2013, due to minimal operational growth and the ‘unfavourable’ impact of foreign exchange.

Pharma division revenues (excluding consumer healthcare and animal health) were just over $12 billion in Q4, compared with $12.5 billion in the same period of 2013.

The growth was largely driven by the performance of Lyrica (pregablin), pneumococcal vaccine Prevnar, Eliquis (apixaban), and Xeljanz (tofacitinib citrate) in the US and Europe. These drugs also performed well in emerging markets, and China registered strong growth in Lipitor (atorvastatin) sales.

But according to Pfizer chairman and chief executive Ian Read, the results show that operational growth was offset by “continued revenue headwinds from product losses of exclusivity”.

This included the patent loss and generic competition for the painkiller Celebrex (celecoxib) in the US, the end of the co-promotion deal with Amgen for Enbrel (eternacept) in North America, and the termination of the Spiriva (tiotropium) collaboration in certain countries.

Impact of lawsuit settlement

The report also reveals for the first time that the company has agreed to pay a $400 million settlement to resolve a securities class action lawsuit.

This levy is still subject to approval in New York federal court, but a Pfizer spokeswoman says in a statement that the company had agreed the settlement to "reflect a desire to avoid the distraction of continued litigation and focus on the needs of patients and physicians".

The lawsuit was filed in 2010 and accused Pfizer executives and the board of false and misleading statements about Pfizer’s financial performance and sales practices that caused Pfizer stock to trade at artificially inflated prices.

The allegedly misleading statements centred on marketing statements made about several drugs’ use off-label, the Wall Street Journal reports, including Geodon antipsychotic, the Zyvox antibiotic, the Lyrica epilepsy treatment and Bextra, which was withdrawn from the market in 2005 due to heart attack risks. Pfizer settled with the Justice Department for $2.3 billion over the claims in 2009.

Revenues were also hit hard by investments, including the purchase of the Swiss vaccine developer Redvax, and its collaboration with Merck to develop Pfizer’s anti PD-1 deal antibody for Phase I trials in non-small cell lung cancer, which could cost Pfizer up to $1.15 billion.

Over the full year in 2014 Pfizer revenues decreased by $2 billion, or 4%, compared with 2013. The US giant is pinning its hopes of financial recovery on pipeline drugs, and Read highlighted breast cancer treatment Ibrance (palbociclib) – for which a provisional FDA decision date of April 13 has been set – as one to watch.

“As we look forward to 2015, we expect continued momentum with our pipeline, notably the potential US approval of Ibrance for advanced breast cancer, as well as anticipated strong growth in emerging markets and from our recent product launches in developed markets,” Read says.

“We are now in a position to commence over 20 registrational studies during the coming four years with candidates that are based upon strong science and target indications that have significant unmet need.”

What Read doesn’t say and what many may now suspect, is that all fingers point to the firm hitting the M&A trail in the wake of these results, which shadow its failed buyout of AstraZeneca not so long ago.   

Bloomberg reports that Pfizer has the lowest share price to earnings ratio of 19 multinational pharma companies, and even suggests the company considering Teva and Actavis as candidates for acquisition.

Lilian Anekwe

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