PFIZER REPORTS FIRST-QUARTER 2019 RESULTS

April 30, 2019 Off By BusinessWire

First-Quarter 2019 Revenues of $13.1 Billion, Reflecting 5%
Operational Growth Driven by 7% Operational Growth from Pfizer
Biopharmaceuticals Group and 1% Operational Growth From Upjohn
First-Quarter 2019 Reported Diluted EPS⁽¹⁾ of $0.68,
Adjusted Diluted EPS⁽²⁾ of $0.85
Raised Midpoint of 2019 Adjusted Diluted EPS⁽²⁾ Guidance
Range by $0.01 to $2.83 to $2.93, Primarily Reflecting Adjusted Other
Income⁽²⁾ Recorded During First-Quarter 2019, Partially
Offset by the Unfavorable Impact of Foreign Exchange
Reaffirmed 2019 Financial Guidance for Revenues

NEW YORK–(BUSINESS WIRE)–Pfizer Inc. (NYSE: PFE) reported financial results for first-quarter
2019 and raised the midpoint of its 2019 financial guidance for adjusted
diluted EPS⁽²⁾.

At the start of the 2019 fiscal year⁽³⁾, Pfizer reorganized
its commercial operations into three businesses:

Pfizer Biopharmaceuticals Group (Biopharma), a science-based
innovative medicines business, which includes all of the previous
Innovative Health business units (except Consumer Healthcare) as well
as a new Hospital business unit that commercializes Pfizer’s global
portfolio of sterile injectable and anti-infective medicines and
includes Pfizer’s contract manufacturing operation, Pfizer CentreOne.
Pfizer also incorporated its biosimilar portfolio into its Oncology
and Inflammation & Immunology business units and certain legacy
established products into the Internal Medicine business unit.
Upjohn, a global, off-patent branded and generic established medicines
business, which includes 20 off-patent solid oral dose legacy brands
including Lyrica, Lipitor, Norvasc, Viagra and Celebrex, as well as
certain generic medicines.
Consumer Healthcare⁽⁴⁾, which includes Pfizer’s
over-the-counter medicines.

Results for the first quarter of 2019 and 2018⁽³⁾ are
summarized below.

OVERALL RESULTS

($ in millions, except per share amounts)	First-Quarter
	2019		2018		Change
Revenues	$	13,118	$	12,906	2	%
Reported Net Income⁽¹⁾		3,884		3,561	9	%
Reported Diluted EPS⁽¹⁾		0.68		0.59	15	%
Adjusted Income⁽²⁾		4,891		4,555	7	%
Adjusted Diluted EPS⁽²⁾		0.85		0.75	13	%

REVENUES

($ in millions)	First-Quarter
	2019		2018		% Change
	2019		2018		Total		Oper.
Biopharma	$	9,185	$	8,881	3	%	7	%
Upjohn		3,075		3,120	(1	%)	1	%
Consumer Healthcare⁽⁴⁾		858		905	(5	%)	(2	%)
Total Company	$	13,118	$	12,906	2	%	5	%

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 period-over-period growth rates that
exclude the impact of foreign exchange⁽⁵⁾.

2019 FINANCIAL GUIDANCE⁽⁶⁾

Pfizer’s updated 2019 financial guidance is presented below. Financial
guidance continues to reflect a full year of revenue and expense
contributions from Consumer Healthcare⁽⁴⁾.

Guidance for Adjusted Other (Income)/Deductions⁽²⁾ was
increased by $100 million, primarily due to milestone income recorded
in first-quarter 2019.
The midpoint of the guidance range for Adjusted diluted EPS⁽²⁾
was increased by $0.01 to an updated range of $2.83 to $2.93,
reflecting a $0.03 operational improvement, primarily due to the
aforementioned increase to Adjusted other income⁽²⁾,
partially offset by unfavorable changes in foreign exchange rates
since mid-January 2019, which had an incremental negative impact of
$0.02.


Revenues			$52.0 to $54.0 billion
Adjusted Cost of Sales⁽²⁾ as a Percentage of Revenues			20.8% to 21.8%
Adjusted SI&A Expenses⁽²⁾			$13.5 to $14.5 billion
Adjusted R&D Expenses⁽²⁾			$7.8 to $8.3 billion
Adjusted Other (Income)/Deductions⁽²⁾			Approximately $200 million of income (previously approximately $100 million of income)
Adjusted Other (Income)/Deductions⁽²⁾
Effective Tax Rate on Adjusted Income⁽²⁾			Approximately 16.0%
Adjusted Diluted EPS⁽²⁾			$2.83 to $2.93 (previously $2.82 to $2.92)
Adjusted Diluted EPS⁽²⁾			$2.83 to $2.93 (previously $2.82 to $2.92)

Financial guidance for Adjusted diluted EPS⁽²⁾ reflects share
repurchases totaling $8.9 billion in 2019. Dilution related to
share-based employee compensation programs is currently expected to
offset the reduction in shares associated with these share repurchases
by approximately half.

CAPITAL ALLOCATION

During first-quarter 2019, Pfizer returned $10.9 billion directly to
shareholders, through a combination of:

$2.0 billion of dividends, or $0.36 per share of common stock; and
$8.9 billion of share repurchases, composed of $2.1 billion of
open-market share repurchases and a $6.8 billion accelerated share
repurchase agreement executed in February 2019.

As of April 30, 2019, Pfizer’s remaining share repurchase
authorization was $5.3 billion.

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Pfizer’s Chief Executive Officer, stated, “Our
first-quarter 2019 financial results were strong, driven by continued
strength from certain Biopharma brands, primarily Eliquis, Ibrance,
Prevnar 13/Prevenar 13 and Xeljanz, as well as strong operational growth
from certain Upjohn brands, primarily in China. Our new commercial
structure is designed to maximize today’s revenue growth opportunities
while transitioning the company to a period post-2020 where we expect
sustained mid-single-digit operational revenue growth through 2025. We
remain focused on executing on our commercial strategies, managing
expenses, advancing our pipeline and prudently allocating our capital to
position Pfizer for sustainable success.

“Our pipeline continues to deliver differentiated therapies that have
the potential to improve the standard of care for patients across
multiple therapeutic areas. In the first four months of 2019, we have
received five regulatory approvals and presented Phase 3 data for Xtandi
in metastatic hormone-sensitive prostate cancer as well as Phase 2
immunogenicity data in adults for our 20-valent pneumococcal vaccine
candidate. Over the rest of 2019, we are looking forward to potential
U.S. regulatory approvals for tafamidis in transthyretin cardiomyopathy,
our Bavencio-Inlyta combination for the treatment of first-line renal
cell carcinoma as well as for our biosimilar rituximab, bevacizumab and
adalimumab molecules. We also expect Phase 3 read outs in 2019 for
PF-04965842, our Janus kinase-1 (JAK1) inhibitor in development for
moderate-to-severe atopic dermatitis, and rivipansel, in development for
vaso-occlusive crisis from sickle cell disease. I believe our pipeline
today represents an unprecedented opportunity to deliver a life-changing
impact for millions of patients while enhancing value for all of our
stakeholders,” Dr. Bourla concluded.

Frank D’Amelio, Chief Financial Officer and Executive Vice President,
Business Operations and Global Supply, stated, “Overall, I was pleased
with our first-quarter 2019 financial performance. We were able to
achieve 5% operational revenue growth and delivered Adjusted diluted EPS⁽²⁾
growth of 13%, primarily reflecting the strong performance of certain
key products and the net impact of our share repurchases. We reaffirmed
our 2019 financial guidance for revenues. Additionally, we raised the
midpoint of our guidance range for Adjusted diluted EPS⁽²⁾ by
$0.01, reflecting a $0.03 operational improvement, primarily due to
approximately $100 million of incremental Adjusted other income⁽²⁾
that was recorded in first-quarter 2019, partially offset by a $0.02
negative impact reflecting unfavorable changes in foreign exchange rates
since mid-January 2019. Finally, in first-quarter 2019, we returned
$10.9 billion directly to shareholders through share repurchases and
dividends.”

QUARTERLY FINANCIAL HIGHLIGHTS (First-Quarter 2019 vs. First-Quarter
2018)

First-quarter 2019 revenues totaled $13.1 billion, an increase of $211
million, or 2%, compared to the prior-year quarter, reflecting
operational growth of $664 million, or 5%, partially offset by the
unfavorable impact of foreign exchange of $453 million, or 4%.

Pfizer Biopharmaceuticals Group (Biopharma) Revenue Highlights

First-quarter 2019 Biopharma revenues totaled $9.2 billion, up 7%
operationally, primarily driven by:

Eliquis globally, up 36% operationally, primarily driven by continued
increased adoption in non-valvular atrial fibrillation as well as oral
anti-coagulant market share gains;
Ibrance globally, up 25% operationally, primarily driven by:

107% operational growth in international markets, reflecting continued
strong uptake following launches in developed Europe, Japan and
certain emerging markets; and
2% growth in the U.S., reflecting continued moderating volumes in
approved metastatic breast cancer indications;

Prevnar 13/Prevenar 13 globally, up 10% operationally, primarily
driven by:

31% operational growth in emerging markets, reflecting the favorable
overall impact of timing and increased volume associated with
government purchases for the pediatric indication and increased
shipments associated with Gavi, the Vaccine Alliance, partially
offset primarily by the non-recurrence of volumes associated with an
adult national immunization program in first-quarter 2018; and
6% growth in the U.S., reflecting increased government purchases in
first-quarter 2019 for the pediatric indication, partially offset by
the continued decline in revenues for the adult indication due to a
declining “catch up” opportunity compared to the prior-year quarter;
and

Xeljanz globally, up 34% operationally, driven by:

89% operational growth in international markets, primarily reflecting
continued uptake in the rheumatoid arthritis indication as well as
from the recent launch of the ulcerative colitis indication in certain
developed markets; and
18% growth in the U.S., reflecting continued strong volume growth in
the rheumatoid arthritis indication and from the launches of the
psoriatic arthritis and ulcerative colitis indications, partially
offset by expected higher rebating and unfavorable channel mix in
first-quarter 2019,

partially offset primarily by lower revenues for:

the Hospital business in the U.S., down 8%, primarily due to the
continued expected negative impact from generic competition for
products that have previously lost marketing exclusivity; and
certain rare disease products, including the hemophilia franchises
primarily due to competitive pressures, and Genotropin in the U.S.,
primarily due to unfavorable channel mix.

Upjohn Revenue Highlights

First-quarter 2019 Upjohn revenues totaled $3.1 billion, up 1%
operationally, reflecting:

25% operational growth in emerging markets, driven by strong,
volume-driven operational growth in China, primarily from Lipitor,
Norvasc and Celebrex; and
10% operational growth in Japan, primarily driven by strong volume
growth from Lyrica and Celebrex,

partially offset by:

13% operational decline in developed markets excluding Japan,
primarily driven by lower revenues for:

Viagra and Upjohn’s authorized generic for Viagra in the U.S.
resulting from increased generic competition following Viagra’s
December 2017 patent expiration;
Lyrica, primarily due to lower volumes in the U.S., reflecting
wholesaler destocking in advance of anticipated generic competition
beginning on June 30, 2019, and in developed Europe, reflecting
continued generic competition; and
Greenstone, Upjohn’s authorized generic subsidiary, primarily due to
continued industry-wide pricing challenges in the U.S.

Consumer Healthcare⁽⁴⁾ Revenue Highlights

First-quarter 2019 Consumer Healthcare⁽⁴⁾ revenues totaled
$858 million, down 2% operationally, reflecting an 8% decline in the
U.S., partially offset by 4% operational growth in international markets.

GAAP Reported⁽¹⁾ Income Statement Highlights

SELECTED TOTAL COMPANY REPORTED COSTS AND EXPENSES⁽¹⁾

($ in millions) (Favorable)/Unfavorable	First-Quarter
	2019			2018			% Change
	2019			2018			Total	Oper.
Cost of Sales⁽¹⁾	$	2,433		$	2,563		(5%)	3%
Percent of Revenues		18.5	%		19.9	%	N/A	N/A
SI&A Expenses⁽¹⁾		3,339			3,412		(2%)	—
R&D Expenses⁽¹⁾		1,703			1,743		(2%)	(1%)
Total	$	7,474		$	7,718		(3%)	1%

Other (Income)/Deductions––net⁽¹⁾	$	92			($ 178	)	*	*
Effective Tax Rate on Reported Income⁽¹⁾		10.0	%		13.5	%

* Indicates calculation not meaningful.

Pfizer recorded other deductions––net⁽¹⁾in first-quarter
2019 compared with other income––net⁽¹⁾ in the prior-year
quarter, primarily driven by:

higher net losses on the early retirement of certain outstanding debt
securities;
higher business and legal entity alignment costs;
higher asset impairments charges;
higher net interest expense; and
lower income from collaborations, out-licensing and sale of
compound/product rights,

partially offset primarily by:

a favorable change in the fair value of contingent consideration.

Adjusted⁽²⁾ Income Statement Highlights

SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES⁽²⁾

($ in millions) (Favorable)/Unfavorable	First-Quarter
	2019			2018			% Change
	2019			2018			Total	Oper.
Adjusted Cost of Sales⁽²⁾	$	2,415		$	2,536		(5%)	4%
Percent of Revenues		18.4	%		19.7	%	N/A	N/A
Adjusted SI&A Expenses⁽²⁾		3,311			3,286		1%	3%
Adjusted R&D Expenses⁽²⁾		1,693			1,739		(3%)	(2%)
Total	$	7,419		$	7,561		(2%)	2%

Adjusted Other (Income)/Deductions––net⁽²⁾		($135	)		($204	)	(34%)	(39%)
Effective Tax Rate on Adjusted Income⁽²⁾		15.2	%		16.7	%

First-quarter 2019 diluted weighted-average shares outstanding used to
calculate Reported⁽¹⁾ and Adjusted⁽²⁾ diluted EPS
declined by 307 million shares compared to the prior-year quarter
primarily due to Pfizer’s ongoing share repurchase program, reflecting
the impact of share repurchases during 2018 and in first-quarter 2019,
partially offset by dilution related to share-based employee
compensation programs.

A full reconciliation of Reported⁽¹⁾ to Adjusted⁽²⁾
financial measures and associated footnotes can be found starting on
page 18 of the press release located at the hyperlink below.

RECENT NOTABLE DEVELOPMENTS (Since January 29, 2019)

Product Developments

Bavencio (avelumab)

In March 2019, Merck KGaA, Darmstadt, Germany, which operates its
biopharmaceutical business as EMD Serono in the U.S. and Canada (Merck
KGaA), and Pfizer announced that the European Medicines Agency (EMA)
validated for review the Type II variation application for Bavencio in
combination with Inlyta (axitinib) for the treatment of patients with
advanced renal cell carcinoma (RCC).
In March 2019, Merck KGaA and Pfizer announced the discontinuation of
the ongoing Phase 3 JAVELIN Ovarian PARP 100 study evaluating the
efficacy and safety of avelumab in combination with chemotherapy
followed by maintenance therapy of avelumab in combination with
talazoparib, a poly (ADP-ribose) polymerase (PARP) inhibitor, versus
an active comparator in treatment-naïve patients with locally advanced
or metastatic ovarian cancer.
In February 2019, Merck KGaA and Pfizer announced that the U.S. Food
and Drug Administration (FDA) has accepted for priority review the
supplemental Biologics License Application (BLA) for Bavencio in
combination with Inlyta (axitinib) for patients with advanced RCC. The
Prescription Drug User Fee Act goal date for a decision by the FDA is
in June 2019.

Eliquis (apixaban) — In March 2019, the Bristol-Myers
Squibb-Pfizer Alliance announced results from the Phase 4 AUGUSTUS
trial evaluating Eliquis versus vitamin K antagonists (VKAs) in
patients with non-valvular atrial fibrillation and recent acute
coronary syndrome and/or undergoing percutaneous coronary
intervention. Results showed that in patients receiving a P2Y12
inhibitor with or without aspirin (antiplatelet therapies), the
proportion of patients with major or clinically relevant non-major
bleeding at six months was significantly lower for those treated
with Eliquis compared to those treated with a VKA. These data were
featured as a late-breaking oral presentation at the American College
of Cardiology’s 68^th Annual Scientific Session 2019 and
simultaneously published in the New England Journal of Medicine.
Ibrance (palbociclib) — In April 2019, Pfizer announced that
the FDA approved a supplemental New Drug Application to expand the
indications for Ibrance in combination with an aromatase inhibitor or
fulvestrant to include men with hormone receptor-positive (HR+), human
epidermal growth factor receptor 2 (HER2)-negative advanced or
metastatic breast cancer. The approval is based on data from
electronic health records and postmarketing reports of the real-world
use of Ibrance in male patients sourced from three databases: IQVIA
Insurance database, Flatiron Health Breast Cancer database and the
Pfizer global safety database.
Lorbrena/Lorviqua (lorlatinib) — In March 2019, Pfizer
announced that the Committee for Medicinal Products for Human Use
(CHMP) of the European Medicines Agency (EMA) adopted a positive
opinion for Lorviqua (approved in the U.S., Canada, and Japan under
the brand name Lorbrena), an anaplastic lymphoma kinase (ALK) tyrosine
kinase inhibitor (TKI), recommending conditional marketing
authorization in the European Union (EU) as a monotherapy treatment
for adult patients with ALK-positive advanced non-small cell lung
cancer (NSCLC) whose disease has progressed after alectinib or
ceritinib as the first ALK TKI therapy, or crizotinib and at least one
other ALK TKI. Conversion to normal approval is contingent on
provisions of comprehensive data confirming that the benefit-risk
balance is positive. The CHMP’s opinion will be reviewed by the
European Commission (EC), with a decision expected in the coming
months.
Talzenna (talazoparib) — In April 2019, Pfizer announced that
the CHMP of the EMA adopted a positive opinion for Talzenna
recommending marketing authorization in the EU as a monotherapy
treatment for adult patients with germline breast cancer
susceptibility gene (gBRCA)1/2-mutations, who have HER2-negative
locally advanced or metastatic breast cancer. Patients should have
been previously treated with an anthracycline and/or a taxane in the
(neo)adjuvant, locally advanced or metastatic setting unless patients
were not suitable for these treatments. Patients with HR+ breast
cancer should have been treated with a prior endocrine-based therapy,
or be considered unsuitable for endocrine-based therapy. The CHMP’s
opinion will be reviewed by the EC, with a decision expected in the
coming months.
Trazimera (trastuzumab-qyyp) — In March 2019, Pfizer announced
that the FDA approved Trazimera, a biosimilar to Herceptin^®(7), for
the treatment of HER2 overexpressing breast cancer and HER2
overexpressing metastatic gastric or gastroesophageal junction
adenocarcinoma. Trazimera is Pfizer’s first oncology monoclonal
antibody biosimilar and its fifth biosimilar to be approved by the
FDA. Trazimera was approved for use in the EU in July 2018 for the
same indications.
Vizimpro (dacomitinib) — In April 2019, Pfizer announced that
the EC approved Vizimpro in the EU as monotherapy for the first-line
treatment of adult patients with locally advanced or metastatic NSCLC
with epidermal growth factor receptor-activating mutations.
Xeljanz (tofacitinib) — In February 2019, Pfizer announced
that it modified an ongoing post-marketing requirement study
evaluating the safety of Xeljanz at two doses, 10 mg twice daily (BID)
and 5 mg BID, versus a tumor necrosis factor inhibitor (TNFi) control
group in patients with rheumatoid arthritis. Following notification
from the tofacitinib rheumatology Data Safety Monitoring Board (DSMB)
of a safety signal regarding the Xeljanz 10 mg BID treatment group,
Pfizer transitioned all patients in the Xeljanz 10 mg BID treatment
group to the Xeljanz 5 mg BID treatment group. The DSMB observed that
patients in this study that were treated with Xeljanz 10 mg BID had a
statistically and clinically important difference in the occurrence of
pulmonary embolism, compared with patients who were treated with a
TNFi. The DSMB also noted an increase in overall mortality in the
Xeljanz 10 mg BID treatment group compared to the Xeljanz 5 mg BID and
TNFi treatment groups. The DSMB also stated it firmly believes that
the risk-benefit profile of Xeljanz 5 mg BID in comparison to the TNFi
group remains appropriately balanced in this study. The Xeljanz 5 mg
BID dose is the FDA approved dose for adult patients with moderate to
severe rheumatoid arthritis. This study was designed to assess the
risk of cardiovascular (CV) events and therefore in contrast to
previous Xeljanz studies, patients were required to be at least 50
years of age and have at least one CV risk factor to be eligible for
participation in this study. All patients entered the study on stable
doses of background methotrexate. Pfizer will work with the FDA and
other regulatory agencies to review the full results upon completion
of this study.
Xtandi (enzalutamide) — In February 2019, Astellas Pharma Inc.
and Pfizer announced results from the Phase 3 ARCHES trial in men with
metastatic hormone-sensitive prostate cancer (mHSPC). The results
showed that Xtandi plus androgen deprivation therapy (ADT) met the
primary endpoint by significantly reducing the risk of radiographic
progression or death by 61% versus ADT alone. Adverse events in the
ARCHES clinical trial were generally consistent with those reported in
enzalutamide clinical trials in patients with castration-resistant
prostate cancer. These data were presented in an oral session at the
2019 Genitourinary Cancers Symposium.
Zirabev (PF-06439535, biosimilar bevacizumab) — In February
2019, Pfizer announced the EC approved Zirabev, a biosimilar to Avastin^®(8),
for the treatment of metastatic carcinoma of the colon or rectum,
metastatic breast cancer, unresectable advanced, metastatic or
recurrent NSCLC, advanced and/or metastatic RCC and persistent,
recurrent or metastatic carcinoma of the cervix.

Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published
today and is now available at www.pfizer.com/science/drug-product-pipeline.
It includes an overview of Pfizer’s research and a list of compounds in
development with targeted indication and phase of development, as well
as mechanism of action for some candidates in Phase 1 and all candidates
from Phase 2 through registration.

PF-06482077 (20-Valent Pneumococcal Conjugate Vaccine) — In
April 2019, Pfizer presented data from a Phase 2 proof-of-concept
study for its 20-valent pneumococcal conjugate vaccine (20vPnC)
candidate, PF-06482077, which is being investigated for the prevention
of invasive disease and pneumonia caused by Streptococcus pneumoniae
serotypes contained in the vaccine in adults aged 18 years and older.
The presentation was delivered at the 29^th European
Congress of Clinical Microbiology and Infectious Diseases. Pfizer’s
20vPnC candidate includes the 13 serotypes contained in Prevnar 13
plus seven additional serotypes serotypes (8, 10A, 11A,12F, 15B, 22F,
and 33F). Pfizer is enrolling three Phase 3 studies evaluating 20vPnC
in adults. Combined, these three studies will enroll more than 6,000
adult subjects, including populations of vaccine-naïve adults and
adults with prior pneumococcal vaccination. Pfizer expects to submit a
BLA to the FDA by the end of 2020, subject to the successful
completion of Phase 3 studies in adults.
PF-07055480 (SB-525) — In April 2019, Sangamo Therapeutics,
Inc. (Sangamo) and Pfizer announced interim data from the Phase 1/2
Alta study evaluating investigational SB-525 gene therapy for severe
hemophilia A.