Pfizer Reports Third-Quarter 2023 Results

BusinessWire

1 year ago

Third-Quarter 2023 Revenues of $13.2 Billion
- Expected Decline in Paxlovid and Comirnaty⁽¹⁾ Revenues Drove 41% Operational Decrease in Third-Quarter 2023 Revenues
- Revenues for Pfizer’s Non-COVID Products Grew 10% Operationally
Third-Quarter 2023 Reported⁽²⁾ Diluted Loss Per Share (LPS) of $(0.42) and Adjusted⁽³⁾ Diluted LPS of $(0.17), Significantly Impacted by $5.6 Billion of Non-Cash Inventory Write-Offs and Other Charges, Which Unfavorably Impacted Reported⁽²⁾ and Adjusted⁽³⁾ Diluted LPS by $0.84
Reaffirms Full-Year 2023 Guidance⁽⁴⁾ Provided on October 13, 2023, of Revenues of $58.0 to $61.0 Billion and Adjusted⁽³⁾ Diluted EPS of $1.45 to $1.65, and Provides All Guidance Components
Reaffirms Full-Year 2023 Non-COVID Operational Revenue Growth Expectation of 6% to 8% vs. 2022
Successful Execution of New Product and Indication Launches, including Abrysvo (Older Adult) and Prevnar 20 (Pediatric), and In-Line Product Growth Contribute to Strong Non-COVID Operational Revenue Growth
Launched Enterprise-Wide Cost Realignment Program Expected to Deliver Annual Net Cost Savings of at Least $3.5 Billion, of Which Approximately $1.0 Billion is Expected to be Realized in 2023 and at Least an Additional $2.5 Billion is Expected to be Realized in 2024 (Compared to Midpoint of SI&A and R&D Expense Guidance Provided on August 1, 2023)

NEW YORK–(BUSINESS WIRE)–Pfizer Inc. (NYSE: PFE) reported financial results for the third quarter of 2023. The company reaffirms its 2023 revenue guidance⁽⁴⁾ range of $58.0 to $61.0 billion and its outlook for Adjusted⁽³⁾ diluted EPS of $1.45 to $1.65 provided on October 13, 2023.

The third-quarter 2023 earnings presentation and accompanying prepared remarks from management as well as the quarterly update to Pfizer’s R&D pipeline can be found at www.pfizer.com.

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “We are encouraged by the strong performance of Pfizer’s non-COVID products in the third quarter of 2023, including significant contributions from new launches and robust year-over-year growth for several key in-line brands. We also have achieved several recent milestones that speak to the underlying strength and breadth of our scientific pipeline, including the U.S. and European Commission (EC) approval and launch of Abrysvo in pregnant individuals, and EC approval and launch of Abrysvo in older adults; the U.S. approval and launch of Elrexfio; U.S. approvals of Penbraya, Velsipity and of the Braftovi+Mektovi combination in BRAF-mutated metastatic non-small cell lung cancer; and EC approval of Litfulo.

“In addition, we continue to make progress toward our proposed acquisition of Seagen, a global leader in discovering, developing and commercializing transformative oncology medicines that we believe can help us conquer cancer in the coming years—and earlier this month, we received unconditional antitrust clearance from the EC on the proposed acquisition, a decision we believe confirms our view that the transaction is pro-competitive, reflective of our complementary portfolios and good for patients.

“With a significant uncertainty removed by our recently announced amended Paxlovid supply agreement with the U.S. government, our expectation of additional clarification on global vaccination and treatment rates by the end of the year, and the breakthroughs continuing to emerge from our pipeline, we look forward to concluding 2023 with positive momentum that showcases Pfizer’s long-term growth potential.”

David Denton, Chief Financial Officer and Executive Vice President, stated: “We are extremely pleased by the strong 10% operational revenue growth of Pfizer’s non-COVID products in the third quarter of 2023. With expected contributions from our new product launches, this puts us squarely on track to meet our full-year non-COVID operational revenue growth target of 6% to 8%. In addition, we launched our cost realignment program, from which we expect to achieve at least $3.5 billion of net cost savings by the end of 2024. Combined with the momentum of our non-COVID product portfolio and U.S. commercialization of Paxlovid, we expect the program to yield improved operating margins this year and help drive Pfizer’s growth through the end of the decade and beyond.”

Results for the third quarter of 2023 and 2022⁽⁵⁾ are summarized below.

OVERALL RESULTS


($ in millions, except per share amounts)	Third-Quarter					Nine Months
	2023		2022		Change	2023		2022		Change
Revenues	$	13,232	$	22,638	(42%)	$	44,247	$	76,040	(42%)
Reported⁽²⁾ Net Income/(Loss)		(2,382)		8,608	*		5,488		26,378	(79%)
Reported⁽²⁾ Diluted EPS/(LPS)		(0.42)		1.51	*		0.96		4.60	(79%)
Adjusted⁽³⁾ Income/(Loss)		(968)		10,172	*		9,908		31,165	(68%)
Adjusted⁽³⁾ Diluted EPS/(LPS)		(0.17)		1.78	*		1.73		5.44	(68%)

* Indicates calculation not meaningful.

REVENUES


($ in millions)	Third-Quarter						Nine Months
	2023		2022		% Change		2023		2022		% Change
	2023		2022		Total	Oper.	2023		2022		Total	Oper.
Global Biopharmaceuticals Business (Biopharma)	$	12,930	$	22,319	(42%)	(42%)	$	43,320	$	75,066	(42%)	(41%)
Primary Care		6,287		15,846	(60%)	(60%)		23,602		55,676	(58%)	(56%)
Specialty Care		3,757		3,404	10%	12%		11,021		10,267	7%	11%
Oncology		2,885		3,070	(6%)	(5%)		8,696		9,124	(5%)	(3%)
Business Innovation	$	302	$	319	(5%)	(7%)	$	928	$	974	(5%)	(4%)
TOTAL REVENUES	$	13,232	$	22,638	(42%)	(41%)	$	44,247	$	76,040	(42%)	(40%)

In the first quarter of 2023, Pfizer established an operating segment, Business Innovation, that includes Pfizer CentreOne (PC1), the company’s global contract development and manufacturing organization and a leading supplier of specialty active pharmaceutical ingredients; and Pfizer Ignite, a recently launched offering that provides strategic guidance and end-to-end R&D services to select innovative biotech companies that align with Pfizer’s R&D focus areas. The prior period has been revised to conform to the current period presentation.

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 changes that exclude the impact of foreign exchange rates⁽⁶⁾.

CAPITAL ALLOCATION

During the first nine months of 2023, Pfizer deployed its capital in a variety of ways, which primarily include the following two categories:

Reinvesting capital into initiatives intended to enhance the future growth prospects of the company, including $7.9 billion invested in internal research and development projects, and

Returning capital directly to shareholders through $6.9 billion of cash dividends, or $1.23 per share of common stock.

No share repurchases have been completed to date in 2023. As of October 31, 2023, Pfizer’s remaining share repurchase authorization is $3.3 billion. Current financial guidance does not anticipate any share repurchases in 2023.

For the third quarter of 2023, basic weighted-average shares outstanding of 5,646 million were used to calculate Reported⁽²⁾ and Adjusted⁽³⁾ diluted LPS.

2023 FINANCIAL GUIDANCE⁽⁴⁾

Pfizer reaffirms its full-year 2023 guidance⁽⁴⁾ for Revenues, Adjusted⁽³⁾ diluted EPS and Effective Tax Rate on Adjusted⁽³⁾ Income provided on October 13, 2023, which is presented below. This guidance incorporates the impacts of certain one-time items, noted below.


	2023 Financial Guidance⁽⁴⁾	One-Time Items Included in Guidance^(a)
Revenues*	$58.0 to $61.0 billion	$(4.2) billion
Operational⁽⁶⁾Decline vs. Prior Year	(41%) to (38%)
Decline vs. Prior Year	(42%) to (39%)

Non-cash Inventory Write-offs^(a)		$5.6 billion

Adjusted⁽³⁾ Diluted EPS*	$1.45 to $1.65	$(1.47)
Operational⁽⁶⁾Decline vs. Prior Year	(75%) to (72%)
Decline vs. Prior Year	(78%) to (75%)

^(a)		One-time items include a non-cash revenue reversal of approximately $4.2 billion related to the return of an estimated 7.9 million treatment courses of U.S. government EUA-labeled Paxlovid expected in the fourth quarter of 2023 and a non-cash charge of $5.6 billion recorded to Cost of Sales in the third quarter of 2023 for COVID products inventory write-offs and other charges.
*		Changes in foreign exchange rates have had a minimal incremental impact since full-year 2023 guidance was issued. Please refer to Press Release Footnote (4) for additional information.

The midpoint of the guidance range for revenues reflects a 40% operational decrease compared to 2022 revenues. Company revenues are anticipated to be lower in 2023 than in 2022 due to expected revenue declines for Pfizer’s COVID-19 products, partially offset by expected operational growth from our non-COVID-19 in-line portfolio, new product and indication launches and recently acquired products.

Excluding COVID-19 products, Pfizer is expecting 6% to 8% operational revenue growth in 2023. Revenue guidance for Pfizer’s COVID-19 products is as follows:

Comirnaty⁽¹⁾ revenues of approximately $11.5 billion, down 70% from 2022 results.

Paxlovid revenues of approximately $1 billion, down 95% from 2022 results.

In contrast to previous years, guidance for both products is no longer based primarily on expected deliveries under existing signed or committed supply contracts, but now also includes, among other things, for Comirnaty⁽¹⁾, transition to traditional commercial market sales in the U.S. in September 2023; and for Paxlovid, expected transition to traditional commercial markets in the U.S. in November 2023, with minimal uptake of New Drug Application (NDA)-labeled commercial product expected before January 1, 2024.

The midpoint of the guidance range for Adjusted⁽³⁾ diluted EPS reflects a 74% operational decrease compared to 2022, primarily driven by the one-time items referenced in Footnote (a) above, anticipated lower revenues from COVID-19 products, higher spending to support new product and indication launches and greater investment in certain late-stage pipeline projects.

Financial guidance for Adjusted⁽³⁾ diluted EPS is calculated using approximately 5.72 billion weighted average shares outstanding, and assumes no share repurchases in 2023.

Pfizer also updated certain other components of its 2023 financial guidance, which are presented below. The increase in guidance for Adjusted Cost of Sales as a Percentage of Revenues reflects the impact of the non-cash charge of $5.6 billion recorded to Cost of Sales in the third quarter of 2023 for inventory write-offs and other charges. The decreases in guidance for Adjusted⁽³⁾ SI&A and R&D Expenses are primarily due to Pfizer’s expectation to realize $1.0 billion of cost savings in 2023 as part of its enterprise-wide cost realignment program. The increase in guidance for Adjusted⁽³⁾ Other (Income) is primarily due to an improved interest rate environment and anticipated higher income from equity-method investments.

Adjusted⁽³⁾ Cost of Sales as a Percentage of Revenues	41.0% to 43.0%
Adjusted⁽³⁾ Cost of Sales as a Percentage of Revenues	(previously 28.0% to 30.0%)
Adjusted⁽³⁾ SI&A Expenses	$13.3 to $14.3 billion
Adjusted⁽³⁾ SI&A Expenses	(previously $13.8 to $14.8 billion)
Adjusted⁽³⁾ R&D Expenses	$11.9 to $12.9 billion
Adjusted⁽³⁾ R&D Expenses	(previously $12.4 to $13.4 billion)
Acquired IPR&D Expenses⁽⁴⁾	Approximately $0.1 billion
Adjusted⁽³⁾ Other (Income)/Deductions	Approximately $1.9 billion of income
Adjusted⁽³⁾ Other (Income)/Deductions	(previously approximately $1.5 billion of income)
Effective Tax Rate on Adjusted⁽³⁾ Income	Approximately 12.0%

Pfizer’s 2023 financial guidance is based on estimates and assumptions that are subject to significant uncertainties. See the Overview of Our Performance, Operating Environment, Strategy and Outlook — Our 2022 Performance and — The Global Economic Environment sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in Pfizer’s 2022 Annual Report on Form 10-K; and the Overview of Our Performance, Operating Environment, Strategy and Outlook — Our Second Quarter 2023 and First Six Months of 2023 Performance and — The Global Economic Environment sections of MD&A in Pfizer’s Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2023 (available at www.pfizer.com); as well as Pfizer’s press release issued on October 13, 2023 (https://www.pfizer.com/news/press-release/press-release-detail/pfizer-amends-us-government-paxlovid-supply-agreement-and), for additional information.

QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2023 vs. Third-Quarter 2022)

Third-quarter 2023 revenues totaled $13.2 billion, a decrease of $9.4 billion, or 42%, compared to the prior-year quarter, reflecting an operational decline of $9.3 billion, or 41%, primarily due to a decrease in Paxlovid and Comirnaty⁽¹⁾ revenues globally, as well as a de minimis impact of foreign exchange. Excluding contributions from Comirnaty⁽¹⁾ and Paxlovid, company revenues grew $1.1 billion, or 10%, operationally.

Third-quarter 2023 Paxlovid revenues declined $7.3 billion, or 97%, operationally compared with the prior-year quarter, primarily driven by no third quarter U.S. sales in anticipation of commercial transition and lower contractual deliveries in most international markets.

Third-quarter 2023 Comirnaty⁽¹⁾ revenues declined $3.1 billion, or 70%, operationally compared with the prior-year quarter, largely driven by lower U.S. government contracted deliveries and lower contracted deliveries and demand in international markets, due to anticipated transition to new variant vaccines globally and to traditional U.S. commercial market sales beginning in September 2023.

Excluding contributions from Comirnaty⁽¹⁾ and Paxlovid, third-quarter 2023 operational revenue growth was primarily driven by:

U.S. revenues from Abrysvo, which contributed $375 million following FDA approval of the older adult indication in May 2023 and publication of the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) recommendation in the CDC’s Morbidity and Mortality Weekly Report (MMWR) in July 2023.

Nurtec ODT/Vydura and Oxbryta, which were acquired in the fourth quarter of 2022 and contributed $233 million and $85 million in global revenues, respectively;

Vyndaqel family (Vyndaqel, Vyndamax, Vynmac) globally, up 47% operationally, largely driven by continued strong uptake of the transthyretin amyloid cardiomyopathy (ATTR-CM) indication, primarily in the U.S. and developed Europe; and

Prevnar family (Prevnar 13 & 20) globally, up 15% operationally, primarily driven by strong patient demand for Prevnar 20 (adult) in the U.S., the U.S. approval of Prevnar 20 (pediatric) and associated stocking, and growth of Prevenar 13 (pediatric) in certain emerging markets; partially offset by anticipated lower market share for Prevnar (pediatric) in the U.S. due to competitive entry.

GAAP Reported⁽²⁾ Statement of Operations Highlights

SELECTED REPORTED COSTS AND EXPENSES⁽²⁾


($ in millions)	Third-Quarter						Nine Months
	2023		2022		% Change		2023		2022		% Change
	2023		2022		Total	Oper.	2023		2022		Total	Oper.
Cost of Sales⁽²⁾	$	9,269	$	6,063	53%	49%	$	17,391	$	24,696	(30%)	(31%)
Percent of Revenues		70.0%		26.8%	N/A	N/A		39.3%		32.5%	N/A	N/A
SI&A Expenses⁽²⁾		3,281		3,391	(3%)	(3%)		10,196		9,032	13%	15%
R&D Expenses⁽²⁾		2,711		2,696	1%	1%		7,864		7,813	1%	1%
Acquired IPR&D Expenses⁽²⁾		67		524	(87%)	(87%)		122		880	(86%)	(86%)

Other (Income)/Deductions––net⁽²⁾		(79)		(59)	33%	50%		(356)		1,063	*	*
Effective Tax Rate on Reported⁽²⁾ Income/(Loss)		28.8%		4.0%				(6.2%)		10.5%

* Indicates calculation not meaningful.

Third-quarter 2023 Cost of Sales⁽²⁾ as a percentage of revenues increased by 43.3 percentage points compared with the prior-year quarter, primarily driven by a non-cash charge of $5.6 billion recorded to Cost of Sales in the third quarter of 2023 for inventory write-offs and other charges ($4.7 billion for Paxlovid and $0.9 billion for Comirnaty⁽¹⁾).

Third-quarter 2023 SI&A Expenses⁽²⁾ decreased 3% operationally compared with the prior-year quarter, primarily reflecting a lower provision for U.S. healthcare reform fees related to Comirnaty⁽¹⁾ and Paxlovid and a decrease in spending on products across multiple customer groups, partially offset by increases in marketing and promotional expenses for recently acquired and launched products.

Third-quarter 2023 R&D Expenses⁽²⁾ increased 1% operationally compared with the prior-year quarter, primarily driven by increased investments to develop recently acquired assets and to support upcoming product launches, partially offset by lower compensation-related expenses.

Third-quarter 2023 Acquired IPR&D Expenses⁽²⁾ decreased 87% operationally, primarily reflecting the non-recurrence of an upfront payment related to the closing of the acquisition of ReViral Ltd. in the third quarter of 2022.

The favorable period-over-period change in Other income—net⁽²⁾ of $19 million for the third quarter of 2023, compared to the third quarter of 2022, was primarily driven by (i) a gain on the divestiture of our early-stage rare disease gene therapy portfolio to Alexion Pharma International Operations Limited, a subsidiary of AstraZeneca PLC, (ii) the non-recurrence of an asset impairment charge incurred in the third quarter of 2022 and (iii) equity income from our investment in Haleon plc in the third quarter of 2023 versus equity losses in the third quarter of 2022; partially offset by (iv) higher net losses on equity securities and (v) lower net periodic benefit credits associated with pension and postretirement plans recorded in the third quarter of 2023.

Pfizer’s positive effective tax rate for the third quarter of 2023 reflects a tax benefit on a pre-tax Reported⁽²⁾ loss, primarily resulting from the Company’s revised forecast and jurisdictional mix of earnings.

Adjusted⁽³⁾ Statement of Operations Highlights

SELECTED ADJUSTED⁽³⁾ COSTS AND EXPENSES


($ in millions)	Third-Quarter						Nine Months
	2023		2022		% Change		2023		2022		% Change
	2023		2022		Total	Oper.	2023		2022		Total	Oper.
Adjusted⁽³⁾ Cost of Sales	$	8,906	$	6,038	47%	44%	$	16,723	$	24,621	(32%)	(33%)
Percent of Revenues		67.3%		26.7%	N/A	N/A		37.8%		32.4%	N/A	N/A
Adjusted⁽³⁾ SI&A Expenses		3,205		3,239	(1%)	(1%)		9,974		8,635	16%	17%
Adjusted⁽³⁾ R&D Expenses		2,679		2,693	(1%)	—		7,797		7,799	—	1%

Adjusted⁽³⁾ Other (Income)/Deductions––net		(388)		(515)	(25%)	(23%)		(1,466)		(1,298)	13%	5%
Effective Tax Rate on Adjusted⁽³⁾ Income/(Loss)		22.3%		4.4%				10.4%		11.9 %

Reconciliations of certain Reported⁽²⁾ to non-GAAP Adjusted⁽³⁾ financial measures and associated footnotes can be found in the financial tables section of the press release located at the link below.

RECENT NOTABLE DEVELOPMENTS (Since August 1, 2023)

Product Developments

Abrilada (adalimumab-afzb) – In October 2023, Pfizer announced the FDA designated Abrilada as an interchangeable biosimilar to Humira⁽⁷⁾ (adalimumab). The interchangeable designation applies to all approved indications of Abrilada, including certain patients with rheumatoid arthritis (RA), juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis, plaque psoriasis, hidradenitis suppurativa and uveitis.
Abrysvo (Respiratory Syncytial Virus Vaccine)
- In August 2023, Pfizer announced the FDA approved Abrysvo, the company’s bivalent RSV prefusion F (RSVpreF) vaccine, for the prevention of lower respiratory tract disease (LRTD) and severe LRTD caused by RSV in infants from birth up to six months of age by active immunization of pregnant individuals at 32 through 36 weeks gestational age. The CDC’s ACIP subsequently recommended Abrysvo for use in pregnant people during 32 through 36 weeks gestation, using seasonal administration, to prevent RSV lower respiratory tract infection in infants. This recommendation was published in the CDC’s MMWR in October 2023, triggering commercial and Medicaid coverage.
- In August 2023, Pfizer announced the EC granted marketing authorization for Abrysvo for passive protection against LRTD caused by RSV in infants from birth through six months of age following maternal immunization during pregnancy (between weeks 24 and 36 of gestation) and for active immunization of individuals 60 years of age and older for the prevention of LRTD caused by RSV. The authorization is valid in all 27 European Union (EU) member states plus Iceland, Liechtenstein and Norway.
Braftovi (encorafenib) and Mektovi (binimetinib) – In October 2023, Pfizer announced the FDA approved Braftovi in combination with Mektovi for the treatment of adult patients with metastatic non-small cell lung cancer (NSCLC) with a BRAF V600E mutation, as detected by an FDA-approved test. The approval was based on data from the ongoing Phase 2 PHAROS clinical trial, an open-label, multicenter, single‑arm study examining Braftovi + Mektovi combination therapy in both treatment-naïve and previously treated patients with BRAF V600E-mutant metastatic NSCLC.
Comirnaty (COVID-19 Vaccine, mRNA)⁽⁸⁾
- In September 2023, Pfizer and BioNTech SE (BioNTech) announced the FDA approved the companies’ supplemental Biologics License Application (Comirnaty 2023-2024 Formulation) for individuals 12 years and older and granted Emergency Use Authorization (EUA) for individuals 6 months through 11 years of age for the companies’ Omicron XBB.1.5-adapted monovalent COVID-19 vaccine. The CDC’s ACIP subsequently recommended a COVID-19 vaccine updated for 2023-2024 for everyone aged 6 months and older; this recommendation was adopted by the CDC Director in September and is now official.
- In August 2023, Pfizer and BioNTech’s Omicron XBB.1.5-adapted monovalent COVID-19 vaccine (Comirnaty Omicron XBB.1.5) received marketing authorization by the EC for individuals 6 months of age and older.
Elrexfio (elranatamab-bcmm)
- In October 2023, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency adopted a positive opinion, recommending marketing authorization for Elrexfio for the treatment of adult patients with relapsed and refractory multiple myeloma (RRMM) who have received at least three prior therapies, including an immunomodulatory agent, a proteasome inhibitor and an anti-CD38 antibody, and have demonstrated disease progression on the last therapy. The EC, which authorizes central marketing approvals in the EU, will take a legally binding decision based on the CHMP recommendation and is expected to make a final decision in the coming months. If granted, the decision will apply to all 27 EU member states plus Iceland, Liechtenstein and Norway.
- In August 2023, Pfizer announced the FDA granted accelerated approval to Elrexfio for the treatment of adult patients with RRMM who have received at least four prior lines of therapy, including a proteasome inhibitor, an immunomodulatory agent, and an anti-CD38 monoclonal antibody. Elrexfio is the first off-the-shelf (ready-to-use) fixed-dose, subcutaneous B-cell maturation antigen (BCMA)-directed agent in the U.S. with the option for every-other-week long-term dosing after 24 weeks of weekly treatment (for patients who have achieved a response and maintained it for at least two months). Approval was based on the results of the single-arm Phase 2 MagnetisMM-3 trial, and continued approval for this indication is contingent upon verification of clinical benefit in a confirmatory trial(s).
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