Pfizer Reports Strong Third-Quarter 2024 Results And Raises 2024 Guidance

Business Wire 29-Oct-2024 6:45 AM

• Third-Quarter Performance Driven by Focused Commercial Execution and Robust Double-Digit Revenue Growth Across Product Portfolio
• Raises Full-Year 2024 Revenue Guidance⁽¹⁾ to a Range of $61.0 to $64.0 Billion and Raises Adjusted⁽²⁾ Diluted EPS Guidance to a Range of $2.75 to $2.95
• Third-Quarter 2024 Revenues of $17.7 Billion, Representing 32% Year-over-Year Operational Growth

• Excluding Contributions from Paxlovid and Comirnaty⁽³⁾, Revenues Grew 14% Operationally

• Third-Quarter 2024 Reported⁽⁴⁾ Diluted EPS of $0.78 and Adjusted⁽²⁾ Diluted EPS of $1.06
• On Track to Deliver Net Cost Savings of At Least $5.5 Billion from Previously Announced Cost Reduction Initiatives

• At Least $4 Billion Anticipated by End of 2024 from Cost Realignment Program⁽⁵⁾
• Approximately $1.5 Billion Expected by End of 2027 from First Phase of Manufacturing Optimization Program

Pfizer Inc. (NYSE:PFE) reported financial results for the third quarter of 2024 and raised its full-year 2024 guidance⁽¹⁾ for both Revenues and Adjusted⁽²⁾ diluted EPS.

The third-quarter 2024 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 delivered another strong quarter of results as we continued to execute with discipline, strengthen our commercial position and advance our pipeline. I am pleased with the performance of our product portfolio in the third quarter as we continued to achieve exceptional growth with our Oncology products, including strong revenue growth contributions from Padcev, Xtandi, Lorbrena and Braftovi/Mektovi, and as we delivered on heightened demand for Paxlovid during the recent COVID-19 wave.

"Our performance through the first three quarters of the year is the result of our focus on our most important strategic priorities. I'm confident that we will deliver on our financial commitments in 2024 and that we are well positioned to continue advancing scientific breakthroughs meaningful to our patients and our company, as well as creating long-term shareholder value, in the years to come."

David Denton, Chief Financial Officer and Executive Vice President, stated: "We are extremely pleased with the strong 14% operational revenue growth of Pfizer's non-COVID products in the third quarter. This follows our strong first-half performance, which demonstrates our continued focus on commercial execution and confidence in our ability to deliver on our financial guidance this year. Importantly, we believe our ongoing cost reduction efforts set the company on a path toward future margin expansion."

OVERALL RESULTS

In the first quarter of 2024, Pfizer reclassified royalty income (substantially all of which is related to our Biopharma segment) from Other (income)/deductions––net to revenues and began presenting Royalty revenues as a separate line item within Total revenues in our consolidated statements of operations. Prior-period amounts have been recast to conform to the current 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⁾.

Results for the third quarter and first nine months of 2024 and 2023⁽⁷⁾ are summarized below.

REVENUES

2024 FINANCIAL GUIDANCE⁽¹⁾

Pfizer raises full-year 2024 revenue guidance by $1.5 billion at the midpoint to a range of $61.0 to $64.0 billion and raises Adjusted⁽²⁾ diluted EPS guidance by $0.30 at the midpoint to $2.75 to $2.95. The company's updated guidance for revenue includes approximately $10.5 billion in anticipated revenues for Comirnaty⁽³⁾ and Paxlovid, approximately $5 billion and $5.5 billion, respectively. Including the contribution from Seagen and excluding revenues from Comirnaty⁽³⁾ and Paxlovid, Pfizer continues to expect full-year 2024 operational revenue growth of 9% to 11% compared to 2023 revenues; and this growth guidance takes into consideration the reduction of sales associated with the previously announced global withdrawal of Oxbryta.

The updated 2024 Adjusted⁽²⁾ diluted EPS guidance takes into consideration our strong year-to-date performance as well as our continued confidence in our business.

Pfizer's updated financial guidance⁽¹⁾ is presented below.

Changes in foreign exchange rates have had a minimal incremental impact since full-year 2024 guidance was updated on July 30, 2024. Please refer to Press Release Footnote (1) for additional information.

CAPITAL ALLOCATION

During the first nine months of 2024, 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:
  • $7.8 billion invested in internal research and development projects, and
  • Approximately $200 million invested in business development transactions.
• Returning capital directly to shareholders through $7.1 billion of cash dividends, or $1.26 per share of common stock.

No share repurchases were completed to date in 2024. As of October 29, 2024, Pfizer's remaining share repurchase authorization is $3.3 billion. Current financial guidance does not anticipate any share repurchases in 2024.

Third-quarter 2024 diluted weighted-average shares outstanding used to calculate Reported⁽⁴⁾ and Adjusted⁽²⁾ diluted EPS were 5,705 million shares. For the third quarter of 2023, basic weighted-average shares outstanding of 5,646 million were used to calculate Reported⁽⁴⁾ and Adjusted⁽²⁾ diluted LPS.

QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2024 vs. Third-Quarter 2023)

Third-quarter 2024 revenues totaled $17.7 billion, an increase of $4.2 billion, or 31%, compared to the prior-year quarter, reflecting an operational increase of $4.3 billion, or 32%, primarily due to growth contributions from Paxlovid as well as several of our acquired products, key in-line products, and recent commercial launches, partially offset by an unfavorable impact of foreign exchange of $133 million, or 1%. Excluding contributions from Paxlovid and Comirnaty⁽³⁾, revenues totaled $13.6 billion, an increase of $1.7 billion, or 14%, operationally compared with the prior-year quarter.

Third-quarter 2024 Paxlovid revenues of $2.7 billion increased $2.5 billion operationally compared with the prior-year quarter, primarily due to strong demand, particularly in the U.S., driven by higher utilization during a recent global COVID-19 wave; the one-time contractual delivery of one million treatment courses to the U.S. Strategic National Stockpile in the third quarter of 2024 that accounted for $442 million in revenue; and no U.S. sales in the prior-year quarter in anticipation of the transition to commercial markets in November 2023.

Third-quarter 2024 Comirnaty⁽³⁾ revenues of $1.4 billion increased $119 million, or 9%, operationally compared with the prior-year quarter, driven primarily by timing of stocking as a result of earlier approval of the new variant vaccine in the U.S. in 2024 compared to 2023, partially offset by lower contractual deliveries and demand in international markets.

Excluding contributions from Comirnaty⁽³⁾ and Paxlovid, third-quarter 2024 operational revenue growth was driven primarily by:

• Global revenues of $854 million from legacy Seagen, which was acquired in December of 2023;
• Vyndaqel family (Vyndaqel, Vyndamax, Vynmac) globally, up 63% operationally, driven largely by continued strong demand, primarily in the U.S. and international developed markets;
• Eliquis globally, up 9% operationally, driven primarily by continued oral anti-coagulant adoption and market share gains in the non-valvular atrial fibrillation indication in the U.S. and certain markets in Europe, partially offset by declines due to loss of patent-based exclusivity and generic competition in certain international markets;
• Xtandi, up 28% operationally, driven primarily by strong demand due to uptake of the non-metastatic castration-sensitive prostate cancer (nmCSPC) indication following approval in the fourth quarter of 2023; and
• Nurtec ODT/Vydura globally, up 45% operationally, driven primarily by strong demand in the U.S. and, to a much lesser extent, recent launches in international markets;

partially offset primarily by lower revenues for:

• Xeljanz globally, down 35% operationally, driven primarily by decreased prescription volumes globally resulting from ongoing shifts in prescribing patterns related to label changes, as well as lower net price in the U.S. and the impact of regulatory exclusivity expiry in Canada; and
• Ibrance globally, down 12% operationally, driven primarily by lower demand due to competitive pressure globally and price decreases in certain international developed markets, partially offset by increased clinical trial supply orders in certain international developed markets versus prior year.

GAAP Reported⁽⁴⁾ Statement of Operations Highlights

SELECTED REPORTED⁽⁴⁾ COSTS AND EXPENSES

Third-quarter 2024 Cost of Sales⁽⁴⁾ as a percentage of revenues decreased by 39.0 percentage points compared to the prior-year quarter, driven primarily by the non-recurrence of a non-cash charge of $5.6 billion recorded in the third quarter of 2023 for inventory write-offs and related charges ($4.7 billion for Paxlovid and $0.9 billion for Comirnaty⁽³⁾).

Third-quarter 2024 SI&A Expenses⁽⁴⁾ were relatively flat operationally compared with the prior-year quarter, reflecting a decrease due to lower U.S. healthcare reform fees primarily related to Paxlovid and Comirnaty⁽³⁾, largely offset by an increase in spending related to marketing and promotional expenses for recently launched and acquired products.

Third-quarter 2024 R&D Expenses⁽⁴⁾ decreased 4% operationally compared with the prior-year quarter, driven primarily by lower spending on certain ongoing vaccine programs and, to a lesser extent, lower spending as a result of our cost realignment program, partially offset by a net increase in spending mainly to develop certain product candidates acquired from Seagen.

The unfavorable period-over-period change in Other deductions—net⁽⁴⁾ of $62 million for the third quarter of 2024, compared with the prior-year quarter, was driven primarily by higher net interest expense and a charge in the third quarter of 2024 related to the expected sale of one of our facilities resulting from the discontinuation of our Duchenne muscular dystrophy (DMD) program, partially offset by net gains on equity securities in the third quarter of 2024 versus net losses on equity securities in the prior-year quarter.

Pfizer's effective tax rate on Reported⁽⁴⁾ income for the third quarter of 2024 is primarily a result of its jurisdictional mix of earnings. Pfizer's positive effective tax rate for the third quarter of 2023 reflects a tax benefit on a pre-tax Reported⁽⁴⁾ loss.

Adjusted⁽²⁾ Statement of Operations Highlights

SELECTED ADJUSTED⁽²⁾ COSTS AND EXPENSES

See the reconciliations of certain Reported⁽⁴⁾ to non-GAAP Adjusted⁽²⁾ financial measures and associated footnotes in the financial tables section of this press release located at the hyperlink below.

RECENT NOTABLE DEVELOPMENTS (Since July 30, 2024)

Product Developments

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.

Corporate Developments

Please find Pfizer's press release and associated financial tables, including reconciliations of certain GAAP reported to non-GAAP adjusted information, at the following hyperlink:

https://investors.pfizer.com/Q3-2024-PFE-Earnings-Release

(Note: If clicking on the above link does not open a new webpage, you may need to cut and paste the above URL into your browser's address bar.)

For additional details, see the attached financial schedules and product revenue tables attached to the press release located at the hyperlink above, and the attached disclosure notice.

DISCLOSURE NOTICE: Except where otherwise noted, the information contained in this earnings release and the related attachments is as of October 29, 2024. We assume no obligation to update any forward-looking statements contained in this earnings release and the related attachments as a result of new information or future events or developments.

This earnings release and the related attachments contain forward-looking statements about, among other topics, our anticipated operating and financial performance, including financial guidance and projections; reorganizations; business plans, strategy, goals and prospects; expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, launches, clinical trial results and other developing data, revenue contribution and projections, potential pricing and reimbursement, potential market dynamics, including demand, market size and utilization rates and growth, performance, timing of exclusivity and potential benefits; strategic reviews; capital allocation objectives; an enterprise-wide cost realignment program, which we launched in October 2023 (including anticipated costs, savings and potential benefits); a Manufacturing Optimization Program to reduce our cost of goods sold, which we announced in May 2024 (including anticipated costs, savings and potential benefits); dividends and share repurchases; plans for and prospects of our acquisitions, dispositions and other business development activities, including our December 2023 acquisition of Seagen, and our ability to successfully capitalize on growth opportunities and prospects; manufacturing and product supply; our ongoing efforts to respond to COVID-19, including our plans and expectations regarding Comirnaty (as defined in this earnings release) and our oral COVID-19 treatment (Paxlovid); our expectations regarding the impact of COVID-19 on our business, operations and financial results; and our Environmental, Social and Governance (ESG) priorities, strategies and goals. Given their forward-looking nature, these statements involve substantial risks, uncertainties and potentially inaccurate assumptions and we cannot assure that any outcome expressed in these forward-looking statements will be realized in whole or in part. You can identify these statements by the fact that they use future dates or use words such as "will," "may," "could," "likely," "ongoing," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "assume," "target," "forecast," "guidance," "goal," "objective," "aim," "seek," "potential," "hope" and other words and terms of similar meaning. Pfizer's financial guidance is based on estimates and assumptions that are subject to significant uncertainties.

Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following:

Risks Related to Our Business, Industry and Operations, and Business Development:

• the outcome of research and development (R&D) activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and further analyses of existing pre-clinical or clinical data; risks associated with preliminary, early stage or interim data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; whether and when additional data from our pipeline programs will be published in scientific journal publications and, if so, when and with what modifications and interpretations; and uncertainties regarding the future development of our product candidates, including whether or when our product candidates will advance to future studies or phases of development or whether or when regulatory applications may be filed for any of our product candidates;
• our ability to successfully address comments received from regulatory authorities such as the FDA or the EMA, or obtain approval for new products and indications from regulators on a timely basis or at all;
• regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities; uncertainties regarding the ability to obtain, and the scope of, recommendations by technical or advisory committees; and the timing of, and ability to obtain, pricing approvals and product launches, all of which could impact the availability or commercial potential of our products and product candidates;
• claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the conduct or outcome of post-approval clinical trials, pharmacovigilance or Risk Evaluation and Mitigation Strategies, which could impact marketing approval, product labeling, and/or availability or commercial potential;
• the success and impact of external business development activities, such as the December 2023 acquisition of Seagen, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which has in the past and could in the future result in increased leverage and/or a downgrade of our credit ratings and could limit our ability to obtain future financing; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired or partnered products; significant transaction costs; and unknown liabilities;
• competition, including from new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line products and product candidates;
• the ability to successfully market both new and existing products, including biosimilars;
• difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock-outs at our facilities or third-party facilities that we rely on; and legal or regulatory actions;
• the impact of public health outbreaks, epidemics or pandemics (such as COVID-19) on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, R&D and clinical trials;
• risks and uncertainties related to our efforts to continue to develop and commercialize Comirnaty and Paxlovid or any potential future COVID-19 vaccines, treatments or combinations, as well as challenges related to their manufacturing, supply and distribution, including, among others, the risk that as the market for COVID-19 products continues to become more endemic and seasonal, demand for our COVID-19 products has and may continue to be reduced or not meet expectations, or may no longer exist, which has and may continue to lead to reduced revenues, excess inventory on-hand and/or in the channel which, for Paxlovid and Comirnaty, resulted in significant inventory write-offs in 2023 and could continue to result in inventory write-offs, or other unanticipated charges; risks related to our ability to develop and commercialize variant adapted vaccines; challenges related to the transition to the commercial market for our COVID-19 products; uncertainties related to the public's adherence to vaccines, boosters, treatments or combinations; risks related to our ability to accurately predict or achieve our revenue forecasts for Comirnaty and Paxlovid or any potential future COVID-19 vaccines or treatments; and potential third-party royalties or other claims related to Comirnaty or Paxlovid;
• trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;
• interest rate and foreign currency exchange rate fluctuations, including the impact of currency devaluations and monetary policy actions in countries experiencing high inflation or deflation rates;
• any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;
• the impact of the increased presence of counterfeit medicines, vaccines or other products in the pharmaceutical supply chain;
• any significant issues related to the outsourcing of certain operational and staff functions to third parties;
• any significant issues related to our JVs and other third-party business arrangements, including modifications or disputes related to supply agreements or other contracts with customers including governments or other payors;
• uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions, such as inflation or interest rate fluctuations, and recent and possible future changes in global financial markets;
• the exposure of our operations globally to possible capital and exchange controls, economic conditions, expropriation, sanctions and/or other restrictive government actions, changes in intellectual property legal protections and remedies, unstable governments and legal systems and inter-governmental disputes;
• the impact of disruptions related to climate change and natural disasters, including uncertainties related to the impact of the tornado at our manufacturing facility in Rocky Mount, NC in 2023;
• any changes in business, political and economic conditions due to actual or threatened terrorist activity, geopolitical instability, political or civil unrest or military action, including the ongoing conflicts between Russia and Ukraine and in the Middle East and the resulting economic or other consequences;
• the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, such as our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines, and our voluntary withdrawal of all lots of Oxbryta in all markets where it is approved and any potential regulatory or other impact on other sickle cell disease assets;
• trade buying patterns;
• the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
• the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, as well as any other corporate strategic initiatives and growth strategies, and cost-reduction and productivity initiatives, including any potential future phases, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs, organizational disruption, adverse effects on employee morale, retention issues or other unintended consequences;
• the ability to successfully achieve our climate goals and progress our environmental sustainability and other ESG priorities;

Risks Related to Government Regulation and Legal Proceedings:

• the impact of any U.S. healthcare reform or legislation or any significant spending reduction or cost control efforts affecting Medicare, Medicaid or other publicly funded or subsidized health programs, including the Inflation Reduction Act of 2022, or changes in the tax treatment of employer-sponsored health insurance that may be implemented;
• U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and other industry stakeholders; as well as pricing pressures for our products as a result of highly competitive biopharmaceutical markets;
• legislation or regulatory action in markets outside of the U.S., such as China or Europe, including, without limitation, laws related to pharmaceutical product pricing, intellectual property, medical regulation, environmental protections, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
• legal defense costs, insurance expenses, settlement costs and contingencies, including without limitation, those related to legal proceedings and actual or alleged environmental contamination;
• the risk and impact of an adverse decision or settlement and risk related to the adequacy of reserves related to legal proceedings;
• the risk and impact of tax related litigation and investigations;
• governmental laws and regulations affecting our operations, including, without limitation, the Inflation Reduction Act of 2022, changes in laws and regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the U.S., the adoption of global minimum taxation requirements outside the U.S. generally effective in most jurisdictions since January 1, 2024, and potential changes to existing tax laws following the November 2024 U.S. elections;

Risks Related to Intellectual Property, Technology and Security:

• any significant breakdown or interruption of our information technology systems and infrastructure (including cloud services);
• any business disruption, theft of confidential or proprietary information, security threats on facilities or infrastructure, extortion or integrity compromise resulting from a cyber-attack, which may include those using adversarial artificial intelligence techniques, or other malfeasance by, but not limited to, nation states, employees, business partners or others;
• risks and challenges related to the use of software and services that include artificial intelligence-based functionality and other emerging technologies;
• the risk that our currently pending or future patent applications may not be granted on a timely basis or at all, or any patent-term extensions that we seek may not be granted on a timely basis, if at all; and
• risks to our products, patents and other intellectual property, such as: (i) claims of invalidity that could result in patent revocation; (ii) claims of patent infringement, including asserted and/or unasserted intellectual property claims; (iii) claims we may assert against intellectual property rights held by third parties; (iv) challenges faced by our collaboration or licensing partners to the validity of their patent rights; or (v) any pressure, or legal or regulatory action by, various stakeholders or governments that could potentially result in us not seeking intellectual property protection or agreeing not to enforce or being restricted from enforcing intellectual property rights related to our products, including Comirnaty and Paxlovid.

Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors are cautioned not to put undue reliance on forward-looking statements. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in our subsequent reports on Form 10-Q, in each case including in the sections thereof captioned "Forward-Looking Information and Factors That May Affect Future Results" and "Item 1A. Risk Factors," and in our subsequent reports on Form 8-K.

This earnings release may include discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.

The information contained on our website or any third-party website is not incorporated by reference into this earnings release. All trademarks mentioned are the property of their owners.

Certain of the products and product candidates discussed in this earnings release are being co-researched, co-developed and/or co-promoted in collaboration with other companies for which Pfizer's rights vary by market or are the subject of agreements pursuant to which Pfizer has commercialization rights in certain markets.

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