U.S. pharmaceutical giant Pfizer (PFE, Financial) reported its first-quarter numbers before the bell on April 28 and the number mix was great except that the guidance meted out for the remaining year appears to be weak as currency headwinds continue to deter the growth of the top-line for the company. The New York-based company beat the Street estimates for the top and bottom line but the future outlook with regard to earnings fell short of analysts’ expectations. The stock was negatively impacted by the dim outlook provided by the top brass and fell 0.23% to $34.51 in pre-market trading. Let us take a sneak peek into the financial playbook of Pfizer and find out the major facts that led to the overwhelming first-quarter results for the fiscal year 2015.
Drug sales was remarkable during the quarter
The first quarter’s remarkable sales was majorly driven by the blockbuster cancer drug, Ibrance which brought in nearly $38 million in sales, beating the analysts’ estimate of $22 million by a large leap. Analysts have estimated that the drug could generate sales of almost $3.39 billion by 2018; since the drug is a costly one, priced at $9,850 per month, it does prove to be a substantial portion of the revenue.
Dissecting the segmental revenue, the Global Innovative Pharmaceutical division saw sales in units increase 7% to $3.08 billion, the Global Established Pharmaceutical division witnessed decline in revenue by 16% to $5.01 billion and the Global Vaccines division’s revenue exhibited a boost of 44% having reached $1.33 billion during the first quarter of the fiscal year. Though the Global Established Pharmaceutical division’s unit sales saw a drag during the quarter, the management remains optimistic that the proposed acquisition of Hospira, a global leader in biosimilars, would accelerate the growth trajectory of this business line in the forthcoming quarters.
It is notable that only around 39% of Pfizer’s total drug sales were from the U.S., the remaining 61% was primarily from international locations, with major emphasis on the emerging markets. Due to the strong dollar, the revenue for this quarter has shown a slight slump as the number of dollars generated after conversion appears to be a paltry sum. But, nevertheless, revenue clocked to $10.9 billion for the first quarter, compared to analysts’ consensus of $10.8 billion.
Earnings rise, but guidance remains weak
Earnings per share for the first quarter were reported at $0.51 a share, against the analysts’ consensus of $0.50 a share. Including the items, earnings came at $0.38 per share from $0.36 a share reported a year ago. Net income rose to $2.38 billion, from $2.33 billion reported in the similar quarter a year earlier.
However, bearing in mind the negative impact of the strong dollar in the upcoming days, the company has lowered its earnings guidance from the prior range of $2-$2.10 per share to $1.95-$2.05 a share for the full year. As such currency headwinds are expected to become stronger, the company has even lowered its revenue guidance to $44-$46 billion from the earlier forecast of $45.9 billion for the full fiscal year.
In spite of lowering the guidance due to the presence of certain temporary headwinds, the top management are upbeat on the earnings and the future ahead. This is well reflected through the words of Ian Read, Pfizer’s CEO, who said, “We began the year with good performance on both the top and bottom line, and I believe the company is well-positioned in terms of in-line products, recent product launches, geographic reach and product pipeline. During the first quarter of 2015, our new products delivered strong performances. We continued to see strong uptake for our Prevnar 13 vaccine in older adults in the U.S. Ibrance, our recently approved therapy for first-line advanced breast cancer in the U.S., performed very well following its February launch…”
Parting thoughts
Pfizer seems to be on a growth trajectory and the new products in its pipeline could create new markets in the long run. Though there are headwinds that would hinder its sales growth to some extent in the upcoming quarters, the solid market for its drugs will aid in generating growth even in the short-run. Let’s stay tuned for the upcoming quarter results which is to be released three months down the line.
