What to watch in Pfizer earnings report

Pfizer (PFE) is scheduled to report results of its second fiscal quarter before the market open on July 31, with a conference call scheduled for 10:00 am EDT. What to watch for 1. 2018 GUIDANCE: Along with its first quarter financial report in early May, the drug giant gave its view for FY18. Pfizer backed its FY18 adjusted EPS view of $2.90-$3.00 on revenue of $53.5B-$55.5B. Analysts are currently expecting FY18 EPS of $2.95 on revenue of $54.29B. Pfizer said Innovative Health revenues increased 3% operationally in 1Q18, primarily driven by continued growth from key brands including Ibrance, Eliquis and Xeljanz. Global operational revenue growth for Ibrance, Eliquis and Xeljanz was 35%, 30% and 29%, respectively. Q1 Innovative Health operational revenue growth was negatively impacted primarily by the loss of exclusivity of Viagra in the U.S. in December 2017 and the resulting shift in the reporting of U.S. and Canada Viagra revenues to the Essential Health business at the beginning of 2018. Innovative Health operational revenue growth was also negatively impacted by lower revenues for Enbrel in most developed Europe markets due to continued biosimilar competition. In the U.S., revenue for Ibrance, Xeljanz, and certain other products was negatively impacted by customer buying patterns. 2. SPLIT OFF THE TABLE: Pfizer said it was “taking a split off the table for the foreseeable future” while speaking on its quarterly conference call in early May. The drug giant added that it has not received an “acceptable offer” for the sale of its Consumer Healthcare business. The company said, “We never say never to anything, but right now, for the foreseeable future, we’re all about executing on our business.” Pfizer said it will continue to manage the Consumer Healthcare unit as it explores other alternatives, which may include “everything from a full or partial separation of the business to ultimately deciding to retain the business.” Pfizer expects to make a decision in 2018. 3. REORGANIZATION: On July 11, Pfizer announced it will organize the company into three businesses: a science-based Innovative Medicines business, which will now include biosimilars and a new hospital business unit for anti-infectives and sterile injectables; an off-patent branded and generic Established Medicines business operating with substantial autonomy within Pfizer and a Consumer Healthcare business. After Pfizer’s reorganization announcement, CNBC’s Jim Cramer said that the move may eventually lead to a spin-off of the company’s health-care business. Cramer reminded investors that “Pfizer had already spun off its animal health business Zoetis (ZTS) in 2013.” 4. PRICE ROLLBACK: Pfizer confirmed it was rolling back its July drug price increases following a conversation with President Trump. In a statement provided to CNBC’s Meg Tirrell on July 10, Pfizer said it will roll back its July 1 price increases “to give the president an opportunity to work on his blueprint to strengthen the healthcare system and provide more access for patients.” The company released the statement following an “extensive discussion” with President Trump. Pfizer said it will return such prices to their pre-July 1 levels as soon as technically possible, and the prices will remain in effect until the earlier of when the president’s blueprint goes into effect or the end of the year.

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