Pfizer Inc. plans to increase research and development spending and focus on smaller deals in a bid to accelerate the delivery of potential blockbuster treatments to market.
“We now believe we are getting close to a growth period,” Pfizer Chief Executive Ian Read said in an interview.
The New York City-based drugmaker on Tuesday raised projections for R&D spending to between $7.7 billion and $8.1 billion, up from $7.4 billion to $7.9 billion previously, as it seeks to bring several cancer, pain and other drugs in the later stages of development to the market.
Pfizer announced the R&D spending adjustment while reporting that its second-quarter revenue rose 4% to $13.47 billion, with currency movements providing much of the lift. Its net income grew to $3.87 billion, or 65 cents a share, from $3.07 billion, or 51 cents a share.
Pfizer is now doubling down on its own R&D efforts, after looking to do a big deal in the past few years. The company expects 25 to 30 drugs from its pipeline to be approved through 2022, including as many as 15 with the potential to ring up $1 billion in yearly sales.
Citing that potential, Mr. Read told analysts the company wasn’t interested in a big deal any longer. A bid to buy AstraZeneca PLC in 2014 and a subsequent attempt to merge with Allergan both came to naught.
“I don’t believe we need such a deal to drive the growth of the company. We’d be better off focusing on developing our pipeline,” Mr. Read said during an earnings call. He said the company will look at smaller deals that would add to Pfizer’s product offerings, perhaps for a gene therapy.
Mr. Read also said it would likely help drug companies like Pfizer if the Trump administration goes through with plans to eliminate the rebates they pay to drug-benefit managers. “Removal of rebates will be very beneficial,” he told analysts.
After facing criticism from President Trump over prices, Pfizer said in July it would defer planned increases on more than 40 drugs while the administration implements its plans for tackling drug prices.
In the latest quarter, Pfizer’s results were boosted by the performance of key brands, such as the blood thinner Eliquis, Ibrance breast-cancer pills and rheumatoid-arthritis therapy Xeljanz. Pfizer also got a $377 million revenue lift from a stronger dollar.
Yet Pfizer expects foreign exchange to turn into a headwind, and it lowered its revenue target for the year to between $53 billion and $55 billion.
The company has been considering options including a sale of its over-the-counter medicines business, and it affirmed it expects to make a decision this year.
Pfizer shares, which have gained 16% over the last year, rose 3.5% to $39.93 on Tuesday.
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