Pfizer

Healthcare

Pfizer’s CEO attacked planned drug pricing reform for singling out their industry

Pfizer’s CEO attacked the proposed Inflation Reduction Act for implementing “price setting” and “forcing their will” on his industry.“Albert Bourla — Chairman and Chief Executive Officer: Thank you. I’m disappointed with what I’m reading in the newspapers. Of course, we can’t know exactly what will happen because we have seen that this situation is very volatile. But everything that they are reporting, they are going to implement a price setting. In reality, it’s not a price negotiation because they are forcing their will by implementing a 95% tax according to previous guidance. That will cause the industry significant. We estimate $270 billion over 10 years. There is a positive provision there that they are reducing the out-of-pocket cost for the patient. That’s a significant one, but it’s too little and too late. They could do way more because that will cost 10% of the $270 billion that they’re going to collect. They are basically not doing that to alleviate patients’ cost because they could give all the money and then make significant, significant difference to the patient. They’re just giving a part of that. And they want even to start it, if I understood well, from year 2025. So although the out-of-pocket is a very positive provision, but the (rest one) is a provision that I think will force the industry to reduce R&D if it goes the way that they are they are suggesting. So other than that, I don’t have anything to add. We will wait to see how the — what exactly in reality that means and we’ll go from there.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO said the legislation was “choosing to single out this industry. I think it’s wrong.”“Albert Bourla — Chairman and Chief Executive Officer: And also I want to say it is very disappointing that they are choosing to single out one industry. Everything in this bill, from what I understand, (indiscernible )that is affecting everyone. But then there are specific measures to affect only the pharma industry, particularly when we are out of a pandemic, where this industry has proven the value that brings to public health and to the global economy. We would be in a very different point in this global economy if we didn’t have the investments in the thriving life sciences sector. And they are choosing to single out this industry. I think it’s wrong. And I hope that reason will prevail when these discussions goes to Congress. Let’s move to the next question, please.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO complained about the focus on pricing but admitted the company would raise prices more if the government didn’t organize large purchases

Pfizer’s CEO complained “very time I speak about pricing, it’s becoming big news.”Albert Bourla — Chairman and Chief Executive Officer: Thank you very much. Chris, we do not provide, let’s say, forward-looking projections on pricing. And particularly, every time I speak about pricing, it’s becoming big news. So I want to make sure that we respect that.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO implied that while the company provided “special pricing” on large government orders, that prices would increase in a “normal market.” “Albert Bourla — Chairman and Chief Executive Officer: I know what you are asking. And I can give a very high-level answer. Clearly, we are providing special pricing when we are contracting very, very big quantities with governments. That’s also the incentive for the government to buy big quantities because the price is really, really very attractive. But if we move to a normal market, the prices would reflect both in vaccines and in antivirals, the prices of similar value, similar technology products that they are out there. And clearly, also when you move to private commercial markets, the complexities are getting way, way higher. We will need to go to single doses in the vaccines. So manufacturing complexities are very higher.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO said the company would see “significant opportunities” in an “open market” because “that creates a very big complexity but also could be taken into consideration as we price our products at that time. “ “Albert Bourla — Chairman and Chief Executive Officer: We need to have distribution to small distribution centers, including physician offices. So all of that creates a very big complexity but also could be taken into consideration as we price our products at that time. And I want to emphasize that also those present significant opportunities for us. Because the open market, it is way more complex, way more diverse to have millions of customers rather than one or two. And this plays to our strengths in terms of having global presence or within the U.S., dramatic presence in every single territory of the country with thousands of people that they are calling physicians, hospitals, accounts, in payers’ accounts, etc., etc. So it’s something that if we see a turn into this market, also we will see us being able to compete more of a position of strength than now. “ (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CFO crowed about the company’s “cash generation capabilities,” noting $25 billion has been funneled to their investors

Pfizer’s CFO: “Over the past few years, Pfizer’s cash generation capabilities have expanded significantly.”“Dave Denton — Chief Financial Officer: Over the past few years, Pfizer’s cash generation capabilities have expanded significantly. And the efficient deployment of this capital is more critical than ever. It is clear to me the company is uniquely positioned for both growth and, at the same time, enhancing financial returns. And as we look to the future of the company, we are focused on three primary areas to drive significant shareholder value. First and foremost is our continued emphasis and investment in science and innovation. We are investing internally and externally to create breakthrough medicines, deploying more than $50 billion in this area in the past three years alone.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer said it had paid out more than $25 billion to shareholders recently, including over $6 six billion in 2022 alone.“Dave Denton — Chief Financial Officer: Our second priority is maintaining and growing Pfizer’s dividend, paying out more than $25 billion to shareholders over this period. We recognize that our dividend represents an important component of returns for our investors. And finally, from time to time, we will return capital to shareholders through value-enhancing share repurchases. Over the past three years, the company has allocated nearly $9 billion in this area. Clearly, maximizing shareholder value will be a major focus. And I believe that all three areas will contribute to our success. More recently and year to date, we deployed more than $12 billion into innovation, paid dividends of $4.5 billion, and repurchased $2 billion worth of our shares. This demonstrates an ongoing commitment to our robust capital deployment framework.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CFO said their performance was strong enough that it was increasing revenue expectations by $2 billion, a “65% operational growth at the midpoint compared to 2021.” “Dave Denton — Chief Financial Officer: Given our strong second quarter performance and our improving outlook for the year, we are increasing our operational expectations for both revenues and adjusted earnings per share. For the full year, we are increasing our operational revenue expectations by $2 billion, and operational adjusted diluted earnings per share expectations by $0.24. Unfortunately, given additional U.S. dollar strengthening since we last updated guidance in early May, foreign exchange negatively impacts revenues by approximately $2 billion, leaving our reported revenue guidance range unchanged at $98 million to $102 billion. This represents an operational growth rate of 29% at the midpoint compared to 2021, a 200-basis-point improvement over prior expectations. The improvement in our operational adjusted diluted earnings per share outlook of $0.24 is also negatively impacted by foreign exchange movements, compressing EPS by $0.19. The net impact of these cross-currents allows the company to raise the low end of its adjusted earnings per share outlook by $0.05 to $6.30 to $6.45 a share. This represents 65% operational growth at the midpoint compared to 2021.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Despite complaints about government price setting, Pfizer reported record profits thanks to federally funded covid drugs

Pfizer predicted over $50 billion in revenue and sales between the covid vaccine and paxlovid. “Dave Denton — Chief Financial Officer: Regarding our COVID-19-related revenues. We continue to expect the vaccine revenue for the year to be approximately $32 billion, unchanged compared to the prior guidance provided on May 3, despite the impact of approximately $1 billion of incremental negative foreign exchange. For Paxlovid, we expect sales of approximately $22 billion, keeping the guidance unchanged, again despite an incremental $300 million headwind due to FX. Our non-COVID-related revenues are absorbing approximately $700 million of impact from negative foreign exchange.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer reported that the company was seeing an all time high in paxlovid usage, thanks to the Federal Government’s “Test to Treat program.” “Angela Hwang — President, Pfizer Biopharmaceuticals: So I think that gives you a sense of how much demand is coming in from all of the states. And then every single week, our utilization of Paxlovid has also increased. In fact, most recently, we hit an all-time high of 389,000 doses of Paxlovid that were used just in one week. So that gives you a sense of sort of the increase and the momentum. What’s really driving this is obviously the education and the familiarity and the experience now of physicians, as well as patients, but also the excellent work that is being done at the federal, as well as the state level — at the state level, in terms of education and utilization. And I want to call out, in particular, the Test to Treat program that I think has been particularly effective and very positive. To date, more than 41,000 pharmacies are now Test to Treat centers. And that means that that just gives access to a tremendous amount of the population to be able to access Paxlovid.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

A Pfizer executive said that currently it pushing paxlovid in a “unbranded” fashion but “ in a commercial setting, you could support through branded education and talk a lot more about the product.” “Angela Hwang — President, Pfizer Biopharmaceuticals: And then I think, finally, even if you think about consumer education, today, we’ve really limited ourselves to unbranded in sort of disease awareness education. But again, in a commercial setting, you could support through branded education and talk a lot more about the product. And so all of these are things that actually Pfizer does and the commercial organization of Pfizer does really well. This is our sweet spot.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer predicted record high revenue in 2022 projecting over $50 billion in sales between the covid vaccine and paxlovid. “Pfizer projects it will generate record-high revenue in 2022, saying Tuesday it expects to sell $32 billion of its Covid-19 shots and $22 billion of its antiviral coronavirus treatment pill Paxlovid this year. However, the company posted mixed fourth-quarter results, beating on earnings but missing on revenue. Pfizer’s stock was down more than 5.7% in morning trading.” (CNBC, 2/8/2022

Pfizer reported fourth quarter revenue doubling to $23 billion thanks to $12.5 billion in covid vaccine sales. “However, Pfizer’s fourth-quarter revenue more than doubled overall to $23.84 billion year-over-year, driven by $12.5 billion in sales of its Covid vaccine. The company’s antiviral pill that fights Covid, Paxlovid, contributed $76 million in U.S. sales during the fourth quarter. The Food and Drug Administration gave the pill emergency approval in December.” (CNBC, 2/8/2022

Pfizer still disappointed analysts because of sales declines in “internal medicine” and flat “hospital sales.” “Pfizer’s miss on revenue was driven by lackluster sales in its internal medicine and hospital segments. Fourth-quarter internal medicine sales fell 3% year-over-year to $2.24 billion, while hospital sales were largely flat at $1.88 billion. Pfizer’s oncology sales expanded 7% to $3.24 billion compared with the year-earlier period.” (CNBC, 2/8/2022

Pfizer has raised prices on at least 100 drugs in 2022 so far, with an average price hike of 4%. (GoodRx, accessed 2/11/2022)