Pfizer Profits Down By 52 Percent


With Profits Down By 52 Percent, Pfizer (PFE) Investors May Pressure for an M&A, a Breakup, or Both

January 28, 2015

By Mark Terry, BioSpace.com Breaking News Staff

Pfizer Inc. (PFE)’s fourth quarter report yesterday has analysts and investors concerned after profit dropped 52 percent and talk began about a possible breakup of the company.

“During 2014, despite significant continued revenue headwinds from product losses of exclusivity and co-promote expiries, we were able to deliver modest adjusted diluted EPS growth,” said Pfizer Chairman and CEO Ian Read in a statement. “This was achieved through a combination of incremental revenue generation from key in-line products and recent product launches, responsible expense management as well as supportive capital allocation.”

The company’s 2015 guidance, however, is less optimistic, citing an expected $3.5 billion loss due to patent expirations and generic competition, as well as another $2.8 billion drop because of foreign exchange rates relative to the U.S. dollar.

Some analysts are speculating that Pfizer will either need to acquire a company, or break it up into two or three companies, or possibly both. Pfizer has indicated that any potential breakup of the company would not happen until 2017.

Pfizer’s 2015 guidance,” said Alex Arfaei, an analyst with BMO Capital Markets Corp., in a statement, “underscores the company’s need for a deal.”

The fourth quarter 2014 report showed a decreased quarterly revenue of $440 million, or 3 percent, compared to the previous year. Revenue in emerging markets increased 7 percent operationally, and certain of the company’s products, including Lyrica, Prevnar, Eliquis and Xeljanz had increased sales, but the company was especially battered by competition from generic versions of Celebrex, Enbrel and Spiriva.

Despite that, Pfizer has been on the prowl for acquisitions ever since the company’s bid for U.K-based AstraZeneca PLC (AZN) fell through in May 2014.
Possible acquisition targets are Teva Pharmaceutical Industries Ltd. (TEVA), UK-based GlaxoSmithKline (GSK), Dublin-based Actavis plc (ACT) and New York-based Bristol-Myers Squibb Company (BMY).

Meanwhile, the company has announced several new drugs in its pipeline. Included are Ibrance (palbociclib), a breast cancer drug that will go to regulators in April of this year, Xeljanz, for rheumatoid arthritis, and a blood thinner, Eliquis. Together the three drugs have the potential to bring in estimated sales of $2.41 billion by 2017.

“We see the valuation as attractive, it’s trading well below peers,” said Ashtyn Evans, a healthcare analyst at Edward Jones, in a note to investors, “while the earnings growth isn’t great, whether it’s through M&A or a breakup, we think they can unlock value for shareholders.”


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John Macey

I was born, and principally educated, in the fields of biochemistry, and business management in the northeastern USA. However, my world-wide professional career has greatly expanded upon that US base to involve the many different segments of the Biotech / Life Science fields globally. – I have been dressed as a surgeon to view many, many surgical proceedures - The major players in the health care fields that I have worked for include: Johnson & Johnson, DuPont, Abbott Laboratories, and F. Hoffmann-La Roche. – Positions have included selling nuclear materials for both in-vivo & in-vitro (radio-pharmaceutical & radio-immunoassay) medical diagnostic purposes, in the four countries in Scandinavia, based south of Stockholm, to managing Ph. Ds at a global Swiss headquarters location. – At one time I held a position of Strategy Manager for Europe, Middle-East & Africa (EME&A) for a Chicago based company, but living in Germany. – I do speak fluent colloquial German. – In addition to having lived in multiple European countries, my professional career took me to Asia for well over a decade. There I had management control of Oceania, the Pacific Rim, Northern Asia, Japan, out to India. – Occasionally, management assignments have taken me to all of Latin America, and most of South America. – I am extremely culturally aware, a skilled negotiator, and a seasoned manager of men and science. – My one abiding passion has always been computing, data, and analysis. As such, my main computer operating system is Linux, and open-source computer applications. – I do also run Microsoft 7, and Mac OS X (all 3 operating systems on the same H-P Ultrabook). I hope you enjoy your time on the Blog, and should you have any comments / feedback please feel free to email me @ jjmacey@jjmacey.net, or visit my Linux Web Site @ www.jjmacey.net (always evolving) – John J. Macey – AKA Adler, which in German means Eagle – Wildwood, New Jersey - Together, we can expand your global markets - with our partnerships. The partnerships are global utlizing multiple Law, Regulatory, Seasoned Management, Employment, M&A and buidlers of Business. Contact use.