Pfizer (NYSE: PFE) announced its second-quarter earnings results before the market opened on Tuesday. How good were those results? Pretty good on some counts, but mediocre on others.
The big drugmaker reported Q2 revenue of $13.5 billion, up 4% year over year. However, Pfizer's operational revenue growth was only 2% year over year. The company's earnings were nearly $3.9 billion, 26% higher than in the prior-year period. Adjusted earnings per share (EPS) for Q2 jumped 21% year over year to $0.81. Pfizer topped Wall Street estimates on both the top and bottom lines.
But there was more to Pfizer's second-quarter update than just the headline numbers. Here are seven things you might have missed with the company's Q2 results.
Image source: Pfizer.
1. A pop for Prevnar
While some of Pfizer's other drugs often get more attention, the company's Prevnar 13 pneumococcal vaccine remains its top-selling product. It always helps when your biggest product performs well -- and that's what happened in the second quarter. Sales for Prevnar 13 increased 8% year over year, thanks to higher volumes in emerging markets and higher government purchases in the U.S. for the pediatric indication.
2. Ibrance growth slowing
How Pfizer's No. 2 best-seller, Ibrance, would perform in Q2 was a big question mark after inventory movements resulted in lower-than-expected sales in Q1. The good news was that Q2 sales for the breast cancer drug jumped 20% year over year to $1.03 billion. Ibrance sales even increased 10% from Q1. However, sales growth for the blockbuster drug appears to be slowing some. Sequential sales growth for Ibrance was 30% in the first quarter and nearly 26% a year ago.
3. Eliquis picking up momentum
Another key drug for Pfizer certainly isn't slowing down. Sales for anticoagulant Eliquis, which Pfizer co-markets with Bristol-Myers Squibb, soared 42% year over year in the second quarter. Sequential growth for the drug was 16%, reflecting a significant uptick in momentum for Eliquis.
4. Some strength left in legacy drugs
One headwind for Pfizer is that sales are declining for several of its older drugs -- but not for all of them. Eight of Pfizer's legacy established products achieved year-over-year sales growth in Q2, with sales for four of them increasing by double-digit percentages. A couple of drugs that have lost exclusivity even saw year-over-year sales growth. Overall revenue from Pfizer's older drugs fell in the second quarter, though.
5. Biggest problem still the biggest problem
Pfizer's biggest problem of the first quarter remained the biggest problem of the second quarter: product shortage issues with its sterile injectables business. Q2 revenue for sterile injectables dropped 8% year over year to $1.3 billion. There were a couple of bright spots, with sales for antibiotics Sulperazon and Zosyn soaring. However, Pfizer still has work to do for its sterile injectables business to help rather than hinder growth.
6. "Employee dividend" nearly the size of shareholder dividend
Pfizer's dividend is one of the best among big pharma companies. But some investors might not realize that the company's "employee dividend" is nearly as large as the dividend it pays to shareholders.
Pfizer spent $6.1 billion to buy back shares in the first half of 2018. However, the company noted that "dilution related to share-based employee compensation programs is expected to offset by approximately half the reduction in shares associated with these share repurchases." In other words, roughly $3 billion worth of shares went to employees as compensation. By comparison, Pfizer spent $4 billion on dividends in the first half of 2018.
7. Currency fluctuations loom large
If you had any doubt about how important currency fluctuations are to Pfizer, consider that the company lowered its full-year revenue guidance solely due to the impact of unfavorable foreign exchange rates. Pfizer now expects 2018 revenue between $53 billion and $55 billion, a $500 million cut from its previous guidance. Currency fluctuations made up half of the drugmaker's total year-over-year revenue growth of 4% in the second quarter.
I wouldn't call Pfizer's Q2 performance great by any stretch. The company's revenue growth remains relatively weak, and its problems of the past continue to be relevant.
However, Pfizer beat both revenue and earnings expectations. Investors rewarded the achievement by driving Pfizer's share price slightly higher in early trading on Tuesday. Overall, I'd say you can chalk up Q2 as a good quarter for Pfizer.
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