Pfizer's ongoing restructuring is significantly reducing revenue, resulting in a $337 million loss in its fourth quarter and a miss of Wall Street's profit expectations.
The results and Pfizer's 2020 financial forecasts didn't please investors, who drove Pfizer shares down more than 4%, an unusually large drop for the biggest U.S. drugmaker. Pfizer also said results will be delayed until next year from a key study of whether its blockbuster Ibrance decreases chances of breast cancer recurring.
Pfizer executives, though, predicted a positive, if complicated, future as the company divests lower-profit segments to focus on its more lucrative new prescription drugs business.
“We finished 2019 with strong momentum and look forward to further momentum,” CEO Albert Borla told analysts on a conference call Tuesday. That includes what Borla called the company's best-ever pipeline, thanks to paring its portfolio to focus on six disease areas where it has great expertise.
The maker of Xeljanz for rheumatoid arthritis and the Prevanr 13 vaccine against pneumonia and related infections reported a net loss of 6 cents per share, mainly due to shifting its consumer health business into a joint venture last year. In the year-earlier quarter, Pfizer lost $394 million, or 7 cents per share.
Adjusted earnings of $3.11 billion, or 55 cents per share, fell short of the 58 cents a share expected by analysts surveyed by FactSet.
Revenue totaled $12.69 billion in the October-December quarter. That topped the $12.61 billion that analysts were expecting, but was 9% lower than a year earlier. Sales in emerging markets like China and India jumped 14% to $3.24 billion.
UBS analyst Navin Jacob wrote to investors that three growth drivers — Ibrance, Xeljanz and Vyndaqel for a rare, fatal heart disorder — had lower-than-expected sales, and operating expenses were surprisingly high. That was mainly due to increased spending on marketing of newer drugs and testing of several future drugs.
In afternoon trading, Pfizer shares fell $2.02, or 5%, to $38.14, while the broader markets rose significantly.
Pfizer Biopharma, its innovative prescription drug business, posted quarterly revenue of $10.53 billion, led by Prevnar 13, Xeljanz, stroke preventer Eliquis and breast cancer pill Ibrance.
Its Upjohn business, which sells off-patent drugs such as Lipitor and Viagra, had revenue of $2.16 billion.
The New York-based company has been executing a major slim down to focus on developing new drugs.
Last July, Pfizer moved its huge stable of nonprescription medicines — including pain reliever Advil and Centrum vitamins — into a new joint venture with partner GlaxoSmithKline. Pfizer owns 32% of the JV, which brought Pfizer a profit of $129 million in the quarter. Meanwhile, Pfizer plans to combine its Upjohn business with generic drugmaker Mylan by mid-summer to create a new drugmaker called Viatris.
Pfizer noted it has three recently approved biosimilar drugs, near-copies of pricey biologic drugs “manufactured” in living cells, that have just launched or will by mid-February. The biosimilar versons of cancer drugs Herceptin, Avastin and Rituxan are being sold for nearly 25% below the brands' list prices.
For all of 2019, Pfizer reported net income of $16.27 billion, or $2.87 per share. Revenue totaled $51.75 billion, down 4% from 2018's revenue. It spent $8 billion on shareholder dividends and $8.9 billion on share repurchases during the year.
Pfizer said that this year it won’t buy back any shares, so it can plow that money into drug development.
Looking ahead, Pfizer Inc. forecast adjusted net income of $2.82 to $2.92 per share, on revenue of $48.5 billion to $50.5 billion for 2020.
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This story has been corrected to show the quarterly net loss was $337 million, not $306 million.
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