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PFIZER REPORTS SECOND-QUARTER 2014 RESULTS

Stocks in this article: PFE

Pfizer Inc. (NYSE:PFE) reported financial results for second-quarter 2014. At the beginning of fiscal year 2014, the company began managing its commercial operations through a new global commercial structure consisting of three operating segments: the Global Innovative Pharmaceutical segment (GIP) (3); the Global Vaccines, Oncology and Consumer Healthcare segment (VOC) (3); and the Global Established Pharmaceutical segment (GEP) (3). Financial results for each of these segments are presented in the Operating Segment Information section. As a result of the full disposition of Zoetis Inc. (Zoetis) on June  24, 2013, the financial results of the Animal Health business are reported as a discontinued operation  in the consolidated statements of income for the second-quarter and first six months of 2013. Results are summarized below.

   
OVERALL RESULTS    
                                         

($ in millions, exceptper share amounts)

 

    Second-Quarter         Six Months    
    2014     2013       Change       2014     2013       Change  
Reported Revenues (1) $   12,773 $   12,973 (2 %) $   24,126 $   25,383 (5 %)
Adjusted Income (2) 3,769 4,003 (6 %) 7,434 7,743 (4 %)
Adjusted Diluted EPS (2) 0.58 0.56 4 % 1.15 1.08 6 %
Reported Net Income (1) 2,912 14,095 (79 %) 5,241 16,845 (69 %)
Reported Diluted EPS (1) 0.45 1.98 (77 %) 0.81 2.34 (65 %)
                                                                                     
 
         
REVENUES    
                                                   

($ in millions)Favorable/(Unfavorable)

 

    Second-Quarter         Six Months    
2014 2013     % Change       2014 2013     % Change      
            Total       Oper.                 Total       Oper.    
GEP (3) $   6,513 $   6,921 (6 %) (5 %) $   12,503 $   13,782 (9 %) (7 %)
GIP (3) 3,547 3,726 (5 %) (5 %) 6,623 7,032 (6 %) (5 %)
Global Vaccines (3) 1,097 970 13 % 14 % 2,022 1,893 7 % 9 %
Consumer Healthcare (3) 912 800 14 % 15 % 1,673 1,611 4 % 6 %
Global Oncology (3) 570 493 16 % 16 % 1,058 949 11 % 12 %
Other (4)         134           63       *       *             247           116       *       *    
Total     $   12,773       $   12,973       (2 %)       (1 %)         $   24,126       $   25,383       (5 %)       (3 %)    
                                                                                 

* Calculation not meaningful.

 
       
SELECTED TOTAL COMPANY ADJUSTED COSTS AND EXPENSES (2)
                                               

($ in millions)(Favorable)/Unfavorable

 

    Second-Quarter         Six Months    
2014 2013       % Change       2014 2013     % Change      
              Total       Oper.                 Total       Oper.    
Cost of Sales (2) $   2,320 $   2,194 6 % 6 % $   4,306 $   4,423 (3 %)
Percent of Revenues (2) 18.3 % 16.9 %

N/A

N/A 17.9 % 17.4 % N/A N/A
SI&A Expenses (2) 3,486 3,550 (2 %) (1 %) 6,506 6,728 (3 %) (2 %)
R&D Expenses (2)         1,714           1,521         13 %       13 %             3,326           3,139       6 %       6 %    
Total     $   7,520       $   7,265         4 %       4 %         $   14,138       $   14,290       (1 %)        
 
Effective Tax Rate (2) 27.9 % 27.9 % 26.5 % 27.4 %
                                                                                   
 

2014 FINANCIAL GUIDANCE (5)

Certain financial guidance components have been updated to reflect performance in the first six months of the year as well as the following factors:

  • Adjusted Revenues (2): The expected negative impact from anticipated multi-source generic competition for Celebrex in the U.S. beginning in December 2014. In addition to the approximate one month of multi-source generic competition, Celebrex revenues also are expected to be negatively impacted in fourth-quarter 2014 by associated wholesaler and retailer destocking.
  • Adjusted SI&A Expenses (2): The expected reduction in promotional spending for Celebrex in second-half 2014 attributable to the aforementioned anticipated multi-source generic competition in the U.S. beginning in December 2014.
  • Adjusted R&D Expenses (2): The impact from the planned $80 million upfront payment to Cellectis SA (Cellectis) associated with the recently announced global strategic collaboration as well as higher expected expenses related to the planned acceleration of certain late-stage clinical programs, including palbociclib and bococizumab, among other programs.
  • Adjusted Other (Income)/Deductions (2): The favorable impacts of lower expected net interest expense over the remainder of 2014 as well as gains realized in the first six months of 2014 on sales of product rights and of investments in equity securities, among various other factors.
  • Reported Diluted EPS (1): The negative impact from charges related to certain legal matters, primarily related to Neurontin, incurred in first-quarter 2014.
             
           
 
Adjusted Revenues (2) $48.7 to $50.7 billion
        (previously $49.2 to $51.2 billion)
Adjusted Cost of Sales (2) as a Percentage of Adjusted Revenues (2)         19.0% to 20.0%
Adjusted SI&A Expenses (2) $13.3 to $14.3 billion
        (previously $13.5 to $14.5 billion)
Adjusted R&D Expenses (2) $6.7 to $7.2 billion
        (previously $6.4 to $6.9 billion)
Adjusted Other (Income)/Deductions (2) Approximately ($200 million) of income
        (previously approx. $100 million of deductions)
Effective Tax Rate on Adjusted Income (2)         Approximately 27.0%
Reported Diluted EPS (1) $1.47 to $1.62
        (previously $1.57 to $1.72)
Adjusted Diluted EPS (2) $2.20 to $2.30
           
 

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, “I am pleased with our operating performance to date. Our recently launched products continued to gain traction during the quarter while our mid- and late-stage pipeline continued to progress with a regulatory submission in the U.S. completed for our meningitis B vaccine candidate and our palbociclib regulatory submission in the U.S. underway. We also look forward to the recently announced meeting in August of the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) to evaluate and make a recommendation regarding usage of our Prevnar 13 vaccine in the adult population. In addition, we also announced targeted business development transactions within our Global Oncology (3) and GEP (3) businesses.”

“I continue to see Pfizer as well positioned to effectively execute on our strategy to further strengthen each of our businesses on a global basis and deliver value to all of our stakeholders,” Mr. Read concluded.

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