Pfizer’s first-quarter revenues slid by almost $1.5 billion, or 9%, to $13.5 billion, compared to the same period last year. During an earnings call Tuesday, the company attributed part of the decline to continued generics-induced erosion, including cholesterol fighter Lipitor in Europe and Australia and antipsychotic drug Geodon in the US. Despite the slide, CEO Ian Read told analysts the company wrapped a successful quarter, and noted the February spin-off of its animal health unit, Zoetis, among the achievements. The company sold 20% of the animal business through the IPO and retains an 80% ownership stake.
While analysts queried execs about the oncology pipeline and had a question or two about a recent Merck diabetes alliance, the bulk of the conversation orbited two issues: when Pfizer is going to break up, and the company’s European strategy for Xeljanz in the wake of CHMP’s recent rejection of the RA drug.
With the exception of a late-call hedge by CFO Frank D’Amelio, who referred to the firm’s future breakup picture as “a path—if we were to do it,” talk about dividing the company into innovative and value businesses was treated as a given. That included Read’s comments that the company is all but divided externally. As he has said in the past, while the businesses are clearly delineated in the developed markets, the division is not so clear in emerging markets, where the two businesses are not so neatly divided.
Execs did some hedging with regard to timing, saying they were evaluating the strengths of the respective businesses by reviewing three years of records. Analysts wanted to know whether those three years would start now, implying a split by 2016 at the earliest, or if the clock had started ticking sooner. Execs would not commit to a start time, but the response put 2016 as an outlying date. Read said the key to a split is understanding what would enable each business to stand on its own and when each would be ready to do so.
Management also discussed its Xeljanz options in Europe. These include going forward with an appeal, re-filing with the EU regulator, or wooing markets country-by-country. President and GM of specialty care and oncology Geno Germano said the country-by-country approach isn’t at the top of the list, but that the company will pursue a centralized approval at this time.
Germano also said US Xeljanz adoption is growing, with rheumatologists prescribing the drug to post-methotrexate and post anti-TNF patients. He said the sales approach, which includes speaker programs and sales reps, started to gain momentum in March. He added that the drug is finding its way onto formularies, with a prior-authorization requirement “just like there is for other RA medicines in the category.” He expects a DTC campaign to start this summer.
