Pfizer offers timing for a split; earnings dip in Q2
Details continued to trickle out about Pfizer's potential break-up. During its Q2 earnings call today, the drug maker confirmed the earliest “if we were going to split” timing would be 2017, noting that it would take three years of prospective financials to meet SEC requirements. Using retrospective financials would be too difficult, the company said.
In an investor note today, Sanford Bernstein analyst Tim Anderson said of Pfizer's ongoing break-up saga: “The last big lever management has left to pull is to fully commit to splitting up the drugs side of the business…One thing Pfizer management has told us was that it was watching whether the split up of Abbott generated ‘sustained shareholder value'—so far at least, investors have been happy with Abbot's strategy.”
Pfizer also shed some light on its decision to go with three divisions, rather than just split in half. The drug maker stated that it wanted to keep its oncology and vaccine culture intact rather than risk it being subsumed into its primary care business. It also acknowledged that the two business units operate very differently.
With only modest savings realized in its restructuring to date, Pfizer saw a $995 million drop in revenue for the quarter—a 7% decline from last year. The drug maker cited the loss of exclusivity from Lipitor, and subsequent generic competition in developed Europe as primary reasons for the loss. The hit was most easily seen in its primary care business, which saw a 15% sales drop. Established products took a 7% hit.
Specialty care revenue was flat for the quarter, although the Enbrel (RA) and Rebif (MS) brands saw growth in the unit. Oncology saw a 28% increase—which was driven by uptake in oncology drugs Xalkori and Inlyta in major markets.Other notable developments came from RA pill Xeljanz, approved in the US but stalled in Europe. Pfizer said that an EU launch will be delayed by several more years due to CHMP's insistence on more safety data. The company will not need to do new trials in order to re-submit the once-daily drug for approval, and management said the company expects to do so in early 2015. The Xeljanz psoriaris program, by the way, will report top-line results from two of its four Phase III trials by the end of the year.