Pfizer returns to buyback strategy to appease shareholders

CEO Ian Read

Pfizer ($PFE) has been hit hard by patent losses and some of its new drugs are not performing as well as it would like, but something CEO Ian Read is really strong at is buying back shares, and so he says the company will do it again.

The drugmaker Thursday announced a $10 billion buyback, its fourth in about two and a half years, Bloomberg pointed out. In fact, the company still has about $3.9 billion left to spend on its last buyback offer. All together, they add up to about $40 billion in share repurchases. It appears to have had a benefit because the company's shares are up about 25% in the last 12 months, Bloomberg said.

Read has been hewing off big chunks of the company to make it more focused, so buying up new operations does not seem like a good use of the company's assets. He has said he would rather use the company cash to buy shares. And it has been raising cash pretty steadily in the last few years. Earlier this year, Pfizer sold off a 20% stake in its animal health business into the independent Zoetis, raising about $2.2 billion in the process. Last month it told shareholders they could exchange $100 in Pfizer shares for roughly $107 worth of Zoetis stock. That came after Pfizer last year completed the sale of its nutrition business to Nestlé for $11.85 billion.

But even as it slims down to offset reduced revenues, it continues to take hits from patent losses. A week ago the patent for erectile dysfunction drug Viagra, a $2 billion a year product, fell off in Europe and generics have already swept in to steal its business. Pfizer last year earned about $1 billion on Viagra outside of the U.S., where Viagra's patent remains intact until 2020. That came shortly after an executive recently acknowledged that a couple of the drugs that it had expected to replace revenue, bloodthinner Eliquis and rheumatoid arthritis med Xeljanz, have so far not lived up to expectations.

- here's the release
- read the Bloomberg story