Pfizer’s new three-unit structure may be all about driving growth for now, but don’t count out a long-awaited generics divestment down the line.
That’s the message company CEO Ian Read and COO Albert Bourla had for investors on Tuesday’s Q2 conference call as they clarified the reasoning behind the pharma giant’s latest reorg.
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“We’re always focused on shareholder return, not the size of the company,” Read said, adding that investors should “rest assured that we will … look at opportunities to maximize” the value of each of the three revamped business units.
With the established medicines unit in particular—which once seemed primed to become one-half of a company-wide split—Pfizer wants to “stand it up as a successful emerging-markets based business. And then all options are open once we do that,” Bourla said.
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Following in the wake of Pfizer’s 2016 decision not to break apart in two, the company trotted out a new structure earlier this month that relocated biosimilars and sterile injectables under its innovative medicines umbrella. The move should lend those product lineups Pfizer’s “very strong expertise in the commercial, in the scientific and in the patient experience domains”—particularly the biosimilars, all of which are entering the commercialization phase, Bourla said.
It’ll also keep those drugs in Pfizer’s hands should it eventually bid its generic drugs goodbye, as a two-way split would have done. And meanwhile, the company is still evaluating options for the consumer health unit it tried unsuccessfully to sell over the past year.
For now, though, both those businesses are chipping in on the drug giant’s top line, a fact that helped Pfizer drum up (PDF) $13.5 billion in revenue and top consensus $13.3 billion estimates in the second quarter. Older, off-patent products Viagra and Lipitor exceeded expectations with $521 million and $185 million in respective sales, helping make up for a rare miss from quick-growing breast cancer blockbuster Ibrance.
On the profit side, adjusted earnings per share of 81 cents topped 74-cent predictions from Wall Street. “Based on our calculation, other income drove the majority (~$0.06) of the beat,” which largely comprises “unrealized gains on equity securities, higher income from collaborations and lower charges on legal matters,” Goldman Sachs’ Jami Rubin wrote in a note to clients.
Pfizer also tweaked its guidance, lowering the midpoint of its revenue range by $500 million “solely to reflect recent unfavorable changes in foreign exchange rates,” it said. It now expects to churn out between $53 billion and $55 billion in 2018 sales. On the flip side, it raised its adjusted EPS forecast by 5 cents, leaving investors and analysts with a $2.95 to $3.05 projection.