Pfizer points to newer meds—including Ibrance—as post-Upjohn cash engines

Ibrance
Driven by a 27% increase in sales for CDK 4/6 inhibitor Ibrance, Pfizer's biopharma portfolio finished up 6% on the second quarter. (Pfizer)

On the heels of news it would spin off its generics wing, Pfizer is looking at a much different future without that $2.8 billion cash engine. But CEO Albert Bourla has a message for investors concerned about that uncertainty: The future is bright—just look at our sales.

Pfizer upped its five-year growth forecast to the high single digits after unveiling a spinoff and merger of generics business Upjohn with Mylan, and less-than-stellar 2% second-quarter operational revenue growth. Bourla told investors during an earnings call Monday that Pfizer would emerge from the Upjohn deal a smaller company but one with a clearer path to long-term sales boosts.

“This deal will move the needle even more dramatically in terms of our growth prospects,” Bourla said.

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With the Upjohn news ringing in their ears, analysts pondered what the spinoff would mean not only for Pfizer’s M&A future but also other drugmakers with in-house generics wings facing growing pricing pressure stateside and abroad.

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The Upjohn split follows through on discussions Pfizer has had since 2011, Wolfe Research analyst Tim Anderson pointed out, and makes sense given the unit’s 7% revenue drop on the quarter. Its Chinese sales fell 20% as the country's new volume-based procurement program launched. And U.S. sales fell by 9%, thanks to generic competition for Viagra and wholesalers unloading their Lyrica stocks ahead of that generic's launch in July.

Anderson said Pfizer would lose about 20% of its operational revenue after giving away Upjohn, which he called a “change of heart” by the drugmaker’s leadership. Despite some positive results—namely Upjohn being a major drag on the company’s growth—Anderson said Pfizer likely lopped off a big chunk of Upjohn’s value by moving it out of house.

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And as for other drugmakers following Pfizer’s example? Not likely.

“Since 2011, the only company to ever really discuss splitting up seemed to be (Pfizer),” Anderson wrote. “While other companies all have mature businesses they could in principle dispose of, often they have had a hard time finding buyers willing to offer an acceptable price.”

Branded portfolio up

But Pfizer offered some solace in the fact that its branded drugs delivered 6% growth overall in the second quarter—and some drugs delivered pretty eye-popping numbers.

Pfizer’s biopharma portfolio raked in $9.6 billion, driven by 67% growth abroad on the back of growing uptake in Japan and Europe. Pfizer also posted double-digit growth in the U.S., with the drugmaker pointing to a growing market for CDK-inhibiting cancer drugs, including its own Ibrance. The CDK 4/6 inhibitor was up 27% to $1.26 billion globally, securing its place as the drugmaker’s top seller.

RELATED: Red flag upgrade for Pfizer: FDA limits Xeljanz in colitis, slaps black box on label

The cancer franchise, in general, helped drive the pharma portfolio's uptick, Bourla noted: Its sales were up 23%, thanks not only to Ibrance, but the prostate cancer med Xtandi, kidney cancer therapy Inlyta and Epogen biosimilar Retacrit, too.

Eliquis, the anticoagulant Pfizer shares with Bristol-Myers Squibb, also continued its sales run with a 26% hike to $1.1 billion. And Pfizer execs touted early results from the launch of Vyndaqel, a.k.a. tafamidis; diagnosis in the ATTR field is already increasing, Bourla said, with 500 new patients joining the fold since launch.

Rheumatoid arthritis med Xeljanz also turned in a heavyweight quarter with $613 million in sales—a 32% increase from the year before. Whether that trajectory will continue, though, is an open question; the drug was hit with a new black box warning last week for an increased risk of blood clots and possibly death. Bourla did warn that "we do expect some impact to prescribing" from the FDA move.

Meanwhile, longtime blockbuster Lyrica posted a 4% sales decline in the quarter, down to $1.18 billion. The drug faces generic competition in the U.S. for the first time after the drug’s primary patent expired last week.

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