No need for a megadeal, Pfizer CEO says. We'll grow despite looming Lyrica generics

Pfizer CEO Ian Read contends that the company's pipeline is strong enough to fuel growth, even after its second-best-selling product, Lyrica, goes off the patent cliff. In other words, don't look for a "transformative" deal.

Pfizer has faced investor questions for several quarters about its M&A plans—particularly in light of cash-boosting tax reform—but on Tuesday, Read made it clear that even if Pfizer were shopping for a megadeal, there aren't any at an "appropriate value" right now. 

"At this moment in time, the best investment we have right now is in our own pipeline," Read told analysts on the company's first-quarter conference call. 

For the period, Pfizer generated $12.9 billion in sales, missing consensus estimates, but the company beat earnings per share expectations thanks to other income, according to a note from Bernstein analyst Tim Anderson. 

Aside from speculation over a potential megadeal, Pfizer has been working to sell its consumer health unit and hasn't received an attractive offer, the helmsman said. Asked by an analyst whether Pfizer would spin off its consumer outfit or form a joint venture, Read said Pfizer is comfortable retaining and investing in the business instead.  

And if investors are still holding out for some kind of company split, forget that, too. CFO D'Amelio said Pfizer isn't interested in splitting right now. 

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Pfizer has fueled itself through megamergers over the years, and analysts have been speculating for quite some time that the drugmaker could make a run at cancer specialist Bristol-Myers Squibb. But Read and other execs said Tuesday they're focused on building out the company's business—though they did note that things can always change. 

On Tuesday's call, Read and Pfizer executives highlighted more than a dozen drugs and vaccines in development that could deliver blockbuster sales eventually. And for pharma watchers worried about growth after Lyrica loses its exclusive lock on the market—expected late this year or mid-2019—more sales growth will come after that, Read said. Pfizer will have to work past multiple patent losses, but new launches and new indications for existing drugs will fill the gaps, they said.

Pfizer expects mid-to-high single digit sales growth in future years, Read pledged, maintaining that its pipeline is "undervalued." Among the R&D programs highlighted were vaccines against C. difficile, S. aureus and a next-generation pneumococcal shot, plus new indications for cancer drugs Ibrance and Xtandi.

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Read said the company's immunology franchise, "taken as a whole," is the best in the industry. According to the company's online pipeline, Pfizer has 11 phase 2 programs in inflammation & immunology and one in phase 3. Xeljanz is in registration stages for ulcerative colitis in the U.S. and up for two potential new approvals in Europe, according to the drugmaker.

Meanwhile, Pfizer's up-and-coming drugs pumped up sales in the first quarter. The anticoagulant Eliquis put up sales growth of 35% to $765 million, while fast-launching breast cancer drug Ibrance jumped 37% to $933 million. The Prevnar vaccine franchise continued its slide, however, falling 1% to $1.38 billion, while Lyrica slipped 1% to $1.13 billion.  

With the first-quarter performance, Pfizer reaffirmed its 2018 guidance. The company is expecting $53.5 billion to $55.5 billion in sales this year versus consensus expectations of $54.4 billion. For earnings per share, the drugmaker guided for $2.90 to $3, compared to consensus of $2.94, according to Anderson. The guidance assumes Pfizer will win a six-month patent extension for Lyrica from the FDA under a pediatric exclusivity application.