Pfizer issues weaker forecast than markets expected

Pfizer issued a weaker financial forecast for 2019 than Wall Street expected, becoming the latest large drugmaker to warn about the ripple effects of a strong dollar.

The pharmaceutical giant said it expects 2019 adjusted earnings per share of $2.82 (€2.47) to $2.92 – short of the average Wall Street analyst estimate of $3.04.

Unfavourable foreign-exchange effects are expected to diminish sales by about $900 million this year, while cutting adjusted earnings per share by about 6 cents.

Outlook

That outlook echoed guidance issued earlier this month by health-care bellwether Johnson and Johnson, one of Pfizer's largest rivals. JandJ said it expects growth to slow or grind to a halt this year as the dollar climbs against rival currencies and rising drug prices become a more central political issue in Washington. Overseas sales are key for Pfizer.

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The company said that its oncology segment – an area of increasing importance for the drugmaker as it restocks its pipeline – had a 53 per cent jump in sales overseas, while sales in that segment in the US advanced only 6 per cent.

At the same time, Pfizer is facing a transitional period during which the company expects a group of new drugs to take the place of older blockbusters. The company’s innovative health segment, which includes new vaccines, oncology, immunology and rare-disease drugs, saw sales increase 10 percent in the fourth quarter.

Meanwhile, revenue from a segment made up of legacy assets facing market exclusivity challenges fell 3 per cent. Bloomberg Intelligence analyst Sam Fazeli said in a note that breast-cancer drug Ibrance and anticlotting drug Eliquis “remain key drivers in 2019,” however, Eliquis will likely face pressure from Johnson and Johnson’s blood thinner Xarelto.

Products

Underlining the importance of its new products, Pfizer and partner Eli Lilly on Tuesday also reported results from a late-stage study of their osteoarthritis drug tanezumab, a nonopioid painkiller Pfizer hopes will replace sales it will lose from the aging blockbuster Lyrica.

However, some analysts were disappointed with the drug’s results at a lower dose. Pfizer shares fell 2.9 per cent in early New York trading. The stock was down 9.4 per cent so far in 2019, compared to a 5.5 per cent gain in the SandP 500 index.

Pfizer ended 2018 as the second-best performing stock in the Dow Jones Industrial Average. Cantor Fitzgerald analyst Louise Chen told investors in a note Tuesday that she continues to be positive on Pfizer shares despite the 2019 guidance. Ms Chen has an overweight rating on the shares.

Pfizer “expects 2019 to be a year with important clinical data readouts across its pipeline,” Ms Chen wrote, underlining the importance of the company’s research efforts. The company said in its statement that it expects to buy back about $9 billion of its own stock in 2019. – Bloomberg