Pfizer Inc. saw a slight year-over-year increase in revenue in the third quarter, but the pharmaceutical behemoth missed estimates due to pricing pressure, patent losses and unfavorable foreign exchange rates.
Revenues rose 1% to $13.3 billion, shy of analyst consensus estimates of $13.55 billion. The company lowered the high side of its 2018 revenue guidance, coming to a range of $53 billion to $53.7 billion. The higher guidance mark was previously $55 billion.
One of the main drivers of the decline is the loss of market exclusivity late in 2017 for erectile dysfunction drug Viagra, executives said on an Oct. 30 earnings call. The impact of foreign exchange rates cost the company $113 million in the third quarter, about 1% of its revenue. And product shortages at its Hospira sterile injectables arm contributed to lower-than-expected returns.
But adding to that, President Donald Trump's blueprint to lower drug costs led Pfizer to back down from price hikes for the remainder of the year. Executives kept the company's 2019 strategy on that front close to the vest.
"We're working with the president on parts of the blueprint, and I expect our approach to pricing at the end of the year will be what I would characterize as business as normal," CEO Ian Read said on the call. "We price to the market price. We price competitively, and we will make those decisions at the end of the year."
At the end of the second quarter, Read spoke confidently about the U.S. marketplace moving away from rebates for pharmacy benefit managers such as Express Scripts Holding Co. He kept that view and showed skepticism as the industry awaits guidance from Washington.
"I do believe [rebates] continue to be a point of interest for the administration — it is the most effective way the administration can lower prices for patients at the point of purchase," Read said. "But I don't think it is in the best interest of patients ... and we hope that the administration will reconsider its position on that."
'Wide range of opportunities'
Weighing heavily on Pfizer's future is the loss of exclusivity of its nerve pain and seizure drug Lyrica. Its patent is due to expire in December, and the medicine faces potential competition from drugmakers Mylan NV, Teva Pharmaceutical Industries Ltd. and Novartis AG.
Lyrica had sales of $1.13 billion in the third quarter, already losing steam by 2% from last year.
But COO Albert Bourla expressed optimism about the company's future, with a particular zeal for research and development.
"Pfizer is preparing for what we expect to be an era of sustained growth following the impact of the Lyrica loss of exclusivity that will negatively impact our growth in the next two years," Bourla said. "We now have a wide range of opportunities to continue to grow our core brands and a strong deep R&D pipeline that has become a competitive advantage."
Executives were most enthusiastic about the late-stage clinical success of rare disease drug tafamidis, disclosed in the third quarter. Read said an application to the FDA would be submitted before the end of the year.
Bourla indicated that Pfizer would likely not be looking for acquisitions during the growth period, further signaling an effort to slim down operations to promote new products.
"We are going to enter into a period of growth post-2020, and we need to make sure that we execute right now on our commercial launches and market preparations," Bourla said. "And a large M&A deal typically comes with big integration plans that disrupt operations during this integration, and this is what we would like to avoid."
Top-selling vaccine
In vaccines, Prevnar 13 continued to hold the top-selling spot at Pfizer, bringing in $1.66 billion in revenue, a 9% boost from the year before.
Sales of breast cancer drug Ibrance grew 17% from last year to more than $1 billion over the quarter. International markets drove that growth, particularly in Europe and Japan, Read said on the call.
The company's prostate cancer drug Xtandi, which it shares with Astellas Pharma Inc., brought in $180 million for a 20% increase year over year.
Xtandi garnered a new approval from the U.S. Food and Drug Administration over the third quarter, as well, making it the only oral treatment for both non-metastatic and metastatic castrate-resistant prostate cancer.
Pfizer and Bristol-Myers Squibb Co.'s blood thinner Eliquis grew 35% from last year, bringing in $870 million.
Biosimilars also played a part this quarter, with a strong future lineup as approvals for Neupogen biosimilar Nivestym and Herceptin biosimilar Trazimera came through in the U.S. and Europe, respectively.
The fourth quarter will be Read's final stretch as CEO of Pfizer, though he will remain chairman of the board. COO Bourla will step into the CEO role effective Jan. 1, 2019, and has already made changes at the executive level and personnel levels.