Pfizer Waiting for Cues on Tax Reform to Pursue Deals -- Update

By Jonathan D. Rockoff Features Dow Jones Newswires

Pfizer Inc. says it wants to wait to see what happens with tax reform in Washington before deciding on any big mergers or acquisitions.

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With lawmakers poised to take up tax reform soon, "it would be imprudent not to wait" to see what happens and how it would affect the values of any companies Pfizer would be interested in acquiring, Chief Executive Ian Read said in an interview as the company reported second-quarter results.

Analysts expect the New York drug company, which in recent years unsuccessfully pursued AstraZeneca PLC and dropped a deal to buy Allergan PLC, to look again at a big acquisition for growth.

At the end of the first quarter, Pfizer had about $23 billion in cash available, most of that overseas. Chief Financial Officer Frank D'Amelio said tax reform could give Pfizer potentially far more resources -- $150 billion or more -- to do a deal.

Pfizer's revenues fell in the second quarter as sales slowed for some top-selling products, but the company raised the low end of its full-year adjusted earnings guidance, citing reduced expenses and higher-than-expected royalty income from certain products. The company now expects earnings of $2.54 to $2.60 per share, compared with prior guidance of $2.50 to $2.60 per share.

Pfizer's second-quarter performance underscores the company's shifting reliance on newer drugs like breast-cancer treatment Ibrance, as older products like the antidepressant Pristiq, male-impotence pill Viagra and Lyrica pain remedy face or will face generic competition.

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Revenues for the quarter fell 2% to $12.9 billion, partly because sales of some of the company's older drugs declined. Sales of Pfizer's top-selling product, the Prevnar pneumonia vaccine, also dropped, by 8% to $1.15 billion.

Sales of newer Pfizer products, such as Ibrance as well as blood-thinner Eliquis and the Xeljanz arthritis treatment, rose by 50% or more. The company attributed the overall revenue miss to a strong dollar and the sale of an infusion-pump business.

Mr. Read pointed to the company's pipeline of drugs in development as a promising source of future growth. He said the company could see as many as 15 approvals by 2020 with sales potential of $1 billion a year or more.

Analysts polled by Thomson Reuters had forecast earnings of $2.55 per share for the year.

In all, Pfizer reported earnings of $3.07 billion, or 51 cents per share, up from $2.05 billion, or 33 cents per share, a year earlier. Excluding certain items, earnings rose by 3 cents to 67 cents.

--Imani Moise contributed to this article

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

Pfizer Inc. says it wants to wait to see what happens with tax reform in Washington before deciding on any big mergers or acquisitions.

With lawmakers poised to take up tax reform soon, "it would be imprudent not to wait" to see what happens and how it would affect the values of any companies Pfizer would be interested in acquiring, Chief Executive Ian Read said in an interview as the company reported second-quarter results.

Analysts expect the New York drug company, which in recent years unsuccessfully pursued AstraZeneca PLC and dropped a deal to buy Allergan PLC, to look again at a big acquisition for growth.

At the end of the first quarter, Pfizer had about $23 billion in cash available, most of that overseas. Chief Financial Officer Frank D'Amelio said tax reform could give Pfizer potentially far more resources -- $150 billion or more -- to do a deal.

Pfizer's revenues fell in the second quarter as sales slowed for some top-selling products, but the company raised the low end of its full-year adjusted earnings guidance, citing reduced expenses and higher-than-expected royalty income from certain products. The company now expects earnings of $2.54 to $2.60 per share, compared with prior guidance of $2.50 to $2.60 per share.

Pfizer's second-quarter performance underscores the company's shifting reliance on newer drugs like breast-cancer treatment Ibrance, as older products like the antidepressant Pristiq, male-impotence pill Viagra and Lyrica pain remedy face or will face generic competition.

Revenues for the quarter fell 2% to $12.9 billion, partly because sales of some of the company's older drugs declined. Sales of Pfizer's top-selling product, the Prevnar pneumonia vaccine, also dropped, by 8% to $1.15 billion.

Sales of newer Pfizer products, such as Ibrance as well as blood-thinner Eliquis and the Xeljanz arthritis treatment, rose by 50% or more. The company attributed the overall revenue miss to a strong dollar and the sale of an infusion-pump business.

Mr. Read pointed to the company's pipeline of drugs in development as a promising source of future growth. He said the company could see as many as 15 approvals over the next five years with sales potential of $1 billion a year or more, and half of those by 2020.

Analysts polled by Thomson Reuters had forecast earnings of $2.55 per share for the year.

In all, Pfizer reported earnings of $3.07 billion, or 51 cents per share, up from $2.05 billion, or 33 cents per share, a year earlier. Excluding certain items, earnings rose by 3 cents to 67 cents.

--Imani Moise contributed to this article

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

Corrections & Amplifications

This was corrected on Wednesday, August 2, 2017 at 10:56 a.m. ET because the original incorrectly stated the company could see as many as 15 approvals by 2020 with blockbuster sales potential in the ninth paragraph.

Pfizer Inc. Chief Executive Ian Read said the company could see as many as 15 approvals over the next five years with sales potential of $1 billion a year or more, and half of those by 2020. "Pfizer Waiting for Cues on Tax Reform to Pursue Deals -- Update," published Aug. 1, 2017, at 1:34 p.m. EDT, incorrectly stated the company could see as many as 15 approvals by 2020 with blockbuster sales potential in the ninth paragraph. (Aug. 2, 2017)

(END) Dow Jones Newswires

August 02, 2017 11:06 ET (15:06 GMT)