Pfizer Inc. offered a rosy outlook for the year, outlining the benefits from the new U.S. tax law and casting the Amazon.com Inc.-led partnership to lower health-care costs as positive for the drug industry.
New York-based Pfizer reported for the fourth quarter a profit of $12.27 billion, or $2.02 a share, up from $775 million, or 13 cents a share, a year earlier. The big gain came largely from a $10.7 billion benefit from the revaluation of deferred tax liabilities.
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Under the new U.S. tax law, the drug company must pay a tax of $15 billion over the next eight years on its overseas earnings. Yet executives described the impact from the tax changes overall as positive, starting with Pfizer's effective tax rate dropping 6 percentage points to 17%.
The tax law "helps level the playing field to make U.S. companies more competitive," Pfizer Chief Executive Ian Read said in a call with analysts and investors.
As a result of savings from the tax changes, Pfizer made a $200 million contribution to the company's charitable foundation in the fourth quarter, plans to pay $100 million in bonuses to employees and will make a $500 million contribution to its U.S. pension plan by the end of September.
The company said it plans to buy back $5 billion in shares this year and invest $5 billion in manufacturing and other capital projects in the U.S. over the next five years.
Mr. Read reaffirmed Pfizer's plans to reach a decision on selling or spinning off the consumer-health business this year.
He said he expects consolidation sometime among the biggest pharmaceutical companies and indicated Pfizer would be involved, though he also touted Pfizer's pipeline of cancer, immunology and other drugs in development.
Asked about the new health-care partnership among Amazon, Berkshire Hathaway and JPMorgan, Mr. Read said he viewed the development as "totally positive" for the drug industry because use of innovative medicines helps lower health-care spending overall.
"Any attempt to lower health-care costs will have to involve" using medicines and making sure patients take their prescriptions, Mr. Read said.
In an interview, Mr. Read said the $10.7 billion gain in the quarter is a result of Pfizer, unlike other drug companies, designating much of the company's overseas earnings in previous years as likely to come back to the U.S., a policy that reduced overall earnings in those years.
"Our previous year earnings would have been higher if we didn't designate these tax liabilities," Chief Financial Officer Frank D'Amelio said.
In the fourth quarter, Pfizer reported that revenue edged up 0.6% to $13.7 billion, as growth in key products like breast-cancer drug Ibrance, bloodthinner Eliquis and arthritis treatment Xeljanz offset sales lost from generic competition for stalwarts such as Viagra male-impotence pills.
The company also provided an upbeat outlook for 2018, forecasting adjusted earnings of $2.90 to $3.00 a share on up to $55.5 billion in sales.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Imani Moise at email@example.com
(END) Dow Jones Newswires
January 30, 2018 14:15 ET (19:15 GMT)
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