5 Things Pfizer's Management Wants You to Know

By Keith Speights Markets Fool.com

Pfizer (NYSE: PFE) might have fallen short of expectations with its fourth-quarter earnings results, but the market didn't seem to mind. The big drugmaker's shares were up slightly on Tuesday following the fourth-quarter update. Investors were probably much more focused on the future for Pfizer than its past performance.

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The company's management team, led by CEO Ian Read, had quite a bit to say about what might lie ahead for Pfizer in the quarterly earnings call. Here are five things Pfizer's executives said you'll want to know. (Quotes come from S&P Global Market Intelligence.)

Pfizer CEO Ian Read. Image source: Pfizer.

Corporate tax reform

Ian Read chose to skip the meeting President Donald Trump held with biopharmaceutical executives so that he could participate in Pfizer's conference call. However, President Trump's policy changes was a primary topic of discussion in that call -- especially the potential impact of his proposed corporate tax reform.

Read said Republicans' corporate tax proposals "are overall favorable for the pharmaceutical industry." He added that the changes under discussion should allow Pfizer to create more jobs in the United States.

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Potential streamlining of regulations, particularly with the U.S. Food and Drug Administration (FDA), was another thing Pfizer viewed positively. Read liked the idea of speeding up the FDA's drug approval process, including approvals for generic drugs.

Frank D'Amelio, Pfizer's CFO, saw a good opportunity to benefit the company's shareholders under some of the ideas floating around in Washington about repatriation of corporate cash parked overseas. His bottom-line take on the different tax rates being put forward was "the lower, the better."

President Trump's healthcare priorities

What about Trump's plans to repeal of Obamacare? Read said that there was "no windfall for our industry" from the increased number of patients covered through the Affordable Care Act. He added that the level of insurance for many of the estimated 20 million individuals obtaining coverage through Obamacare didn't give much access to innovative drugs.

Read didn't seem too concerned about another one of Trump's healthcare priorities: bringing down prescription drug prices. He expressed support for value-based pricing and potential regulatory changes that would put patients' percentage of out-of-pocket spending for drugs on an equal footing with the out-of-pocket percentage for hospital stays. Read added that he thinks that there are "lots of ways we can work with the administration to ensure that patients have affordable drugs or more affordable drugs in the United States."

Current lineup challenges and opportunities

Pfizer's management team acknowledged some of the challenges for its top-selling product, pneumococcal conjugate vaccine Prevnar 13. Albert Bourla, group president of the company's innovative health segment, stated that around half of the U.S. population age 65 and over had been vaccinated with Prevnar 13. He said Pfizer plans to target the remaining adults in this age group as well as expand to adults ages 19 through 64.

Bourla also addressed the dynamics for prostate cancer drug Xtandi, which saw sales decrease in the fourth quarter compared with what Medivation made in the prior year while prescription volumes increased. He cited increased contributions to assistance programs as a key factor behind these results. Bourla said Pfizer expects significant sales growth for Xtandi, especially as the company reaches out to more urologists.

He was particularly enthusiastic about Ibrance. Bourla noted that Pfizer estimates the drug garnered a 45% market share in the fourth quarter as a first-line treatment of ER-positive and HER2-negative breast cancer, a 40% market share as a second-linetreatment, and around 25% as a third-line treatment.

Pipeline potential

Mikael Dolsten, Pfizer's president of worldwide research and development, projected that the company will have around five approvals each year in 2017 and 2018. Pfizer expects 15 read-outs from pivotal clinical studies over the next couple of years.

Pfizer's PD-L1 inhibitor avelumab stands out as one of the most exciting pipeline prospects. The company especially sees opportunities for the immuno-oncology drug in combination with other therapies. An FDA decision on potential approval for avelumab in treatingmetastatic Merkel cell carcinoma is expected this year.

Ian Read also noted that Pfizer hopes to win additional indications for Xeljanz in 2017. The drug is already approved in the U.S. as a treatment for rheumatoid arthritis. European approval could be on the way this year. Pfizer also expects to file for FDA approval of Xeljanz in treatingulcerative colitis and psoriatic arthritis in the first half of 2017.

More acquisitions?

Pfizer made two key acquisitions in 2016 with the buyouts of Anacor Pharmaceuticals and Medivation. What might be next on the acquisition front for the company?

He said that "some deals that previously wouldn't have been affordable may now be be affordable" if corporate tax reform proposals are enacted. Frank D'Amelio also commented that Pfizer wouldn't shy away from increasing its debt leverage if "an opportunity that made sense" came along.

When asked if the uncertainties about tax reform could cause Pfizer to hold off on making further acquisitions, Read responded, "We're going to continue to do [business development] where we see value for our shareholders. And we think we have flexibility and the balance sheet to do that. And so I don't see a dramatic pause." It sounds like Pfizer's shareholders might see more deals in 2017.

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Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.