PFIZER reported better-than-expected second-quarter results on Tuesday, powered by strong demand for blood thinner Eliquis and recently acquired drugs, and announced plans for an additional $2.5 billion in cost-cutting.
The New York-based drugmaker expects $9.7 billion in total net savings from its cost reductions through 2029 as it seeks to offset declining Covid-related revenue and restore sustainable growth.
The company is counting on newer medicines to lessen its dependence on aging blockbuster drugs, while investors are watching for signs that its $10-billion acquisition of Metsera can help establish a meaningful foothold in the fast-growing obesity market that some analysts see topping $150 billion annually in the coming decade.
Pfizer has said it expects to return to stronger growth after 2028. Its shares rose 2.3 percent.
Chief Executive Albert Bourla said in an interview that through its restructuring programs, the company has cut administrative, sales and marketing expenses 3 percent in the first half of the year, but it is spending 12 percent more on research and development (R&D) year over year.
“We are creating efficiencies, particularly in areas of enabling functions like finance, legal, HR ... and we reinvest in R&D,” Bourla said.
He said the company has already made its big M&A moves in areas such as cancer and obesity. Pfizer has roughly $6 billion of dealmaking capacity remaining and will now focus on smaller bolt-on deals across a range of therapeutic areas, he said.
Bourla said Pfizer plans to maintain its dividend and resume dividend increases after working through a wave of upcoming patent expirations.
The company is seeking a new chief financial officer as Dave Denton is set to depart later this month.
RBC Capital analyst Trung Huynh said the earnings beat reflected broad-based strength across the portfolio, but that Pfizer must deliver on key catalysts through 2026 to be viewed again as a growth company rather than primarily as a restructuring story.
Late-stage data for experimental cancer drug mevrometostat, along with readouts from Metsera’s amylin-based obesity drug, are among the key near-term catalysts investors are watching.
Sales of Eliquis, which Pfizer shares with Bristol Myers Squibb, rose about 21 percent to $2.43 billion in the quarter, above analysts’ estimates of $1.93 billion.
Sales of cancer therapy Padcev rose 23 percent to $667 million, above expectations of about $634 million. Higher sales of Eliquis and Padcev helped offset lower demand for Covid products.
“The near term Pfizer story remains challenging given the multiple large patent expirations the company is facing, but we believe continued progress both commercially and with the pipeline should help increase investor interest,” Guggenheim analysts said in a note.
The company now expects full-year sales of $60.5 billion to $62.5 billion, up from the $59.5 billion to $62.5 billion forecast previously.
It reaffirmed its 2026 profit forecast of $2.80 to $3.00 per share despite the $650-million upfront payment in May for a licensing deal with China’s Innovent Biologics to develop a dozen cancer medicines.
On an adjusted basis, the company reported a profit of 77 cents per share, topping analysts’ estimates by 9 cents.
