October 26, 2015
By Mark Terry, BioSpace.com Breaking News Staff
With Pfizer Inc. hosting its third-quarter financial call tomorrow, analysts are coming up with a list of projections and things to look for.
The Motley Fool has listed five things investors should look for.
1. Progress on cancer drug Ibrance.
The U.S. Food and Drug Administration (FDA) approved Ibrance (palbociclib) for the treatment of advanced metastatic breast cancer back in February. In clinical trials it showed substantially better results than existing treatments and is widely expected to become a blockbuster drug. It brought in $140 million in sales in the second quarter and is projected to make $185.3 million in the third. It is yet approved for use in Europe.
Here’s the catch: It’s priced at $118,200 for a year’s treatment. How are insurance companies dealing with that price, particularly with attention being paid in the U.S. market to drug prices given the recent debacles with Turing Pharmaceuticals’ 5,000 percent price hike for Daraprim and Valeant Pharmaceuticals ’s 212 percent and 525 percent price hikes for Nitropress and Isuprel, respectively.
2. Is Pfizer Going To Buy Something?
Ever since Pfizer’s $119 billion bid for UK-based AstraZeneca PLC fell apart in 2014, analysts have been wondering what company or companies it will buy. Rumors have focused on GlaxoSmithKline , Novartis , Dublin-based Actavis PLC , or Dublin-based Allergan PLC .
3. What’s going on with its global established products (GEP) unit?
The Motley Fool notes that Pfizer has considered spinning off the GEP unit in the past, but isn’t certain it can function successfully as a standalone company. It’s made up mostly of mature therapies, and some of its products drove off the patent cliff and are facing generic competition.
4. Is Pfizer going to juice its buyback program?
Writing for The Motley Fool, Sean Williams notes that the company’s sales have dropped more than 25 percent since 2010, but its share price has grown. A lot of that is because it has done a number of share buybacks and dividends between 2011 and 2014 to the tune of $65 million. This year the share buyback has been about $6 billion and dividends about $7.2 billion. Will there be more?
5. Drug Pricing?
And as mentioned regarding the marketing of Ibrance, what is Pfizer doing regarding drug pricing? Ibrance isn’t the only expensive drug in Pfizer’s portfolio, and any regulatory changes regarding drug pricing could be a problem for the company.
Analysts are also looking at the effect of the company’s $16 billion acquisition of Hospira, Inc. Some analysts speculated that the deal would trigger a company spinoff. Pfizer’s GEP was expected to be boosted by the acquisition, and hit an enterprise value of $34 billion to $63 billion by 2018. In 2014, the GEP segment reported $21.15 billion in revenue.
If a spinoff did occur of the GEP operations, it would become the largest generic drug company in the world. Generics has been a big mover in 2015’s merger and acquisition market. with Philadelphia-based Lannett Company, Inc. buying Kremers Urban Pharmaceuticals Inc. , the U.S.-based specialty generic drugs subsidiary of Belgium-based UCB S.A., and Israel-based Teva Pharmaceutical Industries Ltd. ’s acquisition of Allergan plc .
There might be hints of it in tomorrow’s filing, even if it wouldn’t happen this year. “While a Pfizer break-up would likely be a 2017 event,” wrote Chris Schott, a J.P. Morgan analyst in a June 2015 research note, “we see potential catalysts in 2015 - 2016. Three years of audited financial statement (2014 - 2016) are required before any part of Pfizer can be spun off, and we also see 2017 as an attractive time for action as investors see Pfizer’s innovative pipeline clearly contributing to growth and the established business having transitioned to a more stable profile.”
According to BidnessEtc., 24 analysts have given a consensus rating of “buy” for Pfizer, with four recommending a “hold.” The 12-month price target average is $39.50. Pfizer stock is currently trading for $33.97 per share.
