Prescription for growth at Pfizer? Analysts say deals
By Michael Erman and Divya Grover
(Reuters) - Pfizer Inc PFE.N posted basically flat first-quarter earnings, prompting suggestions that the largest U.S. drugmaker needs to do deals in order to improve its growth prospects.
Sales of rheumatoid arthritis drug Xeljanz, prostate cancer treatment Xtandi and pneumonia vaccine Prevnar fell short of analyst estimates. Sales of breast cancer drug Ibrance, which has just begun to face Novartis AG's NOVN.S rival treatment Kisqali, rose more than 58 percent, but just missed expectations.
"Key franchises came in well below expectations, raising concerns about Pfizer's ability to grow in the absence of M&A," Goldman Sachs analysts said.
Speaking on a conference call with investors, Chief Executive Ian Read said that he expects Pfizer to do big deals in the future, but that a number of U.S. government issues like tax and healthcare reform need to be resolved first. A number of possible target companies are also awaiting make-or-break data that could affect their value, he said.
"We never say never, but I believe the current environment needs to stabilize in order to be an advantageous market for big deals," he said.
Revenue fell 1.7 percent to $12.78 billion, missing the average estimate of $13.09 billion. Pfizer said fewer selling days in the quarter than last year reduced sales by about $300 million.
Sales of Pfizer's patent-protected drugs jumped about 12 percent in the quarter to $7.42 billion, while sales of copy-cat generics and biosimilars fell 10 percent to $5.36 billion.
"Because its pipeline is on the thinner side, continued M&A will likely be part of Pfizer’s future," said Bernstein analyst Tim Anderson. "It has said that targets of all sizes are theoretically on the table." Continued...