- Pfizer on Tuesday reported first quarter revenues that missed analysts' consensus expectations, falling 2% year over year to $12.8 billion. Analysts had expected revenues to stay flat.
- While the big pharma blamed fewer selling days in the first quarter, the miss was driven by a 10% decline in its Essential Health business, which largely encompasses legacy products like Pristiq (desvenlafaxine), Lyrica (pregabalin) and Zyvox (linezolid) — which have all lost marketing exclusivity in some geographic area.
- A bright spot in an overall disappointing performance was a 62% growth from biosimilars. The company launched its first biosimilar product with partner Celltrion in late-2016. Inflectra (infliximab-dyyb) is a copycat version of Johnson & Johnson's Remicade.
Ever since Pfizer failed to pick up AstraZeneca in 2014, and then had its planned merger with Allergan nixed by regulators in 2016, investors have been looking for the company to close on some $100 billion-plus merger to flesh out its pipeline.
Rumors have swirled that Pfizer is interested in nabbing fellow big pharma peer Bristol-Myers Squibb, but the failure of Bristol's checkpoint inhibitor Opdivo (nivolumab) in lung cancer last summer has been a major overhang on the stock, calling into question whether future growth is durable. (Albeit, Bristol's first quarter earnings suggest Opdivo is virtually unstoppable.)
On the other hand, the steady slide in Bristol-Myers stock has made the drugmaker less expensive.
Analysts and investors are growing impatient for some action — Goldman Sachs analyst Jami Rubin, for example, pressed Pfizer during the May 2 earnings call on what it would take for Pfizer "to pull the trigger."
While Pfizer CEO Ian Read wouldn't comment directly on any company, he did give some indications that Pfizer is keeping a close eye on Bristol-Myers situation with Opdivo.
"Certain large companies have significant, almost binary, risks embedded within their business and pipelines, which could meaningfully alter their values," he noted, suggesting Pfizer is currently in a wait-and-see holding pattern.
"I believe the industry will continue to consolidate over time. There is too much fragmentation in the industry. Pfizer has been, and I think will continue to be, an active industry consolidator," said Read, who also noted that the greater macro environment, both in the U.S. and Europe, has increased uncertainty in the marketplace.
The company is waiting to see if the U.S. will enact tax reform that could help bring overseas cash back home and that could lower the corporate tax rate. The company is also interested in seeing the political environment on both continents calm down a bit. Although, Read did note the U.K. remains a geographic area of interest (potentially not ruling out another bid for AstraZeneca).
"We think we have the capability if there is value in the deal, to do a mid-size deal. We also think we have the capability, should the opportunity arise, to do a large deal. But we want to see these uncertainties around tax and politics resolve themselves," said the exec.