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What's Driving Pfizer’s Valuation after 2Q17 Earnings

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Part 3
What's Driving Pfizer’s Valuation after 2Q17 Earnings PART 3 OF 8

Pfizer’s Innovative and Essential Health Businesses in 2Q17

Pfizer’s businesses

Pfizer’s (PFE) portfolio includes medicines, vaccines, and consumer healthcare products segregated into two businesses—Innovative Health and Essential Health.

Pfizer’s Innovative and Essential Health Businesses in 2Q17

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Pfizer’s Innovative Health was previously called the Innovative Pharmaceuticals business, and it included the Global Innovative Pharmaceuticals segment and Global Vaccines, Oncology, and Consumer Healthcare segment. Innovative health contributed over 59.4% of total revenues for Pfizer in 2Q17.

Pfizer’s Essential Health had been called the established pharmaceuticals business. The essential health business also includes legacy Hospira products acquired in September 2015.

Segment performance

The revenue contribution from the Innovative Health segment rose to ~59.4% of total revenues for 2Q17 from ~54.0% of total revenues for 2Q16.

Innovative Health revenues rose 9% operationally to $7.67 billion in 2Q17, compared to $7.10 billion in 2Q16. Revenue growth was driven by strong performance for Lyrica, Ibrance, Eliquis, Xeljanz, Xtandi, and Chantix/Champix. Also, the growth in alliance revenues contributed to overall revenues from the Innovative Health segment in 2Q17.

Essential Health segment revenues reported a 12% decline to $5.23 billion in 2Q17, compared to $6.04 billion in 2Q16. The fall in revenues was mainly due to lower sales of legacy established products, Peri-LOE products, and sterile injectable products, partially offset by revenue growth in biosimilars. Also, the divestment of the Hospira infusion systems partially impacted growth in 2Q17.

Alliance revenues reported over 90% growth to $715 million in 2Q17, compared to $376 million in 2Q16.

The Health Care Select Sector SPDR ETF (XLV) invests 6.6% of its total assets in Pfizer (PFE). XLV also invests 5.6% in Merck and Co. (MRK), 4.2% in Amgen (AMGN), and 3.1% in Gilead Sciences (GILD).

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