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How Are Pfizer’s Business Segments Performing?

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Pfizer’s growth rate

As we’ve already seen, Pfizer (PFE) reported an increase of ~26% in revenues in constant currencies for 1Q16. The company’s 1Q16 revenues were $13.0 billion, which were ~7.7% higher than analysts’ estimates of $12.1 billion. The growth was impacted negatively by foreign exchange rates since more than 50% of its total revenues are from international sales.

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Segment performance

Pfizer’s revenue share for its innovative products segment increased to ~54.1% of its total revenues for 1Q16, from ~52.8% in 1Q15. Revenue share for its established products segment declined to ~45.9% of total revenues for 1Q16, from ~47.2% of total revenues for 1Q15. The segment-wise revenues were as follows:

  • GIP (Global Innovative Pharmaceuticals) revenues increased 25% operationally in 1Q16 compared to 1Q15. This was primarily due to an increase in sales of Eliquis and Enbrel worldwide and Xeljanz, Chantix, and Lyrica in US markets. GIP reported revenues of ~$3.6 billion for 1Q15.
  • VOC (Vaccines, Oncology and Consumer Healthcare) revenues increased 33% operationally in 1Q16 compared to 1Q15. This was primarily due to an increase in Prevnar 13 sales and the launch of Ibrance in the United States. VOC reported revenues of ~$3.4 billion for 1Q16.
  • GEP (Global Established Pharmaceutical) revenues increased 24% operationally in 1Q16 compared to 1Q15. This was driven by the inclusion of legacy Hospira operations, partially offset by lower sales of Celebrex and Zyvox in US markets due to the patent expiration, and lower sales of Lyrica in European markets. GEP reported revenues of ~$6.0 billion for 1Q16.

Geographically, US markets contributed nearly 51% to Pfizer’s total revenues, or $6.6 billion for 1Q16. That’s an increase of ~49% compared to 1Q15. In international markets, sales declined by ~1% to $6.4 billion for 1Q16, contributing ~49% of total revenues.

Investors can consider ETFs such as the Vanguard Health Care ETF (VHT), which holds ~6.5% of its total assets in Pfizer. It holds ~3.9% in Amgen (AMGN), ~3.9% in Bristol-Myers Squibb (BMY), and ~5.0% in Merck & Co. (MRK).

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