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Pfizer’s Innovative Health and Essential Health Businesses

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Sep. 30 2016, Updated 8:06 a.m. ET

Pfizer’s businesses

Pfizer’s (PFE) portfolio comprises medicine, vaccines, and consumer healthcare products. The company has segregated its operations into two businesses: Innovative Health and Essential Health.

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Business segments 

The above chart shows revenues for the last few quarters and revenue estimates for the next two quarters. Pfizer’s Innovative Health segment, which was previously referred to as Innovative Pharmaceuticals, includes the Global Innovative Pharmaceuticals segment and Global Vaccines, Oncology, and Consumer Healthcare segment. Innovative Health contributes over 50% of Pfizer’s total revenues.

Pfizer’s Essential Health segment, which was previously referred to as Established Pharmaceuticals, includes legacy Hospira products that were acquired by Pfizer in September 2015. Excluding the legacy Hospira products, the Established Pharmaceuticals products are losing their revenues due to increased competition.

Segment-wise performance

Pfizer’s Innovative Health business reported a 9% growth in revenues at constant exchange rates to $7.1 billion, compared with $6.6 billion in 2Q15. The growth was driven mainly by increased sales of Ibrance, Lyrica, and Xeljanz in US markets, and Eliquis in both international and US markets. The growth was impacted by lower sales of Prevnar 13 vaccines during 2Q16.

Pfizer’s Essential Health business revenues increased by 9% at constant exchange rates to $6.0 billion in 2Q16, compared with $5.2 billion in 2Q15, driven by the legacy Hospira business. Excluding the revenues from Hospira, Essential Health business revenues decreased by 3% at constant exchange rates during 2Q16.

Investors could consider ETFs such as the Vanguard Health Care ETF (VHT), which holds ~6.8% of its total assets in Pfizer, ~3.0% in Allergan (AGN), ~3.9% in Amgen (AMGN), ~3.7% in Bristol-Myers Squibb (BMY), and ~4.9% in Merck and Co. (MRK).

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