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Understanding Pfizer’s 3Q16 Performance

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Pfizer’s 3Q16 revenue performance

During 3Q16, Pfizer (PFE) recorded revenue amounting to $13 billion. Excluding the impact of foreign exchange, the company’s revenue rose 8% annually. Legacy Hospira’s contribution to Pfizer’s total revenue was $1.1 billion during the period. If we exclude the impacts of foreign exchange and Hospira, Pfizer’s standalone revenue rose 3% during the period.

To overcome the growth hurdle following its patent expiries, Pfizer has been on an acquisition spree. After years of Pfizer’s falling, 3Q16 proved to be the company’s eighth consecutive quarter of operational revenue growth. We’ll discuss Pfizer’s detailed segmental performance in the next article.

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Big pharmaceutical companies struggle to overcome revenue losses

Pfizer isn’t alone in its exposure to such a loss of exclusivity. In fact, AbbVie’s (ABBV) lead drug Humira’s (adalimumab) composition of matter patent is expected to expire in December 2016. Roche’s (RHHBY) big three drugs, MabThera, Herceptin, and Avastin, are expected to face biosimilar competition later in the decade.

Sanofi (SNY) also lost patent protection for its key blockbuster drug, Lantus, and its top line is still struggling. To understand the fall in Lantus, read Will Sanofi See More Growth from Its Blockbuster Insulin Drug?

Pfizer’s EPS performance in 3Q16

During 3Q16, Pfizer’s diluted EPS (earnings per share) fell to $0.21, compared to $0.34 in 3Q15. A charge related to the pending Hospira Infusion System, a loss of product exclusivity, and the impact of foreign exchange caused a fall in the company’s EPS during the period.

If you invest in Health Care Select Sector SPDR ETF (XLV), you can benefit from positive movements in Pfizer’s stock. XLV holds 7.0% in Pfizer.

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