31 Jul

Why Pfizer Expects Lower Revenues for 2Q17

WRITTEN BY Mike Benson

Pfizer’s revenue estimates

Analysts expect a 0.5% fall in Pfizer’s (PFE) 2Q17 revenues to $13.08 billion, following a decline in revenues from blockbuster drugs including Celebrex, Zyvox, and Lyrica, partially offset by the increased sales of the Prevnar family of drugs, Xalkori, Xeljanz, and legacy Hospira products.

Why Pfizer Expects Lower Revenues for 2Q17

Segment-wise expectations 2Q17

Pfizer’s product portfolio is segregated into two business segments: Innovative Health and Essential Health.

Pfizer’s Innovative Health business was previously referred as the Innovative Pharmaceuticals business and includes the global innovative pharmaceuticals, global vaccines, oncology, and consumer healthcare. The segment contributes ~50% of Pfizer’s total revenues and is expected to report growth in 2Q17 due to the strong performance of Eliquis, Ibrance, Lyrica, Xeljanz, and Xtandi. The company’s alliance revenues are expected to contribute to the growth of its innovative health business.

The Essential Health segment

Pfizer’s Essential Health business was previously referred to as the established pharmaceuticals business and includes established products as well as legacy Hospira products. Excluding the legacy Hospira products, the established pharmaceuticals products are losing revenues due to increased competition across all major markets.

This segment includes Celebrex, Zyvox, and Lyrica, which are all losing revenues to generic competition. Revenues from this segment (including those from Hospira products) are expected to fall in 2Q17.

Foreign exchange is also expected to impact Pfizer’s overall revenues in 2Q17.

To divest company-specific risks, investors can consider ETFs like the Vanguard Health Care ETF (VHT), which has 5.5% of its total assets in Pfizer. VHT also has 10.0% in Johnson & Johnson (JNJ), 2.3% in Eli Lilly (LLY), and 3.2% in AbbVie (ABBV).

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