Comparing PFE’s and BMY’s Expense Trends



Pfizer’s expense trends

Pfizer (PFE) has guided for fiscal 2019 adjusted costs of sales as a percentage of revenue of 20.8%–21.8%, and adjusted selling, informational, and administrative expenses of $13.5 billion–$14.5 billion. It expects its adjusted R&D (research and development) expenses to rise 11.05% YoY (year-over-year) to $7.8 billion–8.3 billion in fiscal 2019, and has guided for adjusted other income of $200 million and an effective tax rate of 16.0%.

Analysts expect Pfizer to have SG&A (selling, general, and administrative) and R&D expenses of $14.21 billion and $8.11 billion, respectively, in fiscal 2019, and an effective tax rate of 15.98%.

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Bristol-Myers Squibb’s expense trends

Bristol-Myers Squibb (BMY) has guided for GAAP and non-GAAP gross margins of ~70% in fiscal 2019, and expects its GAAP MS&A (marketing, selling, and administrative) expenses and R&D expenses to fall by a mid-single-digit and high-single-digit percentage, respectively. The company expects its non-GAAP MS&A expenses to fall by a mid-single digit percentage YoY in fiscal 2019, but its non-GAAP R&D expenses to rise by a high-single-digit percentage YoY. Excluding the effects of its Celgene (CELG) acquisition, Pfizer expects a non-GAAP effective tax rate of 16% and a GAAP tax rate of 14% in fiscal 2019.

Bristol-Myers Squibb expects $2.5 billion (13% of the combined company’s total operating expenses) in actionable run-rate cost synergies by 2022, three years after its Celgene acquisition is completed. Around 10% of these synergies are expected to be due to manufacturing improvements, and 55% and 35% associated with SG&A and R&D improvements, respectively. Bristol-Myers Squibb expects the deal to offer commercial efficiencies after combining the oncology and immunology businesses, reduce duplication of resources in its early-stage R&D pipeline, and leverage its biologics capabilities to advance Celgene’s investigational biologic therapies.


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