An Investor's Guide to Pfizer's 2Q15 Earnings
Key products and performance
In the last article we discussed growth trends and positive growth contributors for Pfizer (PFE). In this article, we’ll look at the products that hampered the company’s growth. The overall share of revenues for the established products segment decreased to 43% for 2Q15 from 51% for 2Q14 due to the loss of exclusivity of Celebrex and Zyvox, two of the company’s key products.
Products with negative growth
The company’s revenues were negatively affected by lower sales of the following drugs:
- Lyrica, a drug used to relieve pain from damaged nerves due to diabetes, achieved total sales of $1.2 billion in 2Q15, a decrease of ~7% as compared to $1.3 billion in 2Q14, due to loss of exclusivity in certain countries in the European Union. Lyrica revenues in 2Q15 declined for the first time in the last two years due to a decline of ~34% in revenues from Europe.
- Enbrel, a drug for treatment of spondylitis, psoriasis, and arthritis, achieved sales of $822 million in 2Q15 in markets outside the US and Canada, a decrease of ~16% as compared to $977 million in 2Q14. Overall, the revenues have decreased by ~12% in the last two years.
- Celebrex, a non-steroidal anti-inflammatory drug used to reduce pain and inflammation, reported a sales decline of over 71% down to $224 million in 2Q15 as compared to $762 million in 2Q14, following the loss of exclusivity in December 2014. Celebrex revenues are constantly declining and have declined by over 70% in the last year.
- Zyvox, an antibiotic, reported a sales decline of ~26% to $259 million in 2Q15 as compared to $348 million in 2Q14 following the loss of exclusivity in May 2015. Zyvox revenues have declined by nearly 25% in the last two quarters.
- Lipitor, a drug for reducing cholesterol and triglycerides in the blood, reported a sales decline by ~6% to $509 million in 2Q15 as compared to $543 million in 2Q14 following the continued generic competition in developed markets, which was partially offset by the growth in emerging markets. Lipitor revenues have decreased at constant currencies over the last year.
No loss of exclusivity for existing products is expected in the second half of 2015. Therefore, the company doesn’t anticipate any major changes in revenues that could affect its stock price in the near future.
Revenues of pharmaceutical companies are largely affected by the loss of exclusivity of their key products. Some of the blockbuster drugs expected to lose exclusivity in 2015 are Copaxone by Teva Pharmaceuticals (TEVA), Gleevac by Novartis (NVS), and Avodart by GlaxoSmithKline (GSK). The impact of these drugs will be reflected in 2H15 and 2016 sales figures. Investors who would like to divest their risk might consider the Health Care Select Sector SPDR ETF (XLV), which is focused on pharmaceutical and healthcare companies.
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