10-QPeriod: Q3 FY2017

PFIZER INC Quarterly Report for Q3 Ended Oct 1, 2017

Filed November 9, 2017For Securities:PFE

Summary

Pfizer Inc. reported revenues of $13.17 billion for the third quarter of 2017, a slight increase of 1% year-over-year, and $38.84 billion for the first nine months of 2017, a 1% decrease. Net income attributable to Pfizer Inc. significantly increased to $2.84 billion in Q3 2017 from $1.36 billion in Q3 2016, reflecting strong operational performance and favorable tax items. The company's Innovative Health (IH) segment saw robust revenue growth of 11% driven by key products like Ibrance and Eliquis, while the Essential Health (EH) segment experienced a revenue decline of 12% due to loss of exclusivity and product shortages. Key financial highlights include a substantial increase in income from continuing operations before taxes, up 123% year-over-year for Q3, driven by higher revenues and lower cost of sales, including the non-recurrence of significant impairment charges from the prior year. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. Pfizer's effective tax rate increased to 20.3% in Q3 2017 from 15.5% in Q3 2016, primarily due to changes in the jurisdictional mix of earnings.

Key Highlights

  • 1Q3 2017 revenues increased 1% to $13.17 billion, while YTD revenues decreased 1% to $38.84 billion.
  • 2Net income attributable to Pfizer Inc. surged to $2.84 billion in Q3 2017 from $1.36 billion in Q3 2016.
  • 3The Innovative Health (IH) segment reported an 11% revenue increase, driven by strong performance in oncology and immunology products.
  • 4The Essential Health (EH) segment saw a 12% revenue decrease, impacted by product shortages and loss of exclusivity.
  • 5Research and Development (R&D) expenses remained stable year-over-year at $1.86 billion for Q3 and $5.35 billion for YTD.
  • 6Amortization of intangible assets increased by 22% in Q3 and YTD, largely due to recent acquisitions.
  • 7Pfizer repurchased approximately 97,000 shares of common stock in Q3 2017 under its ongoing repurchase program.

Frequently Asked Questions

Pfizer's Innovative Health (IH) segment drove revenue growth, with key contributors including Ibrance (oncology), Eliquis (cardiovascular alliance), Lyrica (neurology/pain management), and Xeljanz (inflammation & immunology). The Essential Health (EH) segment experienced revenue declines due to factors like product shortages and increased generic competition.

Profitability saw a significant improvement. Net income attributable to Pfizer Inc. more than doubled year-over-year in Q3 2017 to $2.84 billion, driven by increased revenues in the IH segment, favorable changes in cost of sales, and the absence of certain significant charges that impacted the prior year's results.

Pfizer is continuing its cost-reduction and productivity initiatives, expecting to achieve significant annual cost savings. The company incurred costs related to these initiatives and the integration of recent acquisitions, which are detailed in the financial statements, with further savings anticipated from ongoing programs.

Pfizer continued to return capital to shareholders through share repurchases, having completed a $5 billion accelerated share repurchase program in May 2017. The company also has a remaining share-purchase authorization of approximately $6.4 billion as of October 1, 2017. Dividend payments per common share also increased.