Pfizer Reports First-Quarter 2024 Results

• Solid First-Quarter Results Reflect Continued Growth of Key Products and Progress in Executing 2024 Priorities
• First-Quarter 2024 Revenues of $14.9 Billion
  • Expected Decline in Comirnaty(1) and Paxlovid Revenues Drove a Year-Over-Year Operational Decrease in Revenues of 19%
  • Excluding Contributions from Comirnaty(1) and Paxlovid, Revenues Grew 11% Operationally
• First-Quarter 2024 Reported(2) Diluted EPS of $0.55 and Adjusted(3) Diluted EPS of $0.82
  • Both Include an $0.11 Favorable Impact from Final Revenue Adjustment Reflecting Actual EUA-labeled Treatment Courses of Paxlovid Returned by U.S. Government(4)
• On Track to Deliver at Least $4 Billion in Net Cost Savings by End of 2024 from Previously Announced Cost Realignment Program(5)
• Reaffirms Full-Year 2024 Revenue Guidance(6) of $58.5 to $61.5 Billion and Raises Adjusted(3) Diluted EPS Guidance to $2.15 to $2.35

Pfizer Inc. (NYSE: PFE) reported financial results for the first quarter of 2024 and raised its Adjusted(3) diluted EPS guidance while maintaining all other components of its 2024 financial guidance(6).

The first-quarter 2024 earnings presentation and accompanying prepared remarks from management as well as the quarterly update to Pfizer’s R&D pipeline can be found at www.pfizer.com.

EXECUTIVE COMMENTARY

Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “We delivered strong performance in our non-COVID product portfolio in the first quarter of 2024, including increased revenue from several of our recent commercial launches and acquired products, as well as robust year-over-year growth for several key in-line brands, namely the Vyndaqel family, Eliquis, and the Prevnar family. In addition, we had strong oncology revenue contributions from Ibrance, Xtandi, Padcev and Adcetris. Our Paxlovid revenues in the quarter indicate a successful transition into the commercial marketplace in the U.S. and a demonstrated trust in the brand.

“Overall, I am encouraged by a well-executed quarter, setting the tone for the year. Pfizer’s commercial leadership is focused on data-driven opportunities across several key growth brands, both in the U.S. and internationally, and we intend to build on this positive momentum in the quarters ahead.”

David Denton, Chief Financial Officer and Executive Vice President, stated: “I am very pleased by the strong 11% operational revenue growth of our non-COVID products in the first quarter, demonstrating our focus on commercial execution. In addition, we continue to progress our cost realignment program and remain on track to deliver on our targeted cost savings goal by the end of the year.”

OVERALL RESULTS

In the first quarter of 2024, we reclassified royalty income (substantially all of which is related to Biopharma) from Other (income)/deductions––net to revenues and began presenting Royalty revenues as a separate line item within Total revenues in our consolidated statements of income. Prior-period amounts have been recast to conform to the current presentation.

At the beginning of 2024, we made changes in our commercial organization that went into effect on January 1, 2024 to incorporate Seagen Inc. (Seagen) and improve focus, speed and execution. Specifically, within our Biopharma reportable segment we created the Pfizer Oncology Division, the Pfizer U.S. Commercial Division, and the Pfizer International Commercial Division. See the Item 1. Business––Commercial Operations section of Pfizer's 2023 Annual Report on Form 10-K (available at www.pfizer.com).

Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates(7).

Results for the first quarter of 2024 and 2023(8) are summarized below.

REVENUES

2024 FINANCIAL GUIDANCE(6)

Pfizer raises Adjusted(3) diluted EPS Guidance to $2.15 to $2.35 while maintaining all other components of its 2024 Financial Guidance(6). The company still expects full-year 2024 revenues to be in the range of $58.5 to $61.5 billion, which includes approximately $8 billion in anticipated revenues for Comirnaty(1) and Paxlovid (approximately $5 billion and $3 billion, respectively), and approximately $3.1 billion in anticipated revenues from legacy Seagen. Comirnaty(1) revenues continue to perform consistently with our expectations and we anticipate approximately 90% of sales to occur in the second half of the year, mostly in the fourth quarter given the anticipated seasonality of demand for COVID vaccinations.

The updated 2024 Adjusted(3) diluted EPS guidance takes into consideration our confidence in delivering on our cost realignment program target as well as our confidence in the underlying strength in our business.

Pfizer’s 2024 financial guidance(6) is presented below.

Changes in foreign exchange rates have had a minimal incremental impact since full-year 2024 guidance was reaffirmed on January 30, 2024. Please refer to Press Release Footnote (6) for additional information.

CAPITAL ALLOCATION

During the first three months of 2024, Pfizer deployed its capital in a variety of ways, which primarily include the following two categories:

• Reinvesting capital into initiatives intended to enhance the future growth prospects of the company, including:
  • $2.5 billion invested in internal research and development projects, and
  • Approximately $100 million invested in business development transactions.
• Returning capital directly to shareholders through $2.4 billion of cash dividends, or $0.42 per share of common stock.

No share repurchases were completed to date in 2024. As of May 1, 2024, Pfizer’s remaining share repurchase authorization is $3.3 billion. Current financial guidance does not anticipate any share repurchases in 2024.

First-quarter 2024 diluted weighted-average shares outstanding used to calculate Reported(2) and Adjusted(3) diluted EPS were 5,697 million shares.

QUARTERLY FINANCIAL HIGHLIGHTS (First-Quarter 2024 vs. First-Quarter 2023)

First-quarter 2024 revenues totaled $14.9 billion, a decrease of $3.6 billion, or 20%, compared to the prior-year quarter, reflecting an operational decline of $3.5 billion, or 19%, primarily due to a significant decrease in Comirnaty(1) and Paxlovid revenues globally, as well as an unfavorable impact of foreign exchange of $107 million, or 1%. Excluding contributions from Comirnaty(1) and Paxlovid, revenues totaled $12.5 billion, an increase of $1.2 billion, or 11%, operationally compared with the prior-year quarter.

First-quarter 2024 Comirnaty(1) revenues of $354 million declined $2.7 billion, or 88%, operationally compared with the prior-year quarter, driven largely by lower contractual deliveries and demand in international markets as well as lower U.S. volumes, reflecting the anticipated seasonality of demand for vaccinations and as certain markets, including the U.S., transition to traditional commercial market sales.

First-quarter 2024 Paxlovid revenues of $2.0 billion declined $2.0 billion, or 50%, operationally compared with the prior-year quarter, driven primarily by lower contractual deliveries in most international markets and in the U.S. as a result of the transition to traditional commercial market sales, as well as lower demand in China due to the non-recurrent surge in COVID-19 infection during the first quarter of 2023, partially offset by a $771 million favorable final adjustment to the estimated non-cash revenue reversal of $3.5 billion recorded in the fourth quarter of 2023.

Excluding contributions from Comirnaty(1) and Paxlovid, first-quarter 2024 operational revenue growth was driven primarily by:

• Global revenues of $742 million from legacy Seagen, which was acquired in December of 2023;
• Vyndaqel family (Vyndaqel, Vyndamax, Vynmac) globally, up 66% operationally, driven largely by continued strong uptake of the transthyretin amyloid cardiomyopathy (ATTR-CM) indication, primarily in the U.S. and developed markets in Europe;
• Eliquis globally, up 10% operationally, driven primarily by continued oral anti-coagulant adoption and market share gains in the non-valvular atrial fibrillation indication in the U.S. and certain markets in Europe, partially offset by declines due to loss of exclusivity and generic competition in certain international markets;
• Abrysvo, which contributed $145 million in global revenues, driven primarily by the launch of the older adult indication in the U.S. in July 2023; and
• Prevnar family (Prevnar 20 & 13) globally, up 7% operationally, driven primarily by the pediatric indication in the U.S. due to favorable timing of government purchases and higher patient demand in the private market, as well as strong uptake of the adult indication in certain international markets, partially offset by fewer adult vaccinations in the U.S.;

partially offset primarily by lower revenues for:

• Oncology biosimilars in the U.S., down 47% operationally, largely due to lower net price;
• Sulperazon internationally, down 45% operationally, driven largely by lower demand in China in the first quarter of 2024 as compared to the first quarter of 2023; and
• Ibrance globally, down 7% operationally, driven primarily by lower demand globally due to competitive pressure and price decreases in certain international developed markets.

GAAP Reported(2) Income Statement Highlights

SELECTED REPORTED(2) COSTS AND EXPENSES

First-quarter 2024 Cost of Sales(2) as a percentage of revenues decreased by 3.7 percentage points compared with the prior-year quarter, driven primarily by favorable changes in sales mix, including lower sales of Comirnaty(1), which resulted in a lower related charge for the 50% gross profit split with BioNTech and applicable royalty expenses; and, to a much lesser extent, the impact of a $771 million favorable final adjustment to the non-cash Paxlovid revenue reversal, partially offset by the amortization of the fair value step-up of inventory related to the Seagen acquisition, as well as lower sales of Paxlovid.

First-quarter 2024 SI&A Expenses(2) increased 3% operationally compared with the prior-year quarter, driven primarily by an increase in marketing and promotional expenses for recently acquired and launched products, partially offset by a decrease in marketing and promotional expenses for Paxlovid and Comirnaty(1).

First-quarter 2024 R&D Expenses(2) were relatively flat operationally compared with the prior-year quarter, primarily due to lower spending as a result of our cost realignment program as well as lower spending on certain ongoing vaccine programs, largely offset by increased investments mainly to develop certain medicines acquired from Seagen.

The unfavorable period-over-period change in Other deductions—net(2) of $406 million for the first quarter of 2024, compared with the prior-year quarter, was driven primarily by higher net interest expense and lower dividend income, partially offset by net gains on equity securities in the first quarter of 2024 versus net losses on equity securities in the first quarter of 2023.

Pfizer’s effective tax rate on Reported(2) income for the first quarter of 2024 decreased compared to the prior-year quarter primarily due to a favorable change in the jurisdictional mix of earnings.

Adjusted(3) Income Statement Highlights

SELECTED ADJUSTED(3) COSTS AND EXPENSES

See the reconciliations of certain Reported(2) to non-GAAP Adjusted(3) financial measures and associated footnotes in the financial tables section of the press release located at the hyperlink below.

RECENT NOTABLE DEVELOPMENTS (Since January 30, 2024)

Product Developments

Pipeline Developments

A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.

Corporate Developments

Please find Pfizer’s press release and associated financial tables, including reconciliations of certain GAAP reported to non-GAAP adjusted information, at the following hyperlink:

https://investors.pfizer.com/Q1-2024-PFE-Earnings-Release

(Note: If clicking on the above link does not open a new webpage, you may need to cut and paste the above URL into your browser's address bar.)

For additional details, see the financial schedules and product revenue tables attached to the press release located at the hyperlink above, and the attached disclosure notice.

DISCLOSURE NOTICE: Except where otherwise noted, the information contained in this earnings release and the related attachments is as of May 1, 2024. We assume no obligation to update any forward-looking statements contained in this earnings release and the related attachments as a result of new information or future events or developments.

This earnings release and the related attachments contain forward-looking statements about, among other topics, our anticipated operating and financial performance, including financial guidance and projections; reorganizations; business plans, strategy, goals and prospects; expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, launches, clinical trial results and other developing data, revenue contribution and projections, potential pricing and reimbursement, potential market dynamics, including patient demand, market size and utilization rates and growth, performance, timing of exclusivity and potential benefits; strategic reviews; capital allocation objectives; an enterprise-wide cost realignment program, which we launched in October 2023 (including anticipated costs, savings and potential benefits); dividends and share repurchases; plans for and prospects of our acquisitions, dispositions and other business development activities, including our December 2023 acquisition of Seagen, and our ability to successfully capitalize on growth opportunities and prospects; manufacturing and product supply; our ongoing efforts to respond to COVID-19, including our plans and expectations regarding Comirnaty (as defined in this earnings release) and our oral COVID-19 treatment (Paxlovid); our expectations regarding the impact of COVID-19 on our business, operations and financial results; and our Environmental, Social and Governance (ESG) priorities, strategies and goals. Given their forward-looking nature, these statements involve substantial risks, uncertainties and potentially inaccurate assumptions and we cannot assure that any outcome expressed in these forward-looking statements will be realized in whole or in part. You can identify these statements by the fact that they use future dates or use words such as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “assume,” “target,” “forecast,” “guidance,” “goal,” “objective,” “aim,” “seek,” “potential,” “hope” and other words and terms of similar meaning. Pfizer’s financial guidance is based on estimates and assumptions that are subject to significant uncertainties.

Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following:

Risks Related to Our Business, Industry and Operations, and Business Development:

• the outcome of research and development (R&D) activities, including, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, and/or regulatory approval and/or launch dates; the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new pre-clinical or clinical data and further analyses of existing pre-clinical or clinical data; risks associated with preliminary, early stage or interim data; the risk that pre-clinical and clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; and whether and when additional data from our pipeline programs will be published in scientific journal publications and, if so, when and with what modifications and interpretations;
• our ability to successfully address comments received from regulatory authorities such as the FDA or the EMA, or obtain approval for new products and indications from regulators on a timely basis or at all; regulatory decisions impacting labeling, including the scope of indicated patient populations, product dosage, manufacturing processes, safety and/or other matters, including decisions relating to emerging developments regarding potential product impurities; uncertainties regarding the ability to obtain, and the scope of, recommendations by technical or advisory committees; and the timing of, and ability to obtain, pricing approvals and product launches, all of which could impact the availability or commercial potential of our products and product candidates;
• claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from the outcome of post-approval clinical trials, which could impact marketing approval, product labeling, and/or availability or commercial potential;
• the success and impact of external business development activities, such as the December 2023 acquisition of Seagen, including the ability to identify and execute on potential business development opportunities; the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all; the ability to realize the anticipated benefits of any such transactions in the anticipated time frame or at all; the potential need for and impact of additional equity or debt financing to pursue these opportunities, which has in the past and could in the future result in increased leverage and/or a downgrade of our credit ratings and could limit our ability to obtain future financing; challenges integrating the businesses and operations; disruption to business and operations relationships; risks related to growing revenues for certain acquired or partnered products; significant transaction costs; and unknown liabilities;
• competition, including from new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat or prevent diseases and conditions similar to those treated or intended to be prevented by our in-line products and product candidates;
• the ability to successfully market both new and existing products, including biosimilars;
• difficulties or delays in manufacturing, sales or marketing; supply disruptions, shortages or stock-outs at our facilities or third-party facilities that we rely on; and legal or regulatory actions;
• the impact of public health outbreaks, epidemics or pandemics (such as COVID-19) on our business, operations and financial condition and results, including impacts on our employees, manufacturing, supply chain, sales and marketing, R&D and clinical trials;
• risks and uncertainties related to our efforts to continue to develop and commercialize Comirnaty and Paxlovid or any potential future COVID-19 vaccines, treatments or combinations, as well as challenges related to their manufacturing, supply and distribution, including, among others, the risk that as the market for COVID-19 products continues to become more endemic and seasonal, demand for our COVID-19 products has and may continue to be reduced or not meet expectations, or may no longer exist, which has and may continue to lead to reduced revenues, excess inventory on-hand and/or in the channel which, for Paxlovid and Comirnaty, resulted in significant inventory write-offs in 2023 and could continue to result in inventory write-offs, or other unanticipated charges; challenges related to the transition to the commercial market for our COVID-19 products; uncertainties related to the public’s adherence to vaccines, boosters, treatments or combinations; risks related to our ability to accurately predict or achieve our revenue forecasts for Comirnaty and Paxlovid or any potential future COVID-19 vaccines or treatments; and potential third-party royalties or other claims related to Comirnaty or Paxlovid;
• trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;
• interest rate and foreign currency exchange rate fluctuations, including the impact of currency devaluations and monetary policy actions in countries experiencing high inflation or deflation rates;
• any significant issues involving our largest wholesale distributors or government customers, which account for a substantial portion of our revenues;
• the impact of the increased presence of counterfeit medicines, vaccines or other products in the pharmaceutical supply chain;
• any significant issues related to the outsourcing of certain operational and staff functions to third parties;
• any significant issues related to our JVs and other third-party business arrangements, including modifications or disputes related to supply agreements or other contracts with customers including governments or other payors;
• uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions, such as inflation or interest rate fluctuations, and recent and possible future changes in global financial markets;
• the exposure of our operations globally to possible capital and exchange controls, economic conditions, expropriation, sanctions and/or other restrictive government actions, changes in intellectual property legal protections and remedies, unstable governments and legal systems and inter-governmental disputes;
• the impact of disruptions related to climate change and natural disasters, including uncertainties related to the impact of the tornado at our manufacturing facility in Rocky Mount, NC in 2023;
• any changes in business, political and economic conditions due to actual or threatened terrorist activity, geopolitical instability, political or civil unrest or military action, including the ongoing conflicts between Russia and Ukraine and in the Middle East and the resulting economic or other consequences;
• the impact of product recalls, withdrawals and other unusual items, including uncertainties related to regulator-directed risk evaluations and assessments, including our ongoing evaluation of our product portfolio for the potential presence or formation of nitrosamines;
• trade buying patterns;
• the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
• the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, as well as any other corporate strategic initiatives and growth strategies, and cost-reduction and productivity initiatives, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs, organizational disruption, adverse effects on employee morale, retention issues or other unintended consequences;
• the ability to successfully achieve our climate goals and progress our environmental sustainability and other ESG priorities;

Risks Related to Government Regulation and Legal Proceedings:

• the impact of any U.S. healthcare reform or legislation or any significant spending reduction or cost control efforts affecting Medicare, Medicaid or other publicly funded or subsidized health programs, including the Inflation Reduction Act of 2022, or changes in the tax treatment of employer-sponsored health insurance that may be implemented;
• U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, intellectual property, reimbursement or access or restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals and other industry stakeholders; as well as pricing pressures for our products as a result of highly competitive biopharmaceutical markets;
• legislation or regulatory action in markets outside of the U.S., such as China or Europe, including, without limitation, laws related to pharmaceutical product pricing, intellectual property, medical regulation, environmental protections, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
• legal defense costs, insurance expenses, settlement costs and contingencies, including without limitation, those related to actual or alleged environmental contamination;
• the risk and impact of an adverse decision or settlement and risk related to the adequacy of reserves related to legal proceedings;
• the risk and impact of tax related litigation and investigations;
• governmental laws and regulations affecting our operations, including, without limitation, the Inflation Reduction Act of 2022, changes in laws and regulations or their interpretation, including, among others, changes in tax laws and regulations internationally and in the U.S., the adoption of global minimum taxation requirements outside the U.S. generally effective in most jurisdictions since January 1, 2024, and potential changes to existing tax law by the current U.S. Presidential administration and Congress, including the House-passed bill called “Tax Relief for American Families and Workers Act of 2024”;

Risks Related to Intellectual Property, Technology and Security:

• any significant breakdown or interruption of our information technology systems and infrastructure (including cloud services);
• any business disruption, theft of confidential or proprietary information, security threats on facilities or infrastructure, extortion or integrity compromise resulting from a cyber-attack, which may include those using adversarial artificial intelligence techniques, or other malfeasance by, but not limited to, nation states, employees, business partners or others;
• risks and challenges related to the use of software and services that include artificial intelligence-based functionality and other emerging technologies;
• the risk that our currently pending or future patent applications may not be granted on a timely basis or at all, or any patent-term extensions that we seek may not be granted on a timely basis, if at all; and
• risks to our products, patents and other intellectual property, such as: (i) claims of invalidity that could result in loss of exclusivity; (ii) claims of patent infringement, including asserted and/or unasserted intellectual property claims; (iii) claims we may assert against intellectual property rights held by third parties; (iv) challenges faced by our collaboration or licensing partners to the validity of their patent rights; or (v) any pressure, or legal or regulatory action by, various stakeholders or governments that could potentially result in us not seeking intellectual property protection or agreeing not to enforce or being restricted from enforcing intellectual property rights related to our products, including Comirnaty and Paxlovid.

Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors are cautioned not to put undue reliance on forward-looking statements. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in our subsequent reports on Form 10-Q, in each case including in the sections thereof captioned “Forward-Looking Information and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” and in our subsequent reports on Form 8-K.

This earnings release may include discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.

The information contained on our website or any third-party website is not incorporated by reference into this earnings release. All trademarks mentioned are the property of their owners.

Certain of the products and product candidates discussed in this earnings release are being co-researched, co-developed and/or co-promoted in collaboration with other companies for which Pfizer’s rights vary by market or are the subject of agreements pursuant to which Pfizer has commercialization rights in certain markets.

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