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Pfizer registers 30% increase in quarterly profit

Jul 30

Pfizer registers 30% increase in quarterly profit

Pfizer on Monday reported a 30 percent rise in quarterly profit, helped by demand for its branded treatments such as Ibrance, Eliquis and Xeljanz.
Pfizer said net income rose to $5.05 billion, or 89 cents per share, in the second quarter, from $3.87 billion, or 65 cents per share, a year earlier.
Revenue fell 1.5% to $13.26 billion.
Pfizer, which was scheduled to report its second-quarter earnings on Tuesday, also said it would combine Upjohn, its off-patent drugs business, with Mylan.
Pfizer has agreed to spin off its off-patent branded drugs business and combine it with generic drugmaker Mylan, a move that leaves Pfizer with its more profitable innovative drugs, including cancer treatment Ibrance and pneumonia vaccine Prevnar.
The move, which brings blockbuster treatments Viagra and Lipitor under one umbrella with Mylan’s EpiPen, is part of a years-long effort by Pfizer to split into three parts - innovative medicines, lower margin off-patent drugs facing generic competition and consumer healthcare. Pfizer agreed in December to combine its consumer health business with GlaxoSmithKline.
The combined company, which will get a new name, is expected to have 2020 revenue of $19 billion to $20 billion, with free cash flow expected to be more than $4 billion.
The pharmaceutical industry has been under intensifying pressure from lawmakers, including President Donald Trump, to keep prices down for US consumers, which has limited profits and led to recent deals, such as Bristol-Myers Squibb’s plan to buy Celgene and AbbVie’s acquisition of Allergan.
The new company, to be based in the United States and incorporated in Delaware, will be led by Michael Goettler, president of Pfizer’s Upjohn unit, which sells Pfizer’s older drugs that have lost patent protection.
Mylan said Chief Executive Heather Bresch, who took the helm in 2012 and faced intense political pressure over the high price of EpiPen, will retire after the deal closes. Mylan Chairman Robert Coury will become executive chairman of the new company.
“We think it is clear Mylan needed to do something to change direction,” Wells Fargo analyst David Maris said, adding that the deal is also recognition that Pfizer wanted out of generics.
Pfizer’s older drugs business has a much higher operating margin than Mylan’s, Maris added.
Mylan, which had a market value of $9.5 billion prior to Monday’s announcement, last year said it would review its business as it grapples with lower prices of generic drugs and declining sales of its EpiPen emergency allergy treatment.