Pfizer under pressure to do new deals as sales fall

Pfizer’s revenue shortfall in the last quarter is reigniting pressure on the New York drugmaker to make deals to return to growth.

Sales declined 2% to $12.9bn (€10.9bn) in the second quarter, Pfizer reported yesterday.

Revenue, which missed the $13.1bn average of estimates, has now fallen for three quarters in a row.

Investors are watching Pfizer’s next move after several quarters of lacklustre results, dragged down by its top-selling Prevnar vaccination shots and products that are facing loss of exclusivity, like the erectile dysfunction treatment Viagra and pain medicine Lyrica.

Newer drugs, including breast cancer treatment Ibrance, are doing well, and Pfizer has a solid pipeline of potential blockbusters — but that won’t be enough to lift overall sales in the near future.

An acquisitive company several years ago, Pfizer walked away from a $160bn mega-merger with Allergan last year in the face of political backlash over deals that changed a company’s domicile for tax purposes.

There has been pressure for Pfizer to make more deals since last year’s $14bn acquisition of cancer drugmaker Medivation. The lack of short-term growth prospects has been weighing on the shares, which are lagging the Standard & Poor’s Healthcare Sector Index this year.

Following the results, analysts said the focus will be on business strategy and the timing for a potential large-scale deal. Cancer drugmaker Bristol-Myers Squibb is “still the most likely target,” Jeffrey Holford, an analyst at Jefferies Group said. Analysts have speculated that Bristol-Myers is ripe for a takeover after shares slumped following stumbles in its cancer programme.

Pfizer has a busy pipeline across many therapies. It said as many as 15 in development have potential to be blockbusters and that half that could get regulatory approval by 2020. The timing is what may concern investors, though. Credit Suisse analyst Vamil Divan recent said that the pipeline is a “ways off” from creating “major value.” He suggested that even if Pfizer is holding off on large-scale deals, small to mid-size transactions could improve its prospects.

Bloomberg