NEW YORK--(BUSINESS WIRE)-- Pfizer Inc. (NYSE: PFE) reported financial results for third-quarter 2021 and raised 2021 guidance(4) for revenues and Adjusted diluted EPS(3) reflecting the net impact of its updated expectations for contributions to 2021 performance from both Comirnaty(1), the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine, as well as its business excluding Comirnaty(1).
Additionally, Pfizer published this morning on its website the third-quarter 2021 earnings presentation and accompanying prepared remarks from management as well as the quarterly update to its R&D pipeline.
Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “While we are proud of our third quarter financial performance, we are even more proud of what these financial results represent in terms of the positive impact we are having on human lives around the world. For example, more than 75% of the revenues we have recorded up through third-quarter 2021 for Comirnaty(1) have come from supplying countries outside the U.S., and we remain on track to achieve our goal of delivering at least two billion doses to low- and middle-income countries by the end of 2022 -- at least one billion to be delivered this year and one billion next year, with the possibility to increase those deliveries if more orders are placed by these countries for 2022. One billion of these doses will be supplied to the U.S. government at a not-for-profit price to be donated to the world’s poorest nations at no charge to those countries. Despite all we have been able to accomplish to date, we remain focused on our future, not our past. Our ultimate goal is to help bring this pandemic to an end as quickly as possible, but also to apply the lessons we have learned through our work on the vaccine to all of our therapeutic areas. We look forward to providing future updates on these efforts.”
Frank D’Amelio, Chief Financial Officer and Executive Vice President, Global Supply, stated: “I continue to be very pleased with the way our business is performing in 2021, both including and excluding the significant contributions of Comirnaty(1) to our results. In addition to raising our expectations for revenues and Adjusted diluted EPS(3) for the company including Comirnaty(1), today we are also increasing the midpoint of our guidance range for Adjusted diluted EPS(3) excluding Comirnaty(1) for the second consecutive quarter, demonstrating our ability to execute on our broader strategies beyond the vaccine. We continue to make progress on advancing our internal pipeline across all therapeutic areas while also prudently deploying our capital through partnerships and bolt-on acquisitions to gain access to cutting-edge platforms, science and technologies that could potentially bolster our growth in the latter half of this decade. I am proud of what we have accomplished so far in 2021 and look forward to finishing the year strong.”
Results for the third quarter and the first nine months of 2021 and 2020(5) are summarized below.
($ in millions, except per share amounts)
Following the completion of the spin-off of the Upjohn Business(6) in the fourth quarter of 2020, Pfizer operates as a focused innovative biopharmaceutical company engaged in the discovery, development, manufacturing, marketing, sale and distribution of biopharmaceutical products worldwide.
Revenues and expenses associated with the Upjohn Business(6) for all prior year periods presented have been recategorized as discontinued operations and excluded from Adjusted(3) results. Pfizer’s Meridian subsidiary, the manufacturer of EpiPen and other auto-injector products, which had been reported within the results of the Upjohn Business(6) in the first three quarters of 2020, is included within the Hospital therapeutic area for all periods presented.
Business development activities completed in 2020 and 2021 impacted financial results in the periods presented(6). 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).
Financial guidance reflects management’s current expectations for operational performance, foreign exchange rates and management’s current projections as to the severity, duration and global macroeconomic impact of the COVID-19 pandemic.
Pfizer is raising 2021 total company guidance for revenues and Adjusted diluted EPS(3). This reflects the net impact of its updated outlook for contributions to 2021 performance from both Comirnaty(1) and its business excluding Comirnaty(1). The guidance range for Adjusted(3) R&D expenses was increased primarily to reflect anticipated incremental spending on COVID-19 and mRNA-based projects. Ranges for various other components of financial guidance were tightened within their previous ranges primarily to reflect the passage of time and actual performance to date. Current 2021 financial guidance is presented below.
Adjusted Cost of Sales(3) as a Percentage of Revenues
Adjusted SI&A Expenses(3)
Adjusted R&D Expenses(3)
(previously approximately $2.2 billion of income)
Effective Tax Rate on Adjusted Income(3)
The midpoint of the guidance range for revenues represents 94% growth from 2020 revenues, including an expected $1.3 billion, or 3%, favorable impact from changes in foreign exchange rates compared to 2020. The midpoint of the updated guidance range for Adjusted diluted EPS(3) reflects an 84% increase over 2020 actual results(8), including an expected $0.09, or 4%, benefit due to favorable changes in foreign exchange rates compared to 2020.
Financial guidance for Adjusted diluted EPS(3) is calculated using approximately 5.7 billion weighted average shares outstanding, and continues to assume no share repurchases in 2021.
Update to Assumptions Related to Comirnaty(1) Within 2021 Guidance
Due to additional supply agreements that have been signed since mid-July, Pfizer is updating the revenue assumptions related to Comirnaty(1) incorporated within the above guidance ranges. The updated assumptions are summarized below.
Adjusted Income(3) Before Tax (IBT)
High-20s as a Percentage of Revenues
The Comirnaty(1) revenue projection incorporated within Pfizer’s 2021 financial guidance includes approximately 2.3 billion doses that are expected to be delivered in fiscal 2021(5) based on expected ordering patterns through the end of December for the U.S. and through the end of November for the rest of the world. Pfizer and BioNTech continue to expect to manufacture 3 billion doses in total by the end of December 2021. The difference between the number of doses expected to contribute to 2021 revenues versus the number of doses expected to be manufactured by year-end relates to anticipated international deliveries in December, which will be recorded as revenue in 2022 due to our international fiscal calendar(5), and, to a lesser extent, doses expected to be produced but not yet delivered as of December 31, 2021.
Adjusted(3) IBT margin guidance for Comirnaty(1) incorporates the expectation for revenues for the product, less anticipated Adjusted(3) costs to manufacture, market and distribute Comirnaty(1), including applicable royalty expenses, and a 50% gross profit split with BioNTech, as well as shared R&D expenses related to ongoing Comirnaty(1) development efforts and costs associated with other assets currently in development for the prevention and treatment of COVID-19. It also includes R&D expenses related to other mRNA-based development programs. It does not include an allocation of corporate or other overhead costs.
Selected Financial Guidance Ranges Excluding Comirnaty(1)
Pfizer is updating its financial guidance ranges for revenues and Adjusted diluted EPS(3) excluding contributions from Comirnaty(1). Both financial guidance components were tightened within their previous guidance ranges primarily to reflect the passage of time and actual performance to date. In addition, guidance for revenues excluding Comirnaty(1) was tightened around the lower end of the previous range as a result of the Chantix recall and pause in global shipments.
Adjusted Cost of Sales(3) as a Percentage of Revenues
The midpoint of the revenue guidance range above reflects approximately 6% operational growth compared to 2020 when sales of Comirnaty(1) are excluded from both periods, which is in line with the company’s stated goal of at least a 6% revenue compound annual growth rate through 2025. The midpoint of Pfizer’s Adjusted diluted EPS(3) guidance range excluding Comirnaty(1) reflects approximately 12% operational growth compared to the prior year(8).
QUARTERLY FINANCIAL HIGHLIGHTS (Third-Quarter 2021 vs. Third-Quarter 2020)
Third-quarter 2021 revenues totaled $24.1 billion, an increase of $13.8 billion, or 134%, compared to the prior-year quarter, reflecting operational growth of $13.4 billion, or 130%, as well as a favorable impact of foreign exchange of $421 million, or 4%.
Third-quarter 2021 operational growth was primarily driven by:
partially offset primarily by lower revenues for:
GAAP Reported(2) Income Statement Highlights
SELECTED REPORTED COSTS AND EXPENSES(2)
Effective Tax Rate on Reported Income(2)
Third-quarter 2021 Cost of Sales(2) as a percentage of revenues increased 21.9 percentage points compared with the prior-year quarter. The drivers for the increase include, among other things:
SI&A Expenses(2) increased 8% operationally in third-quarter 2021 compared with the prior-year quarter, primarily driven by incremental costs associated with the implementation of our cost-reduction and productivity initiatives, as well as increased product-related spending across multiple therapeutic areas and other costs associated with activity that is closer to pre-pandemic levels as compared to the prior-year quarter.
Third-quarter 2021 R&D Expenses(2) increased 49% operationally compared with the prior-year quarter, which primarily reflects a $650 million up-front payment related to the global collaboration agreement with Arvinas, Inc. to develop and commercialize ARV-471 and increased investments across multiple therapeutic areas, including additional spending related to the development and at-risk manufacturing of the COVID-19 anti-viral programs.
Pfizer recorded $1.7 billion of other income––net(2) in third-quarter 2021 compared with $1.9 billion of other deductions––net(2) in third-quarter 2020. The period-over-period change was primarily driven by:
Pfizer’s effective tax rate on Reported income(2) for third-quarter 2021 was negative, primarily as a result of certain initiatives executed in third-quarter 2021 associated with Pfizer’s investment in the Consumer Healthcare joint venture with GlaxoSmithKline plc (GSK).
SELECTED ADJUSTED COSTS AND EXPENSES(3)
Adjusted SI&A Expenses(3)
Adjusted R&D Expenses(3)
Adjusted Other (Income)/Deductions––net(3)
Effective Tax Rate on Adjusted Income(3)
A full reconciliation of Reported(2) to Adjusted(3) financial measures and associated footnotes can be found in the financial tables section of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since July 28, 2021)
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.
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/files/doc_financials/2021/q3/Q3-2021-PFE-Earnings-Release.pdf
(Note: If clicking on the above link does not open up a new web page, you may need to cut and paste the above URL into your browser's address bar.)
For additional details, see the associated financial schedules and product revenue tables attached to the press release located at the hyperlink referred to above and the attached disclosure notice.
(1) Comirnaty includes direct sales and alliance revenues related to sales of the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine, which are recorded within Pfizer’s Vaccines therapeutic area. It does not include revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in the Pfizer CentreOne contract manufacturing operation within the Hospital area. Revenues related to these manufacturing activities totaled $187 million and $274 million for the third quarter and first nine months of 2021, respectively.
(2) Revenues is defined as revenues in accordance with U.S. generally accepted accounting principles (GAAP). Reported net income and its components are defined as net income attributable to Pfizer Inc. and its components in accordance with U.S. GAAP. Reported diluted earnings per share (EPS) is defined as diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.
(3) Adjusted income and its components and Adjusted diluted EPS are defined as reported U.S. GAAP net income(2) and its components and reported diluted EPS(2) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as actuarial gains and losses from pension and postretirement plan remeasurements, gains on the completion of joint venture transactions, restructuring charges, legal charges or gains and losses from equity securities, but which management does not believe are reflective of ongoing core operations). Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A) expenses, Adjusted research and development (R&D) expenses and Adjusted other (income)/deductions are income statement line items prepared on the same basis as, and therefore components of, the overall Adjusted income measure.
As described in the Non-GAAP Financial Measure: Adjusted Income section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Pfizer’s 2020 Annual Report on Form 10-K, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Because Adjusted income is an important internal measurement for Pfizer, management believes that investors’ understanding of our performance is enhanced by disclosing this measure. Pfizer reports Adjusted income, certain components of Adjusted income, and Adjusted diluted EPS in order to present the results of the company’s major operations––the discovery, development, manufacture, marketing, sale and distribution of prescription medicines and vaccines––prior to considering certain income statement elements. See the accompanying reconciliations of certain GAAP Reported to Non-GAAP Adjusted information for the third quarter and first nine months of 2021 and 2020. The Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS(2).
(4) Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses, gains and losses from equity securities, actuarial gains and losses from pension and postretirement plan remeasurements and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.
Financial guidance for full-year 2021 reflects the following:
(5) Pfizer’s fiscal year-end for international subsidiaries is November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries is December 31. Therefore, Pfizer’s third quarter and first nine months for U.S. subsidiaries reflects the three and nine months ended on October 3, 2021 and September 27, 2020, while Pfizer’s third quarter and first nine months for subsidiaries operating outside the U.S. reflects the three and nine months ended on August 29, 2021 and August 23, 2020.
(6) The following business development activity, among others, impacted financial results for the periods presented:
(7) References to operational variances in this press release pertain to period-over-period growth rates that exclude the impact of foreign exchange rates. Although exchange rate changes are part of Pfizer’s business, they are not within Pfizer’s control and since they can mask positive or negative trends in the business, Pfizer believes presenting operational variances excluding these foreign exchange changes provides useful information to evaluate Pfizer’s results.
(8) As described in footnote (4) above, in the first quarter of 2021, Pfizer adopted a change in accounting principle to a more preferable approach under U.S. GAAP related to its pension and postretirement plans. Prior period financial results have been recast to reflect this change. The recast comparable full-year 2020 Adjusted diluted EPS(3) is $2.26, versus $2.22 previously reported.
(9) Emergency uses of the Pfizer-BioNTech COVID-19 Vaccine have not been approved or licensed by the FDA, but have been authorized by the FDA, under an Emergency Use Authorization (EUA) to prevent Coronavirus Disease 2019 (COVID-19) in individuals 5 years of age and older. COMIRNATY is licensed by the FDA for individuals 16 years of age and older. In addition, COMIRNATY is under EUA for individuals ages 12 through 15, a third dose for certain immunocompromised individuals 12 years of age and older, and a booster dose for certain individuals 18 years of age and older. The emergency uses are only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of the medical product under Section 564(b)(1) of the FD&C Act unless the declaration is terminated or authorization revoked sooner. Please see EUA Fact Sheet at www.cvdvaccine-us.com.
DISCLOSURE NOTICE: Except where otherwise noted, the information contained in this earnings release and the related attachments is as of November 2, 2021. 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; reorganizations; business plans and prospects; expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, clinical trial results and other developing data, revenue contribution, growth, performance, timing of exclusivity and potential benefits; strategic reviews; capital allocation objectives; dividends and share repurchases; plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on these opportunities; manufacturing and product supply; our efforts to respond to COVID-19, including the Pfizer-BioNTech COVID-19 vaccine (Comirnaty) and our investigational protease inhibitors; and our expectations regarding the impact of COVID-19 on our business, operations and financial results that involve substantial risks and uncertainties. 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” and other words and terms of similar meaning. 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:
Risks Related to Government Regulation and Legal Proceedings:
Risks Related to Intellectual Property, Technology and Security:
We cannot guarantee that any forward-looking statement will be realized. 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, 2020 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.
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