Tax changes provide booster shot for Pfizer
Pfizer's fourth-quarter profit soared to US$12.27 billion, thanks to a huge tax benefit related to the United States tax system overhaul.
The biggest US drugmaker on Tuesday reported an US$11.34-billion benefit, mainly from recalculating deferred tax liabilities. Pfizer also said it will take a charge of approximately US$15 billion, payable to the Treasury over eight years, to cover taxes on profits held overseas that it plans to bring back to the US.
The New York company said those figures may need to be adjusted and did not disclose how much money it will "repatriate".
Pfizer said it plans over the next five years to invest roughly US$5 billion in capital projects in the US, including strengthening its US manufacturing "presence". It plans to spend about US$100 million as a one-time bonus for non-executive employees.
The company issued a forecast for adjusted 2018 earnings of US$2.90 to US$3 per share, higher than in the past couple of years, with revenue in the range of US$53.5 billion to US$55.5 billion. Due to the tax overhaul, the company said it expects a tax rate of about 17 per cent in 2018, well below the 23 per cent expected by Credit Suisse analyst Dr Vamil Divan, which he noted in a report.
Pfizer said it's on track to decide this year whether to keep its consumer health business or sell off all or part of it. It makes household staples, including Advil pain reliever, ChapStick and Centrum vitamins.
The maker of Viagra and pain medicine Lyrica said its net income for the fourth quarter amounted to US$2.02. A year earlier, Pfizer posted net income of US$775 million, or 13 cents per share.
Adjusted for one-time items, fourth-quarter earnings amounted to US$3.77 billion, or 62 cents per share, six cents better than analysts had projected. The per-share earnings were boosted by a low 8.6 per cent effective tax rate on fourth-quarter adjusted earnings.
"Pfizer had a strong year in 2017, delivering solid financial results, advancing several significant pipeline programmes and enhancing shareholder value," Chief Executive Ian Read said in a statement. He noted the company won 10 approvals from US regulators last year for new medicines, including new diabetes drug Steglatro and two combo drugs, including Steglatro, or for additional uses for existing drugs.
Pfizer posted revenue of US$13.7 billion in the period, up one per cent and above Street expectations of US$13.61 billion.
Sales growth was led by Lyrica, the Prevnar 13 pneumococcal vaccine and several newer medicines, including clot-preventer Eliquis and rheumatoid arthritis pill Xeljanz.
"This was a strong quarter for Pfizer," Edward Jones analyst Ashtyn Evans wrote to investors, adding, "We expect sales growth to be minimal in the near term as Pfizer faces the patent expirations of top drugs Viagra and Lyrica. However, we believe that Pfizer has the financial flexibility to add to its product portfolio through potentially sizable acquisitions."
For all of 2017, Pfizer reported revenue of US$52.55 billion and net income of US$21.31 billion, or US$3.52 per share.