Pfizer M&A on hold pending clarity on US tax reform
Sales slip for third quarter in a row as leading drug group misses analyst projections
Looming patent expirations on Pfizer’s sexual dysfunction treatment Viagra, pain drug Lyrica and falling Prevnar sales has pushed analysts to prescribe deals as the medicine to resuscitate the company’s growth. Photograph: Andrew Kelly / Reuters
The big deal that Pfizer investors have been hoping for won’t be happening any time in the near future.
On Tuesday, chief executive Ian Read said the drugmaker needs clarity about US tax reform in order to figure out which potential targets are worth buying. Until there’s a resolution in Washington, dealmaking will be “somewhat delayed”, Mr Read said.
“We need to see tax reform, or the absence of tax reform, to understand what the market values are,” he said in response to an analyst’s question about where he stood on large M&A, during Pfizer’s earnings conference call.
Second-quarter results, posted earlier on Tuesday, highlighted why the New York drug giant needs acquisitions. Sales declined 2 per cent to $12.9 billion, missing the $13.1 billion average of estimates compiled by Bloomberg. They have now fallen for three quarters in a row.
Net income rose to $3.07 billion, or 51 US cents per share, from $2.05 billion, or 33 cents per share, a year earlier. Excluding items, Pfizer earned 67 cents per share, beating the average analysts’ estimate by a cent.
Looming patent expirations on Pfizer’s sexual dysfunction treatment Viagra, pain drug Lyrica and falling Prevnar sales has pushed analysts to prescribe deals as the medicine to resuscitate the company’s growth.
Pfizer dropped after Mr Read’s comments. Bristol-Myers Squibb, which analysts have cited as the most likely potential target because of its cancer products, also declined.
– Bloomberg / Reuters