Pfizer Posts Strong Q1 Buoyed by COVID-19 Sales

Pfizer PFE reported solid first-quarter results buoyed by strong COVID-19 vaccine sales, but we don’t expect any major impact to our fair value estimate based on the outperformance. While the COVID-19 vaccine sales are providing a major lift to sales and earnings in 2021 and likely into 2022, we expect sales will fall substantially after 2022, limiting the impact on our valuation. However, the amazing speed to market of a vaccine with excellent efficacy and safety shows Pfizer’s innovative power, a core pillar in the firm’s wide moat.

In the quarter, total sales increased 42% (up 8% excluding COVID-19 vaccine sales), and we expect steady growth over the next three years excluding the COVID-19 vaccine sales. COVID-19 vaccine sales contributed $3.5 billion in the quarter and are guided to be almost $26 billion in 2021, above previous guidance of $15 billion and ahead of our $23 billion estimate. We expect increasing supply, authorization in new age cohorts (ages 12-15 in May in the U.S., followed by almost all ages in the second half of 2021) and booster data to drive robust sales through 2022. Also, we expect the booster data will drive annual sales after 2022 of close to $2 billion with a focus on high-risk patients.

Outside of COVID-19 vaccines sales, Pfizer largely performed well. Top drugs Eliquis (cardiovascular), Vyndaqel (rare disease), and Xeljanz (immunology) all posted strong gains based on leading efficacy driving market share gains. However, cancer drug Ibrance fell 1% as economic hardships (likely related to the pandemic) are increasing the need for Pfizer assistance programs, but this should reverse as the pandemic eases. Also, pneumococcal vaccine Prevnar fell 57% in U.S. adults, where guidance against co-administration with COVID-19 vaccines pressured results, but a new co-administration study of next-generation Prevnar 20 with the COVID-19 vaccine (data later in 2021) should help reinvigorate the franchise.

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