Pfizer’s Q1 Puts Firm on Track for Strong Full-Year Results

Pfizer reported first-quarter results below our expectations. This was largely due to the timing of sales of COVID-19 treatment Paxlovid, which should happen later in the year instead of in the first quarter as we expected. We don’t expect any major changes to our fair value estimate as a result of the minor delay in Paxlovid sales. For 2022, we continue to expect over $60 billion in COVID product sales (vaccine Comirnaty and treatment Paxlovid), close to 10% above management’s guidance, primarily related to signed contracts through mid-April. With close to 120 million courses of Paxlovid likely to be produced in 2022, significant upside exists for this efficacy-leading drug in the near term if utilization can increase. Despite the robust sales expected from COVID products over the next several quarters, we expect a rapid decline in these sales in late 2023 and beyond as the pandemic moderates and vaccine saturation increases.

Excluding COVID products, Pfizer’s total sales increased 2%, with solid growth from new products offsetting generic competition for older drugs. We expect slightly faster growth for the underlying business over the next five years, given relatively low patent losses and continued gains from core drugs. This steady outlook and an improving pipeline help reinforce our wide moat rating.

Pfizer is making strides with several potential new blockbusters in the pipeline. We are most bullish on immunology drugs Cibinqo (approved for atopic dermatitis in January), etrasimod (positive phase 3 ulcerative colitis data in March), and ritlecitinib (filing expected in the second quarter for alopecia). Also, Pfizer’s respiratory syncytial virus vaccine holds significant potential, with phase 3 data expected in late 2023. Several earlier-stage drugs (including an oral GLP-1 drug and a next-generation Ibrance drug) look promising, but larger studies are needed to confirm their efficacy and side effect profiles.