How Pfizer Knocked It Out of the Park in Q3

Pfizer (PFE -0.19%) announced its third-quarter results Nov. 2. In this Motley Fool Live video recorded on Nov. 3, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss how the big drugmaker knocked it out of the park with its Q3 update.

Keith Speights: Right. Well, we talked about the earnings season is in full gear now, another big vaccine maker, Pfizer, provided its third-quarter update on Tuesday morning. Brian, what do you think of Pfizer's results?

Brian Orelli: Comirnaty, which is the brand name of the vaccine. Those estimations were pretty much the highlight of their reports. 2021 sales are expected to be $36 billion. For context, Pfizer's revenue for all of its other drugs was 41.9 billion in 2020. [laughs] Basically, this is almost as much as all of Pfizer's other drugs. Of course, it has to split the profits with BioNTech. But still, it's quite impressive. 2022 sales are expected to go down a little bit to 29 billion, but that 29 billion estimate is fluid and it could go higher if deals come through.

The company says it has capacity to produce four billion doses in 2022, but it's currently only projected sales of 1.7 billion doses. The same day that Pfizer reported, the CDC recommended vaccines for children ages 5-11, so they'll get those shots in arms now, as we've talked about. That's not going to add anything to the $36 billion in sales in 2021, that sales are already factored in and the government is going to give them to kids. It wasn't going to give them to kids, but either way Pfizer and BioNTech were going to make money.

Outside of Comirnaty revenue was up seven percent, Eliquis was up 19 percent. That's an atrial fibrillation drug. It's TTR amyloidosis for cardiomyopathy drug, Vyndaqel and Vyndamax, were up 42 percent. That's been a really big success story for Pfizer. Then Inlyta, which treats various cancers, was up 30 percent. The Prevnar, 13 and 20, were down seven percent. Sutent and Enbrel are both facing generic competition and they fell 31 percent and 12 percent respectively.

Then Xeljanz is down 13 percent, we've talked about that a lot on the show. That was due to the US black box warning, as well as, "Unfavorable change in channel mix." which basically just means they sold drug at lower prices. I think there's a lot of competition among the JAK inhibitors. To try to get onto formularies, they're having to lower the price and then they happen to sell more drug into those channels. That's the reason why Xeljanz was down 13 percent, and then they raised full year guidance and are now expecting $4.13 to $4.18 per share, which is an increase of 84 percent at the midpoint.

Speights: Big jump in revenue for sure, most of it is Comirnaty, the COVID-19 vaccine.

One thing that jumped out to me, Brian, I was reading the transcript. Pfizer's CFO, Frank D'Amelio, I think is his name, said that normally the company doesn't make any comments in its third-quarter update about the coming year. But they made an exception with the projection of sales per Comirnaty in 2022 and I thought it was interesting.

He said that the reason why they were giving the number was because they had seen that some of the sales estimates for next year were really, really high. It sounded like they wanted to set the record straight.

You and I had spoken, we've talked about this wildly optimistic projection from one group that had, I can't remember. I think they were projecting sales of well over $50 billion for Pfizer's vaccine next year. We were both talking about how that just seems ridiculously high. I think Pfizer was seeing some of those estimates and saying, "We need to ground some people in reality here." They came out with that $29 billion figure. Although I do expect that's going to be higher because I would imagine they're going to get more deals lined up between now and into next year.

Orelli: I've heard their CEO or CFO got interviewed and said that the deals that are in place right now are with the bigger countries, the US, the European countries. Those are probably the higher profit ones. The ones that'll come later are the ones that are for the developing countries that take longer to get their budgets together. Those are presumably going to be much lower profit in sales.

Speights: To me, I think best case scenario, Pfizer's still going to see at least a nominal revenue decline with its COVID-19 vaccine next year.

Orelli: Yeah, but my thing is I think maybe you might see a larger decrease in the earnings because I think that the higher percentage of the sales are going to go to that lowest tier price. Even if they match next year's sales, I think they'll probably end up with lower revenue.