Pfizer Fb
Image source: Pfizer.

Whether or not you realize it, we've entered the thick of earnings season, especially for healthcare companies. Coming up this Tuesday, Feb. 2, pharmaceutical juggernaut Pfizer (NYSE:PFE) will release its fourth-quarter results before the opening bell.

For the quarter, Wall Street's consensus calls for $13.6 billion in revenue, a jump of just over 3% from Q4 2014, and EPS of $0.52, a drop from the $0.54 reported in the year-ago quarter. Pfizer has a history of topping Wall Street's estimates in recent quarters, so an EPS beat seems somewhat probable.

As a whole, fourth-quarter earnings reports tend to contain fewer surprises for most large biotech and pharmaceutical companies because we're fresh off the J.P. Morgan Healthcare Conference. This "Super Bowl of healthcare conferences" allows investors to get a good look under the hood at product portfolios and pipelines, usually leaving few major surprises when quarterly reports come out weeks later. Pfizer, though, is an exception. Pfizer's presentation was more of a Q&A panel, leaving investors quite curious about the fourth quarter.

With just days to go, here are three numbers that matter when Pfizer reports.

Images
Image source: Flickr user Sebastiaan ter Burg.

1. Full-year guidance
Normally full-year guidance is somewhat fluid when offered at the beginning of the year, but Pfizer's guidance will likely get a lot of attention given its completed acquisition of Hospira in 2015, and the upcoming closing of its merger with Allergan (NYSE:AGN).

One of the biggest issues for Pfizer has been the weakness of its global established products portfolio, or GEP. Drugs within Pfizer's GEP have either lost patent protection, or they're facing the imminent entrance of generic competitors. The good news with its GEP is that marketing costs are typically low since these are well-known brands that have built substantial rapport with the public and physicians. Unfortunately, the cash flow from these mature products has been shrinking as generic drugs continue to siphon away sales.

The addition of Hospira could help counteract some of this weakness. Hospira's leading portfolio of generic injectables should allow Pfizer to take a bite out of the estimated $70 billion market for generic sterile injectables. The day the deal was announced, Pfizer estimated that it would generate a $0.10-$0.12 boost in EPS in the first year following the transaction.

It remains to be seen if Pfizer will offer any guidance whatsoever involving Allergan. It's uncommon for companies to disclose guidance without a transaction being complete, but with the Pfizer-Allergan merger set to make it the largest healthcare company in the world, investors are going to be mighty curious, especially as it pertains to near-term cost-savings.

Specifically, I would look for revenue growth in the high single-digit percentage range for 2015, and expect the EPS growth rate to be somewhat similar.

2. Ibrance sales
Secondly, I'd pay close attention to the revenue generated by metastatic breast cancer drug Ibrance.

Ibrance

Image source: Pfizer.

We did get some vital information during the recent J.P. Morgan Healthcare Conference that 5,000 more patients received the drug during Q4, pushing the total number of patients prescribed Ibrance up to 20,000 from 15,000 in the previous quarter. We also know that an additional 1,000 physicians prescribed the drug relative to Q3, meaning 5,000 physicians have now put their patients on Ibrance since its February 2015 launch. Group Vaccines President Albert Bourla also commented that Ibrance is already boasting 30% of first-line HER2-negative, ER-positive metastatic breast cancer market share, and it's made inroads in off-label second- and third-line use. Considering that it practically doubled progression-free survival in clinical trials, the quick uptake of Ibrance isn't surprising.

Bourla's data implies that Ibrance's total sales for the fourth quarter should be up sequentially from the third quarter. What'll be interesting is whether the increase is commensurate with prescriptions written. If we see, for example, a 35% increase in sequential quarter prescriptions written, but we only see sales up 20% quarter-over-quarter, it would imply a potentially higher gross-to-net discount. Ibrance's annual wholesale cost of $118,200 is certainly enough to make insurers cringe in horror, and it's quite possible they may try to pressure Pfizer to lower its costs.

3. Prevnar sales
Lastly, take note of the fourth-quarter tally for the Prevnar family of vaccines.

In rapid fashion, Prevnar 13 has become the top-selling vaccine in the world in terms of revenue. A lot of this has to do with Prevnar 13 being the recommended pneumococcal vaccine for persons aged 65 and up by the Centers for Disease Control and Prevention. In the year following this recommendation, sales of the vaccine exploded higher.

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Image source: UK Department for International Development via Flickr.

However, Pfizer has cautioned that Prevnar sales should be slowing in the near future because it'll have hit its easy-to-reach audience in the United States (basically those who were getting a different pneumococcal vaccine prior to the introduction of Prevnar 13). What Wall Street and investors should be curious about is whether this slowing in sales means a plateau of sorts, or just a slowing in the uptrend. The expectation is that Pfizer is going to have to spend more to reach its remaining target audience for Prevnar, but investors now have high expectations. Anything less than high-single-digit near-to-intermediate-term growth would probably be seen as disappointing.

For reference, U.S. sales of Prevnar 13 rose 77% in the third quarter compared to the previous year, but the CDC's recommendation for seniors ages 65 and up to get the Prevnar 13 vaccine came out in September 2014, meaning we may begin to see sales cycle lower on a year-over-year basis beginning with Pfizer's Q4 release.

Stay tuned
Overall, my suspicion is that Pfizer's turnaround is still under way, though proceeding slowly. I'm not sure we're going to see much improvement from its GEP, but I anticipate growth from its vaccine and oncology platform will allow consumers to overlook these issues. I also look forward to Pfizer introducing its full-year financial expectations, with or without Allergan included. Stay tuned folks, because Feb. 2 is only a few days away, and it promises to be exciting.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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