Pharmaceutical portfolios and diverging guidance paths
Pfizer and Merck raised revenue guidance, while product mix and acquisition charges affected the two companies' earnings-per-share outlooks in different ways.
Economics & Markets··Midday
Non-Covid products support Pfizer's range
Pfizer reported second-quarter revenue of 15.034 billion dollars, up 3 per cent as reported and 1 per cent operationally. The company changed its full-year revenue range from 59.5 billion dollars to 62.5 billion dollars to a new range of 60.5 billion dollars to 62.5 billion dollars. That lifted the midpoint by 500 million dollars. According to the release, about 1.5 billion dollars of better-than-expected performance from non-Covid products supported the change, while lower expected Covid-19 product revenue of about 4 billion dollars, compared with about 5 billion dollars previously, offset part of the contribution. Product figures make the mix visible: Eliquis produced 2.425 billion dollars, up 19 per cent operationally; the Vyndaqel family produced 1.762 billion dollars, up 8 per cent; and the Prevnar family declined 4 per cent to 1.337 billion dollars. Diluted results showed a loss of 0.04 dollars a share, while adjusted diluted earnings were 0.77 dollars. Adjusted full-year earnings guidance stayed between 2.80 dollars and 3.00 dollars a share.[1]
Sales growth and acquisition charges at Merck
Merck reported worldwide second-quarter sales of 16.6 billion dollars, up 5 per cent, or 4 per cent excluding currency. The company raised its full-year revenue range from 65.8 billion dollars to 67.0 billion dollars to a new range of 66.3 billion dollars to 67.3 billion dollars. In the same release, its non-GAAP earnings-per-share range fell from 5.04 dollars to 5.16 dollars to a new range of 2.66 dollars to 2.76 dollars. Operating performance and transaction charges sit behind those movements through separate channels. Keytruda and Keytruda Qlex sales reached 8.4 billion dollars, up 5 per cent, with 463 million dollars coming from Keytruda Qlex. Winrevair revenue rose 75 per cent to 588 million dollars, and Gardasil and Gardasil 9 revenue rose 4 per cent to 1.169 billion dollars. A charge of 2.31 dollars a share tied to the Terns Pharmaceuticals acquisition affected both the generally accepted accounting principles loss of 0.54 dollars a share and the non-GAAP loss of 0.13 dollars a share for the quarter. Merck attributed the full-year earnings-guidance reduction mainly to 3.62 dollars a share of acquisition-related charges.[2]
Revenue guidance rises through different earnings paths
Both companies moved their full-year revenue ranges higher, while the stated drivers and earnings-per-share outlooks followed different paths. At Pfizer, the new revenue range reflects the net result of better-than-expected non-Covid portfolio performance and a lower expectation for Covid products. The company left its adjusted earnings-per-share range unchanged. At Merck, a higher revenue range arrived alongside acquisition charges that reduced the non-GAAP earnings-per-share range by more than half. The comparison shows why revenue growth alone cannot stand in for the same period profit or the same guidance revision. Pfizer's changing product mix supported the lower end of its revenue range. Merck's product-sales gains appeared in the same accounts as the earnings effect of acquisition accounting. Large products contributed growth in both releases, yet the forward measures cover different parts of the business. Revenue guidance tracks the commercial sales stream; earnings-per-share guidance also carries expenses and the accounting effects of transactions. Reading the two revisions therefore requires separate attention to portfolio performance and acquisition charges.[1], [2]
