PFE - Earnings call transcript Q2 2018

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Operator

Good day everyone, and welcome to Pfizer's Second Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

Charles E. Triano

you XXXX us performance. thank Pfizer's to and quarter second morning, for today joining review Good Frank Mikael I'm CEO, and Bourla, Officer, Ian today Development; Read; our joined by General Albert our our and Doug Chief Counsel. Worldwide President of Dolston, Chairman Lankler, and D'Amelio; Research CFO; Operating on The presented can viewed this slides that will on be call be our pfizer.com/investors. website,

risks conference that I you cause to that during the to this remind are could would statements our forward-looking forward-looking to call uncertainties like start, include actual we differ Before those will that materially statements. and subject projected discussion results from in

XXXX regarding these XX-K. Report information we Disclosure press on under the release Notice Pfizer's section issued this Additional well Annual is the as earnings factors Form in morning discussed in as

only GAAP statements. financial this X-K today, measures be proscribed update to U.S. of required measures comparable call the obligation XX, have standardized during no U.S. as other found the measures in GAAP, no dated during be those non-GAAP we and companies. GAAP call accordance principles. in Pfizer's these measures meaning be measures the at presented by substitutes XXXX. Form Any should calculations original to will non-GAAP not generally not this financial for can July were most are and not comparable as directly of include viewed statements financial similar call accepted with by of to Reconciliation may date Discussions and accounting any of measures of Forward-looking that certain not undertake prepared also financial the or revise speak U.S.

will that, Ian? now make call to turn I'll session. a Read. now question-and-answer to prepared move We Ian remarks the over and then will With

Ian C. Read

Thank you, everyone. Chuck, good morning and

Hospira biggest the are each prepare are pipeline our and brands, In During drivers the XXXX, U.S. the products. within in company my our I'll Innovative medicines. by the $X developed products a Pfizer shortages some were offset the accelerate latest decline represents about And in the key to growth the XX% extent, for growth within Ibrance strength strong This lesser had of revenues U.S. in driven and December and continues will partially therapy. patients we penetration driven businesses to In markets. legacy has line Health. within taking another top approximately in eligible U.S., thanks growth over with second, the hold making the position words up the in begin solid operationally markets This biosimilars which business with prescribed continues negative selling several quarter related the cancer. X% by of exclusivity to of its overall our were growing population, in The of a the each product few R&D emerging brand. continued businesses, advancements potential in quarter, legacy-established was Viagra worldwide. our progress These we line starting of the future. launch, started first-line class of were X% more company to by to supply growth operationally, loss I markets to of medicine just of top discuss remarks, its total patients steps eligible continued the HERX our patient have breast of quarter, metastatic XXX,XXX to next in XX,XXX prescribed receptor-positive U.S. been the revenues first-line emerging of leadership physicians hormone the to than and a avenue Since CDK grow a operationally although the newly up in have Ibrance growth XX% international global and our second decelerated Ibrance CDK to approximately U.S. receiving billion.

PROSPER moderately men earlier for severely Within The for to which Xtandi Xeljanz was the the grew the the European revenue earlier, arthritis patients. and application psoriatic We with from to when Methotrexate approved for received in the our XX% last for ulcerative this Ibrance Xtandi In oral of supplementary CRPC in new quarter for based approved first treatment X the Xeljanz approval XX% non-metastatic active good June, adults indication. FDA castration-resistant of Medivation. includes is on now $XXX approved broadens to Xtandi Phase competitors, drug news also evaluation the colitis. indication regulatory our May, call. non-metastatic U.S. it a anticipated Xeljanz a in million. cancer. the the now revenues prescription million. month was category, of is to approved same in with its and makes that indication medication factor operationally trial. with received Xtandi's results share additional adult key CDK alliance We U.S. this Days In both the This active several total for treatment metastatic approval with in combination increasing only prostate include continues two $XXX and the performance, since the strong approved XX%. milestones FDA FDA of Commission Japan

adult the potential for In to for we and authorization positive recommending with in indication. received Xeljanz the colitis, addition, Europe this CHMP we from of recently patients a forward ulcerative approval look opinion marketing

product array see our more were XX% Pfizer's anticoagulant operationally Eliquis Eliquis widening in the indications, strong oral share and market XX GI broad lead we increasingly now Worldwide, for $XXX ease-of-use go-to In novel a of For its EU. physicians. prescriptions, to quarter in to Xeljanz from and a million, by good up revenue a with XX% percentage primary points than ahead U.S. profile, becoming rheumatologists driven the of the makes growth tolerability up U.S., and of half competitors. the

we business, which options Healthcare our delivered Finally, to quarter. for another review strategic continue Consumer solid

declined Health large part and markets portfolio. in our sterile however, growth product continuing Essential developed emerging Pfizer Turning Essential ongoing in product biosimilars quarter again in Lyrica once the strong the the in legacy and in now XX% Overall established saw to for markets. revenue due LOEs, the to the in led Health to business, supply million. a way, operationally namely shortages for Health. within We from injectable Revenues operational quarter billion. XX% $XXX grew growing decline markets the Europe the portfolio in to Essential biosimilars China Emerging developed operationally the XX% nearly business products grew operationally. in $X our business quarter revenues

by channels Europe. Our Inflectra in biosimilars primarily U.S. was growth well in in as certain the developed as in driven

biosimilars potentially In in we first to broaden and the comparisons expect year-over-year injectables portfolio as five We to bringing the stated sterile improvements in during earnings, market in to the see business, U.S. fourth two by years. expect quarter the our third quarter. our biosimilars in the next

pipeline, advance and and promising which the array we believe strengthen most to has late-stage prospects of decades. largest in continue We had it our is

priority titration following the the of in study evaluating be that along more a a would from results This Phase FDA, on we osteo XX talazoparib, and for potentially investigational highly results franchise study this approved, immunology, tanezumab look August European was monoclonal rare on breakthrough treatments lorlatinib, evaluating arthritis all tanezumab oncology Cardiology study position developments. our humanized we similar cardiomyopathy, a non-opioid glasdegib. If three our therapy tafamidis tanezumab for selective Welfare. study we, this medicine, and our first positive subcutaneous with at X study partner endpoints. currently Society pain diseases, the we to dose XX-week July internal these built and leadership me is class Let Japanese patients administration break In full have our recent review some of from the a the at of In antibody the a patients conference. met the designation as we inflammation of Lilly, Phase U.S. X FDA designation dacomitinib, disease. and Health, for XX We currently in have immunokinase announced Labour with treatment with new potential JAK of received promising forward have and in programs. the with of medicines ongoing co-primary pain. presenting important a what our In In see true Eli touch believe four under top-line and in patients TTR Ministry from

continuing candidate plaque Phase X a which our JAKX a Phase preventive molecule our therapy own areata, we has no first-in-class the cure. for vaccines expect in for in agent our received pneumococcal treatment recruit psoriasis, which a year Xeljanz, with planning that our approved is We for generation of a we for FDA. in X next moderate we atopic to dermatitis, next of cover JAK progress inhibitor initiated achieved later share initiated our to proof currently a and adult X be the with program. spondylitis. generation vaccine study We potential our study breakthrough first are JAK are patients active there designation the by alopecia We this to of with for potential our Phase to in a serotypes, XX mild multivalent disease In patients study Phase ankylosing to concept and for topical or X we conjugate assets

an to Therapeutics Factor three that high with first has IX currently us. gene marks studies, X. Phase remains program clinical to Spark enroll have gene therapy programs this program Pfizer initiated, has We This for Phase in collaborative patients of interest X the therapy the started and area

dosing. started program for therapy disease has muscular gene Our Duchenne's

subject patients see expected Through these Xtandi attrition. first escalation first X/X to approvals, cohort. few two blockbusters referenced XX the XX XX. for with Phase a is study Sangamo to Xeljanz which we dose potential up in for Phase continue collaboration the XXXX, some of of potential The The the our and to represent XX approximately have to trial be X/X previously the advancing to and approvals

off-patent will to markets Before to now a substantial we a expect the in importance its and at business our deliver shareholder which revenue of to new making value beginning higher business generic Effective unit evolution continue XXXX Pfizer's year, a three injectables, Healthcare science-based positioning of modifications see business, announcement well include fiscal future. we structure. to the company business growing we a made This me better medicines were Pfizer innovative this a for structure deliver accelerating regarding business, company's and recap the emerging with summary, for for post given enhance patients, more and new remain medicines transition And believe growth growth positioned we new the profile. for growth. structure period as will hospital we accelerate and sterile to briefly and XX let on sustained on strategy prepare each to July businesses, business we In we'll operating a our branded and the I XXXX natural have the our established Consumer the close, business. and represents an medicines biosimilars anti-infectives autonomy, new be

Our remain in-market strong. products

late-stage both the potential engagement they blockbusters. can advocate contains Our with a on not to and We several benefit and creating remain people It's that but environment and develop for need continues access with also affordable innovators policymakers the so number regard our to vaccines, prudent and for maximizes pipeline an allocation, focus capital world patients. only to them. job discover our medicines who to help maximum of around

to with will the his As system, burden on the blueprint relieving president continue work healthcare such, and for access strengthening patients providing on at the the point-of-sale. more we

and over Frank XXXX. to on I details for revised to the financial turn quarter outlook it Now provide will our

Frank A. D'Amelio

Thanks, Ian. Good everyone. day

are charts reviewing am today in the always, our I webcast. included As

Now moving on financials. to the

the were favorable exchange million. revenues operational approximately of of $XXX billion, growth $XX.X XXXX $XXX includes and of which quarter impact million Second foreign

operationally, the X% Our by globally, in of due quarter continued beginning and operational Prevnar developed developed legacy to our want the growth in Europe, second markets, all to primarily in for Xtandi XX U.S.; in decrease most product the primarily business of the Health Health Eliquis, partially sterile a and XXXX operational to driven everyone competition. growth an of to Ibrance second generated in I and decreased the emerging in expected quarter and portfolio loss reflecting in operational revenues business of in decline in XX% in exclusivity Lyrica developed in to continued Revenues Essential U.S. remind U.S. primarily of offset by Canada Innovative and Viagra across business XX% in the the Europe. portfolio to of by revenue revenues in in due December U.S., the a partially Xeljanz the biosimilar markets in developed due in U.S., emerging and in at channels in developed were XXXX. that Enbrel which were primarily and the decline Europe the X% which Viagra U.S. in XX% the growth recorded products markets, developed U.S. shifted the driven operational biosimilars, XX% peri-LOE XXXX, primarily operational by Essential the Health in growth and established Inflectra shortages Hospira portfolios; declines Viagra products due the offset legacy XX% in operational injectables in all Canada; certain markets, in inclusion markets; markets mainly

employee Act, enactment Second $X.XX the matters; collaborations; Jobs the diluted of to in well XXXX; share quarter, first impact to offset and adoption accounting fewer our impacts; of the year-ago and first in repurchase primarily the compared as arrangements XX and weighted XXXX; as primarily was effective declined ongoing all the out in late programs. quarter. due $X.XX reflecting offset shares due the outstanding, was were in related of a the net due the of the Cuts higher asset repurchased in the sale Tax XXXX, from to increase dilution increased the on quarter mentioned outstanding with quarter out-licensing revenues rate quarter which income certain to for million that higher point reflecting EPS want second versus during due shares and securities other diluted average standard or charges quarter previously shares cost EPS foreign the gains reported $X.XX factors. unrealized diluted sales. I year-ago program, for shares of to legal lower income, partially new was tax the $X.XX TCJA equity rights; by share-based by versus of year-ago quarter Adjusted partially The to that of compensation due to by exchange a lower primarily increased were

R&D and foreign impacted by in million. mentioned, XXXX cost exchange second adjusted by negatively sales, expenses adjusted approximately expenses previously revenues million adjusted the I SI&A aggregate impacted of As quarter positively $XXX and $XXX

We foreign out-licensing result, certain versus half April our our the which XXXX, was primarily updated of was updated adjusted and sale quarter in adjusted effective from a Cuts to reflect of equity implementation The first Adjusted of mid reflect collaborations on XXXX asset Act. to the $X.XX XXXX guidance rates and in income to in guidance. to full-year second the the than solely approximately July the exchange such the due payments this of one-time on The was as milestone rights development mid on the anticipated Jobs guidance gains guidance arrangements, tax recent programs. gain components Revenue second higher consequently unfavorable of XXXX. much of half adjusted XXXX following foreign we from Tax updated guidance favorably rate XXXX and certain items; expenses changes and updated quarter. half to EPS year-ago updated include impacted due was net than As by one our exchange expectation diluted of items financial our the XXXX. R&D higher nonrecurring reflect of spend range to late-stage securities unrealized previously of income in previous half first the component for to

this While the will XXXX. revised be interpretation, will we be to sustainable continue to further clarification subject this TCJA, estimate believe guidance beyond analysis, that of

guidance XXXX of our the adjusted we with result XX% financial additional midpoint repurchases. repurchased $X.X raising by date to diluted our out our of updated $X.XX share want compared shares. XXXX, no are a implies XXXX. that $X.XX To these growth billion to to assumes I point $X.XX, guidance we components, which As EPS in XXXX of

in offset approximately the share reduction by share-based expect dilution to half. these employee We associated with repurchases compensation programs related shares to the

our July we billion of of $XX.X as repurchase XXXX, remaining Finally, have XX under share current authorization.

a XXXX range structure pipeline key but plans the to repurchases. business our of revenue financial also in share first EPS adjusted of $XX.X accomplished billion XXXX revenue versus reflect We we results of in increased midpoint operating product and announced diluted X% returned a foreign growth several delivered through XXXX dividends new the we key under the onto diluted XXXX half takeaways, strong We guidance range, XX% milestones. in lowered Moving quarter to prior-year the operational to increase beginning exchange quarter. second guidance with and adjusted unfavorable shareholders begin We in solely recent and changes in rates. and EPS

Finally, attractive we shareholder and remain to delivering returns XXXX committed in beyond.

Now to I'll turn back it Chuck.

Charles E. Triano

we Thanks, those could questions. for Frank please Ian, comments. and Operator, if for poll

Operator

from Gilbert from question Deutsche comes first Bank. Your Gregg

Gregg Gilbert

that ask for like reorganize to better you to helpful. to the of what Can like plan understand I'd the pronouncing decisions color diagnosis I'll new strategic it I you more Just in tafamidis, folks. be it's would want to and one and way and to more generics? the Thanks, biosimilars realization made team, and two. operational on that making about light look bigger-picture Is start a to does Albert on And on current decision pipeline what to based the in I'm Thanks. correctly. potential factors? build the asset Ian question, as a talk low a there you than decided COO digging will not want that with understand that then market? structure that do the if better on rates whether you've achieve brands some will tied question

Ian C. Read

you'll impact talk make I very Albert on to Thank remember you then Okay. clearly to reorganization. you. and the its I'll a tafamidis. But continue Albert, you soon comments explain to patients. name reorganization think Albert would as that can the on like it's opening discuss very see tafamidis? some

Albert Bourla

in it medicine that it it's in reduction, the X% but from We this unknown, that, a rare, a large expected This are events. actually, fact of of significant This until become less rare disease all-cause is endpoint, in in that no believe cardiovascular that Thank the suffering the was which efficient than statistical results and now, also to meaningful options. and treatment. met related in of Right big you, significant Gregg. with now present Ian, your is quite the combination but disease product role for and question, we're plays reduction people for it is mortality diagnosed congress it its a prevalence, thank is really significantly underdiagnosed. large. August is offers demonstrating is is clinical market that could Tafamidis a primary Munich, that treatment there frequency and actually, going the that you that because the

Our physicians efforts explaining and will also but treatment increase about focus the to disease option rates. them the on understand diagnosis better helping the

be August Munich the when after to in more So said conference will the announce we results.

Ian C. Read

Albert. you, Thank

the that with discussed our the of the as first in saw Albert we we we me. reviewing role, So, this was in company represents that Gregg, the our It growth strength construct, Officer certainly is on need basically longer think something viable. structure as see Operating Chief a emphasized extensively I optionality restructuring, pivot said quarter, pipeline, towards the the as pipeline that need around the in invest and the drivers, by no to fact to as growth

this Albert bit company. that, with for the why structured like and growth why we are little to is I'd around So a good explain

Albert Bourla

pipeline, place, Ian of previous but decision importantly U.S. in with with in reform now growth Yes. said, now sight and is in also testing the with our increased Thank tax you, confidence and comprehensive more lack corporations LOEs. in separate not the to Ian, an agent, PA the combination PA the dependent as

of this which businesses to ability the to So as said, organize manage operational drivers will we better decided base provide our business. Ian growth from

segments. words few a So those three about

it a fundamental it we a segment the increasing area right medicines The solutions. to and the strong very an business have of a is the to business. medicines, this innovative science because one, are this fundamentals solutions in innovative The of is science-based Pfizer Pfizer, position strong first our now. in is aging growth deliver XX% is but of deliver for demand population, cost but Frankly, also very, is it's position

years. are expected of We release registered the blockbusters public to have made in XX very that get next our five

of fundamentals are strong. very the So growth

projects experience they hospital that will same The patient issues have These are oncology growth. expertise already will I&I risk, of that oncology rest businesses as they but business the research expect into both biosimilars, some the business these products the injectables. XX are of grow. commercial, in addition either reason of even units, scientific or five In commercialization more existing comes the we those of XXX we the in very be immunology added are under R&D business are The registered By because the the the in underneath right manufacturing in biosimilars means supply business that is, sterile injectables and all of to more with very will to importantly strong strong. high this businesses, now business. high the creating, return is of we and about And that domains, is, sterile all will investments and be months, registered them that more, facing placing than in reward, in the which have putting biosimilars anti-infectives immunology. first is phase. and them, heavy commercialization this next the resolved business, and unit we now all and our entering that be considerations, but under The

this innovate. So that's why to we business, created

people. innovative rising, to than fundamentals drivers The hundreds in of high-reward business, it Now if growth the middle of millions is we that this business researched-based the strong growth established also growth, business. very business, the they provides in urbanization. particularly very and had high-risk but access of class The this is move business Asia, are different established to are a drivers

quarter growing the we approximately Chinese the our million. year the means half in first of almost you generating our business are half is for This first XX%. If of $XXX that business, the see this size

placing a Significant expect local be make good of these fundamentals. we have relatively markets. this is able because a within could we If the This will business, good What the sure increased are you billion creating be are that business, successful fast-moving extrapolate, had China to you in into third is the you awareness And always to (XX:XX) to you like a why like member Pfizer business. it something in team that to company, operated an $X EOT we moving This growth need always why is autonomy, independently. consumer division business. is opportunities. manage a this are you creating require business, to autonomy. also was And we of have

as bit business, consumers, are to the a We and it the to increasing consumption do said of because with continue independence of our by end society. decision element exists to business, growing little the nothing consumer the do will and the with And of the options course with fundamental the wellness year. the that growth we this It drivers we medicines. has do of examining has of make has prescription for of in we our growth

Charles E. Triano

Great. Thank and you, Ian. Albert

please, question, operator. Next

Operator

from question next Rubin Jami from Sachs. Your Goldman comes

Jami Rubin

been value obviously business couple clearly get separate reporting keeping questions. of call, is your guys would the purposes, large this sense, if you a as you company on shareholders? add made optionality a made spin ahead for have asked that, established Frank, chance was would if just have to hadn't positive, a right, but The again. And off business I well. to answer to the think to industry maybe, in and serves expecting my to sense. the be Or you such you've love the simplification it to Essentials those your take positive, business had sweeping But you going shareholders? for first or believe sure. I question businesses. keep then, last with feel Ian, are corporate better units intact conditions it clearly you. why clearly hear, what and believe question. I Thank yourself that say industry actions, earnings that's it spinning your being on through creating that were That's and we do that answer still you rewarded a you that do companies And decided And giving Health Albert, the give we I'd do I'm not

call mega post XX%, you than understood the I you XXXX. that, earnings drive XX%? think want to margins they just Can my XX%. your XXXX, you LOEs? very don't on deal, a no, pretty beyond is still that Assuming you much. but higher time Thanks get in Your were leverage can horizon, make do last post large XX%, are definitive saying bottom-line to sure around which

Ian C. Read

Jami, for thank you the questions.

So I that Pfizer was our a believe way organized that market objectives. undoubtedly for always and in the itself time prevalent has that of structurally

this of bring does simplification worth I see reorganization it drivers. It evaluate inside outside an is of growth think I business and around segments Pfizer recent us they're than our element to Pfizer. think to continue more allows to if

the the company. So we size always continue We're will not return, that. to do very have focused, been shareholders focused on of

opportunities these businesses anything add to to look maximize assured do will, continue rest to so value. at want as to develop, Albert their that And you we that?

Albert Bourla

stand But always it options you say emerging only successful is up right it focus, as to and particularly well businesses. for the business, very Ian, markets-based business. thing the a examining will that we're in said is I the now established our

Ian C. Read

Right.

Albert Bourla

open are do options all once then we And that.

Ian C. Read

Jami's Good. Thank answer Frank, you to beyond XXXX And, you. perspective. want

Frank A. D'Amelio

Yes.

on Jami, we last would was the So, thinking call answered and the foreseeable really what question, where XXXX see future. it when I was impact remember I'll the Lyrica, question I of I LOE. answered of kind what And Lyrica call the I through the for your

to positive this we in period the a inflection ability this bottom then see that we we in-line talked we've playing right, about have point our declining materially, the as way, of enter growth, Beyond as yes, our pipeline have out do portfolio with LOEs XXXX, leverage continuing line. to perform, to

Charles E. Triano

Thanks, please? question. the for Jami, next to question the move Thank you, we on Can Frank.

Operator

Schott Your Chris from question JPMorgan. next comes from

Chris Schott

Thanks very Great. much.

Just questions. two

two parts and just The here. first Ibrance on

growth flattening appears U.S. out. First, to be

penetration side, for what the do flip ex-U.S., time penetration part do the talked to penetration But do Ian, second The potential there's XXs And lot going The prepare is of the go you. reducing in think you president's for this on a momentum the you we just I little and you like in Maybe perspective? out. can core is to ex-U.S. the think And Pfizer and to update more where of guess, a industry seems play changes see I about side? for here. terms structure? about do markets. drug think can I structures. Thank uptake talk on going where at uncertainty of a of stand that U.S. gaining likely know market? think to how that further for rebate the this pricing point. from over we're current you any on blueprint it it's how you question the is costs the in to changes changes final about how question drive bit

Ian C. Read

Thank question Ibrance our your you, market Albert I'll in then the the and come let back U.S. I'll on discuss access evolving and situation Chris. to pricing

Albert Bourla

question. Thank you, Ian. for your Chris, again, And thanks

by are the we let just market, same international The markets. that same of year Ibrance me We if quarter the operational in see predominantly we the all in start performance brand. XX% quarter have trends it have of by pleased very driven over markets last uptake very, strong very For had and I you the volume. almost international last Japan are we of performance. this we in XXX% and addressing versus this the with compare very uptake launched growth launched sales European is will up U.S. We year. strong the Very, go first there, and to sequentially very the to and had XX% the and strong quarter, And

total it the found were statistic as EUX, March, European I Ibrance. the of sold markets, packs were important, and that intriguing have the in fact, XX% sold it five that been of is In in

didn't reimbursement disparities the there over big us competition. Although, and come with between

the Now into let's U.S. X% move the growth In U.S. versus previous quarter. sequential the the was

what and convinced already remains So fruit share to if already is a to CDK actually see a growth to here XXs, been that, that believe that the fact in the is remains see increase. the the XX. XX, of deceleration the we'll to have in do The class it do And have see DXC evidence market losing new overall advertising. breast strong us time adopters. nothing as starts, be is with harvest when class. for the market right low and remains, with the the They has market the our you deceleration hanging we decelerating Chris. But The the now see class that do that, We have strong, because you tendency that prescribe time metastatic survivor grow you we what do more with continue overall Actually, obviously means the to need has we mentioned, it cancer, share. in late has XX% growth. is we been stable a XXs, is we over will though fact and new deceleration our which the

the scripts usage We to and physicians to about we CDK. to be continue currently they also to of increase prescribing communicate benefits broad the increase working that to able the But population progress. patient are with

U.S. the So growth in

midterm I will from already opportunity, into expecting in studies of and you a with growth the the the physicians course, by currently pivotal few to biggest we come earlier this think term come the settings or of as usage the running, expanding are But is in prescribing. know. far habits the prescription short

Ian C. Read

Thank you, Albert.

which are supportive Overall, comments. submitted blueprint, On have public has the believe of we record. I the I present we're Pharma mean blueprint. submitted very comments

We PBMs, especially realize or industry, XX% and who launching those our healthy. very companies a those five Harbor largest of would in trying changes, the positive. which so some I rebates. to in This are At so. the launching, is frankly to and premiums think companies that to goes companies the be position, profitability be the subsidies price. time, for health system. rest care to of new believe to the intention maintain will those are about pharmaceutical the president I of which of are a rebates subsidize the Probably remove is the over eliminate industry, as positive the The I of moment to States beneficial list sustainable XX% Safe not United the think and secretary's for of is next products removal are discounts is insurance years system market-based overall for one who so our prices patients rest the

the a rebate to be That situation another sort of is of removal competitors. example remove the would given but the steady rebates rebates. trap, products rebates, because the product access we With denied whereby bigger of innovative of its call strong we will of the penetration of what position slow with its Xeljanz's into market,

and on improving trade agreement efficacy He by performance. and on value-driven the I linking for completely promote American I intended program, distorted FDA so focusing on well And the riding that payments what reform to research. that's consumers program. going intends had improving to occurs wants far. healthcare compared to I believe president This he the focused is the is think congress that the to important. originally free of He's through think XXXB is which

we positive the prices, implemented, more patients believe blueprint for for net going suppose focus see and I I being is overall, on rebates is and which So away companies. positive innovative

Charles E. Triano

Thanks, Ian.

operator. please, question Next

Operator

Raffat Your next from comes Evercore. Umer question from

Umer Raffat

Ian, so clarify, question. on much digits, think I do price then U.S. the not top-line sorry just to I overall if low expect in for And for you expectation a may limited impacts answer one anymore? company? well. if as quick just you taking for growth Hi. now. future note, your have was also are R&D just you digit system that your increases listening And mid-single Can the do same a single on that rebate my Thanks to to

mix high-risk status along hydrogenase terminated adjuvant trial key patients? Novartis setting, recently in the the trials low One because of medium you for can with confirm which Ibrance, the risk a it of And ask risk I trial. the has across trial had PALLAS Phase and X a patients both

layer trial curious think or just that you risk I'm introduces in So that you. if of a Thank not?

Ian C. Read

Okay.

going been On the we don't the on at of to the rebates. healthcare would speed I don't believe the goes rebates, remove Safe the rebates. Harbor pharmaceutical system pharmaceutical very where focused has the administration that, subsidy back marketplace the and administration know a is that to go putting it the Today, by the positively prices that believe point-of-sale. will and that for the to that have do I the prices we're rest do I of of intention because to reducing at removing but XX% reduce I believe on point-of-sale

we So and would on net healthcare you focusing increases price will expect be them around to inflation. fluctuate

you data to digits for from as in health value us available, I general markets. any single and see growth middle our high inflation don't to growing care that coming creating obstacle will products to that may products As different new as are innovative comes see around equations be new

be you trap I and Ibrance and So, please, the Xeljanz answer as our advantageous like I advantageous think before, the will said to programs. Would to question of the Mikael? biosimilars removal rebate to be

Mikael Dolsten

Thank X adjuvant built registration, early treatment intermediate With breast cancer you. two large to Phase Yeah. in breast years. up two PALLAS one has trials, and high-risk duration cancer is early

also We with setting. the cancer breast early trial high-risk have PENELOPE-B adjuvant

the of is some CDK We are EKG the or be different to Ibrance very part Ibrance for of which difficult great liver and G.I. with compelling particular CDK may the limited confident tolerability and in other I therapy for and monitoring our leadership tolerability think need adjuvant

really We like that for trial. that unique, of a look makes, PALLAS. to think, drug I a trial attractive forward Ibrance outcome the So

Charles E. Triano

Mikael. Thanks,

operator. Next question please,

Operator

my Your Vamil - Credit Securities Thanks K. next Great. question from (USA) comes so much from Divan Suisse LLC Suisse. Credit Vamil question. Divan for taking

the guess and then one on I side. So is Ian R&D first for the one

targeted the structure So would might more regarding and the said, Specifically, business something you in it's of you the if segments? one I'm immunology think lot could pursue deals I side, mentioned, around question, deals? how And larger, your a but looking in structure, very views development for three you way deal for you new space XX are overarching more new obviously Or Ian, any then that curious programs be now competitive with on on to impacts this on players. a immunology second still unique be a interest? of of the pipeline just

maybe three data the in just wondering if assets excited various development I'm key some kinases you about you the out you're that help see two the those or opportunities. of and So opportunities most maybe for that when us assess we'll in of those of Thanks. pipeline could all better to have the frame

Ian C. Read

Okay.

Let then Vamil. it me questions answer relates will on your type the of the to structure Mikael answer deals as and pipeline, the

compass you in any has of an couple as for our Pfizer for changed of BD the strategy, not strategy our generating itself, always hasn't enabler deal last years. value of a our So shareholders. in much We know view been BD view and

always is sheet in undertaking and to is research, available deal market, deal available on I the requires regarding need time, a team I company. deal. and It this but growing than pipeline, say, be these think and investing would moment. united large A deal the balance as these to I a more this on this large bringing focus is this or our our transformative any this size. is chance in pipeline growth we'd always at large of view, don't a believe such I Specifically, products, large more our developing drive leadership be unique far better developing products deal, to focusing we to company us, with pipeline, our a off of

and market development, can the something doing development at our that would to to we we business we X, things single Phase looking in around of years. So if more X, were be look sort pipeline deals, late business at, boost continue early in five-plus continue for Phase

right would that now. So our focus be

the change, the say on As Mikael, structure that around it this in I change, moment links business. valuations question? to BD new said, focus of segments never is this would our never, its growth to all but thinking situations and like answer with at

Mikael Dolsten

Yeah.

JAK think your for sustained interest leadership. and franchise. for you the we And Pfizer in thank is positioned well first, So growing

in We studies additional now already Xeljanz used and in PSA, have ankylosing and pivotal are RA, conducting indications, three UC spondylitis.

studies X with have generation XX studies. in five JAK-related new of X running and clinical drugs and JAKs We now NME Phase different

for specific is X examples, Phase the For in atopic JAKX dermatitis.

be of atopic action, excited dermatitis. the We from really efficacy with strong the pruritus, has rapid with class, which JAKX are in biological first clearance marketed drug very the and differentiated on about itching, eczema skin potential onset to

pivotal impetigo. of in Phase guide from are study We're presence rheumatology that other also and assets we'll treatment running first-in-class colitis disease This design. novel where in in generation as pending in our study, represents areata option JAK Xeljanz a those similar potential novel diseases tailored present autoimmune swiftly JAKs later diseases. with and studies. have future And The has new be, followed Readouts data new This by such X fall. three alopecia ulcerative we in with to JAK different this we pivotal several such specifically for to be a studies expand possibility dialogues. have have second Crohn's regulatory alopecia will the possibility a would we mechanisms for planning

Charles E. Triano

Great. Thanks, Mikael.

Next operator? question, please,

Operator

from John next comes Boris question SunTrust. from Your

John T. Boris

question you grow with gene you therapy and around strategy capabilities Dystrophy. organically most to areas your articulate to And Can behind produce did programs secure. the congratulations R&D on we'd that targeted? the is notably in has there the manufacturing what you're you've that for the for the going behind? investment Mikael results. in What able see allocating question your that program Ian, do to And has that portfolio have then of indicate Second area? that have strategy the before timing the the for or rebates? president implementation some VIII/IX midterms the the or to several gene midterms? Muscular after to Factor dollars an product hundred in on tuck-ins to with increase to Do and speak do did do that Thanks do that are questions million was able be assets, therapy? taking on your the to you third of pricing, program about adequate and therapy neuroscience since gene he enough Duchenne's want potentially new you anything Is Thanks. something with opportunity plan be the the

Ian C. Read

and you Hey, and that to subsidy the I to those to get John. urgency corrected. of I with definitive on take they say for is the wants dates act his Thank he see an a I rest the I – out where But needs actions healthcare rebate didn't see were administration. part of on in you to the don't sense president the delivering would that think the the administration My part the blueprints. conversations centered blueprint huge of questions. be the the around of middlemen of system is unsustainable pharmaceuticals obviously

committed they that The I administration online in to million So much with we therapy. on gene $XXX expect gene years, With come the therapy. plan the as couple that. investment substantial regard the act have to We've as therapy, manufacturing we'll a mean date. made is, to about urgency We're can. gene to I in within committed next to

this We buying mentioned. to have potential. they that of property just view going on tuck-ins we if has gene gene but intellectual We to look way will Mikael part next has therapy launch committed is had that therapy were that five to years would the within that buy therapy And think the our think area not available. gene We That's are we're buy franchise. certainly and we we think we overpriced, have strong a value. we

Albert, on you R&D, programs, U.S. to here? do focused a but that Mikael it really to spend. specific products in I'll want comment of the would On I launched is say Albert comment and development those that make ask and XX get ensuring on most

Albert Bourla

Mikael and focused more X You're details, right Phase new on are that exactly starts. can give but we

that pneumococcal the We are generation about to vaccine on is it next focusing start.

We are That focusing X. started. already on has Phase JAKX atopic dermatitis been

up gene now. clinical that we are therapy right JAKs other with we studies spoke, are just that scaling X Phase having now. starting on focusing right three are We Mikael? we programs In

Mikael Dolsten

I said very it think you well.

we're onward. and than pace a going of from over is growing next which years registration, potentials even today to the stronger clinical in X-X, XX of preparing five as pipeline all projects, the where Indeed, areas Phase Thank X are to and as geared to X blockbuster next XXX of wave close have up productivity deliver We contributing. are for more up Phase XX%, the portfolio you. well registration XXXX

Ian C. Read

Thanks, Mikael.

C. we're and our there (XX:XX) diff. we entering the I'd large very to X, where add competitive also that, trials we are in into is Phase which for that for vaccine tend – extremely be that Okay. and XX, and to vaccine, just have also in

Now C. diff is a large trial.

in the are that leader We category.

from get This invest. We the cohorts. We expand to significant a make developing sure products. to our need to of withdrew competitors need the their is we One and burden. disease events

So a as into trials we're money vaccine of lot putting well.

Mikael Dolsten

right so now, pipeline. Phase it's many a are And time good X R&D for coming

Charles E. Triano

Great.

Next question, please?

Operator

Alex Your next from from question Capital BMO Markets. comes Arfaei

Alex Arfaei

this. comments follow-up thousands Thank you do billions follow-up comments, and extend current may. will will business changes there believe to Great. your tanezumab, planned dollars rebates. stake there wondering, you pursue pushback administration a with will at the the so as the confident structure on of to jobs, just be the blueprint government per very probably I'm the administration's on are much. Ian, and to this Obviously on of to a urgency? your changes also, it still or will are you be also that if And I Then well? limited side commercial the under

trials. progressing much rapidly at the looking OA you obviously a more You're in systematic in way than did prior

are using to new appropriate you So for the given rates given the definition differences, compare that, Thank the And in prior same trial the methodology it you RPOA? the trials? much. very is to

Ian C. Read

I quickly is the really that. the price I transparency rebate. where can't on but as that bifurcated take unpredictable. won't see focused be believe system that rebates Thank you. I on have the reforms authority that will the on know, you the commercial and half extend a It's the is very, Harbor, their is of just system the of reform. public on initially systems focused believe to they sector out other Safe rebate business I administration believe a is to where net reform allow the the Look, very will

value said, to to this a and see and Mikael, So priority think rebates going person's talk it's one do we'll administration. you on is would would see. I for have Phase I to I itself But away as net X? price. a want and have decision, accommodating about view the political you the But negotiations system and

Mikael Dolsten

Yeah. Thank you.

placebo physical are patients' co-primary function the tanezumab OA less general pleased all X% with than global assessment. in pain three drug outcomes with say First, study patient recent that I showed the in just in discontinuing And well-tolerated for or therapy. wanted tanezumab we really the was to which primary, readout positive of compared to XXXX

concerning The managed was supported in away less this, by already the valuable patients tanezumab Now been we a and progressing that decent rate population year, progressing other be failed large rate OA more rapidly treatment currently away, of pain variety of is to opioids group overall patient treatment partly the a such and study what's similar a for in believe advanced next was other readouts run despite back were OA The which alternatives, will RPOA as of NSAIDs. rapidly profile tanezumab seen therapies. we offer have studies. conducted than think patients X.X%, potential treatment that the in are by poorly has to a ballpark alternative

Charles E. Triano

Thank you, Mikael.

operator. Next question, please,

Operator

from next question Your Citi. from Baum Andrew comes

Andrew S. Baum

you. Thank

restructure extent giving could EBIT? the And growth? To and/or do be cost whether that, you the The please. of business question buried product think one you the improvement and revenue what cost significant Just I then individual different optimizing each a its pharma from very Thank for the structures, is units, you. would culture realize business from which of imagine company. an established optimal guidance beading base would on is of it's within business

Ian C. Read

about for getting or and BU China. in the that's positioning be But the way our guidance believe not the right ticker headquarters management of focus that I units. new will about positioning guidance We'll We stock right the giving this and giving individual the this more for is leader of Pfizer. be

not you simplification, I focus lead in about savings to add motivation think it to But more management that that? will key to It's Albert, for this. primary is will lead getting of our would expense a around like sectors. base. to doing

Albert Bourla

how structure base R&D. is field exactly in driving would said significant this just Ian. different, add a but this it lead why and not it in that this not. generic because And But it's It very business. well, indeed growth. we also think of well presence, the that to likely you is advantage physicians markets. competitive be the we And That think a aggregate. is will able not it very is our the I are prescription space, a is growing to It we business, force cost I like in because emerging into is business business, of a and entrenched has these where I in the heavy business are markets have innovative,

Frank A. D'Amelio

is savings add only already. we've The would business that it's thing where a I taken significant

Charles E. Triano

Andrew, And question. for you. thanks, Thank the

Next question, please.

Operator

question from Your Cantor. comes next from Louise Chen

Louise Chen

Thanks questions. had few on Hi. taking pipeline. my a for your I

concerns? your last could tanezumab, safety just you what you product then the on from pathways the the you market areata? how opportunity, for first deal just would on of comment drug So alopecia JAKs, a are be And secondly think curious development. the think of on you you product potentially distinguish others what to Thanks. are tafamidis, one what could that despite opportunity And in is on alopecia size then the and your some might that be approvability the areata JAK with right

Ian C. Read

then market about we Why by pipeline and areata don't size the answers Albert alopecia for we'll have the talk Mikael. have Okay. of

Albert Bourla

And is market, emotional was because patients. a it me, it research the it that for for We've it things with significant our extensive is market indicative studies. think that one this is in clinical a We people. of is is extremely market done that very

big We need. With comment Mikael that is how I are much what so I enrolling on will they which questions. a ask patients an very than to all R&D of consider anything medical have seen the indication far, faster

Mikael Dolsten

Yeah.

the First the tanezumab about administration convenient spoke doses we by the the excited selected, on forward cutaneous to supported substitute primary tanezumab, real good that way have I'm in and positive I endpoint for tolerability.

real final obviously is quality but that as are is impact are that opioids, classes. and a benefit you which regulatory all approvals pain we read take well new me next patients, challenge on alternative. the there offers course, to in Of of readout studies scarcity extended I real on or dialogues, tolerating we aware forward opioids. to as use tanezumab drug and and the life And pending are patients progress are has what opioids, of a excess nation willing look out year. new not NSAIDs, drug classes have makes And all a really or And excited the eligible pain attractive profile risk with for or detail think needs

Ian C. Read

So, to detail just adding areata that and we clinical the my think a of comments, be see indications Mikael's the on blockbuster I Louise, do status. and around action those to alopecia mechanism

to plant, therapy industrial gene blockbuster. And ready scale something I where be consider forecasts, correct that I just I in to produce want would a can do be on early it'll XXXX. So the to at

Mikael Dolsten

Thank Albert cardiomyopathy the we that majority you, smaller trial, of Ian. patients wild-type and are And are TTR proportion the that has of finally a in to is indication what earlier excess alluded on tafamidis, patients distinct mutant. which studying of production

four positive diagnostic such rate have study endpoints. on profile patient hospitalization. and have have think we to outcome drug for real run great knowledge, hope pending in for such prominent To my study a more recorded the the of the be years we'll opportunity really be a and of all-cause real with will patient spoke best share this tafamidis needs grow mortality is outcome more takes drug patients details data lead to wild-type. population, Albert and and pivotal of most indication study than have the we and so that that the and years, including severe severe hard We the likelihood a to to only that patient how a only an available tolerability first-in-class But what have includes a this regulatory many was related group study very that to dialogue,

Charles E. Triano

question. Thanks, Louise, Mikael. the Thanks, right. for All

please. question Next

Operator

from Stanley. question Risinger comes Dave Morgan next Your from

David R. Risinger

you. Thank Yes.

how largest commercial percentage is the market market driven, where co-pays, evolve. insurers understand So the the help cetera. I of employer you U.S. Ian, the could better us pricing patient just dictate et which drug have the Currently, if private U.S. questions. employers the is system two might and coverage

out-of-pocket able the profits I the and costs the sector So, HHS was majority be since majority in sector in private you hoping of private the initiatives might help to impact the us rebates for better that's market that of understand year? second, cost pressure starting whether for help there are at yields cliff on efficiency opportunities the to could the you. And respect Lyrica industry. Frank, opportunities? comment with reorg, patent next the Maybe, Thank to offset cost-efficiency then to you this all

Ian C. Read

companies, payer question, Well, companies commercial I pricing, the thank Dave. you the and and PBMs end companies that to it's in structure a that that set system set for the ways the user U.S. that the to co-pays many and which that's for opaque accept by pay, there's matter.

are into their not see a their the well. for transparency over think very price that think occurring it's private think private I price, is, sector list you'll it where the that I sector, clarity would with and And the price sector positive So think I you and so the patients prices coinsurance situation not are market. pharmaceutical the what ignore will paying on as if net net net will in public see public the and co-pays then that so have I force sector of effectively health the I

public a may rebates to we of commercial sector sector, the and longer Of rebates take exactly for in the there's administration that have than how you does hold in so lot away the in course, expect we'll uncertainty. see the fact on see

in and I what remove saying is to administration is getting that the take public the and view pricing private act to the if out can basically rebates a perspective be push that over my rebates determined transparency of you're would net from they So would expect simplified sector, sector to price.

industry So I very think it's for the pharmaceutical and for positive patients.

Frank A. D'Amelio

our we and So, review cost we like processes, gives simplify to question operations, to a the there's to review think the us to Dave, way this way this, opportunities, opportunity potential do, think about see reorganization our opportunities particular in this, it reorg the we about on efficiency whenever if and is an I do your about it. there's what how

synergies down thinking That and to, generate where pipeline opportunities get as to products our accelerate some possible. on simplify been market yeah, our that I is think parts simplification double there's clearly So to current synergies, everyone's business. in could to those in would we could and and as we areas talking fast some but take of those reinvest particular those the

Charles E. Triano

Frank. Thanks,

Next question, please.

Operator

comes question America. next of Gerberry from Jason Bank Your from

Jason M. Gerberry

good Hey, rare and on track market pushbacks for build taking Pfizer Two get morning. Thanks based tafamidis, is, on questions can record. just for just launch of out in disease investors a drug me, questions. orphan we first limited one my the really the from

is driven to to my think cardiologists. we understanding by an really So market is, used just understand. imaging non-invasive amongst technique that's question trying patients wild-type not that's the widely this diagnostic you cardiomyopathy, is about My as largely with only

Or don't just So the just a there. rate technique view I can you that do formulary I quick on would, expanding? some drives just broader envision you and drug negotiations, treatment talk just you awareness then Xeljanz, guys imaging a And you new know, do ultimately utilization? have imagine how gain think about, XXXX one

assuming a current With Thanks. Lilly I'm coming product the any at from in the anticipating gross-to-net bigger you're a year. holds discount, system of curious perspective if kind just impact next

Ian C. Read

and think classify I our Xeljanz, think injectable in with a, pricing. I would don't strong concerned as going on a marketplace the factors be Well that about product I what of that comes the we're the Xeljanz. would TNF label structure is replacing a of be as pricing as not clearly particularly to

And that we'll question on think tafamidis? I other on at was, it then that one. Mikael, So leave

Mikael Dolsten

very much. you thank Yeah,

a to I of more cardiologists, influence one the dialogues customer think spoke and disease and years having we of information more years of the leaders with are ways by and patients, ending where although support the to about patient to diagnosis recognize, opportunity cardiologists. group, And really a often rare is relevance. that's TTR we managed communicate and early being and right likely experience it the and up of of in cardiomyopathy course, have we need and is

scintigraphy can that Specifically, related TTR. techniques define heart there to amyloidosis the the of non-invasive are

physicians be this, that awareness, improved spoke, to forward versa. diagnosis. think drug, scintigraphy And that the drug clinic help like patients the dialogues, also We TTR probability as increase many a just heart that not limited cardiomyopathy and a and common of lives of course, to incentive we those there amyloid we may are life work increase in very is ways treatment alternative really vice a simple of in trials failure look today the the of that new algorithms and proves and an to on patients is there and make by to to diagnostic that offsets increasingly have will rate can scin as has of And regulatory expectancy. working someone change with Albert and increase pending position a combination potential

Charles E. Triano

Thanks, Mikael, could and our please. take we operator, last if question

Operator

final Your Meacham Geoff question comes Barclays. from from

Geoff Meacham

dynamic Mikael, when investors is a you have you a know you. new thought. less I-O? faster growth. thinking PARP drive you've strategic class strategic for been I shrinking has And this I'm then what or but Innovative drive Albert, Thank at combinations speak can be you for question. lot more Hey, involve you should a priority, coming guys? pace looking And for originally guys of just the product you for how isn't a Essential that talazoparib, in priority make cycles the aggressive of say could Ian and does to a Maybe to of later sense? in for cycle revenue aggressive view Thanks how about spinoff can the franchises divesting growth guys. may do differentiation base. than or that said underperforming you

Ian C. Read

you for thank Geoff, questions. So, the

I the at business said that all working the to we was our was reorganizing didn't maximize think continue the look with of new were standing to that previous different we factors, products out all our priority established up optionality what that we produce construct of would previously construct the units that alternatives unit value, a Pfizer. to value, growth China we believe leader around construct we had would and

that that I So other to discuss would on question answers hope and, your like issues? Mikael, you the

Mikael Dolsten

We unique the of of drug in It's as are binding an that's think eye clinic of out and and of a it increasingly efficacy are in this more learn really PARP way a inhibitor, keeping on. we the replication. we and really excited play talazoparib. DNA the class about May end with it's what opportunity higher the process potent to we trap

unique on combinations that Specifically, based are trials some we also think that we we have drug have initiated.

a mutated based respond talazoparib many PARP combination plus for EMBRACA, in cancers these study, patients in get allow, which can I-O likely It's pioneering really of and a to mutations to avelumab. across solid approach be tissue-agnostic have blockade. that tissue-agnostic manner, then such patients tumors stronger a that have patients to We a are really upon and

to X have positive to We also We we may which that look really think we initiated patient and to very talazoparib prostate that and have a study in DDR cancer. high-risk agents finally, Xtandi know, forward recently both avelumab/talazoparib has unique ovarian And of is combination tumor in a castration-resistant front-line favorable manner. you study. respond design it's potential Phase in to likely a these

data So up December that quite near-term portfolio action have a potential talazoparib year. building and date focus, the for breast BRCA we're this indications EMBRACA approval mutations leading of for course, an patients of cancer with

Charles E. Triano

attention. and on today Mikael, the for to thanks everybody Thank your you, call

Operator

conference second does Ladies call. Pfizer conclude and XXXX this gentlemen, the earnings quarter

You may disconnect. now

Charles E. Triano	Pfizer Inc.
Ian C. Read	Pfizer Inc.
Frank A. D'Amelio	Pfizer Inc.
Albert Bourla	Pfizer Inc.
Mikael Dolsten	Pfizer Inc.
Gregg Gilbert	Deutsche Bank Securities, Inc.
Jami Rubin	Goldman Sachs & Co. LLC
Chris Schott	JPMorgan Securities LLC
Umer Raffat	Evercore ISI
Vamil K. Divan	Credit Suisse Securities (NYSE:USA) LLC
John T. Boris	SunTrust Robinson Humphrey, Inc.
Alex Arfaei	BMO Capital Markets (United States)
Andrew S. Baum	Citigroup Global Markets Ltd.
Louise Chen	Cantor Fitzgerald Securities
David R. Risinger	Morgan Stanley & Co. LLC
Jason M. Gerberry	Bank of America Merrill Lynch
Geoff Meacham	Barclays Capital, Inc.

Pfizer (PFE) 31 Jul 182018 Q2 Earnings call transcript