Pfizer Not Making Pricing Changes, Sees Ways To Work With Trump
Executive Summary
Pfizer CEO Ian Read said during the company’s quarterly call that there are ‘lots of ways’ to work with the new Trump administration, his comments coming on the same day several industry leaders met with the new US president.
Already scheduled to report Pfizer Inc.’s year-end financial results Jan. 31, CEO Ian Read missed the high-profile, face-to-face meeting with President Donald Trump that several other pharma and biotech CEOs attended. But he reassured investors there appear to be opportunities for the industry to work with the new president.
As far as whether or not Pfizer will review its pricing strategy, Read said no. “We are not changing our philosophy vis-à-vis how we price our medications and how we take price increases,” he insisted.
Trump has been critical of the industry’s high drug prices and even called the industry out for “getting away with murder” during his first press conference Jan. 11 after being elected president. (Also see "Trump Throws Pharma A Curve Ball On The Third Day Of J.P. Morgan" - Scrip, 12 Jan, 2017.) The rhetoric has made executives and investors nervous about the kinds of pricing restrictions the president might try to implement, but in a public statement following the meeting, the Pharmaceutical Research & Manufacturers of America said the meeting went well and discussion revolved around reforming the tax code to spur job creation in the US.
Despite Read’s firm stance on pricing, the chief executive noted, “there’s lots of ways we can work with the administration to ensure that patients have more affordable drugs in the US.”
Trump’s number one message to pharma’s leadership was to create manufacturing jobs in the US. “That falls squarely inside of getting tax reform, which allow us to reinvest in the US and create jobs, so I think we could be a very big part of the story of creating jobs in the US if we get the tax reform,” Read said.
Another option to lower the cost of developing drugs and thus lower the cost to the consumer is around deregulation, Read suggested. Streamlining the approval process would make it easier for generic drugs to be approved, he said.
Other opportunities exist around balancing the out-of-pocket expenses consumers pay for hospital and drug costs, he said, as well as easing regulations that could improve value-based reimbursement contracting.
Read was also asked about potential tax risk if the administration pursues a border tax. To that, Read responded only, “I think the Republican leadership has overall tax changes that are overall favorable for the pharmaceutical industry.”
Some analysts questioned how the opportunity to return cash to the US through a tax holiday or other tax reform policy would change Pfizer’s business development strategy. Read insisted it won’t. The most impactful change resulting from tax reform as it relates to business development is that foreign companies would not have an advantage over domestic ones, he said, which might make assets more affordable.
“But the lens we look at is from a point of view of creating value for shareholders, so I don’t see tax reform alters our approach,” he said. There will be no “pause” on the M&A front while the company waits to see new tax policy, he added.
The company has completed $40bn in deals since September 2015, Chief Financial Officer Frank D’Amelio added. “If we get dealt a new set of cards, a new hand, then obviously we will play that hand,” he said.
Pfizer’s largest buyout during that time was Medivation Inc., and the addition of the prostate cancer drug Xtandi (enzalutamide) helped drive growth in Pfizer’s Innovative Health division, which was up 1% to $7.73bn in the fourth quarter and 9% to $29.2bn in 2016, the company reported. Growth was also spurred by sales of the breast cancer drug Ibrance (palbociclib) and the blood thinner Eliquis (apixaban). Ibrance surpassed $2bn in sales for the year.
Essential Health sales fell 8% to $5.9bn in the fourth quarter, but grew 7% to $23.6bn for the year. The unit was impacted in the fourth quarter from a 20% operational decline from products that have lost exclusivity, but offset by 3% operational growth from the sterile injectable pharmaceutical portfolio and 48% operational growth from biosimilars.
Pfizer saw strong growth off a small base in biosimilars. The first biosimilar to launch in the US, Inflectra, generated $4m in the US in the fourth quarter, the company reported. Pfizer launched the first biosimilar version of Johnson & Johnson’s Remicade (infliximab) in the US Nov. 21 under partnership with Celltrion Inc. (Also see "Pfizer Will Support Inflectra Launch With Dedicated Sales Force" - Scrip, 14 Nov, 2016.) Worldwide Pfizer’s biosimilars business, including assets gained from its 2015 acquisition of Hospira, brought in $319m for the full year. (Also see "Pfizer/Hospira's Biosimilar Pipeline: Substantial Overlap, Limited Divestiture So Far" - Pink Sheet, 3 Sep, 2015.)