By Michael Erman and Bhanvi Satija
(Reuters) - Pfizer (NYSE:PFE) raised its annual profit forecast on Tuesday, helped by cancer treatments acquired through a $43 billion deal for Seagen and strong sales of its heart disease drug as the company deals with a sharp revenue drop from COVID products.
The market for Pfizer's COVID-19 vaccine and treatment has shrunk by billions of dollars a year.
Pfizer CEO Albert Bourla responded with several acquisitions, including the Seagen deal and cost-cutting measures. The New York-based drugmaker also has sharpened its focus on cancer treatments.
Investors fled from Pfizer as COVID worries declined and the company's shares are trading at around half their pandemic-era highs.
"The market is waiting to see if this company can execute," Bourla said in an interview. "We will continue executing this year, on our cost containment, on our pipeline, on all our new product launches ... and that's what I think should be able to turn around our stock price."
J.P. Morgan analyst Chris Schott (ETR:1SXP) said he expects Pfizer's stock to continue to trade in the current range due to limited revenue growth and stronger expectations for many of its rivals.
"We believe stronger new launch performance and/or further progress on the pipeline will be necessary to significantly change the narrative," he wrote in a research note.
Pfizer shares were basically flat at $30.67.
Sales of Eliquis, the blood thinner it shares with Bristol Myers (NYSE:BMY) Squibb, are expected to be curtailed starting in 2026, when the U.S. begins using negotiated prices for some drugs for its Medicare health plan for people age 65 and over.
Bourla said negotiations over Eliquis with U.S. regulators were tough. Still, Pfizer executives echoed comments from other drugmakers earlier this month, saying it expects to be able to navigate the impact of the new price on Eliquis, which it sees as an important drug for the company for the foreseeable future.
Overall, the impact of the law allowing U.S. price negotiations on Pfizer "is somewhat muted as you think about it economically," Chief Financial Officer David Denton said. He said many products that could be selected for negotiation in the coming years will be nearing the end of their patent protection.
Quarterly sales grew 3% operationally to $13.3 billion, marking its first quarter of sales growth since COVID revenue peaked in late 2022.
The quarter was helped by sales of its heart disease drug, sold under brand names Vyndaqel or Vyndamax and cancer therapy Padcev.
Pfizer now expects annual profit to be in the range of $2.45 to $2.65 per share, compared with its prior forecast of $2.15 to $2.35.
BMO Capital Markets analyst Evan Seigerman said given the company's previous conservative forecast, the increase was somewhat expected. "Still, we are encouraged to see Pfizer executing where it matters," he wrote in a research note.
Pfizer also raised its full-year sales forecast for its antiviral treatment Paxlovid for high-risk COVID cases by $500 million to $3.5 billion.
Vyndaqel sales came in $200 million ahead of analyst estimates at $1.32 billion for the quarter, according to LSEG data.
Sales Padcev, used to treat bladder and urinary tract cancers, were $394 million in the quarter, beating estimates of $362 million.
Quarterly sales of the COVID vaccine Pfizer makes with German partner BioNTech (NASDAQ:BNTX) were $195 million, while Paxlovid sales were $251 million. Analysts were expecting sales of $176 million for Comirnaty and $247.7 million for Paxlovid.
Pfizer was disappointed with its 2023 launch of RSV shot Abrysvo, but the company expressed optimism about the vaccine in the U.S. this year.
"We've significantly strengthened our contracting position," said Pfizer's Chief U.S. Commercial Officer Aamir Malik, noting that those decisions are set to take effect in August. Last year, rival GSK won two-thirds of the RSV vaccine market, mostly due to its contracts with retail pharmacies.