Pfizer to raise R&D spending to bolster pipeline

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING

Pfizer Inc. plans to increase research and development spending and focus on smaller deals in a bid to accelerate the delivery of potential blockbuster treatments to market.

The New York City-based drugmaker on Tuesday raised projections for R&D spending to between $7.7 billion and $8.1 billion, up from $7.4 billion to $7.9 billion previously, as it seeks to bring several cancer, pain and other drugs in the later stages of development to the market.

"We now believe we are getting close to a growth period," Pfizer Chief Executive Ian Read said in an interview.

Pfizer announced the R&D spending adjustment while reporting that its overall revenue in the second quarter rose 4% to $13.47 billion, though currency movements provided a 3% lift. Meantime, its net income grew to $3.87 billion, or 65 cents a share, from $3.07 billion, or 51 cents a share.

Pfizer is now doubling down on its own R&D efforts, after looking at doing a big deal the past few years. The company expects 25 to 30 drugs from its pipeline to be approved through 2022, including as many as 15 with the potential to ring up $1 billion in yearly sales.

Citing the pipeline’s promise, Mr. Read told analysts the company wasn’t interested in a big deal any longer.

"I don’t believe we need such a deal to drive the growth of the company. We’d be better off focusing on developing our pipeline," Mr. Read said during an earnings call. He said the company will look at smaller deals that would add to Pfizer’s pipeline, perhaps for a gene therapy.

Mr. Read also told analysts he expects drug companies like Pfizer would benefit if the Trump administration goes through with plans that would eliminate the rebates paid to drug-benefit managers.

"Removal of rebates will be very beneficial," Mr. Read said during the earnings call. After facing criticism from President Donald Trump, Pfizer said in July it would defer planned price increases on more than 40 drugs to give the administration room to implement its plans for tackling drug prices.

In the quarter, Pfizer’s results were boosted by the performance of key brands, such as the bloodthinner Eliquis, Ibrance breast-cancer pills and rheumatoid-arthritis therapy Xeljanz. Pfizer also got a $377 million lift from a stronger dollar.

Yet Pfizer expects foreign exchange to turn into a headwind for the remainder of the year. The company lowered its revenue target by $500 million at the midpoint to between $53 billion and $55 billion, citing recent unfavorable currency moves.

The company, which has been considering options including a sale of its over-the-counter medicines business, affirmed it expects to make a decision this year.

Shares, which have gained 16% over the last year, rose 2.9% to $39.71 in trading midday on the New York Stock Exchange.

Write to Nishant Mohan at [email protected] and Jonathan D. Rockoff at [email protected]

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