Despite price increases early in 2018, Pfizer’s profits from drugs with generic competitors dropped in the three months through June.
Income in Pfizer’s Essential Health business — which includes Lipitor and other brands that now have external rivals – dipped to $2.82 billion amid rising supply costs, as sales slid to $5.2 billion. Earnings in the unit were supported partly by the inclusion of Viagra, whose patent expired in December 2017.
Pfizer raised the price of over 20 drugs, including Viagra and Lipitor, in January by nearly 10 percent, according to Wells Fargo senior analyst David Maris. Those increases are typically not reflected in earnings until months later.
When asked about a possible sale of its Essential Health business, Chief Executive Officer Ian Read told investors the company “has always been focused on shareholder return” and would examine future opportunities.
Companywide, net income at the New York-based drug manufacturer rose 26 percent to $3.9 billion in the second quarter as revenue climbed 4 percent to to $13.5 billion. Growth was driven by several of Pfizer’s newer products, such as stroke treatment Eliquis and cancer drug Ibrance.
“The performance of these growth drivers was partially offset by product losses of exclusivity, a decline in legacy established products in developed markets and ongoing legacy Hospira supply shortages,” Read said in a statement.
While the company made headlines in July with a second increase in the price of several drugs with generic rivals, it reversed course after President Trump intervened.
[Also read: Novartis joins Pfizer in delaying drug price hikes]
Read told investors the company would continue to work with Trump on implementing his drug pricing blueprint, focusing particularly on the administration’s efforts to end the current drug rebate system.
“We are going to go to a marketplace where we don’t have rebates. I don’t know the speed of that,” he said.
By removing drug rebates, Read told investors that insurance companies and middlemen pharmacy benefit managers would be denied a 40 percent subsidy that will “reduce pharmaceutical prices at the point of sale.”
Read said Pfizer would still focus on net price increases that would align with inflation of healthcare costs.
