Pfizer's revenue declines as it faces more biosimilar competition

Pfizer saw its earnings rise and revenue fall in the second quarter thanks to increased biosimilar competition and the divestiture of Hospira Infusion Systems, the company announced Tuesday.

The New York-based company reported earnings of $3.07 billion, or 51 cents per share, up from $2.05 billion, or 33 cents per share, a year earlier. Revenue fell to $12.9 billion on the quarter from $13.15 billion last year, but excluding the impact of the Hospira divestiture, the company says revenue rose 2%.

Pfizer's innovative health business increased by 9% in the second quarter, driven by continued sales growth for its rheumatoid arthritis drug Xeljanz and fibromyalgia treatment Lyrica in the U.S. and breast cancer drug Ibrance and blood clot treatment Eliquis globally. But the company saw lower revenue in Europe from Enbrel, used to treat rheumatoid arthritis, primarily due to ongoing competition from cheaper knockoff drugs known as biosimilars that enter the market when drugs come off patent.

Its essential health revenue declined 12%, nearly half of which was due to the divestiture of Hospira Infusion Systems, which was sold to ICU Medical in February for $1 billion. The small medical-device business was an outlier in the company's expansive pharmaceutical portfolio and only netted $600 million in sales, a mere 3% of Pfizer's total revenue.

Pfizer management pointed out that Viagra's patent in the U.S. will expire later this year and Lyrica's will expire at the end of 2018, and several other drugs came off patent recently.

But Ian Read, Pfizer chairman and CEO, estimated that 25 to 30 drugs in the pipeline will be approved over the next five years.

"Up to 15 have the potential to be blockbusters ($1 billion in annual sales), and we believe half of these potential blockbusters could receive approval by 2020," Read said in a statement.

Read said President Donald Trump's rumored executive order on drug pricing should help get generic products to the market faster, where the most outrageous price increases have occurred.

"Cost and affordability is an issue for most patients because of large deductibles and high copays and the fact that the rebates we give to insurance companies to help get access are not being used to ensure the patient pays the net price after the rebate," Read said during the conference call.

The price of patented drugs has surged 18% every year since 2010, according to a recent study from the Blue Cross and Blue Shield Association. Pfizer's drugs Lyrica and Enbrel increased by 16% and 14%, respectively, year over year from 2010 to 2016 while they were patent-protected, the study found.