Key Metrics
- Total Revenue: $22.5 billion (6.3% yoy)
- U.S. Revenue: $12.9 billion (7.6% yoy)
- International Revenue: $9.6 billion (2.2% yoy)
- Worldwide Sales Growth: 6.3%
- Innovative Medicine Revenue: $14.6 billion (6.3% yoy)
- MedTech Revenue: $7.9 billion (6.4% yoy)
- Total R&D Expense: $4.952 billion (22% of sales)
Forward guidance
- 2024 Adjusted Operational Sales Growth: Expected to be in the range of 5.7% to 6.2%, with a midpoint of 6%.
- 2024 Reported Sales Growth: Anticipated between 5.1% to 5.6%, with a midpoint of 5.4%.
- 2024 Adjusted Operational EPS Guidance: Updated to $9.91 at the midpoint, reflecting an increase of $0.18 per share for the year.
- Effective Tax Rate for 2024: Expected to be between 17.5% and 18.5%.
- MedTech Adjusted Operational Sales Growth: Revised to approximately 5% for the full year 2024.
- 2025 Preliminary Guidance: Innovative Medicine expected to exceed $57 billion in sales, driven by key brands and new product launches.
- 2025 Effective Tax Rate: Anticipated to be slightly lower than the 2024 rate.
Key takeaways
- Positives:
- Joaquin Duato emphasized the company's "commitment to delivering the next wave of healthcare innovation," highlighting a 6.3% operational sales growth and strong performance in Innovative Medicine, with 11 brands growing double-digits.
- The recent acquisitions of Shockwave and V-Wave in MedTech are expected to enhance market leadership in high-growth cardiovascular segments, contributing to double-digit growth in that portfolio.
- Joe Wolk noted a robust pipeline with five major U.S. and EU approvals in Q3, including RYBREVANT for lung cancer, which positions the company for significant future revenue.
- The company is increasing its adjusted operational sales guidance for 2024, now expecting growth between 5.7% to 6.2%, reflecting confidence in its diversified business model.
- Jennifer Taubert highlighted TREMFYA's strong market reception in ulcerative colitis, suggesting it could replace STELARA's sales as it faces biosimilar competition.
- Negatives:
- The company reported a decline in adjusted net earnings and EPS, impacted by a $1.25 billion IPR&D expense for the NM26 bispecific antibody and a $1.75 billion charge related to talc litigation.
- Joe Wolk indicated a conservative outlook for MedTech in Asia, particularly China, due to volume-based procurement and macroeconomic pressures, expecting no material improvement in that region for the remainder of the year.
- The decline in STELARA sales due to unfavorable patient mix and impending biosimilar competition poses a risk to revenue stability in the immunology segment.
- Operational challenges in the MedTech sector, including competitive pressures and the impact of hurricanes on surgical procedures, could hinder growth in the short term.
Peer Summary
- Pharmaceutical Sector Growth: Pfizer reported a 31% year-over-year growth in Oncology, indicating strong demand in this segment, while Merck's KEYTRUDA saw a 21% increase in sales, highlighting competitive strength in oncology treatments.
- Competitive Pressures: AbbVie noted a 36.5% decline in Humira sales due to biosimilar competition, reflecting challenges in maintaining market share in established products. Similarly, Bristol Myers Squibb acknowledged competitive pressures in immunology, with slower-than-expected performance for Sotyktu.
- Market Dynamics: Eli Lilly's 42% revenue growth was driven by strong demand for Mounjaro, suggesting a shift in consumer preference towards innovative diabetes treatments. However, they also faced channel inventory dynamics impacting sales, indicating potential volatility in revenue.
- Cost Management: Pfizer and Bristol Myers Squibb both emphasized cost savings initiatives, with Pfizer targeting $1.5 billion in savings and BMS aiming for $1.5 billion by 2025, reflecting a sector-wide focus on operational efficiency amidst competitive pressures.
