Pharmaceutical giant Pfizer (PFE -1.04%)released its third quarter financial results on Tuesday, October 29, which showed robust performance in terms of revenue and net income. Revenue of $17.7 billion increased 32% year over year and adjusted EPS of $1.06 increased 58%. Total EPS beat analysts’ consensus estimates by 72%.

With substantial contributions from its oncology products and continued demand for COVID-19 vaccines, Pfizer’s third-quarter results are performing well despite ongoing industry challenges.

Source: Pfizer. Note: Analyst consensus estimates for the quarter are provided by FactSet. YOY = Year after year.

Understanding Pfizer’s business

Pfizer is a global pharmaceutical giant which develops and manufactures health products, including vaccines, pharmaceuticals and consumer health products. Traditionally known for its strength in infectious diseases, the company has expanded into the areas of oncology, inflammation and immunology.

Recently, Pfizer has focused on strengthening its R&D pipeline and making acquisitions to strengthen its oncology segment. She emphasizes innovation capabilities by building a dedicated oncology research and development team and leveraging strategic business acquisitions, such as Seagen, to fuel future growth.

Quarter Highlights

During the third trimester, Financial performance of Pfizer was marked by significant achievements in its oncology and COVID-19 segments. The oncology division alone generated $11.5 billion in revenue in the third quarter, contributing to the company’s overall growth strategy. Products like Padcev, Xtandi and Comirnaty were the best performers.

This period also saw a reduction in operational expenses. Notably, cost of sales decreased by 43% compared to the third quarter of 2023 due to inventory write-offs from the previous year, while R&D expenses saw a slight decline of 4%, indicating efficient management costs. Additionally, the Seagen acquisition, crucial to oncology revenue, brought in $854 million globally.

The quarter faced challengesincluding patent expirations affecting revenue potential and pricing pressures due to regulatory changes. Despite these obstacles, Pfizer’s strategy to protect its intellectual property through lawsuits and settlements has shown promise.

The company’s updated COVID-19 vaccine reported third-quarter revenue of $1.42 billion, up 9% from the same period last year. COVID-19 antiviral drug Paxlovid generated $2.7 billion in sales in the third quarter, up from $202 million in the third quarter of 2023.

Looking to the future

Looking ahead, Pfizer management increased its annual revenue forecast to $61 billion to $64 billion, up from a previous revenue forecast of between $59.5 billion and $62.5 billion, demonstrating confidence in its operational capabilities and market demand. It raised full-year 2024 adjusted EPS guidance to a range of $2.75 to $2.95.

Management emphasized the importance of adapting to local markets, particularly in emerging regions, to seize growth opportunities. As Pfizer continues to face patent expirations, investors will focus on its efforts to minimize impacts and maintain momentum in newly developed and acquired product lines.