Pfizer Q2 2025 Earnings Report

Pfizer EPS Results

• Actual EPS: $0.78
• Consensus EPS: $0.58
• Beat/Miss: Beat by +$0.20
• One Year Ago EPS: $0.60

Pfizer Revenue Results

• Actual Revenue: $14.65 billion
• Expected Revenue: $13.43 billion
• Beat/Miss: Beat by +$1.23 billion
• YoY Revenue Growth: +10.30%

Pfizer Announcement Details

• Quarter: Q2 2025
• Date: 8/5/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 10:00AM ET

Pfizer (NYSE:PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally. The company offers medicines and vaccines in various therapeutic areas, including cardiovascular metabolic, migraine, and women's health under the Eliquis, Nurtec ODT/Vydura, Zavzpret, and the Premarin family brands; infectious diseases with unmet medical needs under the Prevnar family, Abrysvo, Nimenrix, FSME/IMMUN-TicoVac, and Trumenba brands; and COVID-19 prevention and treatment, and potential future mRNA and antiviral products under the Comirnaty and Paxlovid brands. It also provides medicines and vaccines in various therapeutic areas, such as biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Litfulo, Velsipity, and Cibinqo brands; amyloidosis, hemophilia, endocrine diseases, and sickle cell disease under the Vyndaqel family, Oxbryta, BeneFIX, Somavert, Ngenla, and Genotropin brands; sterile injectable and anti-infective medicines under the Sulperazon, Medrol, Zavicefta, Zithromax, and Panzyga brands; and biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Inlyta, Bosulif, Mektovi, Padcev, Adcetris, Talzenna, Tukysa, Elrexfio, Tivdak, Lorbrena, and Braftovi brands. In addition, the company involved in the contract manufacturing business. It serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, retail pharmacies, and integrated delivery systems. The company has collaboration agreements with Bristol-Myers Squibb Company; Astellas Pharma US, Inc.; Merck KGaA; and BioNTech SE. Pfizer Inc. was founded in 1849 and is headquartered in New York, New York.

Pfizer Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Pfizer raised its full-year 2025 adjusted diluted EPS guidance by $0.10 to $2.90–$3.10 per share, citing strong top-line performance and cost management execution.
• Positive Sentiment: The R&D pipeline advanced with encouraging data across multiple programs including Orexel (multiple myeloma), LREXIVO (earlier MM6 study), SV (Civvodatog Vedotin in NSCLC) and Hympazy (hemophilia), while a Phase III start for the second‐generation C. difficile vaccine is planned by year-end.
• Positive Sentiment: Commercial growth remained robust with operational gains in key brands such as Vyndaqel (21% YoY), Paltzem (38%), Cibincon (46%) and sustained leadership in Eliquis and newly launched oncology assets.
• Positive Sentiment: Margin expansion efforts are on track with Q2 adjusted gross margin near 76%, a target of $4.5 billion in net cost savings by year-end, and upcoming manufacturing optimization benefits to bolster profitability.
• Neutral Sentiment: Pfizer maintained disciplined capital allocation, returning $4.9 billion in dividends, setting a 2.7x gross leverage target, and preserving approximately $13 billion in business development capacity post-3SBio transaction.

Presentation

[Operator]

Good day, everyone, and welcome to Pfizer's Second Quarter twenty twenty five Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Francesca DiMartino, Chief Investor Relations Officer and Senior Vice President. Please go ahead, ma'am.

[Francesca DeMartino, SVP & Chief Investor Relations Officer at Pfizer]

Pfizer's earnings call. Hello. Good morning, and welcome to Pfizer's earnings call. I'm Francesca DiMartino, chief investor relations officer. On behalf of the Pfizer team, thank you for joining us.

[Francesca DeMartino, SVP & Chief Investor Relations Officer at Pfizer]

This call is being made available via audio webcast at pfizer.com. Earlier this morning, we released our results for the 2025 via a press release that is available on our website at pfizer.com. I am joined today by Doctor. Albert Bourla, our Chairman and CEO, and Dave Denton, our CFO. Albert and Dave have some prepared remarks and we will then open the call for questions.

[Francesca DeMartino, SVP & Chief Investor Relations Officer at Pfizer]

Members of our leadership team will be available for the Q and A session. Before we get started, I want to remind you that we will be making forward looking statements and discussing certain non GAAP financial measures. I encourage you to read the disclaimers in our slide presentation, the press release we issued this morning, and the disclosures in our SEC filings, which are all available on the IR website on pfizer.com. Forward looking statements on the call are subject to substantial risks and uncertainties that speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. With that, I will turn the call over to Albert.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Francesca. Good morning, Thank you for joining our call. Our business is performing well, and I'm pleased with the progress we achieved in the second quarter. We advanced and strengthened our R and D pipeline. We worked to maximize the value of our commercial portfolio and made further strides to expand our margins.

[Albert Bourla, Chairman & CEO at Pfizer]

We continue to be actively engaged with policymakers as we navigate a complicated and rapidly evolving geopolitical environment, while also remaining focused on advancing our business. With our strong year to date performance, we are raising our adjusted diluted EPS guidance for full year 2025 and remain committed to our dividend. Our programs to expand margins through focus, technology and simplification are working very well. We are driving productivity gains by leveraging technology such as AI and automation, and we are also realizing the benefit of continued streamlining across our company. We believe Pfizer is well positioned to continue creating meaningful value for patients and our shareholders.

[Albert Bourla, Chairman & CEO at Pfizer]

Our top strategic priority this year is, of course, improving R and D productivity. I'm proud of the outcomes you are driving and the meaningful milestones achieved during the quarter. Looking ahead, we believe key programs in our R and D portfolio offer significant opportunities to help address substantial patient needs and drive Pfizer's growth in the coming years. I will mention some highlights. Orexel is a medicine that is performing very well with rapid growth and encouraging progress in claiming leading class SER in new markets, such as Japan, United Kingdom, and Spain.

[Albert Bourla, Chairman & CEO at Pfizer]

The clinical data in Orexio initially heavily treated, triple class exposed multiple myeloma indications continue to be encouraging, with median overall survival of greater than two years, which is more than double the historical median overall survival in this population. Moreover, the majority of responding patients are maintaining their response at thirty months. LREXIVO has the potential to be a leading standard of care with a differentiated clinical profile. It is a convenient, subcutaneous, fixed dosing regimen, the only one, that now includes a once every four week option for select patients. New data presented at the American Society of Clinical Oncology annual meeting in newly diagnosed patients demonstrated the Rexio's potential to move to earlier multiple myeloma treatment settings.

[Albert Bourla, Chairman & CEO at Pfizer]

This data from Part I of the MEGNETIS MM6 study showed a confirmed response rate greater than ninety seven percent and the manageable safety profile in combination with daratumumab and lelanotib. The randomized portion of this phase three study is now enrolling very well. By executing on MAGNETIS MM6 and Telrexfus, other ongoing phase three trials, we aim to achieve label expansion that, if approved, would collectively increase the addressable population approximately fivefold in the growing multiple myeloma market, expected to reach approximately forty four billion by year 02/1930. Civvodatog Vedotin, or SV, is our first in class integrin beta-six ADC that could be a driver of growth later this decade. We are executing a robust development program with this investigational compound in non small cell lung cancer.

[Albert Bourla, Chairman & CEO at Pfizer]

This includes our fully enrolled phase three study of SV monotherapy versus tocetaxel in previously treated non squamous patients that we expect data from next year. In the second line, plus population, we have observed a durable thirty one percent confirmed response rate, which is favorable versus historical data with docetaxel monotherapy. We are also enrolling a phase three study of SV in combination with a PD L1 checkpoint inhibitor in first line non small cell lung cancer with high PD L1 expression based on encouraging phase one data for this combination recently presented at ASCO. These results showed a fifty seven percent response rate and greater than ninety percent disease control, including responses in all patients with a tumor proportion score greater than fifty percent sample, which compares favorably to historical PD anti PD-one monotherapy. These results support an ambition to change standards of care to conventional chemotherapy sparing regimens by leveraging the potential synergy between the DOTIC A disease and PD-one checkpoint inhibitors.

[Albert Bourla, Chairman & CEO at Pfizer]

With our ongoing and planned trials in non small cell lung cancer, SV has the potential to impact large patient populations, with a non small cell lung cancer market expected to reach over $60,000,000,000 by year 02/1930. Our strategy is intended to deliver a first approval in previously treated patients before moving into the first line setting, which is a non small cell lung cancer, includes more than half a million global patients. In hematology, we continue to promote the differentiated profile of hemoptysis. In the quarter, we saw positive top line data from the Phase III PASI study evaluating Hympazy for adults and adolescents with hemophilia A or B. The study's cohort of patients with inhibitors met its primary endpoint, demonstrating a statistically significant and clinically meaningful 93% reduction in annualized bleeding rate compared to on demand treatment in patients 12 years or older, which compares favorably to recent approved products for hemophilia A and hemophilia B.

[Albert Bourla, Chairman & CEO at Pfizer]

These results further strengthen Hympaz's differentiated profile as the first once weekly fixed dose subcutaneous treatment for hemophilia A or B administered in a convenient prefilled auto injector. They also support the potential to expand its label to patients with hemophilia who develop inhibitors to factor replacement as we continue to execute on its launch in the previously approved noninhibitor population. We have seen considerable quarter over quarter growth, particularly in the hemophilia B market, where subcutaneous treatments are only recently available. And following EU and Japan approvals, at the end of last year, we are seeking reimbursement on pursuing early access pathways in other international markets as we grow our presence in the hemophilia market projected to reach nearly 10,000,000,000 by year 02/1930. Moving to our vaccine portfolio.

[Albert Bourla, Chairman & CEO at Pfizer]

We are enthusiastic about our potential to deliver the first approved vaccine for C. Difficile infection. Our second generation investigational vaccine candidate builds upon encouraging results from the prior phase three PLOVER trial of our first generation candidate. This trial demonstrated one hundred percent efficacy against medically attended C. Diff infection despite not achieving the study's primary endpoint.

[Albert Bourla, Chairman & CEO at Pfizer]

With our second generation C. Diff vaccine formulation, we have the potential to simplify the dosing schedule from three to two weeks. This candidate, now in phase two, increased the strength of the immune response fourfold compared to the first generation vaccine. Based on this newly announced phase two data, we are preparing for a phase three start before the end of this year. We will incorporate learnings from the previous CLOVER study to develop new primary endpoints focused on the prevention of severe disease outcomes rather than primary infection.

[Albert Bourla, Chairman & CEO at Pfizer]

If approved, the vaccine could significantly reduce the health care burden of the nearly five hundred thousand annual C. Diff infections and approximately thirty thousand annual deaths in The U. S. Alone. In another one of our Phase three products, we finished dosing the last patient in our study of a vaccine candidate for Lyme disease.

[Albert Bourla, Chairman & CEO at Pfizer]

If successful, we expect to submit for approval next year. We also continue to strengthen our portfolio by harnessing external innovation through strategic business development. The recent closing of our Global Ex China in licensing agreement with 3S Bio grants us exclusive rights to develop, manufacture and commercialize SSGG-seven zero seven, a bispecific antibody. Targeting PD-one and VEGF has the potential to deliver breakthroughs for patients in the next wave in PD-one immunotherapy, which is an established $55,000,000,000 market. With compelling monotherapy data in advanced non small cell lung cancer presented recently at ASCO, we view this promising cancer immunotherapy candidate as a seamless fit within Pfizer's oncology strategy, given our deep experience in the development of antibody therapeutics and our differentiated industry leading portfolio of ADCs.

[Albert Bourla, Chairman & CEO at Pfizer]

We intend to share detail later this year for our plans for a Phase III program. With Pfizer's established presence and global reach, we believe seven zero seven has the potential to become a backbone therapy for multiple solid tumor types where the PDN1 VEDS mechanism could have significant impact. Across our pipeline, we continue to sharpen our focus on programs where the strength of our capabilities give us the greatest opportunities to address substantial patient needs. We look forward to sharing future updates about our programs. Now let's move to commercial.

[Albert Bourla, Chairman & CEO at Pfizer]

Our commercial strategy is unlocking higher productivity and performance across both our US and international divisions. With several of our established brands, we are pleased with our continued market leadership and growth. We delivered another solid quarter for our Vyndaqel family, with 21% year over year operational growth. These products are the foundation of care for patients with a serious heart condition of ATTR cardiomyopathy, and we continue to see strong progress in diagnosing patients and providing broad access. While we continue to closely monitor the competitive impact of new entrants, we believe the Vyndaqel family is differentiated with a strong clinical profile contributing to continued growth.

[Albert Bourla, Chairman & CEO at Pfizer]

With Eliquis, we are the clear leader with robust demand in a growing anticoagulant market. Our international commercial teams are driving higher growth versus the market in our key countries, with effective engagement with health care professionals to reinforce the favorable profile of these medicines. In The U. S, the BMS Pfizer alliance recently announced a new direct to PACE option for purchasing Eliquis via the Alliance's patient resource, Eliquis three sixty Samoa. This option offers uninsured, underinsured, or self pay patient an opportunity to significantly lower out of pocket costs for delegates.

[Albert Bourla, Chairman & CEO at Pfizer]

Among some of our recently launched acquired brands, we are seeing strong underlying demand in competitive classes as we work to build expanded access and greater awareness and loyalty, of course, among health care professionals. With Norte, we continue driving strong commercial execution. We are pleased with the performance of new consumer campaigns and greater precision and effectiveness in sharing compelling clinical data with health care professionals. In The U. S, we achieved strong growth in total prescriptions, and with 47 market share, maintained leadership in the oral CGRP class, offset by pressure on net revenues from the impact of the IRA Medicare Part D redesign and the 340B program.

[Albert Bourla, Chairman & CEO at Pfizer]

Internationally, we are achieving strong performance in several key markets where we already have access and are encouraged by the potential to unlock additional opportunities by continuing to expand access. PAXE, a new a key product in oncology portfolio, is demonstrating strong performance and we see multiple avenues for future growth. ADC for the treatment of adult patients with locally advanced metastatic urothelial cancer, Paltzem achieved high year over year operational growth of 38% in the quarter with growing demand and a one time favorable impact from a transition to a wholesaler distribution model for CGM products. Paltzem, in combination with pembrolizumab, has secured market share greater than 50% in first line LA metastatic UC, and is the standard of care first line treatment. Additionally, we continue to anticipate phase three readouts for PATSER in muscle invasive bladder cancer in two ongoing studies.

[Albert Bourla, Chairman & CEO at Pfizer]

If successful and approved, we expect a significant expanded opportunity to treat patients with bladder cancer focused on the approximately twenty eight thousand in The U. S. With MIBC, approximately eighty percent of whom undergo cystectomy. Cibincon had strong 46% year over year operational growth with the quarter, driven by higher demand in The U. S.

[Albert Bourla, Chairman & CEO at Pfizer]

And growth in key international markets where we have decided to focus. We believe there is additional market opportunities for shebinko in responding to the need among patients with atopic dermatitis. We are seeing the clear impact of recent positive data released for several of our oncology products. It has contributed to strong growth in helping to establish these products as standards of care. Lorbranad achieved 48% year over year operational growth in the quarter, and we expect continued strength through 2025.

[Albert Bourla, Chairman & CEO at Pfizer]

It has a compelling efficacy profile supported by the CROWN study, where the median progression free survival was not reached after five years of follow-up. Lovrenna is emerging as a standard of care for patients with first line, R positive metastatic non small cell lung cancer. We saw continued momentum with Praftovi and Mektovi, with twenty three percent year over year operational growth in the second quarter. Results for the Phase III BREAKWATER trial showed the BRAFTOVI combination regimen double median overall survival versus standard of care for treatment naive patients with metastatic colorectal cancer with a BRAF FV600E mutation. This represents a significant advancement of the approximately four thousand patients diagnosed annually in The U.

[Albert Bourla, Chairman & CEO at Pfizer]

S. With metastatic colorectal cancer with this mutation. They face a more than two fold greater mortality risk compared to patients with no no BRAF mutation. Xtandi contributed strong fourteen percent operational growth during this quarter. Demand is growing for patients with castration sensitive prostate cancer, and it is the top prescribed branded androgen receptor pathway inhibitor.

[Albert Bourla, Chairman & CEO at Pfizer]

With the presentation of ASCO of long term overall survival data from the ARCHES trial, Xtant is now the first and only androgen receptor pathway inhibitor to demonstrate an overall survival benefit at five years in men with metastatic hormone sensitive prostate cancer. We also recently shared positive top line results from the phase three Embark study, making Xtandi the first and only androgen receptor inhibitor based regimen to demonstrate overall survival benefit in non metastatic hormone sensitive prostate cancer with high risk biochemical recurrence. This contributed to demand growth for Xtandi, and we achieved twenty seven percent share in new to brand prescriptions. These positive readouts indicate how we are continuing to invest and focus in areas where we have leadership and expertise, contributing to ongoing progress with our oncology portfolio. A strong performance in The U.

[Albert Bourla, Chairman & CEO at Pfizer]

S. And international divisions showed why we remain confident in the commercial strategy we refined more than a year ago. In the quarter, for example, the key market and brand combinations that we prioritized in our international divisions are outperforming with strong mid to high single digit growth across all regions. We will continue to advance this commercial strategy and expect to drive further progress through precision targeting engagement with patients and healthcare professionals. With that, I'll turn it over to Dave, who will walk through our additional strategic priorities and progress with expanding margins and optimizing capital allocation. Dave?

[Dave Denton, EVP & CFO at Pfizer]

Thank you, Albert, and good morning. To begin this morning, let me emphasize that our solid financial results are a clear reflection of our disciplined execution and strategic priorities. We remain focused on improving patient outcomes and meeting our financial goals while managing the complexities of the external environment. Our cost improvement initiatives have contributed to greater organizational efficiencies, as demonstrated by our robust operating margins achieved this quarter. Going forward, we expect to improve our cash flow, reduce our debt leverage over time, and increase flexibility across our three capital allocation pillars.

[Dave Denton, EVP & CFO at Pfizer]

Our focus remains on creating long term shareholder value. We will continue to invest in our business for the long term while prudently returning capital to our shareholders. Now let me start with our second quarter results, then I will touch on our capital allocation priorities, and then move to our cost improvement initiatives. I'll finish with a few comments on the macro environment as well as our 2025 guidance. For the second quarter twenty twenty five, we recorded revenues of $14,700,000,000, an increase of 10% operationally.

[Dave Denton, EVP & CFO at Pfizer]

This increase was largely due to overall growth both in The US and internationally. Partially offsetting the increase was an $825,000,000 year over year unfavorable impact of higher manufacturer discounts resulting from the IRA Medicare Part D redesign, which took effect in the '25 and overall is largely in line with our expectations. On the bottom line, second quarter twenty twenty five reported diluted earnings per share was $0.51 and adjusted diluted earnings per share was $0.78 ahead of our expectations, primarily due to strong top line performance and our cost management execution. Our results demonstrate the effectiveness of our refined commercial strategy. We remain committed to prioritizing key products and markets, optimizing the global allocation of our commercial field resources, and concentrating our marketing efforts on high priority areas.

[Dave Denton, EVP & CFO at Pfizer]

We saw strong contributions across our product portfolio, primarily driven by the Vyndaqel family, Chimeradi, Paxlovid, Patchcev, and Eliquis, partially offset by declines in Ibrance. Also, I'd like to highlight a significant trend within our portfolio that we expect to fuel the company's top line for the next several years. Year to date, Pfizer's recently launched and acquired products delivered $4,700,000,000 in revenue while growing approximately 15% operationally versus last year. We we plan to continue to invest behind these two product groups to drive their future performance and help enable the company to largely offset our LOEs over the next several years. Adjusted gross margin for the second quarter was approximately 76%, primarily reflecting the product mix within the quarter.

[Dave Denton, EVP & CFO at Pfizer]

Looking at our adjusted gross margin performance over the last two years, we have largely achieved percentages in the mid to upper 70s when adjusting for commodity, which, as you know, has a fiftyfifty gross profit split with our partner, BioNTech. In addition, we believe the expected $1,500,000,000 savings from our phase one of our manufacturing optimization program by the '27 will help bolster gross margins as we transition through the LOE period. Maintaining a strong emphasis on cost management throughout our manufacturing network will continue to be a key priority. Total adjusted operating expenses were $5,800,000,000 for the second quarter, an 8% decline operationally versus last year. Now looking at the components, adjusted SI and A expenses decreased 8% operationally, primarily reflecting a decrease in marketing and promotional spend for various products as a result of our focused investments and ongoing productivity improvements.

[Dave Denton, EVP & CFO at Pfizer]

Adjusted R and D expenses decreased 9% operationally, driven primarily by a decline in spending due to pipeline optimization expected to be reinvested later this year and into next year. We continue to be disciplined with our operational expense management. Q two reported diluted earnings per share was 51¢, and our adjusted diluted earnings per share was $0.78 which benefited from our efficient operating structure in addition to our effective tax rate, primarily driven by a favorable change in jurisdictional mix of earnings. Now let me quickly touch on our capital allocation strategy, which is designed to enhance long term shareholder value. Our strategy consists of maintaining and growing our dividend over time, reinvesting in our business at an appropriate level of financial return, and making value enhancing share repurchases.

[Dave Denton, EVP & CFO at Pfizer]

In the 2025, we returned $4,900,000,000 to shareholders via our quarterly dividend, and we invested $4,700,000,000 in internal R and D. As previously mentioned, maintaining our gross leverage at an appropriate level is a key priority towards improving our capacity for business development. Our gross leverage at the end of the second quarter was approximately 2.7 times, which we are now setting as our new target, down from 3.25 times. During Q2, we announced the licensing agreement with 3SBio, which closed in July 2025. Our business development capacity is now approximately $13,000,000,000 following the 3S Bio deal.

[Dave Denton, EVP & CFO at Pfizer]

Lastly, first half twenty twenty five operating cash flows at $1,800,000,000 was tempered primarily by large expected payments in the second quarter, including an approximately $2,100,000,000 TCJA repatriation tax payment and our payment to BioNTech for our gross profit split. We expect to see improved cash flows in the back half of this year. Overall, we are focused on maintaining leverage at or below our new target to support a balanced allocation of capital between reinvestment and direct return to our shareholders. We continue to be disciplined with our operational expense management, progressing multiple improvement programs as we remain focused on driving operating margin expansion over the coming years. We expect to begin realizing initial savings from the phase one manufacturing optimization program in the latter part of this year.

[Dave Denton, EVP & CFO at Pfizer]

As part of our goal to return to pre pandemic operating margin, we remain on track to deliver on our goal of at least $4,500,000,000 in cumulative net cost savings from our ongoing cost realignment program by the end of this year. As a reminder, in total, we expect approximately $7,700,000,000 in savings by the '27 to drive operating efficiencies, strengthening our business with the potential of contributing significantly to our bottom line over the period. Of these savings, approximately $500,000,000 identified in R and D will be reinvested in the pipeline, which we expect by the '26. Now with that, let me turn to our full year '25 guidance. The pharmaceutical industry continues to navigate a complex global landscape influenced by rapidly changing proposed trade and tariff policies.

[Dave Denton, EVP & CFO at Pfizer]

Strategies to help mitigate the potential impact on our business in the short term have been implemented. And we continue to evaluate opportunities and develop plans which will help mitigate the potential long term impact of tariffs on our business and our operations. That said, the company's guidance absorbs the impact of the currently imposed tariffs from China, Canada and Mexico, as well as potential price changes this year based on the letter received on July 31 from President Trump. Our non COVID revenues continued to perform very well operationally and ahead of our plan. In addition, our guidance assumes favorability to revenues due to foreign exchange rates.

[Dave Denton, EVP & CFO at Pfizer]

As a reminder, our plan assumes that a large majority of our COVID revenues are forecasted in both Q3 and Q4. Given this fact, we believe it is prudent to maintain our full year revenue outlook as we enter the second half of the year. We continue to expect full year '25 revenues to be in the range of 61,000,000,000 to $64,000,000,000 In addition, we now expect adjusted SI and A to be in the range of 13,100,000,000.0 to $14,100,000,000 adjusted R and D to be in the range of $10,400,000,000 to $11,400,000,000 and our adjusted effective tax rate of approximately 13%. Now given our strong performance to date as well as our outlook, including a favorable impact on foreign exchange, our more efficient cost structure, as well as improvements in our adjusted effective tax rate, we are raising our full year '25 adjusted diluted earnings per share guidance by $0.10 This includes absorbing a $0.20 charge for acquired in process R and D associated with the upfront payment for the 3SBio transaction. So just to clarify, without the 3SBio deal, we would have raised our adjusted diluted earnings per share guidance by 30¢.

[Dave Denton, EVP & CFO at Pfizer]

Of this amount, approximately two thirds is due to our strong operational performance and our outlook. I will also point out that while we are raising our adjusted diluted earnings per share guidance, we are partially derisking the expected COVID performance in the second half of this year. As a result, our revised full year '25 adjusted diluted earnings per share range is now $2.9 to $3.1 a share. In closing, we will continue to focus on maximizing our product portfolio's value and driving innovation to strengthen our pipeline. With a stronger balance sheet, we plan to deploy capital more effectively.

[Dave Denton, EVP & CFO at Pfizer]

We will focus on increasing our R and D productivity by deploying AI and digital capabilities, reinvest appropriately to accelerate high value R and D programs, and pursue new growth opportunities through business development. Additionally, our cost improvement initiatives are beginning to expand operating margins through productivity gains and streamline processes. And so with that, I thank you for your attention. I will now open it up for Q and A.

[Albert Bourla, Chairman & CEO at Pfizer]

Operator, please assemble the queue.

[Operator]

We'll take our first question from Trong Nguyen with UBS. Your line is open. Please go ahead.

[Trung Huynh, Executive Director & Equity Research at UBS Group]

Hi, guys. Just there in your prepared remarks, you noted your guidance absorbs the potential price changes this year based on the letter you received from president Trump on July 31. That talks about impacting Medicaid with MFN. Does that imply you think something's gonna happen this year? And if so, what's your broad assumption so we can kind of quantify that hit on your revenues and EPS?

[Trung Huynh, Executive Director & Equity Research at UBS Group]

And then can you perhaps just give us your state of the union on the recent developments with MFN and tariffs? And then just on the CDC recommendations for the vaccines, there was a reduced recommendation in May that a payer pullback for broader adult COVID vaccinations. So just how are you sizing the twenty five, twenty six US fall season versus last year? And can you comment on any progress with state mandates or payer negotiations to stabilize that coverage? Thank you.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Trump. Let me start. I know many people would like to get clarity on the MFM situations, the tariff situations, and I'm not in a position to provide much clarity, not because we are not discussing. Right now, we are in very active discussions. I discussed at the highest levels of this government.

[Albert Bourla, Chairman & CEO at Pfizer]

I discussed myself with the president after he sent the letter me and all the others. We discussed a lot with the Secretary Kennedy, we discussed a lot with Doctor. Post, who is responsible for implementing a lot of these things. And I would say only that these discussions are extremely productive. I think we understand where the president comes from, and we are engaging in a productive way to find a solution.

[Albert Bourla, Chairman & CEO at Pfizer]

But because we are in active discussions, it's inappropriate for me to start providing more details, because I don't want to say things while you're discussing with them. So I understand that many others may have questions about that, and I'm not sure I can give more information than what I just told you, that we have a letter that sets a base of what the president wants. The letter asks a lot from us, but we are engaged in productive discussions with them. And in general, I'm happy the way that they listen to us and the way that we are trying collectively to find solutions that on one hand would make medicines affordable in The US. On the other hand, will make our industry even more competitive compared to China, which is progressing very rapidly to us.

[Albert Bourla, Chairman & CEO at Pfizer]

On the tariffs, also, I don't have much news to add. We are waiting for the two thirty two report. And once we have that, we will see how this discussion again, on the tariffs, I had good discussions with Secretary Latnick, with the US Trade Representative, with Secretary Besson, and of course, with the President, but we have a special relation through the times of COVID. So that's all I can say. I don't know if, Dave, you want to add something on what is included and how we think about it.

[Dave Denton, EVP & CFO at Pfizer]

Yeah, I would just say that the underlying strength of our business is allowing us to raise our guidance in the back half of the year. And with, to Albert's point, with the work that's going on across the industry, we're able to come up with a range of scenarios, and we believe that those range of scenarios associated with potential timing of all of this would allow us to absorb any impact this year based, again, on the underlying strength of our business today and performance today.

[Albert Bourla, Chairman & CEO at Pfizer]

And maybe, Amil, you can comment on the CDC?

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

Yeah. So, Chung, I think your question was largely around commodities. So I'll mention the quarter and then our expectations for the season. Commernity had a very strong quarter in Q2, and I think that's driven partially by gross to net favorability. We've just become much more efficient in managing inventory in the marketplace.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

And we also saw a continued increase in our market share in the quarter. So that's the quarter. Now, as it relates to the season, we don't have a crystal ball, but what we are planning for is we anticipate an indication for the 65 population, as well as those 64 with underlying medical conditions. And that largely reflects the dynamic of how people vaccinate in The US today. We also don't anticipate any major changes in coverage by payers for this season.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

So this could have a modest effect on our vaccination rates, but we anticipate having a very strong season. In addition, I think we're very ready to execute against that. We have our supply and distribution capabilities, which are genuinely unmatched. We have a very robust plan for both physician as well as patient activation, and we monitor sentiment very closely. We have not seen dramatic changes in intent to vaccinate.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

And we also have very strong contract positions, both in retail and non retail, so we look forward to the community season for the fall.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Adrian. Next question, please.

[Operator]

We'll go next to Chris Schott with JPMorgan.

[Chris Schott, Managing Director at JP Morgan]

Great. Thanks so much for the questions, and congrats on the quarter. Just two for me. First, on BD and capital allocation. Just what's driving the slightly lower target leverage for the company going forward?

[Chris Schott, Managing Director at JP Morgan]

I think you lowered it by about a half turn or so. Was looking for any color there. And just on the BD approach, is the approach here still to target a couple smaller deals with that 10,000,000,000 to $15,000,000,000 of capacity you've previously talked about? Or is the thought maybe looking at one larger one? Last really quick one, just to slip in, just the recent PD-one VEGF deal.

[Chris Schott, Managing Director at JP Morgan]

I know you're going to think about doing combos with some of your ADCs. Will we need to see the Phase III data from those ADCs before you move forward, or should we start to think about Pfizer starting development of those programs prior to those readouts? Thank you.

[Albert Bourla, Chairman & CEO at Pfizer]

Chris, as usual, excellent question, but David can take the first two, and then I think Chris can talk about BDM ramp ups.

[Dave Denton, EVP & CFO at Pfizer]

So, Chris, yes, we have actually improved our target from a leverage perspective down to 2.7 from 3.25 times. That is largely because we have improved our cash generation capability over the last a little faster than we anticipated post closing of the CJEN acquisition. So we're now sitting at 2.7 times. We will continue to delever over time. If we were to do a BD transaction, we might tick back up over that 2.7 times, but our objective is to still get down and continue to delever the balance sheet in the long term.

[Dave Denton, EVP & CFO at Pfizer]

Secondly, yes, most likely we would tend to do a, I will say, a smaller deal, given the fact that our capacity is in the $13,000,000,000 zip code at this moment, and so I would expect us more from a smaller perspective from a transaction.

[Albert Bourla, Chairman & CEO at Pfizer]

Yes, and it is 13.

[Dave Denton, EVP & CFO at Pfizer]

It is 13 only because we have essentially allocated some of 3S Bio transaction funds against our BDA target.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Dave. And Chris, how do you think about developing the PDN1 reserve that I know we closed and we are very rapidly executing on a plan even before we could close? Thank you very much. As you know,

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

we do have ongoing programs with the ADCs SV, PD L1V and PADCEV all in phase three. We're not going to wait for readout from these studies, and we'll start earlier with phase onetwo combinations this year, in fact, with those ADCs in combination with three Aspire seven zero seven. How we look at seven zero seven is really to be a potential backbone to replace single agent PD-onePD L1. It's got a unique structure, and the preclinical data suggests potential best in class regarding high affinity for PD-one inhibition and also potentially increased anti angiogenic activity. You've seen the overall response rate in the first line setting of sixty five percent.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

We're confident in this molecule across the cancer areas or tumor areas where we have significant capability, including thoracic, GU and GI, and we'll later this year announce the phase three program for 07/2007.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Chris. My team got me very excited about this molecule and they have presented to me a very aggressive development plan that they plan to execute starting this year. We will share more news the plan later in the year when we kick off the execution. Next question please.

[Operator]

We'll go next to Alex Hammond with Wolfe Research.

[Alexandria Hammond, Director - Head of Therapeutics at Wolfe Research LLC]

Thanks for taking our question. I guess one on MSN. Just given your recently announced DTC patient option for purchasing Eliquis, how should we consider the applicability of this program to the remainder of your portfolio?

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Alexandra. I think it very much will help. I can tell you that the direct to consumer was one of the four things that the letter of president Trump requested from me and everybody else. We think it is a fantastic way to go ahead, so we will work collaboratively to do it. Clearly, Pfizer has good experience from the Pfizer for all, where we have a direct to consumer website that has very, very high traffic.

[Albert Bourla, Chairman & CEO at Pfizer]

And also now we launched together with our partner BMS, the Liquus three sixty, which exactly does what basically that president Trump is asking us to to do. Actually, I'm I'm sure you've noticed that he tweeted himself. He retweeted actually my tweet about the Eliquis. And also, we had serious discussions in the industry. So I have connected, of course, we had the board of all the CEOs that discussed it, and also myself, I'm connecting very often individually with all the major companies.

[Albert Bourla, Chairman & CEO at Pfizer]

And they are all ready to roll up their sleeves and execute something like that. So it remains to be seen. I don't want to speak more, as I said, because we are in active discussions. Next question.

[Operator]

We'll go next to Mohit Bansal with Wells Fargo. Your line is open.

[Mohit Bansal, Managing Director at Wells Fargo Securities]

Great. Thank you very much for taking my question. Dave, I have a question regarding guidance. It does seem like you had quite a good quarter this quarter, and there is FX still in as well as operational reasons here. So wondering what is driving the intact guidance or even, like, not even, like, upping it to the high end of the range?

[Mohit Bansal, Managing Director at Wells Fargo Securities]

It's just would love to know your thought process in in setting this guidance at this point. Thank you.

[Dave Denton, EVP & CFO at Pfizer]

Yeah. Thank you. I think as we looked at guidance, as I said, we are essentially raising bottom end by 30¢ and then absorbing the 20¢ charge for three s BIO transaction. At the same time, we are looking at our future q three and q four, and we're essentially derisking some of that. So this underlying strength of our business would have us increasing guidance even further from a profit perspective.

[Dave Denton, EVP & CFO at Pfizer]

But we, at this point in time, given the volatility that is potentially ahead of us in COVID, we think it is prudent to wait, hold, see how Q3 and Q4 come about, and then update as appropriate from that perspective.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Dave. Next question.

[Operator]

We'll go next to Courtney Breen with Bernstein. Hi all, thank you so

[Courtney Breen, Senior Research Analyst at Bernstein]

much for taking the question. A couple from me. The first is on the efficiencies that we're seeing kind of in your operating model and particularly around s g and a. It'd be great if you're able to kind of give us some extra context around kind of where you are kind of reallocating and investing versus where you're able to pull back and and kind of some more context and detail and color around that both within The US and Ex US? And then secondarily, you've given us some more, detail in terms of m and a and and the $13,000,000,000 range, but can you give us a little bit more insight on the priorities?

[Courtney Breen, Senior Research Analyst at Bernstein]

I know you've talked about kind of the obesity opportunity or cardiometabolic opportunity and immunology being areas of interest. Can you talk about kind of whether they still rank near the top or how you're seeing kind of opportunities out there that you might be interested in? Thanks so much.

[Albert Bourla, Chairman & CEO at Pfizer]

No, thank you, Karknis. Let's start with Alexander to speak about the efficiency in international, and then Amir can chime in on The US.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

Thanks, Wolfgang, for the questions. You remember about eighteen months ago when we started this journey at the International division, we said we will pick our growth driver, both from an inline standpoint and the new product. And that combination will be different country by country based on the environment, the potential and the population to treat. That's what we did. So we've identified in our top 16 markets those combinations and then we invested to win, in the sense that we looked at the shareholders that we need, and then we reduce our investment everywhere else so that we can win in this area.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

And clearly, the growth that we are seeing coming out of that portfolio of assets where we focus is really remarkable because it's not just that we grew 6% at the international level overall, but it's also the quality of the growth. You see that we grew 9% in emerging markets, 9% in China, 7% in Europe. So it's kind of across the geography. And it's also across the different category areas. Care grew 9% driven by Vinda.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

Primary Care grew 4%, 6% excluding COVID driven by Eliquis and our vaccines. And oncology grew 6% driven by Lovren and others. So clearly, it's really how we reduce the costs around the non core asset and the non key countries that help us double down on the area where we wanted to grow.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Alexander. Amit?

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

Courtney, I'll give you a couple of different examples. When we implemented our new commercial model at the beginning of last year, we put in place a few fundamentals. One was having everything in one place and the benefit of scale. So for instance, we consolidated to a single agency partner, and that drove major efficiencies across the business. Second thing is we undertook a major resource reallocation exercise, both in terms of the products where we're investing, as well as the channels that we're investing into.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

And thirdly, we've just embraced technology and the way that technology can drive efficiency across every aspect of our consumer campaigns, our physician targeting, and also Albert referred to our use of Pfizer for All and investment in the Pfizer brand, which for instance, in the categories where we've deployed that, that model has resulted in about a 20% decrease in the cost per new NBRx. So these are just examples of how we're driving efficiency across the commercial business.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you. And I think for me, what really pleased me about it is that we are able to reduce our cost and at the same time continue growing the top line, which is the key here. Pfizer was always good in commercial. I do think that we lost a little bit of our weight during the COVID because the priorities, you can understand, were 100% devotion of the whole company to do something like that. But I'm very proud and pleased that we got up to our feet and we now have developed a commercial machine, but it is really honoring the Pfizer tradition and taking to the next level.

[Albert Bourla, Chairman & CEO at Pfizer]

And I will finish with some questions from the M and A. You asked what would be the range in terms of priorities and in terms of dollars, Dave talked to you. Clearly, with those dollars probably will be in fewer smaller transactions rather than one transaction or the remaining capital allocation, clearly would be in the four areas that we are now active, which is the oncology, the vaccines, the internal medicine with cardiometabolic and obesity, and with INI. On obesity, which is your specific question, clearly we have interest in this area because this is an area that is very big. Science is breaking.

[Albert Bourla, Chairman & CEO at Pfizer]

A lot of new things are coming out. And we have tremendous development capabilities in the primary care type of business, and we have also tremendous commercial opportunities. And by the way, you know, business, there is plenty of offering right now. I mean, in China, China is booming in terms of how many opportunities we have. Our chief strategy officer, Andrew Baum, that is responsible PD, just came back from week long trip to China, and the opportunities are really, really very big.

[Albert Bourla, Chairman & CEO at Pfizer]

So also there are here opportunities in The US. So there is a good substrate that we can choose, but we will be very disciplined with our capital. We will not overpay. We will pay the real value that the assets deserve. With that, let's go to the next question.

[Operator]

We'll go next to Dave Risinger with Leerink.

[David Risinger, Senior Managing Director, Biopharma at Leerink Partners]

Yes, thanks very much. So Albert, thank you for helping lead discussions with the administration to ensure the future success of U. S. Biopharmaceutical innovation. Since you briefly mentioned competition from China, has Pfizer been helping the administration understand the very strong support that the Chinese government provides to local biotech companies based in China?

[David Risinger, Senior Managing Director, Biopharma at Leerink Partners]

I ask the question given significant pressures on biotech companies in The United States. Thank you.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, David, and also thank you for your kind words. I do, and I'm very vocal and I speak at all levels, and not only in the administration, but also in the Senate and the House. This is something that unites, I would say, one of the very few things that unites both Democrats and Republicans is their concern about China's emerging superiority in several technological areas, but where it is very impressive is in the biotech. And I very clearly indicate that this is happening, it's real. I'll give you just some examples.

[Albert Bourla, Chairman & CEO at Pfizer]

In May, the first time, Axios reported the clinical studies in the world right now, China has the leading share. It surpassed The U. S. I did a research myself on publications that are happening from Chinese scientists right now. And in CRISPR, for example, just to give one area, 42% of the global mortgage is coming from China.

[Albert Bourla, Chairman & CEO at Pfizer]

Actually, the structure of biology, which always was their fault, 62% came from China. And to end up, they are not stealing patents. They have filed more patents than The US this year. And so they are protecting very well intellectual property and they are enhancing access to their local markets. And they are giving tremendous support, monetary support, to their biotech ecosystem, which encourages a lot of private money going there.

[Albert Bourla, Chairman & CEO at Pfizer]

I explained all of that to the administration, I think they list. And that's why I said before, we all look to find ways that from one hand, affordability and access of the American patients, on the other hand, to the crown jewel, which is the biotech industry, needs to be supported by the government, by the Congress, so that we can there's so much you can do to slow down science. You won't slow them down. They are very good. What we can do is to focus to be better than them, and that should be our goal. With that, next question.

[Operator]

We'll go next to Carrie Holford with Berenberg.

[Kerry Holford, Head - Global Pharma Equity Research at Barenberg]

Thank you. A couple of questions for me, please. Firstly, looking at ADCETRIS to Kaiser, Q2 performance was a little weaker than anticipated. I understand these drugs are perhaps facing increased competitive pressures, would be interested in your strategy reinvigorating that growth of those c gen assets ex PABCEV. And then secondly, a question on the guidance, specifically tax, and apologies if I missed this earlier.

[Kerry Holford, Head - Global Pharma Equity Research at Barenberg]

But Dave, what has changed with regard to the tax outlook for this year? And how sustainable is this underlying 13% tax rate going forward? You.

[Albert Bourla, Chairman & CEO at Pfizer]

Dan, you want to start with that and then Amir can.

[Dave Denton, EVP & CFO at Pfizer]

Yeah, just on the tax side, there were some one time discrete items that allowed us to improve our tax position this year. I would expect going forward with the new tax regs globally that we would be largely closer to the 15% level from a global tax perspective in the long term.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

Gary, thanks for the question. I think your question is largely around the cGen portfolio and the products. So we feel very good about how we integrated those products. As an example, we were able to cross train all of our field forces, and now we're seeing the benefit of that come through in commercial performance. So if I look at Q2 and the entirety of our c gen commercial portfolio, we grew 15% year over year.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

And that was while managing some of the competitive headwinds that you alluded to on ADCETRIS, which we are starting to see now settle. In particular, we feel very good about the growth in PATSIB. We have greater than 50% market share in the first line, and we see headroom to continue to expand that share, especially in the cisplatinum eligible population, where we are very focused. And it's also important to note that as part of the CGM transaction, it was not only the in line products, but the portfolio that came with it, which continues to perform very well.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you, Amir. Next question, please.

[Operator]

We'll go next to Evan Seigerman with BMO Capital Markets.

[Evan Seigerman, MD & Senior Research Analyst at BMO Capital Markets]

Thank you so much for taking my question. Kind of a follow-up to the prior question. A year and a half into the integration of C Gen, and really aside from PADCEV, what do you believe are the two or three assets that have the potential to really drive a positive IRR for the 42,000,000,000 or so that you spent? And kind of a follow-up there is, what part of the market could SV capture in non small cell lung cancer if and when eventually approved? Thank you.

[Albert Bourla, Chairman & CEO at Pfizer]

Yeah, I will ask Chris to comment. Let's start that there is four main assets, that when we acquired the company, they were around $2,000,000,000 even less of revenues, but they will grow by year 2030 to 10,000,000,000. Now, of course, the value was not only on value. The value was mainly on the platform of the ADC that we got together with the intellectual property, the capability, the people, and the assets. And I will ask Chris to comment on the most important things that are coming out in the short term, medium term, and long term from Cis.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

Thank you very much. So in the short term, Pat said, the readouts for the muscle invasive bladder cancer studies, As you recall, the current indication's eighteen thousand patients. The new indications will be up to twenty eight thousand. So there's both platinum eligible and platinum ineligible, and we expect those readouts in the next six months. And potentially they could change the standard of care for this population.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

This next wave of studies we started, phase three trials in SV, Subototag, Vedotin. The second line study is now fully recruited. In fact, it recruited much quicker than we expected. In the second line space, what we've seen so far in the phase one study in the late line population with a thirty one percent overall response rate and a median overall survival, albeit single line experience, of sixteen point three months. So that gives us confidence in SV.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

It's a pedotin payload. So what we've seen with the other studies with pedotin payloads, including with Tiftac and PADCE, was this potentially synergistic activity when we combine it with an anti PD-one. So SV plus Pembrolizumab has now been combined. As you know, overall we've seen a response rate of approximately sixty percent, but in the population specifically, that's TPS high or PD L1 high expression, all patients so far in the phase one trial have responded. And that obviously is very favorable to what you would expect from pembrolizumab alone.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

The next molecule, PD L1V, that's again another first in class molecule. We're accelerating that into a phase three program for head and neck cancer where we've seen a response rate just shy of sixty percent in the combination with pembrolizumab. And then there's a whole new group of ADCs coming with a TOPA-one payload, including a follow-up to ADCETRIS. Currently, two or three of these molecules showing highly encouraging data in phase one, and we'll update you in the future about those.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you. So, as I said, we are confident that not only we will recuperate the investment with a good return in the season, but I think it's transforming our oncology portfolio and business. Next question, please.

[Operator]

We'll go next to Carter Gould with Cantor.

[Carter Gould, MD & Senior Analyst at Cantor Fitzgerald]

Good morning. Thanks for taking the question. I'm going to go back to the policy side. Guess, Albert, should investors have any expectation around a comprehensive deal that addresses the present's objectives across MFN and tariffs, but also addresses the industry's concerns around enforcing IP protection, compounding, pill parity, IRA implementation. And then separately, Vyndaqel put up a solid quarter year on year, but this is sort of the fourth quarter in a row where sequential growth was more muted or meager.

[Carter Gould, MD & Senior Analyst at Cantor Fitzgerald]

Is Vyndaqel U. S. Growth behind us? And I guess in answering that, can you help frame the push pull between price and competition? Thank you.

[Albert Bourla, Chairman & CEO at Pfizer]

Yes. Let me give a brief answer to the policy. Look, I don't know. We are in very active discussions. You know that the president is impatient, so she wants the results quickly.

[Albert Bourla, Chairman & CEO at Pfizer]

We also want to come to a resolution quickly because I want to offer certainty to all of us and all of you as much as we can have in this period of time. Are we going to are we discussing, in addition to all the things that are related with MFN and tariffs, also things that are related with PBM reform, 340B, with the pill penalty? Absolutely. You know that PBM reform is universally accepted that needs to happen. There was a bipartisan bill, and there is clear indication that the president has spoken so many times about the middleman.

[Albert Bourla, Chairman & CEO at Pfizer]

Also with the pill penalty, he has spoken about it, and also the secretary Kennedy spoke about it, and also we are working on it. And, of course, the 340B has become a major, major problem right now. The 340B is expected to exceed $62,000,000,000 this year. It's a program that has become bigger than Medicare and Medicaid combined. So that's all the product prices, all of that valuable that goes from us out there to, let's say, hospitals.

[Albert Bourla, Chairman & CEO at Pfizer]

And this value is not passed to the patients because they mark up those products in tremendous amounts, way more than you see in Hardin. And, you know, we can't afford that. So we are discussing, we are explaining, it's more complicated than 340B because it involves hospitals. But the program is very good for the small hospitals that was intended. This is not about not having 340B, it's about not having an abuse in the system. Amit, do you want to take the next question?

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

I'll speak quickly about Vindamax in The U. S. And then touch on international too. In The US, yes, we had a very strong quarter. We had 15 year over year growth.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

We maintain momentum and performance versus Q1. And there's a lot that's going on in this market right now. So that performance is a function of improving diagnosis, as well as improving favorability dynamics. So we continue to lead in the face of two competitors coming into that market, both in terms of total market share, but also importantly, lead in terms of first line treatment naive patient share. So we've got good TRx momentum, and that's influenced the growth.

[Aamir Malik, EVP & Chief U.S. Commercial Officer at Pfizer]

Atruevi is taking some first line share, and it's a little too early to tell about the dynamics of Ambutra, and we'll keep a close eye on that for the second half of the year. Now, we do expect continued TRx volume growth, but there will be GTN pressure on US performance, and that's a function of both the Medicare Part D design, but also a result of contracting to maintain access for Vinda, both in Medicare and commercial, where we've maintained 90% access for the brand. So we do expect those dynamics to impact our sequential growth in the back half of this year.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

Yes, for international, we have a very strong dynamic. So we have grown 32% over quarter. But actually since the beginning of the year, we have grown our patient treated by 50%.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

So it's clearly what I was describing at the beginning in terms of focus on the key assets where we think we can have an impact. This one is clearly the demonstration of our focus on execution. Moving forward, we think we're going to continue to grow on this product for three reasons. First, the diagnosis rate in international in most of our key markets is still significantly below what we have in The US and we normally see in this type of disease. Two, the access.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

Access takes a lot of time in international. You need to negotiate price and access in every single country. It took us five years just to get to where we are and competition will have to follow the same timeline to get to the type of access that we get. Just to illustrate my point is we just unlocked UK and Australia at the end of last year, and we just unlocked South Korea at the beginning of this quarter. So just to give you a sense, it takes time, and now that we have access, we are unlocking the potential of those patients being untreated.

[Alexandre de Germay, EVP & Chief International Commercial Officer at Pfizer]

And then finally, we think that the profile of our product and the experience of our key centers will help us the standard of care that we have developed with these assets. So we are very confident with the potential future growth of IndraQuad. And I'm very impressed with the performance of IndraQuadine International, the way that we were not counting on that product before,

[Albert Bourla, Chairman & CEO at Pfizer]

and now suddenly we see a very big thrive. We're not counting on international, I think. Was mainly US. And then let's go to the next question, please.

[Operator]

We'll go next to Assad Hayder with Goldman Sachs.

[Asad Haider, Healthcare Analyst at Goldman Sachs]

Great, thanks for taking the question. Albert, just one more, if I may, on the policy front. Just given the comments you just made, and then triangulating those back to your comments on MFN, that it's now quantified and reflected into guidance to some extent. Maybe just talk about what could cause large swings to those expectations from here, or is your high level view that we are now getting more granular around a central and potentially narrower range of outcomes, directionally speaking? Thank you.

[Albert Bourla, Chairman & CEO at Pfizer]

Clearly, I mean, our team is all over modeling several scenarios. There is no scenario that we have not assessed. There is no scenario that we have not built mitigation plans, and there is no scenario that we haven't assigned the probability of success. But the truth is that we don't know what will be, because all of that are right now under active discussion. So, you know, even if I have some ideas where we should increase the probability of happening and where we should increase the probability of happening, it's not appropriate now in the middle of the discussions and negotiations.

[Albert Bourla, Chairman & CEO at Pfizer]

You don't open the cards, right? So I can't really do that. Thank you. Next question.

[Operator]

We'll go next to Umer Raffat with Evercore.

[Umer Raffat, Senior Managing Director at Evercore ISI]

Hi, guys. Thanks for taking my question. So, I'll spare the MFN question, but I did wanna ask Albert, I feel like some of the points you're making on this call regarding the China biotech ecosystem could possibly resonate with the administration, but I guess how's and I'm not even talking Pfizer specifically, but the industry broadly has been very active with a lot of out licensing transactions to find the next layer of innovation. So, I guess, is administration pushing back with sort of balancing those two? And then separately, on your oncology side, I feel like this B6A trial in lung will obviously be very, very important, and I was very intrigued to see that you shrunk the sample size from six seventy down to four seventy, which presumably signals increased confidence.

[Umer Raffat, Senior Managing Director at Evercore ISI]

And my question is, did you take any interim look to see how the effect size is tracking? Thank you very much.

[Albert Bourla, Chairman & CEO at Pfizer]

Let me take the China one, and then I ask Chris, of course, to comment on the oncology. Look, I mean, there is a lot of sensitivity in the Senate and in the House about everything that is happening in China, right? But I have to say the sensitivity is way more on things that we transfer there, technology that we transfer, than vice versa, things that we take from them to develop them and manufacture them in The U. For example, our deal absorbent and I discussed the Chinese deal that we did with members of the Congress, many members of the Congress, And I explained that we didn't give anything. We took their science and the license to develop it.

[Albert Bourla, Chairman & CEO at Pfizer]

We will do it globally, not in China. To manufacture it, we will do it in The U. S, not in China, and to commercialize it, and we will do it in the whole world, and actually not in China yet, because we don't have the rights yet. So I think less sensitivity on these two ways. But don't take me wrong, China is something that is very high in the radar of the political life of The U.

[Albert Bourla, Chairman & CEO at Pfizer]

S, and we need to be careful with that. Now let's go, Krish.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

Thanks for the question, Umer. Usually for studies, we recalculate effect size or study size based on emerging data from ongoing phase onetwo trials. We did not unblind, and there is no unblinding of ongoing phase three programs.

[Albert Bourla, Chairman & CEO at Pfizer]

Okay. Thank you. Enough. I knew that you would not say much. So let's go to the next question, please.

[Operator]

We'll go next to Rajesh Kumar with HSBC.

[Rajesh Kumar, Head - European LifeSciences & Healthcare Equity research at HSBC]

Hi. Thank you for taking my questions. The first one is on, you know, you you said you'll absorb the potential impact from the letters this year. Can you confirm that, you know, if there were tariffs, etcetera, you can say the same about the next year as well? I know you don't have a guidance, but in terms of how prepared you are with inventory, etcetera, and, you know, the pricing dynamics, do you think current consensus sort of captures the effect for the next year? The second one is on the balance sheet.

[Rajesh Kumar, Head - European LifeSciences & Healthcare Equity research at HSBC]

You know, clearly you are, you know, going with a lower financial gearing target and, you know, in effect that gives you a bit more leeway on a lot of things. When you think of capital allocation, do you think you need to add more types of assets in oncology or would most of the balance sheet capacity be deployed in obesity, immunology, other areas? That is if you have to deploy capital in oncology or, you know, different indications or different mechanisms you still need to add, then would you be comfortable going over the 2.7 times leverage?

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you. Let's start with Dave, and then we will move to Andrew also.

[Dave Denton, EVP & CFO at Pfizer]

Yeah. So as it relates to future years '26 and '27, no, can't we're not confirming or discussing the implication of tariffs or MFN on those out years. Once we have definitive information and knowledge, we'll come back and share that with everyone. Secondly, on just from a BD perspective, and others can comment on this as well, we have lowered our target or improved our target to 2.7 times because we are already at 2.7 times. So it's hard to have a target that we've exceeded so dramatically because our business has done so well.

[Dave Denton, EVP & CFO at Pfizer]

And if if an opportunity were to come along that made sense for us from a BD perspective, obviously, tar we would outstrip the target. It would be higher just like we did with c gen, and we'd work to get us back down to 2.7 over time. And maybe to Albert's point earlier, from a BD perspective, we are interested across the four areas in which we focus today, and we will continue to evaluate assets on the market in all of those four areas.

[Albert Bourla, Chairman & CEO at Pfizer]

Andrew?

[Andrew Baum, EVP and Chief Strategy & Innovation Officer at Pfizer]

Yeah. I'd just add to Dave's comments. Look, I think every potential licensing deal or acquisition is value driven, although there is obviously some value in diversification. We've historically been very active through cGen and more recently through SBIO and oncology.

[Andrew Baum, EVP and Chief Strategy & Innovation Officer at Pfizer]

However, as you know, Pfizer has a strong commercial heritage with significant strength in areas such as internal medicine and I and obviously we've got landmark drugs in those areas. So we believe we have a right to will and if the right opportunity comes up at the right price, you can be sure that we're going to pursue it.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you. Next question please.

[Operator]

We'll go next to Tim Anderson with Bank of America.

[Tim Anderson, Managing Director, Senior Equity Research Analyst at Bank of America]

Thank you. I have a question on IRA. So you guys have two drugs where prices are being negotiated in the current year for implementation in '27. That's Ibrance and Xtandi. One fear that, at least, we've had is that the new administration may press harder for bigger discounts versus last year, potentially, just to make a point in general, not just for Pfizer products.

[Tim Anderson, Managing Director, Senior Equity Research Analyst at Bank of America]

So you're in the midst of those negotiations. Any color you can provide such as how those discussions are lining up with what you expected before those negotiations began?

[Albert Bourla, Chairman & CEO at Pfizer]

Look, as we said, are in the middle of this negotiation, again, for the same reason. Actually, it's not allowed by law to disclose aspects of the negotiation. But I will say something. We have two products, as you said, for '27. Both of them are losing patents on '27.

[Albert Bourla, Chairman & CEO at Pfizer]

So for us, of course, we try to achieve the best we can in the negotiations of the crisis. But the heat on us is very small. The NPV is very small because it's really a few months of exclusivity. It depends on the product. So next question, please.

[Operator]

We'll go next to Steve Scala with TD Cowen.

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

Thank you very much. Two questions. The first one, I apologize, is on MFN. But you have quantified the assumed impact of MFN in 2025, but you won't share your estimate. But I assume it's a big number, well above $500,000,000 for Q4 alone and maybe several times that, which implies a strikingly high number for 2026.

[Steve Scala, Pharmaceutical Analyst at TD Cowen]

And I'm just wondering whether you would walk that number down. Second for Dave, you noted the positive underlying operational performance year to date. You also noted the positive inflection in FX year to date. Curious how the COVID expectations have changed. It seems they must have come down since revenue guidance is flat or unchanged or is something else in the business turned in a little bit light? Thank you.

[Dave Denton, EVP & CFO at Pfizer]

Yeah, maybe on the COVID side, I don't know that our expectations at this moment have changed, but we still have a lot yet to go in q three and q four. So as I think about our future projections, we are still internally working to achieve our number. But as my guidance reflects, we have now derisked some of that delivery in q three and q four. So I don't think anything has changed. We just know that COVID by itself, because of the nature of that business, will always be a little bit more sensitive and a little bit more fluid and harder to predict quarter over quarter, so this is just allowing us to de risk that a bit.

[Dave Denton, EVP & CFO at Pfizer]

And then on the MFN perspective, we are not going to comment on those numbers at this point. Thank you though.

[Albert Bourla, Chairman & CEO at Pfizer]

And the final question?

[Operator]

Our final question comes from Terence Flynn with Morgan Stanley.

[Terence Flynn, Equity Research Analyst at Morgan Stanley]

Great. Thanks for taking the questions. Maybe just two on the pipeline. Just for atiraciclib, I was wondering if we'll get an update from the Phase II study on PFS potentially at San Antonio later this year. I know you've already committed moving into Phase III, but I don't think we've seen anything on durability there.

[Terence Flynn, Equity Research Analyst at Morgan Stanley]

And then on Lobrena, any thoughts about exploring that in the adjuvant setting? Thank you.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

Bruce? Thank you for the question. So atomacyclip, you're correct. As we stated, we're focusing now on the first line space and focusing with CAT six for second line. We remain very confident in atemaciclib on all the data we've seen.

[Chris Boshoff, Chief Scientific Officer and President - R&D at Pfizer]

And the study, the first line trial in ER positive HER2 negative breast cancer, the study is recruiting extremely well. In fact, four times faster than we actually planned or predicted. We've not disclosed the date when we will show the data on the second line, but we'll keep you posted on that. For Lorlatinib, there's no current plan for an adjuvant study.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you very much. Thank you for your attention. Just I want to say that I'm very pleased with the execution of this team in terms of the targets that we have set. I would describe Pfizer right now as a company with a very strong floor and no ceiling. And we plan maintain the prudent way of allocating capital, the focus on execution, the relentless focus on our pipeline productivity and big assets, and improving our margins by the use of technology, focus, and simplification of our business process.

[Albert Bourla, Chairman & CEO at Pfizer]

Thank you very much, and enjoy your summer to those that didn't take vacation, like me.

[Operator]

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Francesca DeMartino, SVP & Chief Investor Relations Officer
• Albert Bourla, Chairman & CEO
• Dave Denton, EVP & CFO
• Aamir Malik, EVP & Chief U.S. Commercial Officer
• Chris Boshoff, Chief Scientific Officer and President - R&D
• Alexandre de Germay, EVP & Chief International Commercial Officer
• Andrew Baum, EVP and Chief Strategy & Innovation Officer

Analysts

• Trung Huynh, Executive Director & Equity Research at UBS Group
• Chris Schott, Managing Director at JP Morgan
• Alexandria Hammond, Director - Head of Therapeutics at Wolfe Research LLC
• Mohit Bansal, Managing Director at Wells Fargo Securities
• Courtney Breen, Senior Research Analyst at Bernstein
• David Risinger, Senior Managing Director, Biopharma at Leerink Partners
• Kerry Holford, Head - Global Pharma Equity Research at Barenberg
• Evan Seigerman, MD & Senior Research Analyst at BMO Capital Markets
• Carter Gould, MD & Senior Analyst at Cantor Fitzgerald
• Asad Haider, Healthcare Analyst at Goldman Sachs
• Umer Raffat, Senior Managing Director at Evercore ISI
• Rajesh Kumar, Head - European LifeSciences & Healthcare Equity research at HSBC
• Tim Anderson, Managing Director, Senior Equity Research Analyst at Bank of America
• Steve Scala, Pharmaceutical Analyst at TD Cowen
• Terence Flynn, Equity Research Analyst at Morgan Stanley