Earnings Call Transcript
PFIZER INC (PFE)
Earnings Call Transcript - PFE Q3 2022
Christopher Stevo, Senior Vice President and Chief Investor Relations Officer
Good morning. Welcome to Pfizer's third quarter earnings call. We anticipate that this call will last 60 minutes. I'm joined today by Dr. Albert Bourla, our Chairman and CEO; Dave Denton, our CFO; and Dr. Mikael Dolsten, President of Worldwide Research and Development and Medical. Joining for the Q&A session, we will also have Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business; Aamir Malik, our Chief Business Innovation Officer; Dr. William Pao, our Chief Development Officer; and Doug Lankler, our General Counsel. Before we begin the call, I'm also happy to announce that we will host an Analyst Day in New York City on the afternoon of December 12. Members of our executive team and other leaders of Pfizer will share information on our rich slate of potential near-term product launches and the R&D readouts which will drive the next wave of product launches after that, both of which will support our 2030 revenues and beyond. In-person attendance will be by invitation, but we will also be webcasting the event. While we're not going to talk more about the agenda today, we look forward to providing more details as we get closer to December 12. Materials for this call and other earnings-related materials are on the Investor Relations section of pfizer.com. Please see our forward-looking statements disclaimer on Slide 4. And additional information regarding these statements and our non-GAAP financial measures is available in our earnings release and in our SEC forms 10-K and 10-Q under Risk Factors and Forward-looking Information and Factors That May Affect Future Results. Forward-looking statements on the call are subject to substantial risks and uncertainties, speak only as of the call's original date, and we undertake no obligation to update or revise any of these statements. With that, I will turn the call over to Albert.
Albert Bourla, CEO
Thank you, Chris. Hello, everyone, and thank you for joining us today. I will briefly touch on some recent highlights. I will then spend the bulk of my time speaking to our expectations for what we feel will be a promising and prosperous future for Pfizer and the patients we serve. In addition to generating a stellar financial performance, since our last earnings call, we reported positive pivotal data for several exciting pipeline programs, including our RSV vaccine candidate for older adults, Prevnar 20 for children, the potential combination of treatment of TALZENNA and XTANDI in men with metastatic castration-resistant prostate cancer, our pentavalent meningococcal vaccine candidate for adolescents and young adults, as well as exciting progress for our GLP-1 program in type 2 diabetes and obesity. Just this morning, we announced positive top line data from the Phase III clinical trial investigating our bivalent RSV vaccine candidate when administered to pregnant participants to help protect their infants from RSV disease after birth. We established a new commercial structure within our global biopharmaceutical business that is focused on 3 broad therapeutic areas: primary care, specialty care, and oncology. We believe this new structure will enable us to maximize the commercial success of the multiple exciting product launches, including several potential blockbusters that are poised to emerge from our scientific pipeline over the next few years. We have continued to advance potentially game-changing vaccines in the fight against respiratory disease by entering into a Phase III study for our mRNA flu vaccine candidate and initiating a Phase I study for a vaccine candidate that combines our mRNA flu and COVID-19 vaccine in one shot. We completed the acquisitions of Biohaven Pharmaceuticals and Global Blood Therapeutics, giving us market-leading franchises in both migraine and sickle cell disease, respectively. Less than 6 months ago after launching An Accord for a Healthier World, a breakthrough initiative designed to close the health equity gap for 1.2 billion people living in 45 lower-income countries, I'm proud to say that the first shipments of our products have arrived in these countries, and we are working with governments on health system improvements that can help make sure these products reach those in need. And of course, we continue to lead the fight against COVID-19. Most notably, our Omicron-adapted bivalent COVID-19 vaccine has been authorized by the U.S. Food and Drug Administration, by the European Medicines Agency and several other regulatory bodies. And as part of Pfizer's commitment to providing equitable access to COVID-19 oral treatments, we agreed to supply at a not-for-profit price up to 6 million PAXLOVID treatment courses to the Global Fund for low and lower middle-income countries. An exciting quarter, for sure. But in our company and our industry, it's all about what's next. The next breakthrough medicine or vaccine, the next game-changing, the next solution to an unmet patient need. This continued pursuit of what's next is embedded in Pfizer's DNA and the foundational driver of our purpose: breakthroughs that change patients' lives. It's also why we have confidence that Pfizer's story is a growth story. We recognize that some are questioning Pfizer's longer-term growth prospects, particularly in the '25 to '30 time frame. That's understandable given that we currently expect a negative impact of approximately $17 billion in revenues from losses of exclusivity during that period based on our internal calculations. We believe we not only can overcome these expected declines, but also can potentially generate strong growth through the end of the decade. Let's take a closer look at how we expect to accomplish this. Our strong capital position has given us the ability to pursue business development opportunities with the potential, if successful, of course, to add at least $25 billion of risk-adjusted revenues to our 2030 top line expectations. We believe the deals we have already done for Arena, Biohaven, Global Blood Therapeutics, and ReViral have the potential to get us more than 1/3 of the way there and that we have more than enough capital to invest in the additional opportunities needed to meet or exceed this target. Perhaps even more exciting is the wave of potential growth drivers emerging from our R&D pipeline in the near term. Over the next 18 months, we expect to have up to 19 new products or indications in the market, including the 5 for which we have already begun co-promotions or commercialization earlier this year. You can find the list of these launches in the appendix of the presentation we posted today for this earnings call. If successful, these 19 launches, of which more than 2/3 have the potential to be blockbusters, will be the most ever in Pfizer's history. The 15 in-house-developed projects alone could potentially represent approximately $20 billion in 2030 sales, which would more than offset the expected LOE impact. Many of these programs are already largely de-risked from a clinical perspective. The majority of them were discovered in-house and nearly all of them would be for indications outside of COVID-19. If approved, we expect each of these to be key contributors to our growth aspirations through 2025 and beyond. And of course, we have many more potential vaccines and medicines in our pipeline with numerous launches expected in the '24 to '30 timeline. These include gene therapy candidates for hemophilia A, B, and Duchenne muscular dystrophy; our oral GLP-1 for diabetes and obesity; a potential combo vaccine that would cover flu and COVID in one shot and many, many more. With regard to our COVID-19 products, while their sales may fall from our expected 2022 levels of approximately a combined $55 billion, we believe our COVID-19 franchises will remain multibillion-dollar revenue generators for the foreseeable future which should serve as a buffer for any unforeseen challenges with other products in our portfolio. Our confidence to execute this plan stems from the depth of our financial resources and the firepower it gives us to pursue business development opportunities, the powerful brand equity we have built up over the past 170 years and further enhanced in the past 2 years. According to a recent survey, our brand awareness now stands at an impressive 82% and our favorability stands at 61% compared with 42% for the industry as a whole, results that were obtained just a couple of months ago. And of course, the strength of the 3 foundational pillars of our company, our world-class scientific, our world-class commercial and our world-class manufacturing engines, and you will see on this slide some highlights of each one of them. Let me now briefly highlight 3 potential blockbusters that we expect to contribute to our long-term growth. RSV is an area of significant unmet need, particularly in older adults and infants. Each year, it is estimated more than 177,000 older adults are hospitalized, and 14,000 of them die in the U.S. alone due to RSV that is confirmed by a diagnostic test. We believe we have the potential to be a leader in this space and have a real impact on public health. On March 24 of this year, the FDA granted breakthrough designation for our RSV vaccine candidate for the prevention of lower respiratory tract disease caused by RSV in individuals 60 years of age or older. We are excited to report positive top line data from the Phase III RENOIR trial in late August, with the recent presentation of detailed results at IDWeek 22. A preplanned interim analysis showed vaccine efficacy of 67% against RSV-associated lower respiratory tract illness, defined by 2 or more symptoms. And vaccine efficacy of 85.7% was observed in participants with more severe disease, presenting 3 or more RSV-associated symptoms of lower respiratory tract illness. We are also excited about the potential for our maternal RSV vaccine candidate. Globally, each year, RSV sickens more than 6.5 million infants under 6 months old and kills approximately 45,000. As announced this morning, our maternal RSV study met the success criterion for 1 of the 2 primary endpoints. Vaccine efficacy of 81.8% was observed against severe medically attended lower respiratory tract illness due to RSV in infants from birth through the first 90 days of life. And high efficacy of 69.4% was demonstrated through the first 6 months of life. So there is the potential that, subject to regulatory approval, by late 2023, early 2024, we could have the only RSV maternal vaccine in the market, along with an RSV vaccine for older adults, that has high efficacy and is well tolerated with no safety concerns. Combined, the 2 indications represent a potential multibillion-dollar peak revenue opportunity if approved, especially with our highly respected primary care sales force executing these launches. Including the RSV antiviral investigational candidates we acquired with ReViral, we aim to have end-to-end solutions with both preventative vaccines and therapeutics to treat those infected with RSV. Ulcerative colitis or UC is a chronic and often debilitating inflammatory bowel disease that affects an estimated 1 million people in the U.S. alone. Many patients living with this disease never achieve or maintain remission, and physicians are seeking effective, proven oral therapies with a favorable benefit/risk profile that can be an attractive first-line advanced therapy option. As a result, we expect the market opportunity to grow by about 50% over the next 5 years. The positive Phase III data from the ELEVATE UC 12 and 52 trials reinforce our belief that etrasimod has a differentiated clinical profile and can be an important treatment option if approved. We believe that etrasimod can be a multibillion-dollar blockbuster product. We expect to launch the product in the U.S. as soon as the second half of 2023, pending regulatory approval, through our specialty care sales force, which already has strong relationships in the UC market, thanks to its work with Xeljanz, biosimilars, etc. Lastly, let's look at migraine. Following our acquisition of Biohaven in early October, we are now aiming to build the world's leading global migraine franchise with the potential to impact 1 billion patients around the world. Migraine is a debilitating disease and has 11.6% prevalence worldwide. In the U.S. alone, there are 40 million patients with migraine, and 1 out of 5 women are migraine sufferers right now. The economic burden is significant at $36 billion per year. We believe our portfolio, including NURTEC ODT, VYDURA, and zavegepant, could meet a range of needs in the market, allowing physicians and patients to decide how to appropriately manage migraine treatment and prevention. As a result, we see the potential to reach more than $6 billion in peak revenues altogether. In the U.S., NURTEC is growing very well, including the impact of Pfizer's co-promoting, which began in August pre-close. NURTEC has further strengthened its #1 market share position in the oral CGRP market, and we expect even stronger growth as we deliver on our promise to further enhance our commercial efforts behind this program. Outside the U.S., it has been approved in the EU, U.K., Israel, Kuwait, the United Arab Emirates, and we have filed for registration in an additional 10 markets. While this is not a new product launch, we believe this is a great example of how we can take this portfolio to new heights by leveraging the full strength of Pfizer's global commercial engine, including in primary care physicians. Moving over to zavegepant. We recently expect to launch zavegepant intranasal in the U.S. next year, pending FDA approval, and we plan to globally commercialize. Lastly, the oral prevention Phase III trial is ongoing with a data readout expected in the third quarter. So with that, I turn it over to Dave to update you on the results and outlook for the financials. After Dave, Mikael will speak about the progression of our pipeline.
David Denton, CFO
Thank you, Albert, and good morning. I'll begin this morning with a few comments regarding how the company continues to deploy capital in a disciplined manner in support of long-term growth and, importantly, enhanced shareholder returns. As you know, Pfizer's cash generation capabilities have expanded significantly over the past several years and the efficient deployment of this capital is more critical than ever. During the first 9 months of 2022, the company has deployed and committed capital in 3 main areas: first, we've invested $7.8 billion in internal R&D as we continue to support our growing pipeline of innovative medicines. These investments are squarely focused on driving revenue growth through 2030. Secondly, in the first 3 quarters of this year, we have invested approximately $8 billion in completed business transactions. Additionally, early in the fourth quarter, the company completed investments of more than $18 billion in transactions, including both Biohaven and GBT, which brings us to approximately $26 billion in capital deployed for business development transactions thus far in 2022 alone. These transactions illustrate our progress towards the goal of adding $25 billion in risk-adjusted 2030 revenues through BD. And finally, we have returned nearly $9 billion of capital to shareholders through a combination of both dividends and value-enhancing share repurchases. Clearly, maximizing shareholder value through prudent capital allocation will continue to be a major focus for Pfizer. So with that, let me briefly review our financial results for the quarter. I'll limit my remarks largely to adjusted and operating growth figures. Third quarter revenues demonstrated strength across many areas of the business, but much of that strength was somewhat obscured by our incredibly strong performance in the third quarter of 2021. Given the strength in the prior year, revenues this quarter decreased 2% operationally. However, looking at it on a 2-year basis, revenues this quarter were up more than 120% compared to the third quarter of 2020. The slight decrease compared to last year was in line with our expectations given the phasing of scheduled deliveries of COMIRNATY, which we discussed in our earnings call last quarter. Also underlying our results this quarter was the strong performance of PAXLOVID as well as continued strength from a number of our other key products. Excluding direct sales and alliance revenues related to the COVID products, Pfizer's revenues grew 2% operationally in the quarter. Gross margins expanded by 1,450 basis points versus the third quarter of last year. This improvement is largely due to increased sales of higher-margin PAXLOVID and decreased sales of lower-gross margin COMIRNATY compared to last year. These improvements were partially offset by the impact of a $400 million charge related to excess raw materials for PAXLOVID. Given the unpredictable nature of the virus, we intentionally chose to order additional stock to ensure we can meet any global health demand if an extreme need were to arise. Adjusted SI&A expenses in the third quarter grew 23% operationally. The increase was primarily driven by spending for PAXLOVID and COMIRNATY and higher health care reform fees. The 2% operational increase in adjusted R&D expense in Q3 was primarily driven by increased cost to develop recently acquired assets as well as investments for certain oncology and non-COVID-19 vaccines programs. This was partially offset by lower spending on programs to prevent and treat COVID-19 and various late-stage clinical programs. The effective tax rate on adjusted income in the quarter was 4.4%, significantly lower than typical, driven by tax benefits related to global income tax resolutions in multiple tax jurisdictions spanning several tax years. Excluding these tax resolutions, the underlying tax rate was consistent with historical trends. As a result, reported diluted earnings per share of $1.51 grew by 6%, while adjusted diluted earnings per share of $1.78 grew 44% on an operational basis in the quarter. Now foreign exchange movements continue to dampen our results, negatively impacting revenues by approximately $950 million and adjusted diluted earnings per share by $0.05 this quarter. Now let me move to our updated 2022 guidance. Given our strong third quarter performance and our improving outlook for the year, we are increasing our operational expectations for revenues by $1.7 billion and adjusted diluted earnings per share by $0.19. This operational increase on the bottom line would have been even higher if not for an incremental $0.06 negative impact due to higher acquired IPR&D expenses. Partially offsetting these operational increases is the impact of additional strengthening of the U.S. dollar since we last updated guidance in late July. Incremental foreign exchange movements negatively impacted our expectations for 2022 revenues and adjusted diluted earnings per share by $700 million and $0.09, respectively. The net impact of these cross currents results in increases to the midpoints of our revenue and adjusted diluted earnings per share guidance ranges. These revised ranges reflect operational growth rates of 31% for revenues and 70% for adjusted diluted earnings per share at the midpoint compared to 2021. And this was up from our previous operational growth expectations for revenues and adjusted diluted earnings per share of 29% and 65%, respectively. Regarding our COVID-19-related revenues, we now expect the vaccine revenue for the year to be approximately $34 billion, up by $2 billion compared to our prior guidance. For PAXLOVID, we expect sales of approximately $22 billion, keeping the guidance range unchanged despite the negative incremental impact of changes in FX. You can see on this slide our updated costs and expense guidance which incorporates our performance to date, our recent acquisitions, and our updated expectations for the remainder of the year. More information on each of these updates can be found in this morning's press release. 2022 guidance once again assumes no incremental share repurchases beyond the $2 billion of share repurchases we completed in March of 2022. In closing, it's an exciting time in the history of Pfizer. We believe that our strong financial performance in the quarter and our improving operational outlook for the year sets the stage for long-term shareholder value creation. With that, I'll now turn it over to Mikael.
Mikael Dolsten, President of Worldwide Research and Development and Medical
Thank you, Dave. Today, I will focus attention on high-value programs that will potentially deliver breakthroughs in areas of high unmet need and are expected to be key contributors to our growth aspirations through 2025 and beyond. With anchor products such as COMIRNATY, PAXLOVID, IBRANCE, and XTANDI, we are building out comprehensive franchises in several areas, including respiratory, metabolic disorders, genetic hematology, and certain cancers. We have deep expertise in these areas, and there is exciting science emerging. I will share updates from 3 of these today: respiratory, metabolic, and prostate cancer. Building on our success with COMIRNATY and PAXLOVID, we see enormous potential to help address major causes of respiratory disease through vaccines and therapeutics. Work on the next-generation vaccine candidates is well underway. And last week, we started a Phase I clinical trial of our second-generation oral therapeutic candidate. Our quadrivalent modRNA flu program has progressed into Phase III, and we will start shortly a Phase I study of an mRNA-based vaccine candidate that combines our quadrivalent modRNA flu vaccine candidate with the Omicron-adapted bivalent COVID-19 vaccine based on BA.4/5. In RSV, we believe a dual focus on developing a vaccine and antivirals could make a significant impact globally. I will share new data with you shortly. PAXLOVID continues to be an important tool in helping to combat the impact of COVID-19. And secondary endpoints from the EPIC-High-Risk study as well as data from real-world evidence support the product's efficacy profile. In the EPIC-HR study, PAXLOVID reduced COVID-19-related all-cause deaths and ICU admissions by 100% and COVID-19-related hospitalization by 86% in unvaccinated, high-risk patients compared to placebo. It also reduced the duration of COVID-19 symptoms by 2 to 3 days compared to placebo. We are pleased to see PAXLOVID leading the COVID-19 treatment landscape and remain confident in its safety and efficacy in treating patients at high risk for severe outcomes. We recently reported a positive interim analysis from a Phase III study in older adults of our novel RSV vaccine candidate, which targets the prefusion F protein on both RSV A and B, without need for an adjuvant. We saw remarkable vaccine efficacy across the first RSV season. The vaccine was extremely well tolerated with favorable systemic tolerability, a key consideration for vaccines. We also are developing the RSVpreF vaccine candidate for use in pregnant women so that protection may be conferred to newborns. And this morning, we announced exciting results from a preplanned interim analysis of our Phase III trial. We observed vaccine efficacy of nearly 82% against severe medically attended lower respiratory tract illness or MA-LRTI due to RSV in infants from birth through the first 90 days of life and efficacy of more than 69% through the first 6 months of life. The success criterion was not met for the second primary endpoint. However, clinically meaningful efficacy was observed with MA-LRTI of 57% in infants from birth through 90 days of life and efficacy of 51% over the 6-month follow-up period. The Data Monitoring Committee indicated the vaccine was well tolerated with no safety concerns for either vaccinated women or their newborns. Given these impressive results, we look forward to filing BLA for both older adults and pregnant women with the U.S. FDA by year-end with potential launches in '23. If approved, our maternal RSV vaccine candidate potentially would be the first available to help prevent this common and potentially life-threatening respiratory illness in young infants. Turning now to prostate cancer. We're building upon the standard of care set by XTANDI in castration-sensitive and castration-resistant populations. The Phase III EMBARK study of XTANDI in non-metastatic castration-sensitive prostate cancer is expected to read out in the first half of '23. And the Phase III TALAPRO-3 study of TALZENNA and XTANDI is expected in '24. These trials may indicate benefit in up to 20% more patients than are currently treated and potentially prolong the duration of use, subject to clinical success and regulatory approval. Now in TALAPRO-2, we observed the first clinical benefit of a PARP inhibitor plus XTANDI in men with metastatic castration-resistant prostate cancer with or without homologous recombination repair or HRR gene mutation. Irrespective of HRR gene mutation status, the study achieved its primary endpoint. The combination delivered a significant and clinically meaningful improvement in radiographic progression-free survival and appears to have resulted in the longest observed such survival in a randomized trial in this setting. We are encouraged by these results and believe that TALZENNA in prostate cancer may have blockbuster potential, subject to regulatory approval. Turning to metabolic disorders. I previously shared that we are developing 2 oral GLP-1 receptor agonists, danuglipron and 1532. Recently presented Phase Ib data for 1532 show dose-dependent reduction from baseline at 4 to 6 weeks in mean daily glucose, fasting plasma glucose, HbA1c, and body weight. Both candidates are potentially best-in-class and differentiated by offering full agonism, which may be required to achieve the same level of response as injectable GLP-1 receptor agonists while offering a convenient once-daily dose for 1532. Glucose effects plateau at lower doses, while body weight effects continue to improve at higher doses. The planned Phase IIb study will evaluate 1532 versus both oral semaglutide and placebo in type 2 diabetes and separately versus placebo in obesity. Using semaglutide as a comparator in the type 2 diabetes arm should allow us to observe potential early signs of differentiation in efficacy, tolerability, and safety. We will evaluate doses up to 260 milligrams in this study, higher than the studies in the Phase Ib. We plan to begin dosing soon and anticipate the readout in the first quarter of 2024. The ongoing Phase IIb study of danuglipron in obesity with now once-monthly titration is expected to complete in the second half of 2023. Data from these studies will be available in relatively quick succession and, assuming clinical success, allow us to select one based on efficacy, tolerability, and dosing to advance to Phase III in both type 2 diabetes and obesity. In closing, we are excited about the developing science within these franchises and share here recent and anticipated milestones in the next 18 months. We look forward to continuing our development both for potential patient benefit and sustainable growth. Thank you. Let me turn over to Chris to start Q&A.
Christopher Stevo, Senior Vice President and Chief Investor Relations Officer
Thanks, Mikael. With that, let's start the Q&A session. We have about 30 minutes for this session. We will answer as many questions as time permits. And Investor Relations will be available after the call to answer any follow-up questions. Chelsea, please go ahead and queue up the first question.
Operator, Operator
Our first question will come from Umer Raffat with Evercore ISI. Next, we'll hear from Colin Bristow with UBS.
Colin Bristow, Analyst
On COVID '23 expectations, should we expect anything from you here on the December 12 Investor event? And then just more broadly around this, how are you thinking conceptually about guiding to this? Will it be similar to last year? Are you thinking of more sort of scenario-based guiding? Anything that would be helpful. And then just a sort of temperature check on business development, if you could update us on your priorities and interests. And then from a deal perspective, just how big would you be willing to go? Thank you.
Albert Bourla, CEO
Thank you. On the December 12, what you should expect, it is a good overview of our very important new product launches in the coming 18 months, with more details about the science and the market potential of those launches as well as some of the most important pipeline potential new medicines and vaccines that they are not going to be launched in the next 18 months but will be launched in the period between '24 and '30. Now for the BD priorities, I would ask Aamir to reiterate once more our strategy when it comes to BD.
Aamir Malik, Chief Business Innovation Officer
Thanks for the question, Colin. The BD priorities remain consistent with what we've articulated before. And principally, we are most excited about scientific substrate that has the potential for patient breakthroughs. That's going to continue to be our north star. We're looking for deals that accelerate our top line growth in the back half of the decade. And importantly, we're focused on opportunities where we can add substantial value, and that can come in the form of either shaping the science or also accelerating our commercial momentum. And if you look at the deals that we announced and closed in 2022, including Arena, Biohaven, ReViral, and GBT, they would all be very consistent with those priorities. We've said that we are agnostic to the size of the transaction. But you've also heard us be very clear about the fact that cost synergy-driven deals are not where our focus is going to be. We're going to be focused on driving growth through our BD.
Albert Bourla, CEO
Thank you, Aamir. And also, Dave, maybe you can also address the question about guidance on COVID and are we going to provide it and when for '23, etc.
David Denton, CFO
Yes. Thank you, Albert. Maybe let me discuss the stage as it relates to COVID and the COVID franchise. I think if you look out longer-term, the franchise is going to be a multibillion-dollar franchise in the respect that this is going to be somewhat like a flu, sustained flu, but actually more deadly than the flu. So therefore, I think the products, both from a vaccine and the therapy perspective that Pfizer has developed, are going to be quite relevant for many years to come. Having said that, when we provide guidance for 2023, when it's appropriate to do so, we will give investors a perspective on what our expectations are for the year. We will break out that guidance specifically, so you can hold us accountable for delivering on those revenue promises when the time comes.
Operator, Operator
Next, we have Louise Chen with Cantor.
Louise Chen, Analyst
I wanted to ask you how you view the various factors influencing 2023, as there seem to be many aspects at play. Additionally, regarding your RSV franchise, there are multiple companies developing drugs in this area, all of which have reported positive results. I'm interested in your thoughts on how you see this market evolving over time.
Albert Bourla, CEO
Yes. I would like to mention a few points about the challenges and opportunities we face, and then I will invite Angela to add her insights, particularly regarding the RSV market. This year, 2023, is extremely significant for us due to the unprecedented number of new product launches anticipated over the next 18 months, most of which will occur this year, with a few starting in early 2024. We're not just introducing a large volume of products; we're also expecting substantial internal peak sales of $20 billion by 2030 from these launches, excluding BD, Biohaven, and Global Blood. This is a significant figure, and executing these launches effectively is crucial for us. Additionally, these launches will provide a notable boost to our non-COVID business. When it comes to COVID, we anticipate that 2023 will be a transition year as we likely shift in the U.S. from a government-led model to a commercial model for vaccines and treatments. The exact timing remains uncertain, but we are prepared to implement changes as soon as possible, although this transition will occur over several years. It’s important to note that PAXLOVID and COMIRNATY may not transition at the same pace. There will be some inventory that needs to be managed in 2023, and as we progress, we can expect new pricing dynamics. Consequently, COVID-related operations will be transitional this year until we can establish a market parallel to that of flu volumes, albeit with different pricing structures and disease severity. This could evolve into a multibillion-dollar franchise for both therapeutics and vaccines. While we aren't ready to project long-term figures, we aim to be as precise as possible with our 2023 guidance. Angela, do you have anything to add regarding the challenges and opportunities? You have been pivotal in managing the new launches and can also discuss the RSV maternal and adult initiative.
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
We are very excited about both the adult vaccine and the maternal vaccine. This aligns perfectly with Pfizer's focus on respiratory vaccines, an area where we have extensive experience from our pneumococcal franchise and recent advancements from COMIRNATY. Additionally, Pfizer is the only company offering both an adult vaccine and a maternal vaccine, which integrates seamlessly into our existing commercial framework. There are significant target populations for both adult and maternal vaccines. Starting with the adult vaccine, there are 61 million individuals aged 65 and older who are eligible for vaccination. RSV can be a devastating disease, with hospital costs for adults exceeding $1.2 billion. It is also frequently underreported and underdiagnosed, presenting a considerable opportunity for us to raise awareness and educate the public about the disease, leveraging our existing commercial resources. In terms of maternal health, RSV also poses a serious threat, particularly to infants under 6 months and preterm infants, contributing to over 102,000 deaths globally due to infections. We see significant potential to make a meaningful impact in this area as well. Our extensive experience with Prevnar gives us a strong legacy in pediatric vaccines, and combined with our expertise in women's health and our commercial network, we are well-positioned to launch the maternal RSV vaccine. We have the scientific expertise, technology, and established relationships with vaccination providers, as well as familiarity with vaccine technical committees worldwide. This will facilitate broad recommendations, enabling us to reach many infants and adults with these significant breakthroughs. Therefore, we believe we have the capabilities to excel with this respiratory vaccine portfolio.
Albert Bourla, CEO
Very well, Angela, and I agree with you.
Operator, Operator
Next, we have Steve Scala with Cowen.
Stephen Scala, Analyst
I have three questions, but they're all short. First, what impact on RSV-associated infant hospitalizations did Pfizer see in the Phase III MATISSE trial? Second, can you tell us what NURTEC sales were in Q3? I know you didn't own Biohaven in Q3, but you likely know the number. And then lastly, all things considered, is it unrealistic to think that COMIRNATY plus PAXLOVID sales could be as much as $15 billion in 2030?
Albert Bourla, CEO
Thank you very much. Mikael, what about the RSV data?
Mikael Dolsten, President of Worldwide Research and Development and Medical
Thank you for the question. So as you have seen in our press release, we reported out very impressive data and the 2 separate primary endpoints that were independent, it is sufficient to hit one for filing. And to our privilege and encouragement, we hit strongly on the most important. And that was defined as severe, medically attended lower tract respiratory infections, where we had close to 82% vaccine efficacy. That is defined by clinical features, such as the rate and the stress of respiration, oxygenation levels, etc. in the children and will include patients, whether they are hospitalized or not. We will later release data on secondary endpoints that include hospitalization. When you look at this dramatic effect on the severe infections, it seems very reasonable to project that we will have a dramatic impact in lowering hospitalizations. I'm probably talking about tens of thousands of hospitalizations in the U.S. that may not happen if this vaccine is used to vaccinate maternal prior to delivering children as appropriately studied in this vaccination. So we're very encouraged and optimistic about that type of value.
Albert Bourla, CEO
Thank you, Mikael. Before I turn to Dave to address the question regarding the sales of NURTEC in the third quarter, I want to mention COMIRNATY and PAXLOVID and the overall franchise. We have indicated that we will offer a clear outlook on our expected sales for next year. Your question about the year 2030 presents additional challenges. However, considering your inquiry about whether it’s unreasonable to foresee a $15 billion franchise, given that it is currently at $55 billion, it's plausible to think it could be that way by 2030, but it's uncertain. This will depend on the behavior of the virus and whether it becomes standard practice to vaccinate alongside flu shots. The development of a combination product would certainly support this possibility. So, while it might be a bit premature to make definitive claims, it isn’t unreasonable given our current situation. Now, regarding NURTEC sales?
David Denton, CFO
Yes. Steve, this is Dave. As you said, we didn't own the business last quarter, but maybe just a little bit of color on how the product is performing. If you look at the volume last year, or last quarter, rather, Q3, if you compare it to last year, it was about a 45% growth rate in year-over-year script volume. And then if you look at it sequentially, which I think is really important, we saw about a 16% growth rate sequentially Q2 going into Q3. So I think this shows the promise of this product, number one. And number two, I think once we get it, now that we have it in the hands of our field force and into our primary care field force, we can really maximize the value of this needed medicine into the patient population here in the U.S. and abroad.
Operator, Operator
Our next question will come from Robyn Karnauskas with Truist Securities.
Robyn Karnauskas, Analyst
On PAXLOVID, I noticed the recent publication highlighting the number of people who have died from not receiving an antiviral. Can you discuss the efforts you're making to educate physicians about prescribing the drug? Do you believe we will reach a point where both patients and doctors will feel more comfortable using it, considering the information regarding the PAXLOVID rebound? Additionally, could you elaborate on the opportunity for vitiligo and alopecia in your pipeline? When can we expect the next update on that?
Albert Bourla, CEO
Thank you very much. Both questions, I think, can be answered very nicely by Angela.
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
Thank you for the question. Let’s discuss PAXLOVID and its progress. First, we are operating under an Emergency Use Authorization, collaborating closely with the U.S. government to educate the public. The government has already done a fantastic job creating awareness through public service announcements and campaigns. Additionally, we've educated potential prescribers of PAXLOVID, with over 500,000 physicians having prescribed it so far. We also trained over 80,000 pharmacists on how to prescribe PAXLOVID, ensuring education is robust at both the prescriber and consumer levels. We’ve worked with state and local governments to enhance this effort. The Test to Treat sites established by the government—currently numbering 27,000—have also played a vital role in educating about PAXLOVID. Overall, I believe things are progressing well, and we are preparing for the upcoming fall season. The fact that 500,000 physicians have already prescribed PAXLOVID reflects their confidence in the treatment. It’s essential that we continue to communicate who is eligible for PAXLOVID, as the CDC outlines 22 risk factors, including being over 65 or having mental health issues and an inactive lifestyle. Our focus moving forward this fall will be on clarifying these eligibility criteria.
Albert Bourla, CEO
And what about vitiligo?
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
We are truly enthusiastic about the new indications for ritlecitinib. The key point here is that there are currently no effective treatments available for these very serious inflammatory conditions, leading to a significant unmet need and a lack of options. Therefore, the ability to introduce a treatment like this to the market is likely to attract considerable interest from patients who have previously been left without alternatives.
Albert Bourla, CEO
And William, can you please address a little bit the issue about the rebounds that was also mentioned?
William Pao, Chief Development Officer
Sure, Albert. Well, Mikael already mentioned that we gave updated data from our EPIC-HR study on the effect of PAXLOVID versus placebo in patients with high risk for COVID-19. And we had additional endpoints there which we showed a 100% decrease in ICU admissions, a 100% decrease in mechanical ventilation among hospitalized patients, 100% who got PAXLOVID were discharged to home versus 53% placebo. We also had an 82% reduction in oxygen support, an 86% reduction in COVID-19-related hospitalizations, an 89% reduction in mean days hospitalized versus 100 patients and also a 73% reduction in any COVID-19-related medical visits. Importantly, we also showed sustained time to symptom alleviation and sustained time to symptom resolution of an impact of 2 to 3 days of PAXLOVID versus placebo. But most importantly, about rebounds, there's been several studies recently that have shown that rebound occurs with COVID, in general. For example, there was a recent publication of 158 patients who got placebo with COVID and actually, 1/3 of those had recurrent symptoms after the resolution of their symptoms, suggesting that it's a phenomenon associated with COVID and not with PAXLOVID. Importantly, we also haven't seen any evidence of resistance that is clinically meaningful. Whereas with antibodies, for example, we have seen that you can also get symptom rebound, but that is associated with resistance. So again, PAXLOVID is not associated with resistance but the antibodies are. So we feel very confident that PAXLOVID has a significant impact and a role against COVID.
Operator, Operator
Next, we have Andrew Baum with Citi.
Andrew Baum, Analyst
A couple of questions. Firstly, as it relates to the maternal RSV vaccine. Could you talk about reimbursement coverage in the U.S.? I'm assuming you'll get an ACIP recommendation. And therefore, there will be 0 out of pocket, which may differentiate it versus the monoclonal. And I'm sure on a cost basis, that will be material. And then secondly, could you talk to your efforts with your ER degrader with Arvinas in light of the evolving data on SERDs? Thinking about Astra's recent positive trial on MDS subgroup. Do you believe that this is a function of defining the right patient population at the right stage of the disease rather than the potential risk to the development of the entire category?
Albert Bourla, CEO
Drew, thank you. In the interest of time, let me give the first answer. Yes, you are right. As long as the product is recommended by the CDC, and we believe with this type of efficacy, it will be recommended, there is 0 co-pay irrelevant of the insurance. If it is commercial or if it is public, their obligation is 0 co-pay from the payers, and they have to cover it. Mikael, what about the Arvinas molecules?
Mikael Dolsten, President of Worldwide Research and Development and Medical
Yes. Thank you for asking. Clearly, we think that there are 2 factors that will separate out the good drugs from the less good in this class of degraders. And we think that PROTAC, which is the mechanistic name of the 471, is more effective in down-regulating the estrogen receptor. And selecting the right patients compared to standard of care, that includes selecting patients that have estrogen receptor mutations and need more powerful drugs and it's related to the property of the drug itself. We look forward to advancing that drug with Arvinas to pivotal studies in the relatively near future and also to soon reveal to you a lot of progress we had in our breast cancer franchise, including the CDK4 drug. And that may be part of what we consider to share in December at the investor update on launches and next waves.
Albert Bourla, CEO
Thank you very much, Mikael.
Operator, Operator
Next is Mohit Bansal with Wells Fargo.
Mohit Bansal, Analyst
On the RSV vaccine front, my question is about the data on maternal vaccination. Sanofi has developed an antibody that can be administered directly to infants and has shown promising results. In your view, could the strategy involve immunizing expectant mothers compared to directly vaccinating infants? How do you see the end market developing over time?
Albert Bourla, CEO
Yes. Angela, do you want to say how we could compete potentially with an antibody in infants?
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
Yes. First of all, if you look at where most of the morbidity and mortality is occurring, it’s primarily in infants under 6 months and also among preterm babies. Therefore, it's essential to have protection starting from day one. We believe our differentiation lies in this aspect. From the moment of birth, there is protection, and it lasts throughout the first 6 months, as demonstrated in our clinical trial. While there are certainly many options available, we believe our vaccine offers a unique solution that is well-suited for infants.
Albert Bourla, CEO
Thank you very much. And of course, Andrew made also the point, with vaccines, we do not have co-pays. And antibodies are quite expensive, and you do have co-pays.
Operator, Operator
Next, we have Tim Anderson with Wolfe Research.
Brian Tsang, Analyst
This is Brian on for Tim. Just two from us. What is Pfizer's current level of interest in Alzheimer's disease? And do you think there are compelling business development opportunities in the market? Or would the efforts likely to be homegrown? And then second, on the Prevnar 20 and the competition. Wondering if you can opine on Merck's strategy, which is to bifurcate the market between peds and adults and have a product tailored to each segment. They have strains in each and they will be going head-to-head against Prevnar. They said a tailored approach is better than a one-size-fits-all approach, which is what Prevnar is. Just wanted to get your thoughts on that.
Albert Bourla, CEO
Thank you very much. Clearly, as you know, Pfizer had externalized their neuroscience portfolio, and we have created a company that's working on that actually. And we have a very significant equity over there. We are monitoring how science is evolving. And apparently, there are a few things that are happening right now. I'm not referring only to the positive data of one study that we just saw, I'm more referring to earlier science that is emerging that seems to have a high promising for most clinical results. So we are monitoring that. And if we think that there is a good opportunity, we may reexamine entering. The reason why we actually want to exit is because we felt the science is not ready at the time. Now I will move it to Angela to answer your second question.
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
We are very proud of our pneumococcal vaccine franchise. I want to start by highlighting the significant achievements of Prevnar 20 since its launch. Despite facing competition from other pneumococcal vaccines, we have achieved a 95% market share and have 97% formulary access. Recently, we received an updated ACIP recommendation that allows Prevnar 20 to be used for catch-ups for individuals aged 65 and older, as well as for those under 65. This reflects Pfizer's leadership and legacy in pneumococcal and respiratory vaccines, demonstrating the strong relationships and expertise we possess in this area. Similarly, in the pediatric sector, while we are preparing for the launch of pediatric Prevnar 20, Prevnar 13 is performing well against the PCV15. The trust and familiarity that physicians have with our pneumococcal vaccine are giving us a competitive edge. Additionally, there is significant anticipation for the five additional serotypes provided by Prevnar 20 compared to Prevnar 15 in the pediatric market. Overall, we are off to a very strong start and eagerly look forward to introducing our next vaccine.
Albert Bourla, CEO
Okay. Thank you very, very much.
Operator, Operator
Next, we have Chris Schott with JPMorgan.
Christopher Schott, Analyst
Actually, kind of a qualitative question on how to think about OpEx dynamics going forward. It seems like we've seen some upward bias in spend at the company, which has kind of coincided with the ramp in COVID sales. I guess for a position where that COVID market resets as we transition past the pandemic, is there opportunity? Or should we think about a pullback in OpEx spending associated with that? Or should we think about these as more normalized levels of spending given all these growth initiatives that you're highlighting and investing behind at this point?
Albert Bourla, CEO
Thank you, Chris. Nice question. And our new CFO clearly has views on this. So Dave, what do you think?
David Denton, CFO
Chris, that's a good question. It's probably a bit early to provide guidance for 2023. However, I don't anticipate a reduction in expenses. In fact, we are fortunate to have a strong launch schedule over the next 18 months. We are committed to investing in these launches to ensure they are successful and that these medicines reach patients quickly. Our focus is on supporting these launches, executing them effectively, and enhancing our sales performance, especially from 2025 to 2030.
Operator, Operator
Next is Geoff Meacham with Bank of America.
Geoff Meacham, Analyst
Thanks for the question. I have a couple of points to discuss. The slide on long-term growth is very informative. Regarding the $20 billion mentioned on Slide 9, can you elaborate on the long-term contribution that is not related to COVID? I understand there is a long-term aspect for COVID, but most investors are more interested in the non-COVID factors. Additionally, looking ahead to next year when many biosimilars for Humira will launch, how much market disruption do you anticipate from higher buyers, similar volumes, and payer preferences? I'm particularly considering the impact on CIBINQO, the launch of etrasimod, as well as Xeljanz and Inflectra.
Albert Bourla, CEO
Yes. I will ask Angela to answer the second question. On the first one, maybe I can give some clarifications. On the $20 billion, so we have included revenues from new launches. This is our estimations for 2030. New launches that are happening either started in '22, CIBINQO, for example, is there, because it started. And then we are adding claims or are about to happen and we have the list in the appendix. And in this list, excluding the BD, which we do not count over there, we count on the previous bar, where we have the $25 billion of revenues, are summing to $20 billion in our expectation. Just to clarify, this does not include COVID. This is excluding COVID, excluding new things that may come from COVID, excluding new things that may come in antivirals or new vaccines or combination vaccines or any of that. These are not part of that. Now in the other pipeline, which are things that are not in the near, near short term and things that will launch after the 18 months period all the way to '30, clearly, a lot of these things maybe are not known to you yet. But among the things that are known to you and that should be included over there, should be the GLP-1, should be any combinations between flu and COVID or RSV, should be our interferon, and the Lyme vaccines, the Arvinas, should be the gene therapies that could come. All of that should count towards that bar that we haven't quantified yet publicly. Of course, we know what we expect ourselves. Thank you very much. Now, Angela. The I&I and the vaccine launch.
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
The biologics market and the oral market are distinct. The treatment algorithms for biologics and orals differ. For example, Xeljanz's label states that patients must have used anti-TNF treatments before transitioning to an oral JAK inhibitor. Therefore, I don't believe the competition lies among biologics. Instead, orals primarily compete with HUMIRA and its biosimilars, with each having specific roles. Xeljanz is one example, and etrasimod is another, demonstrating that oral therapies can be utilized earlier in treatment, even before biologic therapies. It's important to recognize the different lines of treatment and the specific scenarios in which an oral is appropriate versus a biologic, as there is no overlap in their use.
Albert Bourla, CEO
Thank you, Angela. We're running a little bit late, so we will take three more questions and try to answer them quickly.
Operator, Operator
Next is Terence Flynn with Morgan Stanley.
Terence Flynn, Analyst
I was just wondering on PAXLOVID, it looks like there's going to be some doses remaining on the current U.S. contract as we head into 2023. So just maybe, I know you talked about how COMIRNATY would work as we move to a commercial market. But maybe just help us think about how that will work here in the U.S. as we transition out of the pandemic here. And the second question I had is just any more detail you can share on the Prevnar data in peds regarding the serotype coverage? I know that was a question that came out post the Phase III data.
Albert Bourla, CEO
Regarding PAXLOVID, it will follow a similar path to the vaccine. We anticipate a transition period where we will announce the list price and collaborate with the U.S. government for a smooth changeover as they cease distribution of their products. This will ensure continuous market coverage. We will provide further details on these dynamics and the timing of the transition in our guidance for next year. Mikael, do you have any insights on the pediatric side?
Mikael Dolsten, President of Worldwide Research and Development and Medical
Just very briefly that we have had positive studies in U.S. 3-plus-1 schedule, European Union 2-plus-1, after either 4 or 3 doses, which is the toddler complete schedule. We covered 20 serotypes in U.S. and 19 in the EU. But the totality of data across all endpoints, we believe, clearly speaks to that this is an important vaccine that adds coverage. And it's likely going to be the vaccine in the near term and for quite many years that have the broadest coverage.
Operator, Operator
Next, we have Chris Shibutani with Goldman Sachs.
Chris Shibutani, Analyst
Could you share your expectations regarding the uptake velocity for RSV? Is flu a reliable indicator for this? How quickly might we reach our goals based on that? Additionally, regarding etrasimod, in the previous ownership, there were opportunities related to Crohn's disease data from Phase II and atopic dermatitis data from Phase III, which were planned for calendar 2022. Will we receive any updates on those clinical programs?
Albert Bourla, CEO
Yes. I will ask William to provide some insights on the clinical programs.
William Pao, Chief Development Officer
Yes. Sure. For etrasimod, we have nothing new to update at this time, Chris.
Albert Bourla, CEO
All right. And then for RSV, I would say, clearly, we think that it could become like flu-like. I think all respiratory diseases eventually will have coverage like we have right now in flu. The question is how often that will happen. And that will depend on several factors. Education, of course, of the people and their physicians, but also the availability of combination programs and products that could significantly bring all 3 of them together, RSV, COVID, and flu.
Operator, Operator
Next, we have Umer Raffat with Evercore ISI.
Umer Raffat, Analyst
I wanted to ask two questions on pricing today, if I may. Perhaps first one, Albert, I know the COVID vaccine repricing was a very bold decision. And I understand the dynamics around the value proposition, the pandemic versus endemic era pricing, etc. But I think the sheer magnitude of the increase is making a lot of investors ask questions around ESG implications, any political blowback, etc. I'm just curious how you guys thought about this very important decision and how you're thinking about the expectation on net pricing. And then separately, on PAXLOVID. I know you're running a 10-day trial versus the 5-day course that's currently approved. Does that mean PAXLOVID will effectively become 2x the price once a 10-day course is approved?
Albert Bourla, CEO
Yes, I can address both points. I believe it was a bold and correct decision to price the vaccine during the pandemic at a very low rate. This was the right approach, and we have maintained that price over the years. Now that we are approaching a different phase and transitioning to a product with different packaging, moving to single-dose vials rather than multi-dose vials, we are adjusting the vaccine's price based on cost-effectiveness. The current pricing model from the CDC is significantly lower than the $110 to $130 price we've set. Additionally, consumers will not notice any changes because there will be no copay, ensuring that the system benefits from a cost-effective product. Regarding PAXLOVID, it is too early to comment on pricing because we have not yet announced any, and we are uncertain about the outcomes of ongoing studies or the forthcoming class of treatments following PAXLOVID.
Operator, Operator
Our last question will come from David Risinger with SVB Securities.
David Risinger, Analyst
I have two questions. First, regarding the 2% operational growth in the third quarter, can you explain your assumptions and how we should view growth prospects moving forward, especially in the fourth quarter since you've provided updated guidance? Second, could you give an update on your next-gen oral antiviral for COVID?
Albert Bourla, CEO
Thank you. One, on the 2% operational, excluding COVID, just to make a clarification, if you exclude also the contract manufacturing business that we have that was really COVID-related, it has very increased revenues last year because we were contract manufacturing for BioNTech territories that we don't have to do now because BioNTech took over for their territories their own manufacturing. In fact, the growth was 4% of our pharmaceutical business, excluding COVID and excluding this piece of contract manufacturing. Now Angela, based on that, what will we expect to be the growth trajectory?
Angela Hwang, Chief Commercial Officer and President, Global Biopharmaceuticals Business
Well, we've talked about our 5-year CAGR, right, to be 6%. And just I want to reiterate that, that is exactly the track that we're on. Every year does not necessarily have to look identical. But over the 5-year period, we're absolutely confident that we're going to deliver the 6% CAGR.
Albert Bourla, CEO
All right. So thank you very much. So with that, I think we are close to bringing our call to a close. Please don't forget to attend our event on December 12, where we will provide details about our very important new product launches in the next 18 months in some of our most important pipeline, potential new medicines and vaccines. Thank you for joining us today. Have a great rest of your day.
Operator, Operator
Ladies and gentlemen, this does conclude today's earnings call, and we appreciate your participation. You may now disconnect.