(MENAFN- AFP)Pfizer on Tuesday projected 2018 earnings would beat analyst expectations due to the US tax cuts, as it pledged to boost investment over the next five years.
The company now expects to pay a 17 percent tax rate in 2018 on adjusted earnings, down from the previous expectation for 23 percent. Chief financial officer Frank D'Amelio said the 17 percent level should be "sustainable" in years ahead.
The drugmaker, a long-time critic of US tax policies prior to the December reform, projected 2018 adjusted earnings per share of $2.90 to $3.00, better than the $2.78 expected by analysts.
Pfizer chief executive Ian Read was one of the most outspoken critics of the US tax rate and sought more than once to shift Pfizer's headquarters overseas through a mega-merger in part to benefit from a lower tax rate.
In 2016, Pfizer pulled the plug on a proposed $160 billion merger with Dublin-based Allergan after President Barack Obama adopted rule to prevent "inversion" deals meant to evade US taxes.
"I do believe Pfizer played a major role in placing a spotlight on the disadvantageousness of the US tax code for multinationals," Read said on an analyst conference call.
The drugmaker plans to invest about $5 billion on capital projects in the US over the next five years, including "the strengthening of Pfizer's manufacturing presence in the US," according to a press release.
A Pfizer spokeswoman said there was no detail at this point as far as how the announcement would affect specific manufacturing plants or hiring.
- Earnings surge on tax cut -
Pfizer reported fourth-quarter earnings of $12.3 billion, compared with $775 million in the prior year.
The huge jump was due to a one-time $11.3 billion boost from US tax reform based on Pfizer's "provisional" analysis of US tax reform effects on deferred tax liabilities "and subject to further analysis."
Excluding that one-time lift and effects from acquisitions and divestitures, net income in the fourth quarter was $3.8 billion, up 30 percent from the year-ago period.
Revenues were up one percent at $13.7 billion.
Products that experienced growth included Eliquis, which is used to treat an irregular heartbeat, the pneumonia vaccine Prevnar, and cancer drug Ibrance, although revenues from Ibrance missed some analyst expectations due to lower pricing in Europe.
These gains helped offset a $2.1 billion impact from lost marketing exclusivity in 2017 on other products, D'Amelio said.
Shares of drugmakers and other health related stocks were under pressure Tuesday on news business giants Amazon, Berkshire Hathaway and JPMorgan Chase are creating a company to address runaway health care costs.
Read welcomed the announcement by the three companies, saying any attempt to lower costs is "totally positive."
"It's encouraging that private actors are entering and encouraging for the use of modern pharmaceuticals," he said.
Shares of Pfizer fell 2.6 percent to $38.01 in late-morning trading.
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