Pfizer, the U.S. drug giant behind blockbuster treatments like Viagra and the pneumonia vaccine Prevnar, reported fourth quarter 2017 earnings which easily beat Wall Street analyst expectations, including a massive $11 billion boost from President Donald Trump’s new tax cuts. Pfizer stock initially gained on Tuesday morning before dropping by about 3%.
Pfizer’s financial fortunes were boosted by strong demand for flagship drugs like Prevnar, the rheumatoid arthritis treatment Xeljanz, and the blood thinner Eliquis. But the $11.34 billion gain from the new tax law made up the vast majority of its reported $12.27 billion fourth quarter profit. The company also announced a full year revenue forecast range of $53.5 billion to $55.5 billion.
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As for the broader effects of the GOP tax law, Pfizer said that it would pay $15 billion in taxes over the next eight years in order to repatriate overseas cash as its effective tax rate falls from about 20% to 17%. Furthermore, the company announced that it would be using some of its new tax gains to invest in manufacturing and employee pension plans, as well as $100 million for a one-time bonus to non-executives this year.
A string of companies have announced one-off bonuses and foreign cash repatriation in the wake of the tax law—drug makers in particular. Last week, Johnson & Johnson said it would take a $13.6 billion charge to bring back billions in overseas cash, which would then be used to fund operations and pay down debt.