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Pfizer Is the Latest Drug Maker to Reap Billions From Trump’s Tax Cuts

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.