Domain: Finance
Question:
The CFO of J&J wants a detailed summary of how the company is performing relative to its closest peer, Pfizer. The information will be used for an internal earnings deck, which provides critical information to prepare for the public earnings presentation. To accomplish this task, analyze and provide a summary of financial and operating performance from 2023 to 2024 between Johnson and Johnson (J&J) and Pfizer per the below guidelines:

A) Rank the two companies on (i) a total basis and provide a ranking for (ii) each company’s most comparable business segments (further defined below). Explicitly state the rank order (1 = stronger, 2 = weaker).
B) Regarding item (ii) noted in point A, only rank the highest-level, comparable business segments among the two companies. For example, compare J&J’s Innovative Medicine segment with Pfizer’s Biopharma segment, because they are the most comparable across the two companies and they’re the highest-level groupings of underlying business segments, aside from the total company level
C) For the comparison of total company results, rank the companies by financial and operating performance
D) For the comparison of similar segments, rank each based on how their revenue has trended over the noted time period. Moreover, note for the user what the underlying drivers were
D) The above commentary for points A-E is to frame how to conduct the analysis, but in terms of the output provided to the user, provide sections for “High Level Summary” (which includes the analysis for the companies as a whole) and “Underlying Drivers” (which includes the deeper layer of analysis)
F) Explicitly flag when results are driven by one-time or non-recurring items (e.g., COVID write-offs, acquisition effects) and provide a brief normalization bridge to show how results would look on an underlying basis.

Expected points in a correct answer:
Concludes that from 2023 to 2024, Pfizer's reported financial and operating results outperformed Johnson and Johnson (J&J).
Provides a normalization bridge: clearly explains (at least directionally) how COVID swings and one-time items (e.g., Seagen acquisition, Paxlovid timing, 2023 write-offs) narrow the gap between Pfizer and J&J.
States Pfizer realized 6.8% YoY revenue growth.
States Johnson and Johnson realized 4.3% YoY revenue growth.
States on a reported basis, Pfizer's EPS grew 280%.
States Pfizer's EPS grew from $0.37 to $1.41, and clarifies that this rebound was amplified by Pfizer's unusually depressed 2023 base due to COVID-related charges.
States Johnson and Johnson had a 11.2% increase in EPS.
States Johnson and Johnson's EPS increased from $5.20 to $5.79.
States Pfizer's adjusted EPS improved 69%.
States J&J had a near flat increase of 0.6% for adjusted EPS.
States Pfizer's net margin improved ~1,020 bps and explicitly attributes the expansion to cycling 2023 COVID-related inventory write-offs (non-recurring), rather than implying it was a structural improvement.
States J&J's net margin had a (250 bps) decline.
States J&J experienced larger headwinds in 2024 relative to Pfizer from discontinued COVID-19 business.
States revenue in J&J's COVID-19 Vaccine division dropped (82%) YoY.
States Pfizer's Comirnaty product had a (52%) decline.
Identifies significantly higher YoY Paxlovid revenues as a driver for Pfizer's revenue outperformance.
States the higher Paxlovid revenues were largely due to one-time items recorded in 2023 and 2024.
Identifies the addition of legacy Seagen revenues in 2024 as a driver for Pfizer's revenue outperformance.
States the Seagen acquisition occurred in late 2023.
Identifies continued growth in Vyndagel as a driver for Pfizer's revenue outperformance.
States Pfizer's 2024 reported YoY favorability is partially driven by Cost of Sales.
States the Cost of Sales reflects cycling $6.2 billion of inventory write-offs.
States the write-offs were for their Paxlovid and Comirnaty offerings in 2023.
Identifies J&J's comparable high-level segment as 'Innovative Medicine'.
Identifies Pfizer's comparable high-level segment as 'Biopharma.'
States Biopharma's revenue growth of 7.1% outpaced Innovative Medicine's YoY growth.
States Innovative Medicine's YoY growth was 4%.
States the outperformance is largely driven by Pfizer's superior growth in the Oncology division.
States Pfizer's growth in the Oncology division was 25.4%.
States J&J's growth in the Oncology division was 17.7%.
States both companies had lower revenue for COVID-19 products.
States revenue for Pfizer's Comirnaty business declined (52.3%).
States the revenue decline of J&J's 'COVID-19 VACCINE' business was (82.3%).
Concludes Pfizer's Comirnaty business strongly outperformed the revenue decline of J&J's 'COVID-19 VACCINE' business.
States Pfizer's adjusted EPS increased from $1.84 to $3.11
States Johnson and Johnson's adjusted EPS increased from $9.92 to $9.98
States the explicit rank order (1 = stronger, 2 = weaker) for (i) total company results and (ii) comparable segments.