Good day, everyone, and welcome to Pfizer's 4th Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.
Good morning and thank you for joining us today to review Pfizer's Q4 and full year 2018 performance and 2019 financial guidance and business outlook. I'm joined today by our CEO, Albert Bourla Frank D'Amelio, our CFO Michael Dolsten, President of Worldwide Research and Development Angela Huang, Group President, Pfizer Biopharmaceuticals Group John Young, our Chief Business Officer and Doug Lankler, General Counsel. Slides that will be presented on this call can be viewed on our website, pfizer.com/investors. You'll see here that slide 3 covers our legal disclosures. Albert and Frank will now make prepared remarks and then we will move to a question and answer session.
With that, I'll now turn the call over to Albert Bourla. Albert?
Thank you, Chuck, and good morning, everyone. During my remarks, I will speak about our performance for the year, the continued advancement of our pipeline and the strategy we have put in place to return Pfizer to a period of sustained growth, following the impact of the Lyrica LOE that will negatively impact our growth in both 2019 2020. Frank will then provide details regarding regarding the Q4 and our 2019 financial guidance. Pfizer had another solid year in 2018. Revenues for the year were up 2% operationally.
We saw continued growth in several of our biggest selling medicines and vaccines in emerging markets and in biosimilars. These increases were partially offset by the EUR 1,700,000,000 in LOE impacts as well as decreases in the legacy established products portfolio in developed markets and in our sterile injectables portfolio, primarily due to continued legacy Hospira product shortages in the U. S. I will begin with a few words regarding the performance of each of our businesses, starting with Pfizer Innovative Health. This business had another strong year, growing its top line 6% operationally, thanks to the continued strength of several key brands, including Ibrance, Eliquis and Xeljanz globally and Prevnar 13 primarily in emerging markets.
I would also remind you that Viagra transferred from PIH to PEH at the beginning of 2018. So if you exclude Viagra from the calculation, the growth would have been 9% operationally. For full year 2018, Ibrance revenues were $4,100,000,000 which represented an increase of 32% operationally, While approximately 50% of eligible U. S. Patients are getting a CDK inhibitor in combination with endocrine therapy.
Many are still receiving endocrine monotherapy or chemotherapy. We continue to educate the oncology community about the benefits of Ibrance therapy. We remain confident in Ibrance leadership in the class based on the strength of our data, significant first mover advantage and most importantly, the continued positive patient experience with more than 200,000 patients prescribed the medicine worldwide since its launch. Our current growth driver for Ibrance remains outside of the U. S, particularly in developed Europe and Japan, and we had another quarter of solid growth here.
Ibrance has achieved reimbursement in the majority of international developed markets and despite increasing competition has maintained greater than 90 percent of total CDK class volume in these key markets. For Xtandi, Alliance revenues in the U. S. Were up 18% for the full year, and when combined with our royalty income on ex U. S.
Sales totaled nearly $1,000,000,000 in 2018. We are continuing to see an increased number of urologists prescribing Xtandi, and our launch of the expanded indication in non metastatic prostate cancer in the U. S. Following the July approval made it the first and only FDA approved oral medication for both onmetastatic and metastatic castration resistant prostate cancer. We continued to see growth in Xtandi throughout this year, and we remain focused on demonstrating the value of moving Xtandi into earlier treatment settings.
In December, along with our alliance partner, Astellas, we announced that the Phase III ARCHES trial evaluating Xtandi plus ADT in men with metastatic hormone sensitive prostate cancer met its primary endpoint, significantly improving radiographic progression free survival versus ADT alone. These data further differentiate Xtandi from the competition, both branded and generic. We are engaging global health authorities in discussions regarding the potential of an expanded indication for Xtandi, and we remain confident that Xtandi will be one of the pillars of our Calendly portfolio for years to come. For this year, Xeljanz had a tremendous performance with revenues increasing 33% operationally to 1 point $8,000,000,000 Our 4th quarter results continued a pattern of extremely strong performance for Xeljanz, with scripts up 35% compared with the prior year quarter. This was driven by continued growth in rheumatoid arthritis prescriptions as well as increased contributions from the drug's recent expansion into psoriatic arthritis and ulcerative colitis.
We look forward to these new indications, becoming even more meaningful contributors in 2019, particularly in ulcerative colitis. Eliquis had another strong year with Alliance revenue and direct sales growing 35% operationally to $3,400,000,000 Lastly, our consumer healthcare business grew 3% operationally for the year with revenues totaling $3,600,000,000 In December, we entered into a definitive agreement with GSK under which we have agreed to create a new consumer healthcare joint venture. We expect the transaction to close in the second half of twenty nineteen, subject, of course, to customary closing conditions, including GSK shareholder approval and required regulatory approvals. Turning now to Pfizer Essential Health. While revenues for the year declined, we once again saw strong operational growth both in emerging markets and in our biosimilars portfolio.
Emerging markets revenue for the business grew 11% operationally for the year to $7,800,000,000 Some of the biggest growth drivers in emerging markets were Lipitor, up 19% operational Norvasc, up also 19% operational and Sterile Injectables, up 13% operational. Our biosimilars business grew 41% operationally in 2018 to approximately $1,000,000 We received FDA approvals for 2 biosimilars in 2018, and we see the potential for up to 4 additional approvals in 2019. PEH growth in emerging markets and biosimilars was more than offset by lower revenues for our legacy established products portfolio in developed markets and product supply shortages in the sterile injectable business. In the U. S.
Sterile injectable business, manufacturing supply constraints continue to impact our top line. We expect these issues to be significantly improved by the end of 2019 and continue to expect this business to be a solid growth contributor in the future. As you are aware, as of the start of our 2019 fiscal year, Pfizer is now organized into 3 businesses: Pfizer Biopharmaceuticals Group, a science based innovative medicines business led by Angela Wang Apijon, an off patent branded and generic medicines business headquartered in China and led by Michael Gettler that is bringing 20 of our most iconic brands to more than 100 markets around the world and our consumer healthcare business, led by Chris Slager, which is preparing to become part of a joint venture I mentioned earlier. Now let me turn my attention to our R and D pipeline. This year, we saw a wave of new approvals from our pipeline, including 4 targeted cancer agents over the last 4 months of 2018.
In total, we received 7 key approvals in 2018 spanning both new molecular entities and line extensions, which will allow us to serve a broader patient population. In terms of the recent news, let me touch on some of the key milestones we have achieved since our Q3 call. In rare disease, NDA accepted our NDA filing for tafamidis for the treatment of ATTR cardiomyopathy with a PDUFA date in July. As a reminder, we estimate less than 1% of ATTR cardiomyopathy patients have been diagnosed. And currently, there are no approved treatments for this disease, making it an incredibly underserved market.
In oncology, we have several promising developments. We received FDA approvals for LoBrena, a 3rd generation ALK inhibitor for lung cancer and for Gerizmo for acute myeloid leukemia. In the oncology biosimilar space, we received a positive CHMP opinion for zirabeb, a potential biosimilar to Avastin. We have initiated clinical studies
for a
second cancer vaccine applicable in major solid tumor types, and we advanced a second CDK inhibitor for Ibrance resistant cancer into clinical studies. In vaccines, we started a Phase III trial for our next generation 20 valent pneumococcal conjugate vaccine for adults 18 and older. In inflammation and immunology, our JAK3 inhibitor for moderate to severe alopecia areata started a pivotal Phase IIbIII trial. In internal medicine, Pfizer and our partner Eli Lilly announced this morning positive top line results from a Phase III study evaluating tanezumab 2.5 milligram or 5 milligram in patients with moderate to severe osteoarthritis pain. Looking ahead, we see the potential in 2019 for several inflection points that will further advance our pipeline.
These include potential U. S. Approvals for a combination of Bavencio and Inlyta for first line renal cell carcinoma as well as for up to 4 biosimilars, rastuzumab, veracizumab, rituximab and adalimumab, which when taken together represent a potential blockbuster opportunity for Pfizer. We also expect Phase III readouts for rivapencil in single cell disease and for our JAK1 in atopic dermatitis as well as further Phase III data readouts for tanezumab, which has the potential to address the serious unmet needs of the more than 27,000,000 Americans living with osteoarthritis and the more than 33,000,000 suffering chronic low back pain. Thanks to these achievements and expected milestones, we believe we are extremely well positioned for what we expect to become an era of sustained top line growth with leverage to the bottom line growth rate, following the impact of the Lyrica LOE.
We view this as a significant opportunity because 3 very positive trends are intersecting at the same time. 1st, macro trends such as an aging population and the rising middle class in emerging markets, increasing the number of people seeking access to both innovative and established medicines. 2nd, the continued advancement of what we believe is the best pipeline in our history with good breadth and strong innovation. And finally, after Lyrica, we expect to enjoy the benefits of a dramatic abatement in LOEs until the second half of the next decade. Our job now is to stay the course, take the steps necessary to pivot to growth.
Our strategy for doing so can be summed up in 3 words: innovating for growth. This means we must advance both scientific innovation that significantly improves current standards of care and commercial innovation that addresses patient access and affordability issues. To deliver these innovations, we have taken steps to ensure we have the right organizational structure in place and that our resources are focused in the right areas. To improve operational effectiveness and create capacity for value creating work, we have reorganized our operations to simplify them. We are initiating an enterprise wide digital effort to speed up drug development, enhance patient and physician experiences and access and leverage technology and robotics to simplify and automate our processes.
And we are significantly reallocating capital across the enterprise by investing more aggressively in profitable growth drivers and reducing resources in areas of lower strategic importance. This includes significant planned reductions in indirect SI and A spending, much of which will be reallocated to R and D. And within R and D, the entire increase in spending will be project related with overhead costs actually anticipated to come down. In addition, of course, to all of this, we have the financial flexibility to continue to undertake additional shareholder friendly capital allocation initiatives. We see a growing dividend as an important part of our investment thesis.
We also have the ability to deploy capital as appropriate in other areas, whether that be share repurchases or business development initiatives, where at the current time, we are focused on smaller, tuck in type acquisitions and licensing opportunities for mid stage compounds. Of course, our business isn't without its challenges. Cost significantly, we need to ensure that our innovation and risk taking is rewarded in the marketplace while doing all we can to ensure affordable access for patients. This end, we continue to work with governments, policymakers, payers and other players in the health care ecosystem to advocate for pro innovation policies that benefit patients, our company and our industry as a whole. All the steps we are taking are designed to enable us to achieve our purpose of delivering breakthroughs that change patients' lives.
In summary, we see our improved growth profile coming more clearly into focus, and we believe we remain well positioned to deliver new medicines for patients, prepare the company for accelerated growth in the future and create enhanced shareholder value. I will now turn it over to Frank to provide details on the quarter and our outlook for 2019. Frank?
Thanks, Albert. Good day, everyone. As always, the charts I'm reviewing today are included in our webcast. Now moving on to the financials. 4th quarter 2018 revenues were approximately $14,000,000,000 which reflects operational growth of $657,000,000 or 5% and the unfavorable impact of foreign exchange of $383,000,000 or 3%.
Our Innovative Health business recorded 10% operational revenue growth in the Q4 2018, driven primarily by Ibrance in international markets, Eliquis and Xeljanz globally and Prevnar13 in the emerging markets, all of which were partially offset by the loss of exclusivity of Viagra in the U. S. In December of 2017 and the resulting shift in reporting of Viagra revenues in the U. S. And Canada to the Essential Health business at the beginning of 2018 and decreased revenues for Enbrel in most developed Europe markets, mainly due to continued biosimilar competition.
Revenues for our essential health business in the 4th quarter decreased 3% operationally, primarily due to 13% operational decline in the legacy established products portfolio in developed markets, driven mainly by industry wide pricing challenges in the U. S. And generic competition. A 14% operational decline the Sterile Injectables portfolio in developed markets, primarily due to increased competition across the portfolio and continued legacy Hospira product shortages in the U. S.
Over 10% operational decline in the peri LOE products portfolio in developed markets, mainly as a result of expected declines in Lyrica, Developed Europe and Pristiq, all of which were partially offset by the addition of Viagra revenues from the U. S. And Canada that were previously recorded in the IH business, a 10% operational growth in emerging markets, primarily reflecting growth across the LEP and SiP portfolios in China and operational growth of 31% from biosimilars in developed markets, primarily from Inflectra in certain channels in the U. S. In the Q4, we recorded a $0.07 loss per share compared with earnings per share of $2.02 in the year ago quarter is primarily due to the unfavorable impact of the non recurrence of a $10,700,000,000 benefit recorded in Q4 2017 to reflect the December 2017 enactment of the Tax Cuts and Jobs Act.
Higher asset impairment charges, primarily associated with generic sterile injectable products acquired in connection with Pfizer's 2015 acquisition of Astera and higher restructuring implementation costs, partially offset by the non recurrence of net losses on the early retirement of debt recorded in the Q4 of 2017 as well as higher revenues in Q4 of 'eighteen compared to last year. Adjusted diluted EPS for the 4th quarter was $0.64 versus $0.62 in the year ago quarter. The increase was primarily due to higher revenues and lower SI and A expenses. I want to point out that diluted weighted average shares outstanding declined by 152,000,000 shares versus the year ago quarter, due primarily to our ongoing share repurchase program, reflecting the impact of shares repurchased during 2018, partially offset by dilution related to share based employee compensation programs. As I previously mentioned, foreign exchange negatively impacted Q4 2018 revenues by approximately $383,000,000 and positively impacted adjusted cost of sales, adjusted S and A expenses and adjusted R and D expenses in the aggregate by $408,000,000 As a result, foreign exchange had a negligible impact on adjusted diluted EPS compared to the year ago quarter.
As you can see on this chart, we've met or exceeded all components of our 2018 financial guidance. Turning now to our 2019 guidance, I'd first like to note that our guidance reflects a full year contribution of revenue and expenses from consumer healthcare. Our revenue guidance of $52,000,000,000 to $54,000,000,000 reflects an anticipated $2,600,000,000 headwind from products that have recently lost or are expected to lose marketing exclusivity shortly, including the LOE for Lyrica in the U. S. In June 2019, as well as an anticipated $900,000,000 negative impact from unfavorable changes in foreign exchange rates relative to the U.
S. Dollar compared to actual FX rates from 2018, partially offset by continued strong growth expected from key product franchises, including Ibrance, Eliquis, Xeljanz and Xtandi as well as contributions from newly launched products and indications. Moving on to other elements of our 2019 financial guidance. Compared with 2018 actual results, the midpoints of these ranges imply higher adjusted cost of sales as a percentage of revenues, resulting primarily from the anticipated LLE of Lyrica in the U. S, lower adjusted SI and A expenses reflecting a 3% to 4% increase in direct spend for product marketing promotion being offset by a reduction in indirect spend and higher adjusted R and D expenses to support our late stage and emerging early stage pipelines.
In addition, we anticipate significantly lower adjusted other income this year compared to 2018. As I highlighted on our 3rd quarter earnings call, we expected the core components of other income, net interest income and expense, income from royalties and the VIV joint venture as well as our pension credit to net to approximately flat or 0. We have since refined our forecast and are now estimating approximately $100,000,000 of income for 2019. This is approximately $1,200,000,000 less than 2018 adjusted other income, which included $586,000,000 of net gains on equity investments as well as $464,000,000 of income from collaborations, out licensing arrangements the sale of compound rights. In 2019 and forward, we will exclude gains or losses on equity investments from adjusted results because of their inherent volatility and because we do not believe they reflect the results of our core business.
As we report our quarterly results in 2019, the 2018 adjusted results will be presented excluding these gains, While income from collaborations, out licensing arrangements and the sale of compound rights will remain in adjusted results, our guidance does not assume any potential future milestone income until it is actually recorded. We expect our effective tax rate on adjusted income to be approximately 16%, which we believe is sustainable for the foreseeable future. We expect 2019 adjusted diluted EPS to be in the range of $2.82 to 2.92 dollars As I just mentioned, this range now excludes gains and losses on equity investments, which favorably impacted 2018 adjusted diluted EPS by $0.08 This range also reflects an anticipated $0.06 negative impact from changes in foreign exchange rates and expected share repurchases of approximately $9,000,000,000 in 2019. Now I want to highlight how our 2019 guidance compares to 2018 revenue and adjusted diluted EPS. The midpoint of our 2019 revenue guidance, excluding the anticipated $900,000,000 negative impact from foreign exchange, implies flat to slightly improved operational performance compared to 2018 despite facing an anticipated $2,600,000,000 of LOE headwinds this year, which is $900,000,000 more than 2018.
On adjusted diluted EPS, the midpoint of our 2019 guidance, excluding the anticipated $0.06 negative impact from foreign exchange also implies comparable operational performance compared to 2018 after removing the $0.08 gain on equity investments. I want to highlight that despite the significant challenges of the Lyrica LOE this year, we expect our 2019 operational performance for revenues and adjusted diluted EPS excluding foreign exchange to be comparable with 2018. Moving on to key takeaways, we delivered strong Q4 2018 financial results with 5% operational revenue growth and 3 adjusted diluted EPS growth compared to the year ago quarter. Our 2019 financial guidance ranges imply comparable operational performance to revenues and adjusted diluted EPS when excluding the impact of foreign exchange and 2018 net gains on equity investments despite the anticipated loss of market exclusivity in the U. S.
For Lyrica on June 30, 2019. We accomplished multiple product and pipeline milestones since our previous quarterly update and we returned $20,200,000,000 to shareholders in 2018 through a combination of dividends and share repurchases. Finally, we remain committed to delivering attractive shareholder returns in 2019 and beyond. Now I'll turn it back to Chuck.
Thank you, Frank, and thank you, everybody. Operator, can we please poll for questions now?
Your first question comes from Steve Scala from Cowen.
Thank you very much and congratulations on a strong twenty 18 and a solid 2019 outlook. Couple of questions. First, to clarify, has Bavencio Plus Inlyta been filed in first line renal cell? And if yes, was this based on the PFS data or was OS met since ESMO? And if only PFS, then how will the regulators view this given the KEYTRUDA plus Inlyta achieve both PFS and OS?
So that's the first question. 2nd question is, can you craft an expectation for us for the tafamidis rollout? Will this be more like a traditional cardiovascular rollout, which can be sluggish or more like a novel orphan drug filling an unmet need, which can be much more rapid? Thank you very much.
Thank you, Steve. I think maybe John can answer the Bavencio Inlyta question.
Yes. Thanks for the question, Steve. So we obviously only confirm filing when it's formally a filing has formally been received by the FDA. So what I can say at this point in time is that we're in the filing phase for that study
Sure. So we're really excited about the potential launch of tafamidis for ATTR cardiomyopathy. We do see this as a rare disease, but it is a severely under diagnosed rare disease, particularly because there is no treatment today and diagnosis involves the use of invasive heart biopsies. We know that from autopsy data that there are probably 100,000 potential patients in the U. S, the prevalence of this disease.
But we also know that only about 1% of these patients are diagnosed today in the U. S. So really from a launch perspective, diagnosis is going to be a key focus of our launch plans. And in this regard, diagnosis and market development is a key area for Pfizer, is a key area of expertise for Pfizer. Let's just take example, the diagnosis of the ALK mutation for Xalkori in non small cell lung cancer.
At the launch of Xalkori, the diagnosis rate here was about 1%, but we know that today it has reached diagnosis rates of 80% 90%. So we have a strong record of success in developing new markets across not just the ALK example, but many therapeutic areas. But the one thing we've also learned from this is that it does take time. So our launch is going to be focused on a number of factors. 1st, in creating suspicion for this disease by both cardiologists as well as patients through education around the symptoms of cardiomyopathy.
In parallel, we also want to increase the utilization of non invasive scintigraphy versus heart biopsy as a means of diagnosis. We know that there are about 15,000 scintigraphy machines in the U. S. Today, and these machines are already being used routinely to diagnose other cardiac diseases. So we know that this is a routine procedure and it is already reimbursed.
So when we look in totality, what we see for tafamidis is the following. We have excellent data. We have compelling patient benefit. We have deep expertise and commercial footprint in cardiology. We also have a track record of success in creating new markets, and we plan to bring all of this to bear in diagnosing and treating the cardiomyopathy patient.
Thank you, Angela. And needless to say that for both Bavencio and Inlyta and Tafamidis, we are really very excited about the future based on the strength of the data of both studies.
Right. Thank you. Next question please, operator.
Your next question comes from Umer Raffat from Evercore.
Hi, thanks so much for taking my questions. First, just wanted to since this has been such a topical thing, your commentary on large M and A, maybe for the broader audience, can you reiterate your thoughts? I'd be very curious what your preferences are on large versus mid and how you define smaller acquisitions in terms of dollars. 2nd, just quickly on R and D. On tafamidis, my question I guess is, there wasn't a free acid couldn't you have developed a free acid form for 20 milligram also?
And I asked because presumably that could have helped with the European pricing structures given your existing 20 milligram approval there? And finally, Frank, just your thoughts on absolute SG and A and R and D dollar changes in the next 5 year timeframe, just mostly trying to understand your thought process on operating margin evolution post Theraqa?
Thank you very much, Omer. I will recap my thoughts on M and A and then Michael can deal with the R and D question about tafamidis. Look, as we have said consistently and we started saying that from the Q2 last year and the Q3 last year and now we are repeating in the Q4 earnings call. Business development is not a strategy. It is a way to execute your strategy.
And our strategy has been very clear. Our strategy is top line growth through the introduction of breakthrough medicines, and we summed it, as I said in my comments, into innovating for growth. And we believe that right now, we are very well positioned to achieve this strategy because of the combination of one virtual LOE free period after the Lyrica LOE until 2025, the mid of the decade, and also the introduction of a great pipeline, what we think is the greatest pipeline ever. So with that in mind, when we have the right hand to play, what we need to do is to make sure that we maximize the chances of achieving the potential that those new launches are expecting to bring. And this means that execution is extremely important.
Right now, execution can make the difference. And the large M and A is not that we'll not add right now much in our growth profile, but it could take derail us from execution because a large M and A requires thousands of people to work together just to integrate the 2 companies. That being said, first of all, we never say never, so we are examining all opportunities. And also, we do plan to deploy capital to enhance our growth profile. It's just that this time, the capital that we plan to deploy has a very different slightly different lack of revenue growth and we needed to bring either pieces that could enhance the strategy to break the company at that time or we could bring revenue streams that will enhance the growth profile that was actually very bad at the time.
Right now, the dogma is changing, and it is how can we bring assets to enhance even further our pipeline to make our growth sustained. And because we have a very strong R and D machine that right now I fully trust their ability to choose assets and also develop them, This is why our strategy is to deploy capital towards this direction. As I said though, we never say never and of course, we will never lose our flexibility deploy capital if you see the opportunities in the best way to achieve our balance. And with that, I will ask Michael to comment.
So thank you for the question. We have under breakthrough designation, mood, tafamidis registration and the 20 milligram formulation for once a day administration was the one used in the clinical studies, and it has priority review, and Albert pointed out potential FDA action date in July. We have also filed a 61 milligram formulation that we think is a very convenient alternative that is under standard review as expected and would potentially be approved in the fall. This would offer patients the very best choice is for a therapy that has this really strong data set and the consistency in core myopathy.
And also I would ask Frank to comment on the question about SI and A and R and D expenses. Yes.
So if you think about SI and A, we've printed what $14,200,000,000 in 20 18. We guided to $13,500,000,000 to $14,500,000,000 So the midpoint is $14,000,000 couple of $100,000,000 lower than what we showed in 2018 on actuals. And we actually swung a few 100,000,000 from indirect SI and A to direct SI and A. So on SI and A, as we're working our way through the Lyrica patent cliff. So think about that will take place in 2019, 2020.
We'll remain tough on SI and A. On R and D, as you look at R and D, we guided $7,800,000,000 to $8,300,000,000 We spent about $8,000,000,000 last year. We'll watch the R and D number, but given how our late stage pipeline we expect to grow, we think that R and D will continue to grow. Once we get past Lyrica LOE, we get into 2021, where 2020 is the base, We expect that top line to grow in the mid single digits and we will make sure we leverage that relative to the bottom line, get operating leverage margin expansion so that the revenues are growing at a rate that's more than what the expenses are.
Thank you very much. And I see, Michael, do you want to make a comment?
I just wanted to make sure since your head is keen. Formulation interest, Umer, that the 61 milligram free acid formulation is equivalent to the 80 milligram top dose that we used in the clinical trial. So that will be a single tablet as an alternative and potential available latest for pending review. But there's no difference in dose.
It is just the dosage form. Perfect. Thank you. Thank you.
Next question please, operator.
Your next question comes from Chris Schott from JPMorgan.
Great. Thanks very much for the question. So I just 2 here. The first was on tanezumab. Can you just talk about the profile that you see emerging from these first two studies?
I guess specifically on RPOA Type II and this case of osteonecrosis. I guess my understanding you've had some dialogue as you're starting these studies on acceptable levels of these signals. Can you just confirm that what you're seeing so far is at least below what you think is an acceptable threshold in terms of safety? And then my second question was about Xtandi and key drivers going forward. And here, I guess, are you seeing the traction you'd hope to see with the label expansion?
And do you expect any impact as we think about generic ZYTIGA looking out into 2019? Thank you.
Thank you, Chris. Let's have John start with tanezumab answer the tanezumab question and then maybe Michael can jump in. And then Angela, can you please take the Xtandi question?
Okay. Thanks for the question, Chris. So let me just sort of context that just by saying from our review of the two studies that I've read out to date, we continue to believe that tanezumab has the potential to offer a new non opioid treatment with sustained efficacy for moderate to severe OA osteoarthritis and chronic lower back pain patients who are not receiving adequate relief or can't tolerate other analgesics and also for our cancer pain patients. And those are the patient populations in our pivotal studies. We also see that tanezumab has the potential to address serious high unmet need for those patients.
We estimate that there are around 27,000,000 Americans living with osteoarthritis, 33,000,000 patients living with chronic lower back pain and many of those patients failed to achieve adequate pain relief despite treatment with various types of pain medications. Additionally, we also know that the misuse of an addiction to opioids leads to more than 115 deaths every day in the United States. And it's estimated that 21% to 29% of patients prescribed opioids for chronic pain misuse them and 8% to 12% develop an opioid use disorder. So we remain encouraged by the emerging clinical profile for tanezumab, although we recognize that many questions still need to be answered. Last year we saw data from 1 Phase 3 OA study, which was Study 1056.
That population represented about 10% of the total number of patients in our Phase 3 program, which overall includes 6 Phase 3 studies in around 7,000 patients in osteoarthritis, chronic lower back pain and cancer pain. So today's study we announced earlier on today, we shared top line results from our 2nd Phase 3 OA study, which is 1057. And that population represents another 12 percent of the total number of patients in our Phase 3 program. So in summary, I would say we continue to see datasets readout. We have more than 3 quarters of the total number of patients in our Phase 3 program still to readout, although the profile is emerging.
And as I say there are many questions that we still need to answer about the profile of the product. But overall we remain very positive. But Michael,
Rejor. That was a terrific overview of why we are excited about this new emerging potential pain drug class for patients in great need for new opportunities to treat difficult disease. With the 1057 study, it was as we have projected and believe to expect RPOA in low single digit percent. In 1057, it was just above 2% versus 1056%, above 1%. This is the range that we have assumed will come out in these trials.
And across now 1,000 patients, we have RPOA at 1.7%. Within the RPOA, I just wanted to punctuate that the majority of them are of type 1, the milder case with only joint narrowing joint space narrowing and an infrequent symptomatology. And only 1 third of them about are of a type with more significant radiological changes. Finally, we had one case of osteonecrosis, which is in line with our expectation that it's going to be a rare event. We have now more than 1,000 patients in osteoarthritis treated with tanezumab, which gives us quite good opportunity to see an emerging drug profile with robust efficacy and as expected adverse event profile that for these patient types seems to me provide really favorable benefit to risk given the alternative treatments of few and would offer a way for us to treat difficult pain, avoiding abuse dependencies such as with opioid.
And let me just conclude and say, please remember that the type of patients in 105756 have been through at least 3 different classes of analgesics and on average had OA for more than opportunity to treat their disease. And let me conclude with reminding you that total joint replacement was similar across placebo and tanezumab treated, again, an important finding for us.
Thank you very much, Michael. And Angela, key drivers of growth for Xtandi, please?
Sure. So let me begin by talking a little bit about how well Xtandi did in 2018 and how pleased we are with its performance, but also very optimistic about its future. As you heard Albert say, it is Xtandi is one of the pillars of our oncology business. So full year 2018, we grew 18%. Q4 versus Q4 2017, we grew 12%.
And if you include royalty revenues, Xtandi actually achieved over $1,000,000,000 in 2018. But when we step back and take a look at its growth strategy, I would describe it as follows. First, it's our base business in metastatic castrate resistant prostate cancer. This was our first indication and our growth strategy here has been focused on driving uptake among urologists and we're really pleased with the progress that we've seen here. Today, more than 30% of our new scripts are written by urologists, and we're continuing to see market share growth segment.
The 2nd segment and growth segment is the non metastatic castrate resistant prostate cancer segment. And this is the PROSPER data. And we've seen very positive trends here as well since the launch of PROSPER in July of 2018. Just in 6 months, our market share is quadruple that of Erlida. Or if you look at it a different way, it's equivalent to the combination of chemo use and Erluda combined.
You may not it in total sales yet, but that's because the new patients are coming into therapy, new patients are coming every day. So you may not see the full impact of this pool of patients, which is still accumulating. So it will take time to realize. Finally, loss opportunity, and the one that we're really excited about is in the hormone sensitive prostate cancer patient population, because this is where the duration of therapy will be the longest. And here there are 2 patient segments.
The first is based off of our ARCHES data. It's the metastatic hormone sensitive patient and there are about 38,000 new patients coming in a year. As you know, the results of ARCHES was announced in December and it will be presented at ASCO in February. We look forward to our discussions with the FDA to potentially support an expanded indication for Xtandi here. The second segment of growth is going to be in the non metastatic hormone sensitive patients.
In here, there are about 30,000 new patients a year. This is being studied in the EMBARK trial, which we'll read out next year. So in totality, we believe that we have excellent data and we also have the potential for new indications and this will enable Pfizer to make significant impact on patients' lives, but importantly to change the standard of care for prostate cancer. You also asked a question on ZYTIGA generics to have a minimal impact on our business. Typically, generic impact is greatest with the originator brand.
In this instance, Xtandi also has indications that are different from ZYTIGA. And in addition to that, our dosing frequency is different. We also don't have the requirement for steroid coadministration and we also have differences in our monitoring requirements. So I think that all of these will stand well in terms of making switching less likely and for the impact on Xtandi to be minimal as we expect.
Thank you, Angela. And as I said before for the Bavencio, Inlyta and Tafamidis products, equally excited about tanezumab and the Xtandi, particularly with the new indications that are coming.
Your next question comes from Alex Arfaei from BMO Capital Markets.
Great. Thank you very much. First on Xeljanz, you obviously have strong momentum there. You have a formidable competitor coming expected this year. They have a lot of rebates leverage.
You have more JAKs coming, TNF biosimilars, TYK2. Obviously, a lot of activity in this market. So I'm just wondering how you're thinking about the commercial dynamics in major immunology markets? And then a follow-up in emerging markets, obviously, very strong performance by your legacy products like in cardiovascular disease, Lipitor and so on. I'm just wondering how sustainable is that in your view?
Thank you very much.
Yes. On Xeljanz, I will ask Angela to comment, but just to make an initial comment that Xeljanz already has this year $1,800,000,000 So Xeljanz already have crossed the threshold, but it is quite important to be able to be stopped by exclusionary practices that maybe leaders can have in contract. But I will ask Angela to comment on the growth prospects of Xeljanz in 2019 and beyond.
So first of all, just beginning with 2018, as Albert said, I mean, tremendous growth that we've seen in Xeljanz, 37% growth Q4 over last year Q4. And particularly in the U. S, really strong double digit growth, about 20 6%. What we're seeing here in Xeljanz, and I'll start with the U. S, is really the mobilization of all of the indications for Xeljanz.
We see strong uptake for Xeljanz in rheumatoid arthritis and a really great experience and I think in comfort by rheumatologists in prescribing Xeljanz. So just as an example, about 53% of U. S. Patients now are using Xeljanz without methotrexate as monotherapy, which is just great progress in terms of, I think demonstrating the confidence that rheumatologists have with Xeljanz. But what we also saw towards the end of last year was the launches of PSA and UC.
And another example here of the growth that we've experienced, in terms of the Q4 volume growth, a third of that volume growth came from these two new indications. And just as another example of why we're excited about these new indications, in UC, specifically, our early data shows that we've also recently surpassed SymPony in terms of new patient market share. So I think in the U. S, we continue to see a tremendous growth possible across all of these indications. And as you know, we have other indications that are part of our lifecycle management that we will be continuing to work on.
Globally, we have launched RA, UC as well as PSA, but what we are in the middle of is gaining reimbursement for these new indications. We're encouraged by recent signs from payers of their acceptance of Xeljanz in these new indications, such as the NICE approval that we got in 2018 for both UC and the PSA indications. For MedMet, when we sort of bring together all of these indications, RA, which is our base business, but now tagging on UC and PSA, we see between both of two new indications, a market that's approximately $10,000,000,000 large. And I think over time with reimbursement, but also the increased comfort level and experience that rheumatologists, gastroenterologists will have with prescribing Xeljanz, we expect to see continued and strong growth from this franchise. I think you asked a question about competitors as well.
And certainly, this is a class that is hugely competitive. But I think that Pfizer's long experience and I think a track record of success in JAK Science as well as our deeply entrenched and commercial footprint in rheumatology and now in gastroenterology will stand us well as we deal with this increased emerging
markets is emerging markets is and will continue to be a key strength for us and the key pillar of growth and particularly in the context of the new reorganization. Let's not forget that a very big part of the emerging markets business has become part of the Upjohn group. And this is this was exactly engineered so that we will be able to maximize the growth and particularly in areas like Asia and particularly China, but they have the biggest potential. But Frank, why don't you give us some numbers to color the picture?
Sure. So Alex, emerging markets for the quarter, dollars 3,300,000,000 in sales for the year, dollars 12,650,000,000 in sales, each up 13% on an operational basis, strong performance. China for the quarter the year, more than 20% growth. So you asked what do we expect going forward? We believe we can continue to grow emerging markets in the low double digits on a going forward basis.
Thank you. Next question please, operator.
Your next question comes from Vamil Divan from Credit Suisse. Great.
Thanks so much for taking my questions. So So one, just around 2019 guidance. Can you just elaborate a little bit more what you're assuming in terms of net price increases in the U. S. Into that guidance?
And maybe just with all the discussions out of D. C, are there any significant changes that you're assuming may take place in the 2019 timeframe? And then just the second one is more on the oncology side. Any update around when we might see some of the adjuvant breast cancer data from Ibrance? I know that's a key part of the next sort of part of the growth story for that franchise.
So maybe you can share anything there. And then similarly with Bavencio, we did some work around the immuno oncology, advent opportunity. And it doesn't look like there's a lot of work being done with Bavencio there. Maybe you can just comment on any advent opportunity for that product. Thanks.
Right. On 2019 guidance and the pricing, I will ask again Frank to run some
of the numbers. Sure. So Vamil, in terms of price in the U. S. For 2019, we assume that price will be flat and worldwide, we're assuming price that's in the negative low single digits, so minus low single digits and U.
S. Flat.
And I just want to make a comment here, but it's very clear that pricing is not going to be a growth driver for us now and I think in the future. It's very clear. So this is all included in our guidance and is also included in our projections for mid single digit growth post Lyrica LOE for the 5 years. And that will come from breakthrough medicines and based on volume rather than in price increases. And with that, the oncology question about Ibrance, let me pass it to Angela, please.
Sure. So we're really excited about the adjuvant opportunity. And as you said, it is the third part of our growth strategy. So a very important part of our growth story for Ibrance, but also for oncology in general. The two studies, PENELOPE and PALLAS, are the studies that we are looking forward to.
Both of them are going well and have recruited faster than expected. And these studies are important because they give us the potential to double the number of patients that are eligible for Ibrance. But we have to remember that these studies are event driven and based on our projections should read out sometime next year. So I think more to come on that as we progress through the clinical trials. And then I think you had a second question on
Pavenger, I think John maybe can take it and then you can add Angela. Okay.
Yes. Thanks for the question, Vamil. So we're obviously continuing our effort with the execution of the avelumab development program. It includes 30 ongoing studies, 7 of which are potentially registration enabling involving more than 9,000 patients across 15 tumor types. I think it's always important when we talk about IO to say that we have always recognized, believe that the real value of IO is expected to be an effective combinations.
And we believe that solid preclinical science where we're in a good position to be competitive in a number of tumor types, it really underpins our development strategy. One example of that that I think Albert has already commented on is the JAVELIN Renal-one hundred and one trial, a combined Bavencio with Inlyta in previously untreated advanced renal cell carcinoma patients. And the combination provided superior progression free survival compared to Suten. There are 2 additional immunotherapy Phase 3 studies ongoing including axitinib with pembrolizumab in first line renal cell carcinoma, which is a study sponsored by MSD and also enzalutamide and atezolizumab in CRPC which is sponsored by Genentech and Roche. But I think in terms of the wider development program which is kind of where you're driving, we're currently testing up to 10 Pfizer combinations with checkpoint inhibitors, including 5 targeted Pfizer therapies.
We also have a number of studies combining velemaV and talazoparib across a range of indications. So that really speaks to just the way that we see Bavencio as being potentially valuable therapy in some important areas of high unmet need for patients where we believe combinations could really advance standard of care.
Thank you.
Great. Thank you. Next question please operator.
Your next question comes from Tim Anderson from Wolfe Research.
I have
a few questions. I don't want to put the cart before the horse on this, but 2020 consensus has earnings growth nearly flat. There are a variety of pushes and pulls. You're launching new products. You have some strong growing in line brands, but you still have Lyrica LOE spilling over into 2020.
I'm wondering if you can comment on how you kind of view where consensus sits on the earnings line. Is 2020 likely to be a flattish year as well? Why different in 2019 versus 2018? Was that at the advice of your accountants or the IRS or someone else? And then last question on the JAK1 inhibitor for atopic derm, you have a Phase 3 reading out in 2019.
Can we assume you'll need 2 Phase 3s for approval in that indication? And when would the second one read out if it does require to?
Thank you. Frank, why don't you deal with the question about the consensus and the OID? And then Michael can discuss the JAK1 Phase 3 study.
So first, Tim, on the OID question, now that was my decision in terms of taking the gain or loss on equity securities equity investments out of adjusted income. New accounting was put in place on this in the beginning of 2018 in terms of realizing or booking gains and