Pfizer Profit Tops Views; Sales Flat on Competition from Generics
Dow component Pfizer said its quarterly profit more than tripled on the sale of its consumer health business, although revenue was flat amid lower sales of its Lipitor cholesterol fighter and generic competition for several medicines.
The drugmaker earned $9.45 billion in the fourth quarter, or $1.32 a share, compared with $2.73 billion, or 37 cents a share, a year earlier.
The results were due largely to Pfizer's $16.6 billion cash sale of its consumer health products, including Listerine mouthwash and Sudafed allergy drug, last month to Johnson & Johnson .
Excluding the sale and other one-time items, the world's largest drug maker earned 43 cents per share, representing a 12% decline. Analysts, on average, expected 42 cents, according to Reuters Estimates.
Despite its annual $7 billion research budget, Pfizer has been unable to launch enough drugs to offset sales declines of products facing generic competition. Fourth-quarter revenue from both its Zithromax antibiotic and Zoloft anti-depressant, for instance, plunged by more than 70%.
Monday's strategy meeting follows Pfizer's bombshell announcement on Dec. 2 that it halted studies of torcetrapib, a drug that raises "good" HDL cholesterol, due to safety concerns. Pfizer had been counting on the product to post future annual sales of more than $10 billion.
"While we attained nearly all of our financial targets for the year, we continue to face a difficult operating environment, including competitive challenges and the risks inherent in drug development," Chief Executive Officer Jeffrey Kindler said in a release.
Shares fell sharply on the torcetrapib setback, but have rebounded since the company on Dec. 18 boosted its quarterly dividend 21%.
But with torcetrapib's demise, Pfizer badly needs new products and revenue by the time Lipitor's patent lapses as early as 2010 and its sales -- now about $13 billion a year -- drop precipitously.
Meanwhile, Pfizer is counting on a major cost-cutting campaign to deliver earnings per share growth in 2007 and 2008, on average, in the high single-digit percentage range.
The New York-based company, which aims for annual cost savings of $4 billion by 2008, in November said it would cut its U.S. sales force by 20%, or 2,200 jobs.
As many analysts had expected, Pfizer announced an expanded restructuring plan at today's presentation. The company also gave new earnings guidance for 2007 and 2008.
Pfizer's fourth-quarter revenue of $12.6 billion was little different than the year-ago quarter.
Zithromax sales fell 73% to $109 million, while Zoloft fell 79% to $166 million.
Sales of Lipitor, which remains the world's top-selling drug, slipped 1% to $3.34 billion due in part to competition from far-cheaper generic forms of Merck's Zocor.
Impotence-treatment Viagra posted quarterly sales of $450 million, a 5% gain, while revenue from allergy drug Zyrtec jumped 14% to $374 million. Zyrtec is sold in partnership with Belgian drugmaker UCB.
Sales of arthritis treatment Celebrex rose 15% to $540 million, continuing its recovery from earlier declines that had been spurred by safety concerns.
Lyrica, used mainly to treat neuropathic pain caused by diabetes and shingles, more than doubled to $353 million. Pfizer disclosed it has asked U.S. regulators to also approve the medicine as a treatment for fibromyalgia, a pain disorder that predominantly affects women.