Pfizer Tops Views; Shares Pressured by Sector Selloff
PfizerWednesday reported a higher-than-expected fourth-quarter profit, helped by lower taxes, a weak dollar and growing demand for its drugs for nerve pain, kidney cancer and smoking cessation.
After initially rising on the earnings news, Pfizer shares were recently trending lower as investors sold off drug stocks for the second day in a row on fears about the health of the U.S. economy.
Earnings for Pfizer, the world's largest drug maker, fell to $2.88 billion, or 42 cents per share, from $9.45 billion, or $1.32 per share, a year earlier, when Pfizer reported a big gain from the sale of its consumer health business to Johnson & Johnson .
Excluding special items, earnings were 52 cents per share.
Analysts on average had forecast 47 cents, according to Reuters Estimates.
New York-based Pfizer raised the lower end of its 2008 profit forecast, which excludes special items, to $2.35 per share from $2.31 while keeping the top end at $2.45. Reuters Estimates' average earnings outlook was $2.35.
Pfizer in the past year has cut more than 10,000 jobs and is paring other costs to keep earnings growing amid generic competition for several of its former blockbusters, including antidepressant Zoloft and blood pressure treatment Norvasc. It is also tightening its belt ahead of the U.S. patent expiration, possibly by 2010, for its Lipitor cholesterol fighter.
Quarterly company revenue rose 4 percent to $13.1 billion, well above the Reuters Estimates forecast of $12.18 billion.
But revenue would have declined by 1 percent if not for the weak dollar, which raises the value of sales outside the United States.
"With strong product performance, cost reductions, improved productivity and the benefits of foreign exchange, we achieved both revenue and (earnings) growth despite losing U.S. market exclusivity for Norvasc and Zoloft," Pfizer Chief Executive Jeff Kindler said in a statement.
Sales by Product
Global sales of Lyrica, which treats pain caused by shingles and fibromyalgia, leaped 60 percent to $564 million in the fourth quarter, making it the standout among Pfizer's relatively new medicines.
Sales of Sutent, recently launched to treat kidney cancer, jumped 75 percent to $182 million. Revenue from Champix more than tripled to $311 million despite warnings that the smoking-cessation pill may cause depression and suicidal behavior.
Arthritis treatment Celebrex continued to rebound despite concerns about cardiovascular risk, with sales jumping 18 percent to $637 million. Anti-impotence pill Viagra's sales rose 10 percent to $498 million.
Although global sales of Lipitor rose 3 percent to $3.43 billion, they would have fallen 1 percent without the positive foreign exchange factors. Its global sales fell 2 percent to $12.7 billion for the full year, hurt by competition from inexpensive generic forms of Merck's Zocor.
Pfizer said a favorable tax rate of 18.2 percent, compared with 21.7 percent for the year-ago period, helped bolster results.
As Lipitor's patent expiration approaches, Pfizer is aggressively forging development deals with smaller drug makers following more than five years of limited success by its own far-flung laboratories in producing big-selling medicines.
But the company in October acknowledged a major setback by ending its involvement with Exubera, the first form of inhaled insulin, after doctors and patients shunned the product. Pfizer had introduced the drug in partnership with Nektar Therapeutics.