Wyeth Fourth-Quarter Profit Rises 17%, Cuts Outlook
Wyeth Thursday forecast flat revenue and lower earnings for 2008 due to suddenly erupting generic competition for its blockbuster Protonix heartburn medicine and assumptions about possible generic competition for other medicines.
The drugmaker also reported fourth-quarter earnings rose 17 percent on higher sales of its Enbrel arthritis drug and Prevnar vaccine to prevent childhood infections.
Wyeth forecast 2008 earnings, excluding special items, of $3.35 to $3.49 per share, a decrease of 1 percent to 5 percent from 2007. Analysts polled by Reuters Estimates, on average, forecast $3.51 per share.
The company's lower profit forecast hinges on keeping its research spending flat with 2007 levels and slightly trimming other expenses.
"This company is already spending below many of its competitors" on research as a percentage of sales, said Leerink Swann analyst Seamus Fernandez, expressing concern about the trend.
The lower earnings outlook follows the unexpected U.S. launches in recent weeks of three generic forms of Protonix. Protonix has been one of Wyeth's biggest products, with annual sales of more than $1.7 billion.
Late last month, Israel's Teva Pharmaceutical Industries introduced its generic despite an unresolved patent dispute with Wyeth.
Wyeth on Tuesday said it would introduce its own authorized generic form of Protonix, in view of Teva's move. India's Sun Pharmaceutical Industries then announced it had launched its own copycat in the United States.
Even before that setback, Wyeth had been beset by U.S. rejections or delays for drugs it had hoped would offset expected plunging sales of its anti-depressant Effexor when it faces U.S. generic competition by 2010. They include treatments for schizophrenia, depression, hot flashes and constipation.
Wyeth said fourth-quarter earnings rose to $1.02 billion, or 75 cents per share, from $855 million, or 63 cents a share, a year earlier.
Excluding one-time items, it earned 78 cents per share. On that basis, analysts' average forecast was 79 cents, according to Reuters Estimates. Wyeth said the results matched expectations, with any numerical difference explained by "rounding off" of calculations.
Quarterly revenue rose 10 percent to $5.76 billion, ahead of the $5.60 billion forecast by analysts. All three of the company's business units reported strong results.
"It looks like it was a decent quarter, not a great quarter," Fernandez said. He said sales of Protonix and Effexor were above his expectations, although the Protonix gains will be short-lived due to the generic onslought.
Quarterly sales of Prevnar rose 11 percent to $556 million.
Sales of Enbrel, which Wyeth sells outside the United States, jumped 36 percent to $565 million. Sales of Protonix rose 10 percent to $461 million.