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Drugmaker Wyeth on Thursday posted a 13 percent jump in second-quarter profit, trouncing Wall Street forecasts, as cost cuts overcame lower sales due to generic competition and the strong dollar.
The maker of children's vaccine Prevnar and antidepressant Effexor also hiked its 2009 profit forecast.
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CNBC.com Wyeth Earnings |
Madison, N.J.-based Wyeth [WYE
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], the world's No. 12 pharmaceutical company by sales, is being bought by No. 1 drugmaker Pfizer [PFE
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] this fall for $68 billion — the industry's biggest acquisition this year.
Wyeth said its net income amounted to $1.27 billion, or 94 cents per share. That's up from $1.12 billion, or 83 cents a share, a year earlier.
Without $44.9 million in restructuring costs and $21.2 million in costs for the acquisition by Pfizer, income would have been 98 cents per share. That was 13 cents more than Wall Street expected.
Revenue was down 4 percent, to $5.7 billion from $5.95 billion, as the strong dollar reduced worldwide revenue by about 6 percentage points.
Analysts polled by Thomson Reuters were expecting revenue of $5.58 billion.
Meanwhile, Wyeth raised its 2009 profit forecast to a range of $3.48 to $3.58 per share, from a range of $3.33 to $3.53.
Wyeth shares rose 31 cents to $47.17 in morning trading.
On Monday, Wyeth shareholders voted overwhelmingly to approve the Pfizer deal, which still requires approval by antitrust regulators in the U.S. and a few other countries. The two companies are working on selling parts of their animal health businesses, in the European Union and possibly elsewhere, to gain approval.
"We remain focused on delivering strong performance as we work with Pfizer toward the successful integration of our two companies," Wyeth Chief Executive Bernard Poussot said in a statement.
Poussot will be leaving after the deal closes, late in the third quarter or in the fourth quarter, but eight other senior Wyeth managers have been chosen for the Pfizer team, in research and development and commercial operations, Wyeth Chief Financial Officer Greg Norden said.
"Wyeth has delivered yet another strong quarter in challenging times," he told analysts during a conference call, referring to the global recession, generic competition, unfavorable change rates and other factors.
A jump of nearly $200 million in other income, to a total of $243 million, also helped. That item included $145 million in royalty income from former or licensed products, including an unspecified, one-time payment of $109 million, plus improved investment performance over 2008 and $65 million in income from a hedging program meant to offset effects of currency fluctuations.
Wyeth's key growth drivers, such as Prevnar and biologic rheumatoid arthritis treatment Enbrel, did well in the quarter, said Joe Mahady, president of Wyeth pharmaceuticals.
Excluding currency effects, sales jumped 24 percent to $783 million for Prevnar, the world's top-selling vaccine. It protects against pneumonia, meningitis and other pneumococcal diseases.
Sales of Enbrel outside the U.S. were up 21 percent, excluding currency rates, at $736 million; in the U.S. and Canada, where Wyeth splits sales with Amgen [AMGN
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], Wyeth's share was up 7 percent at $304 million. Sales rose 9 percent both for Wyeth's hemophilia medicines, which brought in $248 million, and for the nutritional products, which made $436 million.
However, sales were down 22 percent, excluding currency effects, to $772 million for blockbuster antidepressant Effexor, which now has generic competition in some other countries.
"Our new products are making measurable contributions," Mahady added, with Wyeth getting a combined $175 million from four products, including antibiotic Tygacil and kidney cancer drug Torisel.
Wyeth now is increasing manufacturing capacity for the nutrition products, building one new factory and expanding two others in Asia.
For first six months, net income increased 6.5 percent to $2.47 billion, or $1.83 per share, from $2.32 billion, or $1.72 per share, in the first half of 2008.
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