Pfizer said quarterly earnings fell 18%, hurt by one-time charges and anemic sales of inhaled diabetes drug Exubera.
The world's largest drugmaker also warned its 2007 earnings will be below Wall Street expectations due to the unexpectedly swift introduction of cheaper generic forms of its hypertension treatment Norvasc. Pfizer also said 2008 revenue will be little changed from 2007, which itself was expected to be flat with last year.
Pfizer also warned that sales of its biggest product, cholesterol fighter Lipitor could have "modest growth to modest decline" this year because more U.S. patients than expected switched to cheaper generic forms of Merck's rival Zocor.
Pfizer posted net income of $3.39 billion, or 48 cents a share, in the first quarter, compared with $4.11 billion, or 56 cents a share, in the year-ago period. Excluding special items, New York-based Pfizer earned 68 cents a share.
Revenue rose 6% to $12.47 billion from $11.75 billion last year, as sales of the company's best selling drug, cholesterol reducer Lipitor, grew 8% to $3.36 billion. Price increases, fewer rebates and favorable foreign exchange rates made up for a decline in U.S. prescriptions for Lipitor.
Analysts surveyed by Thomson Financial expected earnings per share, excluding charges and gains, of 57 cents on revenue of $11.77 billion.
However, beating Wall Street estimates by 11 cents a share took a back seat to a $1.2 billion reduction in expected full-year revenue with the early loss of patent exclusivity for Pfizer's second best-selling drug, the blood pressure medication Norvasc.
In late March, a federal appeals court invalidated Pfizer's patent for Norvasc, allowing Mylan Laboratories to begin selling a generic version.
Generic Norvasc sales cut into about a week of Pfizer's sales in the first quarter.
Norvasc sales dropped 10% to $1.07 billion in the first quarter. The company had hoped to retain patent protection on the drug until September.
Favorable exchange rates will partly make up for lost Norvasc sales by adding $450 million to the company's revenue, Pfizer said. The weaker dollar makes Pfizer's products cheaper, and therefore more attractive, to international markets.
As a result, Pfizer forecast adjusted earnings per share of $2.08 to $2.15, down from a previous range of $2.18 to $2.25, with a 2007 revenue estimate of $47 billion to $48 billion.
Previously, the company had forecast 2007 and 2008 revenue comparable to 2006, when Pfizer booked $48.4 billion in sales. Adjusted earnings per share estimates for 2008 remain unchanged at $2.31 to $2.45.
Now, Pfizer forecasts 2008 revenue of $46.5 billion to $48.5 billion, given uncertainty over the status of the Canadian patent for Lipitor and the loss of an estimated $300 million in revenue from Norvasc, which will be partly offset by $450 million of sales stemming from the weaker dollar.
Analysts estimate adjusted earnings per share of $2.17 on revenue of $48 billion in 2007, and $2.32 on revenue of $47.37 billion in 2008.
"With regard to our near-term performance, apart from the impact of losing U.S. exclusivity for Norvasc six months earlier than expected and the uncertainty created by a recent adverse lower court decision regarding Lipitor patent protection in Canada, Pfizer's projected overall performance for 2007 and 2008 remains on track," said Jeffrey Kindler, chairman and chief executive, in a statement.
For the latest quarter, Pfizer reported a 22% rise in sales of the arthritis pain drug Celebrex to $598 million, an 11% increase in sales of the impotence drug Viagra to $434 million, and a sixfold increase in sales of the cancer drug Sutent to $102 million. Sales of the diabetic nerve pain treatment Lyrica more than doubled to $395 million.
Sales of the inhalable insulin treatment Exubera were "disappointing," the company said, not specifying dollar amounts. Pfizer said the updated guidance reflects the slower market acceptance of the drug.
Shares of Pfizer fell 3 cents to $27.04 in early trading on the New York Stock Exchange.