Pharmas Market with Mike Huckman

Pfizer And Lipitor: Prescription For Big Loss


in Pfizer's earnings report today. Well, the world's biggest drug company, is having major problems with the world's biggest-selling drug.Lipitor sales fell a surprising 25% in the U.S. and 13% worldwide in the second quarter.And the company says for the full year revenue from the cholesterol fighter could be down as much as 5%.

Goldman Sachs pharmaceuticals analyst, James Kelly, estimates in a research note to clients this morning that the huge drop in Lipitor sales equates to four cents in earnings per share or one-half of the company's eight cent miss on EPS. Goldman Sachs has done and wants to do more investment banking for PFE, makes a market in the stock and a director of PFE is also a director of Goldman. Lipitor is facing intense competition from cheaper generic Zocor, which some doctors say works just as well as Lipitor for many patients, and from brand-name pills including Merck   and Schering-Plough's Vytorin (a combo of MRK's Zocor and SGP's Zetia) and AstraZeneca's  more potent Crestor.

The Pfizer earnings press release is 27 pages. I don't think I've ever seen a quarterly big pharma report that's so chock full of quotes from the CEO spinning about how he is changing and will change the direction of the company. Regarding Lipitor, Chairman and CEO Jeff Kindler is quoted as saying, "...Lipitor, our most prescribed product, did not meet our expectations for the quarter." And regarding his turnaround plan, Kindler says, "As we continue to put our foundation for the future in place, the entire management team is working tirelessly to identify ways to improve the performance and outlook for Pfizer."

In addition to Lipitor, part of Pfizer's problem is that its drug development pipeline and at least one new product is not living up to expectations. While the new stop-smoking pill, Chantix, and cancer drug, Sutent, are off to relatively strong starts, the launch of the first-ever inhalable diabetic insulin, Exubera, is "disappointing". Pfizer sold just $4 million worth of Exubera in the second quarter. That's very small potatoes for big pharma and way below the blockbuster expectations the company and some analysts had for the product.

While it could be market-related as well, the PFE report seems to be leading nearly the entire sector into the red this morning.

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The Pfizer conference call is at noon ET today. If Kindler says anything newsworthy, I will keep you posted.

Questions?  Comments?