Pfizer’s profit down 19% as sales hit by generic competition

Pfizer has reported first-quarter profit fell 19% after revenue from cholesterol pill Lipitor declined because of generic competition.

The company trimmed its 2012 forecast after the sale of a unit.

Net profit dropped to $1.79bn (€1.35bn), or 24 cents (18c) a share, from a year earlier, Pfizer said yesterday. Earnings excluding one-time items beat by 2c the 56c average of 19 analysts estimates compiled by Bloomberg.

Pfizer employs close to 5,000 people across 11 locations in Ireland. Total capital investment by the company here exceeds $7bn (€5.3bn).

The pharma group’s global investors are focused on the company’s drug development pipeline, with regulatory decisions near on Eliquis, a blood thinner being developed with Bristol-Myers Squibb, and the arthritis pill, Tofacitinib. They’re also awaiting more clarity on how chief executive Ian Read will divest the animal health unit, scheduled to be announced by July.

“The real news will be the updates on the product pipeline for the company that will be left after the nutrition and animal health units are gone,” Erik Gordon, a business professor at the University of Michigan, said.

Pfizer shares were up 5c (0.22%) on the New York Stock Exchange yesterday at $22.95 at 2pm local time. The shares had gained 9.2% in the last 12 months prior to yesterday’s results. The company reported net profit of $2.2bn (€1.7bn), a year earlier.

Pfizer said full-year profit will be $1.23 to $1.38 a share, compared with a previous forecast of $1.52. The change was from sale of company’s the nutrition unit, the pharmaceutical firm said.

Revenue fell to $15.4bn from $16.5bn a year earlier, hurt by a 25% drop in sales from its pharmaceutical business because of the loss of US patent protection for Lipitor. The sales loss was made up for with a 7% cut to costs, excluding the impact of foreign exchange, part of Mr Read’s plan to make the company more efficient.

Pfizer also said that it took a $450m charge after agreeing to settle a lawsuit with Brigham Young University over credit for development of the arthritis painkiller Celebrex.

The quarter’s results were “nothing dramatic,” Mark Schoenebaum, an analyst with ISI Group in New York who has a buy rating on the company, said in a note to clients. The cost of the settlement was “not a big deal for a company as big as Pfizer,” he said.

Sales of Lipitor, still Pfizer’s best-selling drug, fell 42% to $1.4bn. Those declines were led by a 71% fall-off in the US, after the cholesterol pill lost patent exclusivity in November.

The quarter “was driven primarily by growth in certain brands including Celebrex, Enbrel and Lyrica, growth in key geographies such as China, as well as our continued ability to realise cost savings and efficiently allocate our shareholders’ capital,” Mr Read said.

Lyrica is used to treat pain from damaged nerves. Sales of the drug, Pfizer’s second best-selling product, grew 16% to $955m. Prevnar, its vaccine for pneumococcal disease, saw sales fall 6% to $941m. The company blamed fewer babies being born in the US, and said that it had tapped out a backlog of children that needed the shot.

Enbrel, Pfizer’s rheumatoid arthritis shot, gained 3% to $899m. Sales of Celebrex rose 7% to $634m.

Mr Read said last week that Pfizer is deciding how it will shed the animal health unit, which makes drugs for pets and livestock and had sales of $4.18bn last year.

The pharmaceutical giant is likely to divest the unit in a combined initial public offering and share swap, he said, in which Pfizer would sell some stock on the open market and exchange a portion of Pfizer shares for stock in the new company. Revenue from the unit rose 4% to $1.03bn.

A public offering of as much as 20% of the value of the animal health business would let Pfizer take cash from the unit without triggering a large tax penalty, said Erik Gordon.

Pfizer announced last month that it would sell its infant nutrition unit to Nestle for $11.9bn. Mr Read said that the first use of cash from that sale will be to buy back shares. The company isn’t looking for major acquisitions.

— Bloomberg


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