Charges, generic Lipitor cut Pfizer first quarter net 19 percent
By LINDA A. JOHNSON
Pfizer Inc. said Tuesday that its first-quarter profit fell 19 percent, due to legal and other charges and new generic competition to blockbuster cholesterol pill Lipitor cutting U.S. sales by 15 percent despite the drugmaker offering big rebates and discounts to keep patients on its brand.
The world's biggest drugmaker beat Wall Street's profit expectations but narrowly missed its sales forecast in the first full quarter since Lipitor lost patent protection.
Pfizer lowered its adjusted profit forecast for 2012 by 6 cents, to $2.14 to $2.24 per share. Analysts had predicted $2.26 per share. Including one-time items, it expects earnings per share of $1.23 to $1.38.
New York-based Pfizer said the forecast change was due to its recent decision to sell its infant-nutirition business to Swiss food and drink giant Nestle SA for $11.85 billion. The steep drop in Lipitor revenue was factored into its previous forecasts.
The maker of Viagra said net income was $1.79 billion, or 24 cents per share, down from $2.22 billion, or 28 cents a share, a year earlier.
Excluding one-time items, Pfizer would have made $4.43 billion, or 58 cents per share. Analysts were expected 56 cents a share.
Charges totaled $2.64 billion after taxes. They included $1.07 billion for adjustments to the value of acquired businesses, $115 million in acquisition-related costs, and $1.45 billion for a mix of restructuring and productivity initiatives, a writedown on an immune disorder compound acquired when Pfizer bought fellow drugmaker Wyeth in October 2009, and legal fees.
Those included a $450 million charge for a confidential agreement announced Tuesday to end a lawsuit with Brigham Young University and a professor there, Dr. Daniel Simmons. According to a Pfizer regulatory filing, the suit concerned predecessor companies that Pfizer bought allegedly breaching a 1991 agreement on research involved in the discovery of blockbuster painkiller Celebrex.
Revenue totaled $15.4 billion, down 7 percent from $16.5 billion a year ago. Analysts were expecting $15.46 billion.
Sales in the U.S., where Pfizer's patent expired on Nov. 30 for Lipitor, the top-selling drug in history, fell to $5.95 billion, from $7.02 billion. International sales edged up 1 percent, to $9.45 billion.
Lipitor sales fell 42 percent, to $1.4 billion from $2.39 billion.
"I am pleased with out first-quarter 2012 financial performance, which was driven by growth in certain brands including Celebrex, Enbrel and Lyrica, growth in key geographies such as China" and cost-cutting, CEO Ian Read said in a statement.
In early trading, Pfizer shares were down 17 cents at $22.73.
Edward Jones analyst Linda Bannister said Pfizer's earnings beat was driven by greater-than-expected cost controls, adding that she's "pleased with Pfizer's ability to execute on its strategy to divest non-core assets and concentrate on its biopharmaceutical core."
Bannister, who has a Buy rating on Pfizer shares, noted it "has several late-stage pipeline products that are expected to be approved in the near term," including potential blockbusters Eliquis for stroke prevention and tofacitinib for rheumatoid arthritis.
Revenue from prescription medicines fell 8 percent to $13.07 billion, as sales declined in the oncology, primary care and specialty care businesses.
Revenue from Celebrex climbed 7 percent to $634 million, Enbrel for immune system disorders rose 3 percent to $899 million and Lyrica, for fibromyalgia and pain, jumped 16 percent to $955 million.
Generic competition cut total revenue by $1.3 billion, Read noted.
Pfizer's sales in emerging markets, considered the industry's best prospect for growth as developed countries try to rein in their spending on medicine, rose 6 percent to $2.3 billion.
The established products business, which sells medicines that have gone off patent but remain popular, jumped 18 percent, to $2.8 billion. That was mainly because Lipitor revenue was shifted to that business, from the primary care business. Specialty care revenue likewise was affected by shifting two smaller sellers that got generic competition from that category to established products, Xalatan for glaucoma and anti-fungal medication Vfend.
The animal health business saw revenue rise 4 percent to $1.03 billion, while revenue from consumer health products such as Centrum vitamins fell 1 percent to $735 million. The soon-to-be sold infant nutrition business posted a 9 percent jump in revenue, to $513 million.
Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma
Copyright 2012 The Associated Press.