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Pfizer profit falls short, Lipitor disappoints
2007-07-18
Pfizer Inc. (NYSE:PFE) on Wednesday reported lower-than-expected quarterly earnings on competition with generics and a surprisingly big 13 percent decline in sales of its best-selling Lipitor cholesterol fighter. The world's biggest drug maker, whose shares fell almost 4 percent, said it earned $1.27 billion, or 18 cents per share in the second quarter. That compares with $2.42 billion, or 33 cents per share, a year earlier. Excluding special items, New York-based Pfizer earned 42 cents per share. Analysts on average expected 50 cents, according to Reuters Estimates. The company affirmed its 2007 and 2008 profit forecasts, but investors and industry analysts remained skeptical. HSBC analyst Kevin Scotcher cut his rating on Pfizer to "neutral," saying the results called into question whether Pfizer can meet its earnings targets. "We believe that a loss of confidence in a single quarter is enough to persuade investors to defer a decision to buy Pfizer," Scotcher said. Pfizer, hurt by the recent loss of patent protection on its anti-depressant Zoloft and blood pressure treatment Norvasc, said global company revenue fell 6 percent to $11.08 billion. That was shy of Wall Street expectations of $11.44 billion. "Regarding Lipitor, we are in a tough battle," Pfizer Chief Executive Jeffrey Kindler said, noting the pill was facing "intensely" greater competition from other cholesterol drugs than the company had envisioned. Pfizer's disappointing results compound a bumpy start to the second-quarter reporting season for drugmakers. On Tuesday, rivals Johnson & Johnson (NYSE:JNJ - ABT) on Wednesday encouraged investors with its strong quarterly results and forecasts. "While Pfizer's results do not bode well for the group overall, Pfizer's underlying fundamentals are substantially worse than the industry average and thus should not be representative of the group as a whole," Morgan Stanley analyst Jami Rubin said in a research note. The New York-based company said sales of Lipitor, by far the world's biggest drug, rose 5 percent overseas but tumbled 25 percent in the important U.S. market. Global Lipitor sales were $2.7 billion. Pfizer attributed Lipitor's U.S. free-fall to declining prescriptions for the medicine, now facing competition from far cheaper generic forms of Merck & Co.'s (NYSE:MRK) Zocor, and by patterns of stocking by wholesalers and related factors. The wholesaler inventory patterns should not have a negative impact on U.S. Lipitor sales during the rest of the year, Pfizer said. For the full year, the company expects Lipitor sales to range from flat to a 5 percent decline compared with 2006. Lipitor, whose U.S. patent could expire as soon as 2010, is showing weakness at a time when Pfizer has no apparent cholesterol medicine to replace it. The company scrapped development of another possible blockbuster cholesterol drug in December. Aside from Lipitor, sales of schizophrenia drug Geodon, painkiller Celebrex and erectile dysfunction drug Viagra came in below expectations, said Leerink Swann & Co. analyst Seamus Fernandez. Geodon sales rose 8 percent to $178 million, while sales of Celebrex edged up 1 percent to $478 million. Viagra sales slipped 3 percent to $382 million. Sales of Lyrica, its neuropathic pain drug that recently won U.S. approval for fibromyalgia, jumped 49 percent to $405 million. Pfizer's net income was hurt by a number of charges related to restructuring, acquisitions and deals, including payments made to Bristol-Myers Squibb (NYSE:BMY - ^DRG) (Reporting by Ransdell Pierson and Lewis Krauskopf)
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