Pfizer Inc. (PFE) Chief Executive Officer Ian Read said he won’t seek large deals to replace falling revenue, as the world’s biggest drugmaker loses patent exclusivity to drugs responsible for 60 percent of yearly sales.
“We are not going to chase revenue at the destruction of capital,” Read said today in a telephone interview. “We have geographic breadth, we have portfolio breadth, we have technology breadth. We never say never, but I don’t see why we would need that.”
Read has been shrinking the company by selling units and buying back shares, in contrast to his predecessors Jeffrey Kindler, who bought Wyeth for $64 billion in 2009, and Henry McKinnell, who bought Pharmacia for about the same price in 2002. Pfizer will still form partnerships and pursue companies with treatments in mid- to late-stage testing, Read said.
Pfizer, based in New York, faces competition from cheaper generic medicines to at least 19 drugs from 2010 through 2015, led by the cholesterol pill Lipitor, the world’s best-selling drug, according to data compiled by Bloomberg. Investors have rewarded Read’s strategy for dealing with the acquisitions, with shares climbing about 14 percent since he took over on Dec. 5, more than double the return of the company’s U.S. peers.
Pfizer may also buy over-the-counter medicines to bolster its consumer health unit with ‘bolt-on’ deals that fit with existing product lines, said Chief Financial Officer Frank D’Amelio.
“It’s a good business today, and to the extent that we can continue to supplement that business to make it better, we will,” D’Amelio said in a telephone interview.
Pfizer is selling its animal health and infant formula units to buy back shares and focus on developing new drugs, Read said July 7. The units may fetch $22 billion, according to Seamus Fernandez, a Boston-based analyst at Leerink Swann & Co.
After a review, the company decided to keep its consumer business and its established products unit, which makes generic and off-patent drugs that Pfizer determined were needed to compete in fast-growing emerging markets, Read said today.
Pfizer today reported second-quarter net income rose 5.2 percent to $2.61 billion, or 33 cents a share, from $2.48 billion, or 31 cents, a year earlier. The company reiterated its 2011 profit forecast range of $2.16 to $2.26 a share and maintained its guidance for 2012, the first full year of generic competition to Lipitor.
Pfizer fell 87 cents, or 4.6 percent, to $18.14 at 4:15 p.m. in New York Stock Exchange composite trading, underperforming the 2.6 percent decline in the Standard & Poor’s 500 Index. Shares have climbed 17 percent in the past 12 months.
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