Pfizer Inc., the world’s largest drugmaker, authorized a new share buyback program for as much as $10 billion as Lipitor lost about 15 percent of its market in the first week the cholesterol pill faced generic competition.
The quarterly dividend was increased to 22 cents a share from 20 cents, according to a statement today. The stock repurchase plan is in addition to Pfizer’s existing program, the New York-based company said. Chief Executive Officer Ian Read, 58, also was named board chairman.
Pfizer lost U.S. patent protection on its biggest seller, the Lipitor cholesterol pill, at the end of last month. Generic versions of the drug accounted for about 15 percent of the Lipitor market in the week ended December 2, the first week copies were available, according to a report today from Chris Schott, an analyst at JPMorgan Chase & Co.
The buyback “is on first thought higher than what most people were anticipating,” said Damien Conover, an analyst at Morningstar Inc. in Chicago, in a telephone interview. “It will be viewed as a positive by the investment community.”
Pfizer has been working to minimize losses from Lipitor by making deals with insurers to block the use of generic versions in exchange for lowering the price of branded Lipitor.
“This is a very complicated generic launch, the way Pfizer is going after retaining share, this is rather unprecedented,” said Conover. “It is probably a little too early to tell” how well the company will do in holding off generics.
New Repurchase Plan
Under its existing program, Pfizer had repurchased $6.5 billion of shares as of November 1, and it anticipates repurchasing between $7 billion and $9 billion this year, said Joan Campion, a spokeswoman for Pfizer, in a phone interview.
Under the new repurchase program Pfizer plans to buy about $5 billion of its stock in 2012 with the rest of the $10 billion amount available in 2013 and beyond, the company said in its statement.
“The dividend increase and new share repurchase program are a testament to our continued commitment to enhancing shareholder value and to our continued confidence in the business,” Read said in a statement.
Read took over the board chairman position from George Lorch, who will become an independent director, the company said in a separate statement. Read became CEO after Jeffrey Kindler resigned as chief executive officer and chairman in December 2010. Lorch was named to the board post a few days later.
Pfizer shares declined less than 1 percent to $20.39 at 4:00 p.m. New York time.