Pfizer Profit Beats Estimates on Added Wyeth Products
Pfizer Inc., the world’s biggest drugmaker, said first-quarter profit rose more than analysts estimated as products added from the acquisition of Wyeth overcame costs from the U.S. health overhaul. The shares gained.
Profit excluding certain items was 60 cents a share, beating the 53 cent average estimate of 13 analysts surveyed by Bloomberg. Net income decreased 26 percent to $2.03 billion, or 25 cents a share, from $2.73 billion, or 40 cents, a year earlier, the New York-based company said today in a statement.
Pfizer counts the pneumonia vaccine Prevnar and the depression pill Effexor among the medicines gained in its $68 billion purchase of Wyeth, completed in October. Products from Wyeth contributed more than $3 billion to Pfizer’s sales in the quarter. The health-care law, enacted in March, cut revenue for the period by $56 million, the company said.
“Results came in better than expected, both from slightly higher sales -- about 1 percent more than we were looking for -- and from cost saves,” Joel Levington, managing director of corporate credit for Brookfield Investment Management Inc. in New York, said in an e-mail.
Pfizer increased 35 cents, or 2.1 percent, to $17.26 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest gain among companies in the Dow Jones Industrial Average. The shares have lost 5.1 percent this year.
Chief Executive Officer Jeffrey Kindler was a key negotiator between the pharmaceutical industry and President Barack Obama’s administration on crafting the health-care bill. Drugmakers Eli Lilly & Co., Abbott Laboratories, and Johnson & Johnson have projected reduced sales because of Obama’s health-care overhaul.
The drugmaker reaffirmed its forecast for the year of $2.10 to $2.20 a share in earnings, excluding some items, and revenue of $67 billion to $69 billion. Pfizer projected a $300 million sales reduction from the U.S. health-care law.
For 2012, Pfizer said it reduced its target revenue by $800 million to include the impact of the health-care overhaul. It now projects 2012 sales of $65.2 billion to $67.7 billion, and reaffirmed its forecast for adjusted earnings of $2.25 to $2.35 a share.
“We expect to offset the impact on earnings from the anticipated decline in revenue through spending reductions and other means, as necessary,” Chief Financial Officer Frank D’Amelio said in the statement.
Merck & Co., the second-largest U.S. drugmaker, said that its first-quarter sales were cut by $33 million because of increased rebates to Medicaid under the health-care law. It projected the overhaul will cut full-year sales by $170 million.
Pfizer’s revenue in the quarter increased 54 percent to $16.8 billion on the addition of the Wyeth products. The company is counting on treatments gained from Wyeth to help offset losses when generic copies of its top-selling Lipitor cholesterol pill enter the market in November 2011.
The drugmaker’s priorities for business development are established products, including branded generics; emerging markets, focusing on Brazil, Russia, India, China, Turkey and Mexico; and the therapeutic areas of cancer, pain, inflammation, Alzheimer’s disease, psychoses, diabetes and vaccines, D’Amelio said in a telephone interview today.
No Big Deals
“We’re not going to do another $68 billion acquisition,” he said. Pfizer is especially interested in deals that involve drugs in later stages of development, typically in the third of those generally required for U.S. approval, he said. “We clearly have the ability to do bolt-on transactions.”
Sales of Lipitor, the world’s best-selling medicine, rose 1.3 percent in the quarter to $2.76 billion. Use of the drug has been falling since 2006 when cheaper copies of a rival pill, Merck’s Zocor, came on the market.
The pain pill Lyrica generated $723 million, an increase of 5.7 percent. Revenue from Chantix, used to quell nicotine cravings, rose 6.8 percent to $189 million. Viagra sales increased 5.5 percent to $479 million.
Pfizer didn’t break out sales data for all Wyeth products or revenue from specific alliances. Research and development and selling, informational and administrative expenses were $6.66 billion combined, about $800 million lower than expected, Brookfield’s Levington said.
“It seems like Pfizer, much like other pharma peers, under-promised and over-delivered on cost savings,” he said.