Drugmaker Pfizer's 2Q profit plunges

July 22, 2009 10:07:52 AM PDT
Drug giant Pfizer Inc. on Wednesday said its second-quarter profit plunged 19 percent, as the strong dollar pulled down revenue, and higher taxes and costs for its pending purchase of rival Wyeth hurt the bottom line. Still, Pfizer raised its 2009 profit forecast slightly.The maker of cholesterol fighter Lipitor, impotence treatment Viagra and stop-smoking drug Chantix said its net income was $2.26 billion, or 34 cents per share. That compares with net income of $2.78 billion, or 41 cents per share, in the second quarter of 2008.

Excluding charges totaling 14 cents per share, Pfizer's earnings per share were 48 cents, topping analyst estimates by a penny. Revenue totaled $10.98 billion, down 9 percent from $12.13 billion in the second quarter of 2008.

Analysts polled by Thomson Reuters were expecting earnings per share of 47 cents and revenue of $11.27 billion.

Pfizer expects to close on its $68 billion purchase of Wyeth - the biggest deal in the industry this year - late in the third quarter or in the fourth quarter. On Monday, 98 percent of Wyeth shareholders voted to approve the deal, which still requires approval from some regulators.

Sales were down in all five of New York-based Pfizer's business units, dropping the most, 20 percent, in the one marketing established products that have lost patent protection and whose sales are generally eroding.

Pfizer, the world's biggest drugmaker by sales, said unfavorable exchange rates reduced revenue by $1.1 billion, or 9 percent.

"Our results this quarter demonstrate our ability to continue to deliver solid operational performance despite a challenging and dynamic economic and operating environment," Pfizer Chief Executive Jeff Kindler said in a statement. "On a constant currency basis, all of our pharmaceutical units and animal health generated revenue growth during the quarter, with the exception of the established products unit."

Pharmaceutical sales fell 9 percent to $10.06 billion, as sales declined for some top products. Lipitor, the world's top-selling drug, saw sales fall 10 percent to $2.69 billion amid increasing competition, blood pressure treatment Norvasc saw a 17 percent drop to $518 million due to generic competition, and Chantix saw sales fall 7 percent to $192 million, mainly due to U.S. warnings about suicidal behavior and depression in some patients.

Due to the exchange rates, revenue for virtually all Pfizer drugs declined, with the exception of nerve pain treatment Lyrica and cancer drug Sutent, which each saw sales rise less than $20 million.

Animal health sales fell by 9 percent to $648 million. Because Wyeth also has an animal health division, the companies are planning to divest some of those products to win regulatory approval.

Yet Pfizer increased its profit forecast for the year to $1.90 to $2.00 per share, excluding one-time items, from $1.85 to $1.95 a share. The company also changed its forecast for revenue for 2009, setting it at $45 billion to $46 billion. The forecast had been for a wider range, $44 billion to $46 billion.

For the first six months, net income fell 10 percent, to $4.99 billion, or 74 cents per share, from $5.56 billion, or 82 cents per share. Revenue dropped by 9 percent, to $21.85 billion from $23.98 billion.