News Column

A bitter pill: Lower sales hurt Pfizer profit

May 5, 2014

By Kevin McCoy, @kmccoynyc, USA TODAY

Pfizer shares fell Monday after the pharmaceutical giant reported its first-quarter profit had dropped 15% due to cheaper generic competition that continues to reduce sales of its multiple medicines, plus the end of some partnerships with other drugmakers.

The stock closed down more than 2.5% at $29.96.

Pfizer, which recently has made three unsuccessful offers to acquire rival AstraZeneca, confirmed its 2014 profit forecast for earnings per share of $2.20 to $2.30 and revenue of $49.2 billion to $52.3 billion.

The maker of Viagra said net income was $2.33 billion, or 36 cents per share, for the January-March period. That's down from $2.75 billion, or 38 cents per share, a year earlier.

Excluding one-time charges, income was 57 cents per share. Analysts surveyed by Thomson Financial Network had forecast 55 cents per share.

Revenue totaled $11.35 billion, down 9%. Analysts had expected $12.08 billion.

Pfizer CFO Frank D'Amelio said the New York-based company's first-quarter performance "was in line with our expectations and reflected the continuing impact of product losses of exclusivity, the expiration and near-term termination of certain collaborations and an operating environment that remains challenging."

While Pfizer confirmed its adjusted financial guidance for 2014, D'Amelio said the company will update the projections if necessary, when it receives additional financial data about the U.S. exclusivity it enjoys with pain medication Celebrex.

D'Amelio also said Pfizer continues to project repurchasing approximately $5 billion of the company's shares this year, with $1.7 billion bought back through May 2.

The company released its financial results as its bid to acquire British-Swedish multinational AstraZeneca on Sunday prompted United Kingdom opposition leader Ed Miliband to accuse Prime Minister David Cameron of acting like a Pfizer "cheerleader," the Financial Times reported Monday.

Among Pfizer's top sellers, sales rose 8% to $1.15 billion for pain and fibromyalgia treatment Lyrica and 4% to $914 million for immune disorder drug Enbrel. Sales of pneumonia vaccine Prevnar were flat at $927 million, while key newer medicines -- rheumatoid arthritis pill Xeljanz and cancer drugs Xalkori and Inlyta -- remain disappointing at less than $100 million in the quarter.

For the first time, Pfizer reported separate operating results for its three business segments, to give investors more insight into performance as the company considers eventually breaking off some of its business.

All three segments reported sales at least slightly below 2013's first quarter, and income was down for both Pfizer's newer medicines and its older, mostly off-patent drugs.

The segment that includes vaccines, cancer drugs and consumer health products, though, increased income by 6%, to $1.06 billion. Pfizer reported income of $1.77 billion for its newer medicines and $4.05 billion for older "established" prescription drugs.

Contributing: The Associated Press

Spencer Platt, Getty Images

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Source: USA Today