New York: Pfizer Inc reported higher third-quarter (Q3) profit as aggressive cost-cutting offset a negative foreign exchange impact and declining sales of drugs, including those facing competition from cheaper generics.
Despite slow growth of some newer drugs and declines for many of its established medicines, sales were still better-than-expected and lower costs and job cuts allowed Pfizer to top Wall Street estimates for the quarter, sending its shares nearly 2% higher.
The world’s biggest drugmaker, which got much bigger last week with completion of a $67.3 billion acquisition of Wyeth, posted a net profit of $2.88 billion, or 43 cents per share in its last pre-merger quarter, compared with a profit of $2.28 billion, or 34 cents per share, a year ago.
Excluding items, Pfizer earned 51 cents per share, exceeding analysts’ average expectations by 3 cents, according to Thomson Reuters.
Sales declined 3% to $11.6 billion, but that also topped analysts’ estimates of $11.41 billion.
“The quarter was very good,” said Deutsche Bank analyst Barbara Ryan. “Revenues were higher than expected. They beat the earnings number by 3 cents despite a 31.8% tax rate, which reflects the repatriation of cash.”
Pfizer’s bought Wyeth to help soften the 2011 blow from the loss of US patent protection on the cholesterol drug Lipitor -- the world’s biggest-selling prescription medicine -- by adding Wyeth’s lucrative vaccines and injectable biologic medicines.
Lipitor’s worldwide sales for the third quarter declined 9% to $2.9 billion. They were down 12% in the United States, amid competition from cheap generic versions of rival cholesterol-lowering drugs.
Pfizer updated its full year forecast to include Wyeth sales and operations following the 15 October closing of the acquisition -- its third mega-deal in the last nine years after swallowing up Warner-Lambert in 2000 and Pharmacia in 2003.
The company now expects revenue of $49 billion to $50 billion and adjusted earnings of $2.00 to $2.05 per share, up from its pre-Wyeth view of $1.30 to $1.45 per share.
“I think people are optimistic about the opportunities for earnings and cash flow over the next couple of years primarily as a function of the Wyeth acquisition,” Ryan said.
Pfizer said its results were helped by a reduction in workforce to about 75,400 at the end of the third quarter, a decline of 1,100 jobs in the quarter and 6,500 from the start of the year.
Adjusted research and development costs declined 8% to $1.6 billion, while adjusted selling, informational and administration expenses were down 6% to $3.2 billion.
“Overall it was a decent quarter, driven by cost cutting,” Sanford Bernstein analyst Tim Anderson said in a research note.
Revenue was hurt by about 5% due to foreign currency exchange rates, partly related to the strength of the dollar a year ago. That was somewhat offset by a 2% increase due to an adjustment in the year-ago quarter for product returns, the company said.
In a recent interview Pfizer identified the cancer drug Sutent, the pain medicine Lyrica and the smoking cessation drug Chantix as important future growth drivers.
But Lyrica sales were only up 5% to $708 million, while Sutent sales grew 9% to $246 million. Chantix, which has been beset by reports of psychiatric problems, fell 15% to $155 million.
In addition to its flagship Lipitor, other older medicines were also in decline with the blood pressure drug Norvasc down 13% to $488 million, the pain drug Celebrex down 4% to $602 million and erectile dysfunction treatment Viagra off 8% to $466 million.
That said, Ryan noted, “It was unbelievable how close everything came in relative to what people expected.”
Shares rose 31 cents, or 1.7%, to $18.29 on the New York Stock Exchange.