Pfizer Inc., the world's largest drug maker, said Friday its profit fell 18 percent in the first quarter, hurt by one-time charges and disappointing sales of diabetes drug Exubera. Adjusted results beat Wall Street expectations by a wide margin.
Net income grew to $3.39 billion, or 48 cents per share, from $4.11 billion, or 56 cents per share, a year ago. Excluding one-time items, the company reported adjusted profit of $4.8 billion, or 68 cents per share, up from $4.35 billion, or 59 cents per share, last year. Pfizer, which early in the quarter announced it would trim its work force by 10 percent, reported restructuring costs of $812 million, up from $299 million a year ago.
Revenue rose 6 percent to $12.47 billion from $11.75 billion last year. Sales of the company's best selling drug, cholesterol reducer Lipitor, grew 8 percent to $3.36 billion, topping most Wall Street estimates. Price increases, fewer rebates and favorable foreign exchange rates made up for a decline in U.S. prescriptions for Lipitor, which has come under heavy competition from cheaper, generic cholesterol drugs.
Sales of the inhalable insulin Exubera, however, were "disappointing," the company said, not specifying dollar amounts.
The results were well above Wall Street's expectations. Analysts surveyed by Thomson Financial expected earnings per share, excluding charges and gains, of 57 cents on revenue of $11.77 billion.
As expected, Pfizer reduced full-year revenue estimates — by $1.2 billion — to reflect the early loss of patent exclusivity for Pfizer's second best-selling drug, the blood pressure medication Norvasc.
In late March, a federal appeals court invalidated Pfizer's patent for Norvasc, allowing Mylan Laboratories Inc. to begin selling a generic version. Generic Norvasc sales began on March 23, therefore cutting into Pfizer's sales in last week of the first quarter.
Pfizer's Norvasc sales dropped 10 percent to $1.07 billion in the first quarter. The company had hoped to retain patent protection on the drug until September. Favorable exchange rates will partly make up for the lost Norvasc sales by adding $450 million to the company's top line, Pfizer said. The weaker U.S. dollar makes Pfizer's products cheaper, and therefore more attractive, to international markets.
As a result, Pfizer revised its forecast for adjusted earnings per share to $2.08 to $2.15 per share, down from a previous range of $2.18 to $2.25. Revenue is projected to be $47 billion to $48 billion. Previously, the company had forecast 2007 revenue comparable to 2006, when Pfizer booked $48.4 billion in sales.
Pfizer now forecasts 2008 revenue — originally seen in line with 2006's total — of $46.5 billion to $48.5 billion, given uncertainty over the status of the Canadian patent for Lipitor and the loss of an estimated $300 million in revenue from Norvasc, which will be partly offset by $450 million of sales stemming from the weaker U.S. dollar. Adjusted earnings per share estimates for 2008 remain unchanged at $2.31 to $2.45.
Analysts estimate adjusted earnings per share of $2.17 on revenue of $48 billion in 2007, and $2.32 per share on revenue of $47.37 billion in 2008.
"With regard to our near-term performance, apart from the impact of losing U.S. exclusivity for Norvasc six months earlier than expected and the uncertainty created by a recent adverse lower court decision regarding Lipitor patent protection in Canada, Pfizer's projected overall performance for 2007 and 2008 remains on track," said Jeffrey Kindler, chairman and chief executive, in a statement.
For the latest quarter, Pfizer reported a 22-percent rise in sales of the arthritis pain drug Celebrex to $598 million, an 11-percent increase in sales of the impotence drug Viagra to $434 million, and a sixfold increase in sales of the cancer drug Sutent to $102 million. Sales of the diabetic nerve pain treatment Lyrica more than doubled to $395 million.
Pfizer said the updated guidance reflects the slower market acceptance of Exubera.