Pfizer Inc., the world’s biggest drugmaker, reported an 18 percent drop Thursday in its first-quarter profit on tougher generic competition but said it still expects to meet profit expectations for the full-year.
The latest earnings and revenue figures each were below Wall Street expectations, and Pfizer shares fall 4 percent in midday trading.
Its profit fell because of sharp declines in sales of the blood-pressure drug Norvasc and allergy drug Zyrtec. Both have lost patent protection and compete against cheaper, generic drugs. Wall Street expects the biggest blow to revenue in 2010, when sales of the world’s best-selling drug Lipitor are sure to fall after it loses patent protection.
The company earned $2.78 billion, or 41 cents per share, in the January-March period compared with profit of $3.39 billion, or 48 cents per share, a year earlier.
Pfizer earned 61 cents per share, excluding charges for the buyouts of CovX and Coley Pharmaceutical Group Inc.
Revenue fell 5 percent to $11.85 billion from $12.47 billion.
Analysts polled by Thomson Financial expected a higher adjusted profit of 66 cents per share on revenue of $12.09 billion.
Its shares fell 84 cents to $20.26 in midday trading. They are near the lower end of their 52-week range of $20.19 to $27.73.
Ongoing restructuring and strong financial management should help drive single-digit earnings per share growth between now and 2010, said Deutsche-Bank North America analyst Barbara Ryan, in a note to investors. But she said Pfizer shares will remain under pressure until the company can find a way to dilute its dependence on Lipitor.
The company expects full-year 2008 adjusted profit between $2.35 and $2.45 per share. Analysts, on average, forecast profit of $2.39 per share.
Pfizer said cost-cutting measures partially offset revenue declines in 2007 and the company is on track to reduce costs by $1.5 billion to $2 billion by the end of 2008. The measures, which included cutting 11,000 jobs and closing eight facilities in 2007, are part of an effort to shore up the company’s financial position as it faces more costly drug patent expirations.
Sales of the cholesterol drug Lipitor, fell 7 percent to $3.14 billion from $3.36 billion during the quarter. Meanwhile, sales of Norvasc, which lost patent protection in March of 2007, were cut in half to $513 million during the quarter. Pfizer stopped selling Zyrtec in January after that drug lost patent protection.
“We all want to find a way to not be so dependent on one particular blockbuster,” said Chairman and Chief Executive Jeff Kindler, in a conference call Thursday.
During the conference call, Kindler highlighted the company’s recent buyouts and licensing deals as ways to broaden the product pipeline. Recent deals include the buyout of Serenex Inc. for its cancer drug candidate SNX-5422 and a licensing contract with Avant Immunotherapeutics for rights to the developing cancer vaccine CDX-110.
Kindler also expects more growth in international markets as the majority of sales now already come from overseas.
Pfizer is looking to several drugs to help drive growth over the next few years, including the anti-smoking drug Chantix, for which sales rose 71 percent to $277 million. Sales of the fibromyalgia treatment Lyrica, rose 47 percent to $582 million. Celebrex, the only COX-2 inhibitor painkiller still on the market since Vioxx was withdrawn, gained 2 percent to $611 million.