Pfizer Earnings Fall on Declining Lipitor Revenue

Pfizer

net income declined 19% in the first quarter of 2012 as the company lost exclusive rights to the cholesterol drug Lipitor. The company reported net income of $1.8 billion, or 24 cents per share, compared to $2.2 billion, or 28 cents per share, a year earlier. Lipitor revenues in the U.S. alone dropped $383 million, or 71%, from a year ago. Adjusted earnings per share of 58 cents beat the 57 cent estimate from Citigroup

and the 55 cent estimate of Goldman Sachs

. Pfizer reported revenue declines in about half of their businesses. Primary care revenue declined 25% to $4.1 billion as Lipitor moved to the established product unit, which reported a revenue increase of 17% to $2.8 billion. The New York-based company's specialty care unit saw a revenue decline of 9% to $3.6 billion as the company lost exclusive U.S. rights to Vfend in February 2011, Xalantan in March 2011 and Geodon in March 2012. Revenue in emerging markets grew 9% primarily in China, Russia and Mexico. First quarter revenue “Was driven primarily by growth in certain brands including Celebrex, Enbrel and Lyrica, growth in key geographies such as China,” Chairman and Chief Executive Officer Ian Read said in a press release issued today. “These and 6 various other factors have mitigated the negative financial impact of product losses of exclusivity of approximately $1.3 billion compared with the year-ago quarter.” The company lowered its 2012 guidance to revenue of $58.0 billion to $60.0 billion from a high of $62.5 billion. The company anticipates diluted earnings per share of $1.23 to $1.38 from an earlier range of $1.37 to $1.52. Pfizer will sell its nutrition business to Nestle for $11.85 billion in cash with a planed transfer date in the first half of 2012, the companies announced April 23. Revenue attributable to the nutrition business rose 8% in the first quarter of 2012 to $513 million largely on growth in China. “Following the completion of this divestiture, we expect to allocate the after-tax proceeds to further share repurchases, or invest in other business- development opportunities,” Read said in a press release issued at the time of the announcement. The company spent about $1.7 billion purchasing 77 million shares in the first quarter, Chief Financial Officer Frank D'Amelio said in the press release. Pfizer is also looking to sell its animal health business, with the goal of a sale between July 2012 and July 2013, D'Amelio said. Revenues attributable to the animal health business rose 6% to $1.0 billion as legacy products continued to perform well. Citigroup said it expects “Pfizer to see continued deterioration of its base business in the US, with execution risk on the pipeline, and potential restructuring issues” in an analyst note issued today. The two largest risks the bank listed to the drug manufacturer are delays in selling non-pharmacy units and increasing competition in emerging markets.