Drugmaker Pfizer's 4Q profit plunges on lower sales, higher research, legal and other costs

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FILE - In this May 4, 2014 file photo, a security camera hangs above the Pfizer logo on the exterior of a former Pfizer factory in the Brooklyn borough of New York. The pharmaceutical giant reports quarterly financial results on Tuesday, Jan. 27, 2015. (AP Photo/Mark Lennihan, File)


Pfizer Inc.'s fourth-quarter profit fell by half as worsening generic competition and unfavorable currency rates reduced sales, and higher research spending and legal costs also hurt the bottom line.

The world's second-biggest drugmaker by revenue reported lower sales for most of its huge portfolio of prescription medicines, with the biggest hit coming from new generic competition to popular painkiller Celebrex.

Pfizer revenues have been declining amid a long wave of patent expirations, which allows much cheaper generic versions of its drugs to corner the market, while CEO Ian Read looks for a way to return to growth and mollify frustrated investors.

The New York-based company still beat Wall Street expectations, but it forecast 2015 profit and revenue below its 2014 results. The forecast, for 2015 revenue of $44.5 billion to $46.5 billion and adjusted earnings per share of $2 to $2.10, also is below analyst expectations for $48.21 billion in revenue and $2.21 per share.

Shares of Pfizer, a Dow component, rose 31 cents to $33.11 in morning trading as the broader markets fell.

The Viagra maker said Tuesday that it posted net fourth-quarter income of $1.23 billion, or 19 cents per share. That's down from $2.57 billion, or 39 cents per share, a year earlier.

Excluding one-time items, Pfizer had adjusted income of $3.44 billion, or 54 cents per share. Analysts surveyed by FactSet were expecting 53 cents, on average.

Revenue totaled $13.12 billion, down 3 percent, but above expectations of $12.89 billion.

Recently approved drugs, particularly for various cancer types, are building up sales, but Pfizer remains under pressure from big investors to boost its relatively low stock price. Selling and spinning off big parts of its business over the last few years, including animal health, nutrition and a capsule-making unit, have helped but haven't been enough to satisfy detractors.

That's pushed Read to fall back on Pfizer's oft-used strategy of doing big deals to boost revenue and cut costs right away, but he apparently is still seeking one after being rejected last year by Britain's AstraZeneca PLC. That deal was an attempted "corporate inversion" that would have moved Pfizer's headquarters from the U.S. to Britain — and reduced the company's corporate tax rate.

Erik Gordon, an analyst and professor at University of Michigan's Ross School of Business, said Pfizer had "a good fourth quarter," but that "after its failure to win AstraZeneca, it needs to find another large takeover target."

Total prescription drug sales dipped 3 percent, to $12.08 billon.

Pfizer's top two drugs, Lyrica for fibromyalgia and other pain, and Prevnar vaccines against pneumonia and other infections, grew 10 percent and 16 percent, respectively, with each producing more than $1.3 billion in sales in the quarter.

"We see 2015 as the trough earnings year for" Pfizer and expect value to be driven by mergers and acquisitions, restructuring and experimental cancer drug Ibrance, Jeffries LLC analyst Jeffrey Holford wrote to investors.

Ibrance is expected to be approved in the U.S. by mid-April. It's a first-in-class drug for advanced breast cancer whose growth is fueled by the hormone estrogen but not the growth factor HER2 — the majority of postmenopausal women with breast cancer.

Pfizer said it plans to buy back about $6 billion of its shares this year, after returning nearly $12 billion to shareholders through dividends and share repurchases in 2014.

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Follow Linda A. Johnson at https://twitter.com/lindaj_onPharma

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