Pfizer reported a 9% drop in fourth-quarter revenues yesterday, as it continued to feel the effects of generic competition to some of its older product lines. But while operating profit also declined, cost-cutting offset the fall and the results came in a little better than forecast.
For the second quarter running revenues fell, at $13.6 billion compared to $14.9 billion a year earlier, while net income slid 3% to $2.7 billion. The latter was better than expected and helped by cost-savings that came in at $800 million, twice the target set for 2005 when Pfizer unveiled its restructuring plan.
For the full year, revenues fell 2% to $51.3 billion, while net income was down 29% to $8.1 billion.
Growth of the company’s biggest selling drug, Lipitor (atorvastatin), rose 3%, adding $3.36 billion to the pot, slower than in previous quarters but still ahead of forecasts that have been reined in because of increased competition in the statin market.
Pfizer recently won a lawsuit against Indian generic drugmaker Ranbaxy Laboratories, blocking its efforts to put out a generic version of the drug in the USA. The prospects for the drug over the next couple of years are hard to gauge: there will be greater competition as cut-price generics to rival product Zocor (simvastatin) from Merck & Co reach the market later in 2006, but Lipitor has been given ‘preferred brand’ status under the new Medicare prescription drug benefit system, which should bolster the brand.
Another big earner, blood pressure drug Norvasc (amlodipine), succumbed to the loss of patent protection outside the USA and saw sales dip by 1% to $1.24 billion, although prospects for the drug in 2006 brightened considerably after Pfizer won a lawsuit defending its patents for Norvasc in the USA earlier this week.
Meanwhile, the withdrawal of COX-2 inhibitor Bextra (valdecoxib) on safety concerns and pressure on related drug Celebrex (celecoxib) continued to weigh heavy on the company’s revenues. Sales of Celebrex, which had peaked at $3 billion, dropped 53% to $427 million in the fourth quarter.
Looking ahead to 2006, Pfizer chief executive Hank McKinnell said that while the firm’s performance exceeded expectations and that “investors should be aware that the factors driving Pfizer's performance may differ materially in 2006,” imparting a note of caution for the coming year. He said financial guidance for this year would be given at an analyst meeting on February 10.
Pfizer withdrew its financial guidance for 2006 and 2007 after reporting declining revenues in its third-quarter 2005 results.