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fizer has reported a decline in earnings and revenues for the second quarter but successful cost-cutting means that the figures beat analyst expectations.
Net profit came in at $2.26 billion, a fall of 19%, hit by foreign exchange, a higher tax rate and costs connected to the pending Wyeth acquisition. These were partially offset by savings from cost-reduction initiatives and lower in-process R&D charges.
Pfizer’s turnover was $10.87 billion, down 9%, while pharmaceutical sales also declined 9% to $10.06 billion. Revenues from the cholesterol blockbuster Lipitor (atorvastatin) fell 10% to $2.69 billion, hit by competition from other statins, notably the generic version of Merck & Co’s Zocor (simvastatin). Generic competition also hurt the colorectal cancer drug Camptosar (irinotecan), down 38% to $85 million and more significantly the blood pressure treatment Norvasc (amlodipine), which fell 17% to $518 million.
Sales of Chantix/Champix (varenicline) declined 7% to $192 million, amid continuing safety concerns and changes to the label, while the COX-2 inhibitor Celebrex (celecoxib) fell 7% to $548 million. The erectile dysfunction drug Viagra (sildenafil) brought in $423 million, down 9%.
On the positive side, sales of Lyrica (pregabalin), for epilepsy, fibromyalgia and neuropathic pain, edged up 2% to $629 million, while the kidney cancer treatment Sutent (sunitinib) climbed 5% to $223 million. Alliance revenues from seven drugs, notably Eisai’s Alzheimer’s disease treatment Aricept (donepezil) and Boehringer Ingelheim’s Spiriva (tiotropium) for chronic obstructive pulmonary disease, rose 6% to $598 million.
Chief executive Jeffrey Kindler said the results “demonstrate our ability to continue to deliver solid operational performance despite a challenging and dynamic economic and operating environment”. He noted that the decline in revenues for established products was expected “at this stage of their lifecycle,” adding that the Wyeth deal is progressing well as Pfizer continues to generate revenues “consistent with our expectations” and “streamline our cost structure”.
Frank D’Amelio, chief financial officer, stated that Pfizer is upping its earnings guidance for the full year to $1.90-$2.00 per share from $1.85-$1.95 and narrowing revenue guidance to $45.0-$46.0 billion from $44.0-$46.0 billion. He added that “we’ve made substantial progress on our cost-reduction initiative with an operational decrease of approximately $740 million in adjusted total costs realised during first-half 2009”.
In connection with the Wyeth acquisition, Mr D’Amelio said Pfizer had replaced its bridge loan facility with permanent financing “and are making substantial progress in planning for a successful and rapid integration of Wyeth following the closing”. The response from analysts was fairly positive, with most praising the firm for its costs control.
