US pharmaceutical giant Pfizer finally unveiled it eagerly-awaited earnings forecast for 2006 on Friday, after reeling back its original outlook last year, but ended up leaving shareholders with a rather bitter taste in the mouth.

The world’s largest drugmaker, which has enjoyed many years of stellar growth, issued a rather disappointing earnings target for the year, as it expects flat revenues on the back of patent expiries to impede on its financial performance.

Shares of the group, which are traded on the New York Stock Exchange, fell 2.5% to close at $25.68 after the announcement, reflecting investor sentiment on the firm’s 2006 earnings per share projection of $2.00 excluding special items, falling below general expectations of $2.04 a share. Similarly, analysts surveyed by Thomson Financial were expecting income to rise around 2% for the year, but Pfizer says that earnings will actually dip around 1%.

According to media reports, Chief Executive Henry McKinnell has told analysts that 2006 will be a key year in transforming Pfizer. “We are moving from what I call the 'old Pfizer,' a company characterised by the medicines we launched so successfully in the 1990s, to the 'next generation' Pfizer, characterised by a new wave of important medicines now reaching patients,” McKinnell claimed, as quoted by The Associated Press.

In 2006, Pfizer is facing the loss of patent protection on its antidepressant blockbuster Zoloft (sertraline), which made sales of $3.3 billion in 2005 and, last year its blockbuster antibiotic Zithromax (azithromycin sesquihydrate) also lost its patent armour, hurting the group’s revenues. In addition, sales of the firm’s flagship drug, the cholesterol-lowerer Lipitor (atorvastatin), are likely to be dented by competition in the form of Merck & Co’s rival Zocor (simvastatin), which is much cheaper than Lipitor, as well as Bristol-Myers Squibb's offering, Pravachol (pravastatin).

But despite the warnings of potential generic erosion of revenues during the year, industry observers seem a little confused over the lower forecast, in light of the big cost-cutting plan Pfizer unveiled last year, which aimed to shave $4 billion in expenses by 2008 to lift earnings.

Meanwhile, Pfizer claimed in a statement that its consumer products division, Pfizer Consumer Healthcare, which it is currently considering selling, has a stand-alone value of more than $10 billion. The unit’s well-balanced product portfolio, buoyed by key brands such as Listerine, Benadryl and Visine, helped it generate 2005 revenues of $3.9 billion and pre-tax earnings of around $700 million. The company expects to make a decision about what to do with the division in the third quarter, and pharmaceutical heavyweights such as Germany’s Bayer and UK group GlaxoSmithKline are said to by closely watching the situation.