The Wall Street Journal-20080124-Pfizer Outlook Is Hopeful After a Tough Year
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Pfizer Outlook Is Hopeful After a Tough Year
Pfizer Inc. put an upbeat coda on a difficult year, posting an encouraging earnings report despite flattened sales of its cholesterol-fighting best seller and heightened pressures on the drug industry.
While Pfizer's fourth-quarter net income dropped 70% from a year- earlier period that factored in a significant one-time gain, its earnings excluding items exceeded Wall Street forecasts, as did the drug maker's revised forecast for 2008. Its shares rose 63 cents, or 2.8%, to $22.86 in 4 p.m. composite trading on the New York Stock Exchange.
Pfizer's fourth-quarter sales rose 3.7% to $13.1 billion, and full- year sales increased slightly to $48.6 billion, helped by foreign- exchange fluctuations.
Investor attention is focused on how the New York drug maker shores up sales of cholesterol-fighter Lipitor, the world's best-selling medicine. The drug doesn't face generic copycats until at least 2010 but has been fighting to hang onto market share as cheaper versions of Merck & Co.'s Zocor threaten its preeminence. Pfizer launched an ad blitz and a series of scientific analyses attempting to demonstrate Lipitor's superiority. The tactic seemed to work: Lipitor revenue in the fourth quarter increased 3% to $3.4 billion.
"Holding the revenue flat is pretty good considering the patent expirations Pfizer is facing," says Michael Krensavage, a drug analyst at Raymond James & Associates.
Chief Executive Jeffrey Kindler faces myriad challenges, chief among them filling a barren late-phase pipeline by the time the Lipitor patent expires. At a meeting March 5, he is set to further explain his strategy, which he said yesterday will include investing in complementary businesses, emerging markets and existing products. Of his continuing transformation of Pfizer, Mr. Kindler said in an interview, "You're never done."
Antidepressant Zoloft also faces generic threats, and that drug's fourth-quarter sales fell 20% to $134 million. In March, Pfizer lost market exclusivity for blood-pressure drug Norvasc, sending that drug's fourth-quarter sales down 51% to $650 million. And in October, the company took a $2.8 billion charge to discontinue selling its Exubera insulin inhaler.
This month, Pfizer will stop selling Zyrtec, an allergy medicine that brought in $1.5 billion in 2007 sales. As part of the 2006 sale of Pfizer's consumer-health business, Johnson & Johnson won the rights to sell Zyrtec over the counter and Pfizer agreed to stop selling its prescription version when those sales begin. In February, it loses exclusivity on Camptosar, a cancer treatment valued at $969 million in 2007.
Separately, Abbott Laboratories, of Abbott Park, Ill., saw fourth- quarter sales jump 16% to $7.22 billion. Full-year sales increased 15% to $25.91 billion. Profit for the quarter was $1.2 billion, or 77 cents a share, compared with a loss in the year-earlier period of $476.2 million, or 31 cents a share, due largely to acquisition charges.
Abbott relies heavily on Humira, its drug for inflammatory diseases, which brought in $3.1 billion in 2007. Investors will be looking this year to how the Food and Drug Administration rules on the drug-coated stent Xience, a device to prop open heart arteries.
