Pfizer reports 4Q results, lowers guidance

Pfizer announced Tuesday that fourth-quarter net income rose to $2.9 billion, compared with $767 million in the year-ago period, boosted by a $2 billion tax-related accounting gain. Overall sales for the period increased 6 percent to $17.6 billion, and came in above analysts' predictions of around $17 billion.

Alongside the results, Pfizer revised down its previous guidance for 2012, the first full year when Lipitor will face generic competition in the US, and said it now expects revenue of $63 billion to $65.5 billion, down from its earlier prediction of $65.2 billion to $67.7 billion. The company indicated that the new forecast reflected both "changes in market conditions" and the "elimination of projected revenue contribution from future business development transactions." However, Pfizer confirmed its earnings forecast for the same year of between $2.25 and $2.35 per share.

The drugmaker indicated that savings would be achieved in part through reductions in its R&D spending, with the budget expected to fall to between $6.5 billion and $7 billion, from its previous target of up to $8.5 billion in 2012. "Driving this decline is the planned reduction in the number of disease areas the company will focus on," the company noted, as well as the closure of its research site in Sandwich, UK. The drugmaker noted that the decision to stop work at the facility would lead to the majority of the plant's 2400 employees being made redundant. The company also plans to transfer or eliminate approximately 1000 jobs at its Groton, Connecticut facility, as well as outsource or transfer some functions from its Cambridge, Massachusetts site to Groton.

In quarterly sales results, revenue from Lipitor fell 17 percent to $2.6 billion, while sales for the full year were down 6 percent to $10.7 billion, mainly due to the launch of generic versions of the drug in Canada and Spain. Lyrica revenue was flat at $821 million, compared to the year-ago period, but grew 8 percent for the 12-month period to $3.1 billion. Revenue also included sales of several Wyeth products, including Enbrel, which generated quarterly sales of $865 million, and the Prevnar and Prevnar 13 vaccines, which had combined sales of $826 million in the quarter. For the full year, the products posted sales of $3.3 billion and $2.4 billion, respectively.

For 2010, Pfizer reported a 4-percent decline in net income to $8.3 billion despite a 36-percent increase in sales to $67.8 billion, which included revenue of $18.1 billion from Wyeth products. The company indicated that it remains on track to achieve cost reductions from the Wyeth deal of $4 billion to $5 billion by the end of 2012, and said it had achieved more than $2 billion of the expected reductions last year.

CEO Ian Read commented that "During 2011 we expect to complete our ongoing review of the composition of our business portfolio to determine the optimal mix of businesses that we can appropriately fund and manage in order to achieve consistent growth and maximum return on investment." For the coming year, the company said it expects to earn $2.16 to $2.26 per share, below analysts' estimates of $2.30 per share, on revenue of between $66 billion and $68 billion. The company also said it would buy back as much as $5 billion in shares, increasing the drugmaker's authorised share repurchases to $9 billion.

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