Pfizer announced Thursday that third-quarter net income fell 77 percent to $761 million compared with the prior-year period, due primarily to a $2.8-billion charge to end sales of inhaled diabetes treatment Exubera. The quarterly results were also negatively impacted by generic competition and a 5-percent decline in Lipitor sales to $3.2 billion.
CEO Jeffrey Kindler noted that "we made an important decision regarding Exubera, a product for which we initially had high expectations. Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians. We have therefore concluded that further investment in this product is unwarranted." Nonetheless, Kindler added that the company remains "on track to achieve our full-year 2007 revenues and adjusted diluted earnings-per-share goals."
The drugmaker stated that it plans to return the licensing rights for Exubera to partner Nektar Therapeutics and transition patients to other diabetes treatments over the next several months. Pfizer added that it halted production of the drug at its plant in Indiana and placed between 650 and 750 workers at the facility on paid leave. "Consistent with our bearish views on Exubera, we had predicted that Pfizer would give up on Exubera eventually but had not expected this to be so soon," remarked Morgan Stanley analyst Jami Rubin.
Regarding other financial results, the company reported that quarterly pharmaceutical sales decreased 4 percent to $11 billion, compared to the year-prior period. Celebrex's quarterly sales rose 8 percent to $577 million, while revenue from Lyrica increased 37 percent to $465 million. Revenue from Viagra was up 6 percent to $450 million, while Chantix recorded sales of $241 million in the quarter, up from $33 million in the comparable quarter last year.
However, the drugmaker also stated that sales of Norvasc fell 47 percent to $640 million, while sales of Zoloft declined 73 percent to $124 million, both due to generic competition in the US. Overall, third-quarter revenue decreased 2 percent to $12 billion, compared with the year-ago quarter, beating the $11.8 billion forecast by analysts.
Earlier this year, the company said it would eliminate 10 percent of its workforce as part of a restructuring effort and CEO Kindler commented Thursday that "there are no quick fixes, rather a series of actions that brick by brick are putting in the foundation we need for the future." The executive added that "there isn't a single solution that we are going to one day open the curtain and unveil, and I'm very sorry if some people find that disappointing."
"This is not a good quarter. The company is in crisis, and the company is not behaving like they are in crisis. They are not replacing the revenue they are losing,'' commented Michael Obuchowski of Altanes Investments. Nonetheless, Deutsche Bank's Barbara Ryan suggested that Pfizer's financial results were encouraging. "They're delivering on their guidance, which can be viewed as a meaningful positive considering all the challenges the company is facing," Ryan explained.
The drugmaker added that it expects sales of Lipitor to decrease between 3 percent and 5 percent in 2007, compared with the previous year.
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