Drugs

Return to Article

Pfizer Beats EPS Target by a Penny

Elizabeth Trotta

Pfizer (PFE Quote) posted greater-than-expected profit and revenue for the second quarter Wednesday. Foreign exchange rates helped to balance a highly competitive statin market, loss of some product exclusivity and safety concerns that marred U.S. sales of its smoking-cessation drug Chantix.

Shares of the Big Pharma company added 49 cents, or 2.7%, to $18.84 in recent early morning trading Wednesday.

Pfizer said it earned 41 cents a share in the recent quarter, vs. 18 cents a share in the comparable year-ago period. On an adjusted basis, the company reported profit of 55 cents a share on revenue that increased 9% to $12.1 billion.

Analysts surveyed by Thomson Financial had expected the company to earn 54 cents a share on revenue of $11.46 billion.

Pfizer said pharmaceutical sales increased 9% to $11.1 billion, with 7% of that coming from the favorable impact of foreign exchange.

The loss of exclusivity of Novarsc, Zyrtec and Camptosar resulted in a revenue decline of $496 million, or 39%.

"Many of our key products continued to perform well both in the U.S. and international markets, including Lyrica, Celebrex, Viagra and Geodon, as well as Lipitor in the face of a highly competitive statin market, said CEO Jeff Kindler in Tuesday's release.

Lipitor revenue increased 9% -- with a 6% boost from favorable foreign exchange rates -- to $3 billion.

Pfizer said sales from Lyrica increased 52% to $614 million due to demand in managing nerve pain associated with diabetes and shingles, and also in light of the June 2007 U.S. approval for fibromyalgia treatment. Sales of Sutent for advanced renal cell carcinoma and gastrointestinal stromal tumor, increased 45% to $211 million -- with a 2% decrease in the U.S. and an 80% increase internationally.

Sales of smoking-cessation drug Chantix increased just 3%, reflecting a 35% decline in the U.S. Pfizer recently updated Chantix's U.S. label to include additional safety information.

A May 2008 report by the Institute for Safe Medication Practices said the drug was "suspected in various adverse drug event reports of causing a wide spectrum of injuries, including serious accidents and falls, potentially lethal cardiac rhythm disturbances, severe skin reactions, acute myocardial infarction, seizures, diabetes, psychosis, aggression and suicide." Subsequently, the Federal Aviation Administration banned the use of the drug by pilots and air traffic controllers.

Looking ahead, Pfizer is guiding for earnings of $2.35 to $2.45 a share on revenue of $47 billion to $49 billion in 2008.

The company tightened its guidance for adjusted cost of sales as a percentage of revenue to between 15% and 15.5% from 14.5% to 15.5% and reduced its prediction for the effective tax rate on adjusted income to a range of 21.5% to 22% from a previous range of 22% to 22.5%.