Updated from 7:07 a.m. EDT
is reducing its full-year earnings guidance by 10 cents a share, citing the earlier-than-expected loss of exclusivity of the blood-pressure drug Norvasc.
The warning came Friday as Pfizer reported first-quarter earnings that beat Wall Street's expectations. Pfizer earned 68 cents a share, excluding one-time items, vs. the Wall Street consensus of 57 cents.
First-quarter revenue of $12.47 billion topped the average forecast of $11.77 billion by analysts polled by Thomson First Call.
Adding back one-time items, Pfizer earned $3.39 billion, or 48 cents a share, for the quarter ended March 31, down from a year-ago quarter profit of $4.11 billion, or 56 cents a share. First-quarter 2006 revenue was $11.74 billion.
Jeffrey Kindler, the chairman and CEO, told analysts that Pfizer's first-quarter performance was "solid" despite "disruptive" events, such as the Norvasc case, and uncertainty due to a patent challenge in Canada to Lipitor. The cholesterol-fighter is Pfizer's biggest drug. Norvasc is second in sales.
For 2007, Pfizer now expects earnings of $2.08 to $2.15 a share, excluding one-time items, on revenue of $47 billion to $48 billion. Analysts were looking for a profit of $2.17 a share for 2007on revenue of $48 billion.
Pfizer previously had forecast 2007 earnings of $2.18 to $2.25 a share, assuming that earnings would grown 6% to 9% over last year's EPS of $2.06.
For 2008, Pfizer is maintaining guidance of $2.31 to $2.45 per share, excluding one-time items. The consensus is $2.32. Pfizer's revenue forecast is $46.5 billion to $48.5 billion, in line with estimates.
Vice Chairman David Shedlarz said the wide range for the 2008 earnings forecast reflects uncertainty in Canada, where Lipitor produces annual sales of $800 million to $900 million. Last year, Lipitor had worldwide sales of $12.9 billion.
Shares of Pfizer recently slipped 11 cents to $26.95. Although volume was higher than average, the stock was trading in a narrow range.
Shedlarz said the loss of Norvasc exclusivity -- six months earlier than had been expected -- would cost Pfizer 13 cents a share this year and $1.2 billion in revenue. Some of that loss will be offset by favorable foreign exchange rates compared to a Pfizer forecast in January.
Pfizer had expected that Norvasc would be free from generic competition until late September. However,
began selling generic Norvasc in late March after another company, Canada's
, won a court challenge of the Norvasc patent.
Apotex isn't selling generic Norvasc because Mylan is the only company to get approval from the Food and Drug Administration. Pfizer is selling its own low-priced version, even though it also sells full-priced Norvasc.
Norvasc contributed $4.9 billion in worldwide sales last year. For the first quarter of 2007, worldwide Norvasc sales fell by 10% to $1.1 billion. U.S. sales fell 18% to $511 million.
Lipitor is under a different type of generic-drug attack, but it did better than many analysts' had expected. First-quarter worldwide sales rose 8% to $3.36 billion. U.S. sales rose 8% to $2.13 billion even though some analysts had forecast flat or lower U.S. sales. Pfizer attributed most of the sales gain to a price increase.
Lipitor is being pressured by generic versions of
Zocor, and, to a lesser extent,
Both lost U.S. patent protection last year, and managed care companies are
encouraging patients to choose these generics over brand-name Lipitor. Pfizer said the switch from Lipitor to generic Zocor was "slightly greater than we had predicted."
Although Pfizer has survived Lipitor patent challenges in most major markets, it lost a case in Canada in January affecting a patent due to expire in July 2010. The challenge was filed by India's
"We have appealed the Canadian decision, which we believe was wrongly decided," Kindler said. Pfizer defeated another Ranbaxy challenge in Canada to a patent due to expire in May.
Aside from the Norvasc case, the biggest disappointment is the inhaled insulin Exubera. Approved by the FDA in January 2006, Exubera has been hit by production delays, marketing delays and a poor response from consumers and doctor response. Analysts have slashed their once-glowing estimates of its revenue potential.
"While we remain convinced that Exubera offers substantial benefit for diabetic patients worldwide, we are disappointed with the product's performance to date," Kindler said. Sales were so small that they weren't included in Pfizer's first-quarter press release.
"We remain very committed" to Exubera, said Ian Read, who runs Pfizer's worldwide pharmaceutical operations. Pfizer is expanding its education efforts to physicians, plans to initiate direct-to-consumer advertising in the summer and adding to its Exubera sales force.
Pfizer's most recent quarter included rising sales for the arthritis drug Celebrex, up 22% to $598 million, and for Lyrica, a treatment for nerve pain and epilepsy, up 106% to $395 million. Celebrex's growth, Pfizer said, "will depend in part on the impact" of television advertising and a "refocused" sales strategy.
Two new drugs, Sutent for kidney cancer, and Chantix, for smoking cessation, exceeded Pfizer's expectations with first-quarter sales, respectively, of $102 million and $162 million. The impotence drug Viagra gained 11% to $434 million; the schizophrenia drug Geodon advanced 18% to $216 million; and Caduet, which combines Lipitor and Norvasc, rose 89% to $146 million.