Wyeth ( WYE) posted a third-quarter profit and outlined cost-cutting moves that will result in as much as $1 billion in restructuring charges over the next few years. The Madison, N.J., drugmaker earned $1.1 billion, or 81 cents a share, excluding items, on revenue of $4.7 billion for the three months ended Sept. 30. Analysts polled by Thomson First Call had been expecting a profit of $1.02 billion, or 76 cents a share, and revenue of $4.81 billion. For the same period last year, Wyeth earned $1.01 billion, or 75 cents a share, excluding one-time items, on revenue of $4.47 billion. The recently completed quarter was subject to several one-time items, including 5 cents a share for restructuring costs and 12 cents a share for an income tax charge related to Wyeth's repatriation of about $3.1 billion of earnings from foreign units. When all one-time items are included, Wyeth earned $869.9 million, or 64 cents a share, for the third quarter of 2005. For the full year, Wyeth said it expected to reach or exceed the upper end of an earnings range of $2.80 to $2.90 a share, which excludes charges for restructuring and repatriating earnings. The estimate repeats a revised prediction that Wyeth issued earlier this month. The Wall Street consensus is a profit of $3.98 billion, or $2.93 a share, on revenue of $19.1 billion. Along with the solid forecast, shareholders had received another gift on Sept. 29 when Wyeth said it would raise it quarterly dividend by 9%. The quarterly payment of 25 cents is payable Dec. 1 to shareholders of record on Nov. 11. This was Wyeth's first dividend increase since 1999. In midmorning trading, Wyeth's stock was off 31 cents to $45.92. Among the company's best-selling drugs, the antidepressants Effexor and Effexor XR posted third-quarter sales of $861 million, down 4% from the same period last year. The company said sales reflect the impact of generic competition as well as a "slowdown" for all depression medications.
Ken Martin, the chief financial officer, said he expected Wyeth to reach a definitive agreement in two weeks with Teva Pharmaceutical Industries ( TEVA) to settle a patent dispute with the Israel-based generic drug company concerning Effexor XR. Martin said the companies would then file their agreement with the Federal Trade Commission, which he said could rule on the deal within 30 days. A federal court judge also must sign off on the agreement. The companies announced a tentative settlement on Oct. 18. Top-performing products for the third quarter included Enbrel, which is prescribed for several inflammatory diseases, including rheumatoid arthritis and psoriasis. Wyeth recorded sales of $276 million, up 59% from the same period last year. Wyeth sells the drug in markets outside North America. Its partner Amgen ( AMGN) sells the drug in North America and recorded third-quarter sales of $641 million, up 34%. Among other big products, the severe heartburn drug Protonix reported sales of $405 million, up 7%. Sales of Prevnar, a vaccine to prevent pneumococcal disease in infants and young children, advanced 23% to $393 million, and Zosyn, an intravenous antibiotic, saw sales gain 15% to $227 million. The company also said it hopes to have completed by early January the restructuring of its U.S. sales staff that promotes products to primary care physicians. Wyeth started a pilot project earlier this year in six U.S. markets, seeking to reduce duplication of sales force visits and to cut costs. Bernard Poussot, who runs Wyeth's prescription drug business, said the restructuring would lead to cutting 25% to 30% of the full-time U.S. primary care sales force. However, Wyeth also is hiring some part-time sales representatives, meaning that the total reduction will be about 15%. Poussot said Wyeth is exploring ways to improve the efficiency and reduce expenses related to overseas marketing, too. The U.S. sales force promoting products to specialists isn't affected. "Wyeth's company-wide productivity initiatives are on track and moving forward on several fronts," said Robert Essner, the chairman and CEO, in a prepared statement. "We expect to keep Wyeth in a strong competitive position."