Updated from 11:21 a.m. ESTPfizer ( PFE) said Monday that fourth-quarter and full-year earnings narrowly beat Wall Street estimates. Jeffrey Kindler, the chairman and CEO, said that although Pfizer achieved "nearly all of our financial targets" last year, "we continue to face a difficult operating environment" due to generic competition and "the risks inherent in drug development." The latter comment referred to the December announcement that Pfizer was
Pfizer's full-year earnings per share of $2.06, excluding items, beat the company's updated guidance and analysts' average forecasts by a penny. Special items had a profound effect on Pfizer's performance, and the biggest came from the $16.6 billion sale of its consumer products division to Johnson & Johnson ( J&J) in late December. Once all items were counted, Pfizer earned $9.45 billion, or $1.32 a share, for the fourth quarter vs. a profit of $2.73 billion, or 37 cents, for the same period in 2005. The results reflected a $7.9 billion gain from the consumer-products division divestiture. For the full year, Pfizer earned $19.34 billion, or $2.66 a share, on revenue of $48.37 billion. In 2005, the company earned $8.09 billion, or $1.09 a share, on revenue of $47.41 billion. Like all big drug companies, Pfizer is struggling with the impact of generic competition, and cheap copies of best-sellers continued to hit the company hard last year. Last year's sales of the antidepressant Zoloft dropped 35% from the previous year to $2.11 billion, while revenue from the Zithromax/Zmax antibiotics plunged 69% to $638 million. There's more trouble on the way. The blood pressure drug Norvasc, Pfizer's second-biggest product, loses U.S. patent protection in September. Norvasc produced worldwide sales $4.87 billion last year, up 3% from 2005. Also, the allergy drug Zytrec loses U.S. patent protection at the end of the year. In 2006, the Zytrec family of drugs contributed $1.57 billion, up 15% from 2005.
On the bright side, sales of Lyrica jumped to $1.16 billion last year from just $291 million in 2005. A treatment for epilepsy and certain types of nerve pain, Lyrica beat Pfizer's original target of $900 million. The company expects to hear from the Food and Drug Administration later this year on its request for Lyrica as a treatment for fibromyalgia. Sales of the schizophrenia drug Geodon fell short of the company's goal of $800 million, but last year's sales of $758 million still rose 29% from 2005. Among other drugs, sales of the impotence treatment Viagra gained 1% to $1.66 billion. Viagra was one of nine Pfizer drugs with more than $1 billion in sales last year. New entrants to the blockbuster club were Lyrica and the Detrol family of bladder-control drugs, whose sales rose 11% to $1.1 billion. Pfizer also promised a "full court press" this year for marketing Exubera, the inhaled insulin, including direct-to-consumer advertising in the second half. Although Exubera was approved by the FDA 12 months ago, its full-scale launch was delayed due to inhaler manufacturing problems and to Pfizer's decision to spend more time on educating doctors and patients. Pfizer is expanding its marketing efforts to primary care doctors after having first focused on diabetes specialists. "We used this time to understand the fundamental drivers of this market," said Ian Read, president of worldwide pharmaceutical operations. Read predicted peak annual sales of $2 billion, although he conceded that such big sales wouldn't be achieved as early as Pfizer had forecast. Despite setbacks among experimental drugs and the assault of generic drugs, Pfizer executives predict solid financial health for the next few years even though sales will remain flat through 2008. The proceeds of the consumer-products sale plus "strong cash flow from operations over the next several years," will enable the company "to make key investments in new products and technologies and to support a strong dividend and an active share purchase program," said Vice Chairman David Shedlarz.