Second-quarter results at Pfizer ( PFE) underscore all the reasons why the big-pharma bellwether has sought to acquire its smaller rival Wyeth ( WYE) for $68 billion.

For one thing, sales at nearly all of Pfizer's main product lines contracted in the second quarter. Though the company highlighted "the unfavorable impact of foreign exchange" as the main cause behind the overall performance, a closer look reveals a company struggling in the face of heightened competition from generics as patents expire on key drugs.

Pfizer said revenue in the quarter fell 9% to nearly $11 billion from $12.13 billion a year ago, a decline virtually equal to the $1.1 billion that a stronger dollar cut from the company's top line, according to Pfizer's math. But even accounting for that exchange-rate impact, Pfizer's top line was flat with a year ago -- and zero growth, obviously, just won't do.

Further down in its earnings release, Pfizer admitted to the root cause of its problems -- the very problems Wyeth, with its innovative biotech products, is meant to address.

"In addition to foreign exchange," Pfizer said in the release, "other factors that negatively impacted" its results "included the loss of U.S. exclusivity for Zyrtec in January 2008 and Camptosar in February 2008, the loss of exclusivity in Japan for Norvasc in July 2008, as well as the revenue declines for Lipitor, as a result of continued intense competition, and for Chantix/Champix, mainly due to label changes."

In that dense paragraph, you have it all: Four of Pfizer's (at one time) best-selling blockbuster drugs, all but one of them suffering from increased competition from generics, and the last one, Chantix, severely curtailed following reports that the nicotine-busting drug might induce suicidal behavior in some users.

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