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.

As far as specific numbers go, Norvasc (a blood-pressure medicine) fell 17% to $518 million from the second quarter of 2008; Lipitor (the worldwide cholesterol-blowing blockbuster drug) declined 10% to $2.7 billion; Zyrtec, as expected, finally went to zero sales; Camptosar plunged 38% to $85 million; and Chantix slipped 7% to $192 million.

Between them, that's nearly half a billion dollars in lost revenue.

To combat these trends, Pfizer has aggressively cut costs, at which it has excelled (15,000 workers laid off since 2007, for example). The moves continue to help -- at least when it comes to Pfizer's bottom line, that is. In its earnings release, the company lifted its profit guidance for the rest of the year.

Of course, when you cut costs -- including not only staff reductions, but the shuttering of labs and plants -- you also make it harder to develop new drugs.

And so Pfizer has decided to acquire its way out of its drug-development doldrums. The company began courting Wyeth back in June 2008, and now expects to close on the deal, which has already received shareholder approval, in the late third quarter or early fourth. The buyout doesn't come without risk, of course: Pfizer has said that it's borrowing $22.5 billion from a bank consortium to finance the deal.

In its pre-market earnings release, Pfizer said adjusted second-quarter earnings were $3.25 billion, or 48 cents a share, compared with $3.7 billion, or 55 cents a share a year earlier. Analysts surveyed by Thomson Reuters were expecting earnings of 47 cents a share.

Reported earnings in the quarter were $2.26 billion, or 34 cents a share, a decrease from $2.78 billion, or 41 cents a share, a year earlier.

The company raised its 2009 adjusted earnings guidance to $1.90 to $2 a share from a previous forecast of $1.85 to $1.95 a share. Analysts expect earnings of $1.96 a share.

Pfizer shares were trading Wednesday afternoon at $15.98, up 29 cents, on heavy volume.

Wyeth shares meanwhile gained 60 cents to $47.72.

Around the other big-pharma neighborhood, Eli Lilly ( LLY) stock was trading basically flat at $34.55 after reporting strong quarterly results Tuesday ; Merck ( MRK) was up 27 cents to $29.92; Johnson & Johnson ( JNJ) lost 10 cents to $59.39; and GlaxoSmithKline ( GSK) slipped 19 cents to $37.95.

--Joseph Woelfel contributed to this article.
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