Pfizer tops estimates, but challenges remain
Pfizer earned $2.26 billion, or 34 cents per share, compared with $2.78 billion, or 41 cents per share, in the year-earlier period. Adjusted earnings per share were 48 cents, compared to 55 cents per share in the same period last year. Earnings per share beat consensus forecast by a penny, according to Reuters Estimates.
Revenue fell 9 percent from the same period a year ago to $10.9 billion, below FactSet Research estimates of $11.24 billion. Foreign exchange had an unfavorable impact on revenues of about $1.1 billion or 9 percent. For second-quarter 2009, U.S. revenues, representing 41 percent of the total, declined 5 percent to $4.5 billion. International revenues, representing 59 percent of the total, declined 12 percent to $6.5 billion compared with the prior-year quarter, but grew operationally by 2 percent. That growth was more than offset by the unfavorable impact of foreign exchange of 14 percent.
Meanwhile, helping results too were lower cost of sales, lower selling, informational and administrative expenses and lower R&D costs, amounting to overall cost reduction of 5 percent. Offsetting these lower costs, however, were an increase in the effective tax rate as well as costs incurred in connection with the pending Wyeth acquisition.
"Our results this quarter demonstrate our ability to continue to deliver solid operational performance despite a challenging and dynamic economic and operating environment. On a constant currency basis, all of our Pharmaceutical units and Animal Health-generated revenue growth during the quarter, with the exception of the Established Products unit [...]" Jeff Kindler, Chairman and Chief Executive Officer said in a statement.
Without much in terms of growth drivers going forward and an unimpressive pipeline, many analysts view Pfizer's deal to acquire Wyeth as crucial to Pfizer's future earnings and growth. Regarding the Wyeth deal, Kindler added that Pfizer made "significant progress" and achieved "several key milestones, including approval of the acquisition by the European Commission [...]."Indeed, looking at the segmented results, many of Pfizer's drugs continued to suffer. Cholesterol drug Lipitor sales fell 10 percent worldwide in the quarter to $2.69 billion, Viagra sales declined 9 percent to $423 million and blood pressure drug Norvasc sales dropped by 17 percent to $518 million. Anti-smoking drug Chantix declined only 7 percent, but may be hurt more following the FDA's suicide warning. Meanwhile, pain drug Lyrica sales climbed 2 percent to $629 million.
Pfizer also raised its full-year forecast for earnings, excluding items, to a range of $1.90 to $2.00 per share. Previously, it expected $1.85 to $1.95 per share. 2009 revenue should be between $45 billion and $46 billion. The drug maker's previous range had been $44 billion to $46 billion.
Pfizer has shown in this quarter it has made some progress, but to convince investors it might need to do far more after a couple of years of choppy and disappointing performance. PFE shares declined 1.6 percent in pre-market trade at last check. [Update: Shares have reversed direction by midday trading, up about 2 percent as investors chose to concentrate on the positives.]