Pfizer and Merck Earnings Impress Investors

Pfizer and Merck Earnings Send Stocks Climbing On a day when stock markets seem to be free falling, with the Nasdaq off 3% and the S&P 500 down by more than 2%, the Dow Jones Industrial Average is getting a bit of help from two of its components -- Pfizer (PFE) and Merck (MRK). The two drug giants are the only ones in the 30-stock index that are climbing, other than Walmart (WMT), after both pharmaceuticals reported quarterly results early Tuesday morning that beat Wall Street estimates.

Pfizer Earnings

Pfizer, the world's biggest drugmaker, said on Tuesday its first-quarter net income fell 26% because of charges related to the Wyeth acquisition. But adjusted net income rose 33% to 60 cents a share, beating estimates of 53 cents a share. Revenue jumped 54% to $16.8 billion, slightly above estimates of $16.6 billion, thanks to the addition of Wyeth products. Pfizer reaffirmed its 2010 outlook, but lowered 2010-2012 revenue targets due to changes expected from the health care reform law.

The maker of the world's top-selling drug, cholesterol treatment Lipitor, is trying to look past it. While sales of Lipitor grew by 1% in the quarter to $2.76 billion, its patent is expiring next year. And as Lipitor sales make up 16% of its revenue, Pfizer will have to look to other drugs for growth.

Those expected to provide some of that growth include fibromyalgia treatment Lyrica, whose sales rose 6% to $723 million, arthritis drug Celebrex, which saw sales inch up by 1% to $570 million, and the Prevnar and Prevnar 13 invasive pneumococcal disease vaccines, whose together saw sales reach over $800 million. In fact, Pfizer now has 16 potential blockbuster drugs, which could bring at least $1 billion each annually.

Pfizer also has 26 drugs in Phase 3 trials, which could help replace some of the lost Lipitor revenue. And while perhaps its pipeline isn't as promising as those of other pharmaceuticals, Pfizer's stock has already accounted for that, trading at a discount to its peers. If CEO Jeff Kindler's promise of increased dividends materializes soon, it will help justify Pfizer shares' 2.3% rise by late afternoon on Tuesday.

Merck Earnings

Merck, the second-largest U.S. drugmaker said on Tuesday that its revenue doubled in the first quarter to $11.42 billion because of the addition of Schering-Plough products. But charges related to its November acquisition of Schering-Plough dragged down profit sharply to $298.8 million, or just 9 cents per share. Excluding charges, Merck would have earned 83 cents a share, beating estimates for earnings of 75 cents per share and revenue of $11.18 billion.

For Merck, which is already dealing with generic competition for its blood-pressure drugs Cozaar and Hyzaar, it was the double-digit sales growth for a half-dozen of its top medicines that excited investors. Among them were asthma drug Singulair, inflammatory disease treatment Remicade and diabetes drug Januvia.

The maker of cholesterol drug Zetia also also said it is on track to to achieve cost savings of $3.5 billion in 2012 though the merger. And although it also lowered its revenue forecasts for the coming years due to health care reform, the decrease was smaller than analysts had expected. Merck shares climbed more than 2% by late afternoon trading.

Teva and InteMune Shares Decline

Wall Street, it seems, however, wasn't impressed with the first-quarter results from Teva (TEVA), the world's largest generic drug maker. Teva also beat analysts' estimates on the bottom line, but the 16% sales growth on the top line to $3.65 billion came short of expectations. Sales of its multiple sclerosis branded drug Copaxone rose 28%. But Teva shares fell 1.7% today.

Unrelated to earnings, InterMune (ITMN) dropped 5.4% before trading was halted pending news on its lead product, Pirfenidone, a treatment for idiopathic pulmonary fibrosis.
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