Drug maker Pfizer Inc. (PFE) announced a 42 percent drop of its top selling drug Lipitor in the U.S. for the fourth quarter after the drug lost patent to pave way for generic version. The overall worldwide fall for the drug is 24 percent during the quarter. The absence of another strong drug to offset the losses will likely to be felt in the coming quarter.
Meanwhile, the company has cut its adjusted earnings forecast for 2012 citing currency fluctuations. However, the company's adjusted earnings and revenues came in above Street expectations.
The New York-based Pfizer disclosed that it is on track to finalize strategic conclusions for the businesses of Animal Health and Nutrition in the current year itself. The company also indicated that any decision on the question of breaking up of these businesses would happen after July 2012 but not later than July 2013.
The company revealed its intention of launching additional products to improve its post-proof-of-concept compounds portfolio in top priority disease areas. Pfizer would also buy back shares worth $5 billion in 2012 from the available $10 billion authorization.
The company earned net income of $1.44 billion, down 50 percent from $2.89 billion and earnings dropped 49 percent to 19 cents a share from 36 cents a share in the year-ago quarter. However, on an adjusted basis, net income rose 3 percent to $3.86 billion from $3.74 billion and earnings grew 6 percent to 50 cents a share from 47 cents a share in the year earlier quarter.
Total revenues slipped 3.5 percent to $16.75 billion from $17.35 billion in the previous year quarter. Of this, biopharmaceutical revenues accounted for $14.14 billion, down 6.1 percent from $15.05 billion.
Wall Street analysts' were expecting the company to deliver earnings of 47 cents a share on revenues of $16.61 billion.
Cholesterol drug Lipitor sales dropped 24 percent to $1.999 billion from $2.63 billion in the year-ago quarter. In the U.S., the sale plummeted 42 percent to $816 million from $1.41 billion in the prior year quarter.
For the full year too, Lipitor sales plummeted 11 percent to $9.58 billion from $10.73 billion in 2010. In the U.S. the drug witnessed 6 percent downside to $5.0 billion from $5.33 billion in the previous year.
Moving ahead, Pfizer has cut its adjusted earnings forecast to $2.20 - $2.30 a share from $2.25 - $2.35 a share. Similarly, the company reduced its revenue outlook to $60.5 - $62.5 billion from $62.2 - $64.7 billion projected earlier. Street analysts currently estimate the company to earn $2.30 a share on revenues of $63.06 billion.
Importantly, the company's adjusted cost of sales is targeted at 20.5 – 21.5 percent for 2012 compared to around 20.06 percent in the fourth quarter of 2011.
Predictably, Lipitor has had its effect on the company's fourth quarter as well as full year revenues. Yet, the company could manage to top revenue estimates partly because it involves only one month of the three-month and 12-month period. The other reason could be contribution from non-pharma segment. But this will not help for the full period, be in 3 month or 12-months. The company needs to come out with a concrete plan for the development of its business since the product pipeline may not be able to offset the losses of strong brands like Lipitor, which represented one-sixth of total sales in 2010.