By Jonathan D. Rockoff and Michael Calia
Pfizer Inc. said Tuesday it was looking at potential deals,
including big ones, after earlier dropping its pursuit of British
rival AstraZeneca PLC.
The New York pharmaceutical company said U.K. takeover rules
didn't allow it to consider reviving its interest in AstraZeneca
for the time being.
The update came as Pfizer said its second-quarter revenue edged
lower to $12.8 billion due to competition from low-price generic
medicines, though its results for the period topped
expectations.
In May, Pfizer dropped a $120 billion proposal to buy
AstraZeneca. Pfizer Chief Executive Ian Read said the company is
looking at deals, regardless of size.
"But we have no ongoing work looking at AstraZeneca because we
are in a six-month quiet period" imposed by U.K. takeover rules,
Mr. Read said in an interview.
One driver of Pfizer's interest in AstraZeneca, executives have
said, was the chance to cut its tax burden by locating the combined
company in the U.K., a maneuver known as a tax inversion. Mr. Read
urged U.S. lawmakers to fix what he called the "competitive
disadvantage" that American companies face against foreign rivals
enjoying more-favorable tax rates and rules.
"There is a disadvantage to being an American company because
something called taxes, which is an expense, are a lot higher," Mr.
Read said.
Chief Financial Officer Frank D'Amelio also said the company was
in the "late innings" of its major cost-cutting initiatives. After
making billions of dollars in cuts in recent years, he said Pfizer
doesn't see the opportunity for more such large reductions, unless
the company does a big acquisition.
In the second quarter, the company posted earnings of $2.9
billion, or 45 cents a share, down from $14.1 billion, or $1.98 a
share, in the prior-year period. Results for the same period a year
ago included about $10.5 billion in pretax benefits from selling
its animal-health unit as well as a legal settlement.
Excluding such items, earnings rose to 58 cents a share from 56
cents. Analysts had projected per-share earnings of 57 cents and
revenue of $12.47 billion.
Revenue fell 2%, hurt by foreign-currency changes and the
expiration of Pfizer's co-promotion with Amgen Inc. of Enbrel, a
psoriasis and rheumatoid arthritis drug.
Pfizer lowered its revenue outlook for the year, pointing to the
looming generic competition for blockbuster painkiller Celebrex in
December. The company now expects $48.7 billion to $50.7 billion,
down from its previous range of $49.2 billion to $51.2 billion.
Rival drug maker Merck & Co. said its second-quarter sales
fell slightly to $10.9 billion as its drugs faced competition from
generics and new rivals.
Merck reported a profit of $2 billion, or 68 cents a share, up
from $906 million, or 30 cents a share, a year earlier. A large
part of the bump, however, came from items including AstraZeneca
exercising an option to buy Merck's interest in heartburn remedies
Nexium and Prilosec.
Excluding that item, the company's adjusted per-share earnings
rose to 85 cents from 84 cents.
To find new sales growth, Merck is trying to focus on
therapeutic areas where it feels it is strongest, including drugs
for cancer, hepatitis C and diabetes as well as vaccines.
Adam Schechter, who runs Merck's commercial operations,
expressed confidence that regulators will approve pembrolizumab, an
immunotherapy to treat skin cancer. "We are ready to launch
pembrolizumab," Mr. Schechter said. The Food and Drug
Administration decision deadline is Oct. 28.
Merck CEO Ken Frazier said Merck is interested in small deals to
add to its portfolios of prescription drugs and animal-health
products. He ruled out an inversion deal designed to reduce
taxes.
Tess Stynes contributed to this article.
Write to Jonathan D. Rockoff at jonathan.rockoff@wsj.com and
Michael Calia at michael.calia@wsj.com
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