Pfizer Inc.'s (PFE) second-quarter profit dropped 19% on lower
sales of its top drugs including cholesterol-fighter Lipitor and
pain reliever Celebrex.
Pfizer's smaller rival, Eli Lilly & Co. (LLY), meanwhile,
reported increased revenue and profits, helped by higher sales of
cancer drug Alimta and the antidepressant Cymbalta.
Both U.S. drug makers exceeded Wall Street expectations and
raised their earnings forecasts for 2009. Several major drug makers
may see improved second-half results as the effects of unfavorable
currency rates dissipate, but challenges such as generic
competition will continue. British drug giant GlaxoSmithKline PLC
(GSK) said Wednesday it expects a better second half.
Pfizer shares rose 18 cents, or 1%, to $15.88. Lilly shares
dropped 12 cents to $34.35.
New York-based Pfizer saw sales of many top drugs decline due to
generic competition and unfavorable currency rates. Generic
competition and drug-research setbacks were among the factors that
drove Pfizer to agree earlier this year to acquire Wyeth (WYE) in a
cash-and-stock deal originally valued at about $68 billion. The
deal is expected to close by the end of the year. Like other drug
makers, Pfizer also has laid off thousands of employees to cut
costs and bolster earnings.
Pfizer said net income attributable to the company dropped to
$2.26 billion, or 34 cents a share, from $2.78 billion, or 41 cents
a share, a year earlier. The latest quarter included costs related
to the pending Wyeth acquisition and other items; excluding these,
earnings were 48 cents a share, a penny ahead of the mean estimate
of analysts surveyed by Thomson Reuters.
"Our initial impression is that the company exhibited good cost
control," said Miller Tabak analyst Les Funtleyder.
Pfizer's second-quarter revenue dropped 9% to $10.98 billion.
Unfavorable foreign-exchange rates accounted for the entire
decrease. U.S. sales dropped 5% to $4.5 billion, while non-U.S.
sales dropped 12% to $6.5 billion.
Sales of Lipitor, the top-selling prescription drug in the
world, dropped 10% to $2.69 billion, with U.S. sales falling 6% and
non-U.S. sales down 13%. Lipitor continues to be pressured by
intense competition, including from AstraZeneca PLC's (AZN) Crestor
and generic versions of Merck & Co.'s (MRK) Zocor.
Celebrex sales dropped 7% to $548 million, while
anti-hypertension drug Norvasc posted a sales decline of 17%, to
$518 million. Sales of smoking-cessation drug Chantix continued to
decline, hurt by reports of potential neuropsychiatric side
effects.
Among the few big Pfizer drugs that saw sales gains were pain
drug Lyrica, up 2%, and cancer drug Sutent, which rose 5%.
Pfizer increased its forecast of adjusted 2009 earnings to a
range of $1.90 to $2 a share, from $1.85 to $1.95 per share. The
Thomson estimate for 2009 is $1.96 a share.
Indianapolis-based Lilly said net income for the three months
ended June 30 rose 21% to $1.16 billion, or $1.06 a share, from
$959 million, or 88 cents a share, a year earlier.
The latest quarter included a pretax charge of $105 million, or
6 cents a share, to cover costs of a potential settlement of U.S.
state government investigations into Lilly's marketing of the
antipsychotic Zyprexa. Lilly said it's in advanced discussions with
several states that weren't part of the $1.4 billion settlement
reached earlier this year with state and federal entities probing
Lilly's marketing of Zyprexa for unapproved uses.
Excluding the Zyprexa charge, Lilly earned $1.12 a share, well
above the Thomson estimate of $1.02 a share.
Lilly's second-quarter revenue rose 3% to $5.29 billion.
Unfavorable foreign-exchange rates reduced growth by seven
percentage points. Excluding currency, the 9% operational sales
growth was driven by six percentage points of higher volume and
three points of higher prices.
While sales of Lilly's top drug, Zyprexa, were down 3% at $1.2
billion, Lilly posted solid growth for three other drugs: the
Cymbalta antidepressant, Humalog for diabetes and cancer drug
Alimta.
"We continued to have good, strong underlying operating
performance," Lilly Chief Financial Officer Derica Rice said in an
interview. Rice said Lilly continued to cut costs where
possible.
Lilly's Cialis erectile-dysfunction drug has gained ground on
Pfizer's Viagra. Cialis second-quarter sales were flat at $363
million, while Viagra was off 9% at $423 million. Both drugs,
however, decelerated from the first quarter. Lilly executives said
Cialis is taking market share from Viagra in new prescriptions
written by U.S. doctors, and has surpassed Viagra in Europe in
sales.
Lilly increased its 2009 earnings forecast - excluding one-time
items - to a range of $4.20 to $4.30 a share, from $4 to $4.25. The
Thomson estimate is $4.23 a share.
But the increased full-year outlook appears conservative in
light of the upside to Lilly's earnings in both the first and
second quarters.
Rice explained on a conference call with analysts that Lilly
will incur higher operating expenses to support the forthcoming
U.S. launch of anti-clotting drug Effient, and Lilly will increase
its direct-to-consumer advertising for various products. Effient
will compete with Plavix, the blockbuster drug co-marketed by
Sanofi-Aventis (SNY) and Bristol-Myers Squibb Co (BMY).
Also, Rice told Dow Jones Newswires that marketplace challenges
remain, including a more difficult pricing environment due to
pressure by payers and increased utilization of generic drugs,
driven by the weak economy.
Pfizer executives are scheduled to hold a conference call with
analysts to discuss quarterly results at 11 a.m. EDT.
-Peter Loftus, Dow Jones Newswires; 215-656-8289;
peter.loftus@dowjones.com
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