Pfizer global drug sales fall, spark concern

Reuters: Pfizer Inc showed further weakness in its main business of prescription medicines, sending shares down as much as 3.2 per cent on concern over future growth as the company prepares to divest better-performing non-pharmaceuticals businesses.

The world’s largest drugmaker saw sales declines in primary care, specialty care, branded generic and oncology medicines during the second quarter, although drug sales grew in fast-growing emerging markets.

That could mean it is in vulnerable shape ahead of the US patent expiration in November on its top-selling Lipitor cholesterol fighter. Generic competition has already begun to chip away at overseas sales of the $ 10 billion-a-year drug.

Pfizer said global prescription drug sales fell three per cent in the quarter to $14.64 billion, and were down seven per cent after stripping out the benefit of the weaker dollar. Lipitor worldwide sales fell eight per cent to $ 2.59 billion.

Those declines were partly offset by a stronger performance in its animal health and nutritional products business. But Pfizer plans to divest those units in the coming months, through a sale or spin-off, and will rely more on the strength of its new drug pipeline as a result.

Pfizer earned $ 2.61 billion, or 33 cents per share in the quarter. That compared with $ 2.48 billion or 31 cents per share a year ago.

Excluding special items, Pfizer earned 60 cents per share. Analysts on average expected 59 cents, according to Thomson Reuters I/B/E/S. Results were helped by a lower effective tax rate of 29 per cent, from 32 per cent a year ago, due to extension of a federal research and development credit.

Total revenue fell one per cent to $16.98 billion, matching Wall Street expectations, but would have fallen five per cent if not for the weaker dollar, which boosts overseas sales.

Pfizer shares were down 1.9 per cent at $18.65 in midmorning trade after dipping as low as $18.42 earlier in the session.

Wall Street has been sour on Pfizer for the past five years due to its steadily falling earnings, plunging share price and its inability to create big-selling new medicines. But some investors had begun to look for new growth opportunities in an improving experimental drug pipeline and cost savings derived from its 2009 purchase of rival Wyeth.

“If you look at the pipeline there’s a lot of exciting things going on,” said CLSA analyst David Maris, referring to Pfizer’s experimental drugs for rheumatoid arthritis, lung cancer and blood clots that are now in late-stage trials.

Upcoming data on Pfizer’s experimental rheumatoid arthritis drug tofacitinib is critical for the company, said Edward Jones analyst Linda Bannister.

The pill works by blocking a protein called Jak-3 and could be deemed more convenient than Johnson & Johnson’s Remicade and other standard treatments that must be injected or infused.

“The big thing this year is the Jak-3,” Bannister said. “People are paying close attention to that.”

For the first time, Pfizer’s animal health products crossed the $1 billion mark, with sales jumping 18 per cent to $ 1.06 billion – bolstered by the company’s recent acquisition of King Pharmaceuticals and its Alpharma brands.

Sales of consumer healthcare products, including its Advil decongestant and Robitussen cough medicine acquired through its purchase of Wyeth, rose six per cent to $721 million. Revenue from nutritional products rose four per cent to $ 493 million.

The company last month said it planned to sell or spin off the animal health and nutritionals units, whose combined value could exceed $ 16 billion. Pfizer expects to complete any transactions in 12 to 24 months.

Pfizer shares have risen about 8.5 per cent so far this year, slightly outpacing a 7.5 per cent gain for the ARCA Pharmaceutical Index of large US and European drugmakers. Over the past 52 weeks, Pfizer shares have risen 27 per cent, twice the advance seen for the drug sector.

Pfizer earlier this year said it would cut as much as 25 per cent of its $ 8 billion to $ 8.5 billion research budget to deliver on a 2012 profit forecast.

The drugmaker on Tuesday reaffirmed its 2011 profit forecast of $ 2.16 to $ 2.26 per share, excluding special items. It predicted earnings in 2012 of $ 2.25 to $ 2.35 per share – reflecting stable or improved earnings the first full year Lipitor faces US generics.