Drugmaker Pfizer posts 9 percent jump in 2Q profit, beats forecasts, on new revenue from Wyeth

Drugmaker Pfizer posts 9 percent jump in 2Q profit

Pfizer Inc. on Tuesday reported a 9 percent rise in second-quarter profit, trouncing Wall Street expectations as revenue jumped 58 percent due to favorable currency rates and its mega-acquisition of fellow drugmaker Wyeth last October. Shares jumped 5 percent on the surprisingly strong report.

The maker of cholesterol blockbuster Lipitor and impotence pill Viagra said net income for the three months ended July 4 rose to $2.48 billion, or 31 cents per share. A year ago, income was $2.26 billion, or 34 cents a share. Pfizer has since sold millions of new shares to help pay for Wyeth.

Pfizer, the world’s biggest drugmaker by sales, reported revenue of $17.33 billion, up from $10.98 billion last year, mainly due to $5.4 billion from Wyeth products. U.S. sales jumped 63 percent and foreign sales, 54 percent.

Excluding 31 cents in one-time items, income was $4.96 billion, or 62 cents a share. Those items included $1.1 billion before taxes for integrating Wyeth’s systems, employee severance and other restructuring, plus $2.1 billion before taxes for various charges related to buying Wyeth.

Analysts surveyed by Thomson Reuters expected 52 cents a share on revenue of $16.65 billion.

Shares rallied 86 cents, or 5.6 percent, to close at $16.34 Tuesday.

Wyeth is Pfizer’s third major purchase in nine years. Still, Pfizer is reportedly one of three huge companies interested in U.S. biotech firm Genzyme Corp., if France’s Sanofi-Aventis SA can’t close on its reported $18 billion offer.

Asked if Pfizer might buy Genzyme, Chief Financial Officer Frank D’Amelio threw cold water on the idea. He told The Associated Press in an interview that Pfizer is looking to make complementary “bolt-on acquisitions” worth “a couple billion up to several billion dollars.”

The price for Genzyme is “a whole lot more than what a bolt-on transaction would be,” he said.

He added Pfizer has a partnership with Protalix BioTherapeutics Inc. for a generic version of Genzyme’s drug for the genetic disorder Gaucher disease, up for U.S. approval by February.

Pfizer faces generic competition for Lipitor, the world’s top-selling drug with about $13 billion in 2009 sales, and eight other big-selling, high-margin drugs by 2015. It has had some highly touted drugs fail in testing recently. It bought Wyeth for $68 million to bolster revenue, cut costs and diversify, nabbing Wyeth’s vaccine and biologic drugs, consumer health products such as Centrum vitamins and its animal health business.

Already, Pfizer has cut 17,900 jobs of the 19,500 planned, and it’s reached half of its planned savings of $4 billion to $5 billion by 2012.

Pfizer reaffirmed its 2010 profit forecast, for revenue of about $68 billion and earnings per share of $2.10 to $2.20, excluding one-time items. Analysts expect $2.16 per share on revenue of about $67.3 billion, on average.

Pfizer also maintained its 2012 targets, with revenue at about $66.6 billion and earnings per share of $2.25 to $2.35, excluding items. Wall Street expects only $61.66 billion and $2.18 per share, partly because Lipitor loses U.S. patent protection in November 2011.

Leerink Swann analyst Seamus Fernandez cited favorable currency exchange rates, lower costs and an improved gross profit margin as the reasons Pfizer beat estimates by so much.

The patent losses will cut revenue in 2015, compared to 2010, BernsteinResearch analyst Dr. Timothy Anderson wrote to investors, but “large amounts of cost-cutting and share repurchases should help keep EPS flattish through the same period.”

“If there is any disappointment in results, it will be that (Pfizer) did not increase its share buyback or dividend,” he wrote. “Investors have been pushing for this.”

Pfizer halved its 32-cent dividend last year to help pay for Wyeth, angering investors who count on the dividend given that Pfizer stock has languished at $20 a share or less for two years. Pfizer hiked the dividend to 18 cents in January, and D’Amelio said its board will raise it again in December.

Altogether, prescription drugs brought in $15.02 billion, up 49 percent. Sales totaled $893 million for animal health products and $678 million for consumer health products.

Sales were up sharply in all Pfizer prescription drug segments except its small cancer business. The primary care business had revenue of $5.92 billion, up 15 percent, while specialty care products, including Wyeth blockbusters Enbrel for rheumatoid arthritis and pneumococcal vaccine Prevnar, skyrocketed 165 percent to $3.77 billion. Sales in emerging markets were up 55 percent to $2.25 billion and established products jumped 63 percent to $2.73 billion.

“Thank goodness for the Wyeth acquisition,” said analyst Steve Brozak of WBB Securities. “It gave them a year’s worth of breathing room” when investors can’t easily compare sales figures to year-ago quarters.

For the first six months, Wyeth posted net income of $4.5 billion, or 56 cents per share, down 10 percent from $4.99 billion, or 74 cents a share, in the first half of 2009. Revenues climbed 56 percent, to $34.08 billion.