TRENTON, N.J. (AP) — Pfizer Inc., fresh from buying fellow drugmaker Wyeth and already deep into integrating its operations, on Wednesday posted a 34 percent jump in revenue, but about $3.2 billion in acquisition charges and higher costs across the board weighed down profits.
The maker of Viagra and cholesterol fighter Lipitor, which paid $68 billion to get Wyeth's vaccines, biologic drugs and consumer health staples such as Centrum vitamins and pain relievers Advil and Anacin, already has slashed about 4,200 jobs and cut other costs.
New York-based Pfizer said its revenue in the fourth quarter totaled $16.54 billion, half a billion above what analysts were expecting as the recession continues to reduce sales of even prescription medicines. Wyeth products contributed $3.3 billion of those sales. Excluding that boost, revenue was up about 7 percent from the $12.35 billion Pfizer reported in the fourth quarter of 2008, but Pfizer noted favorable exchange rates boosted total revenue by 4 percent.
Net income amounted to $767 million, nearly triple the $266 million the world's biggest drugmaker earned a year earlier, when results were hurt by a whopping $2.3 billion charge to settle federal charges Pfizer improperly marketed some of its drugs. That profit is equal to earnings per share of 10 cents, or 49 cents after excluding the acquisition charges and other one-time items.
Analysts polled by Thomson Reuters were expecting Pfizer to earn 50 cents a share, on average. The per-share results were reduced somewhat because Pfizer issued new shares to help fund the Wyeth purchase, increasing outstanding shares by about 16 percent.
Pfizer did not provide directly comparable figures on revenue, profit and costs for the 2009 and 2008 periods.
In morning trading, shares of Pfizer fell 48 cents, or 2.5 percent, to $18.58.
The company forecast 2010 revenue of $67 billion to $69 billion, and earnings per share of 95 cents to $1.10, or a range of $2.10 to $2.20 excluding one-time items.
Analysts were expecting revenue of $67.5 billion, but higher earnings per share, at $2.27. Pfizer said it recently reduced its 2010 forecast by 6 cents a share because of the recent strengthening of the dollar.
Currency exchange rates have fluctuated considerably in the last few years, adding to the volatility generic competition brings to drugmakers' revenue. A strong dollar generally hurts results of U.S.-based companies that, like Pfizer, get about half their revenue from overseas.
"This report was less than the Street was hoping for, and the guidance, though somewhat light, likely resets expectations to achievable, if not ambitious, levels," analyst Les Funtleyder of Miller Tabak & Co. wrote to investors. He said it was too soon to judge the success of the now combined" company and reiterated his hold rating on Pfizer shares.
Analyst Steve Brozak of WBB Securities said shares were down because investors wanted a higher profit forecast for this year, but he's focused on what he thinks are more positive and important numbers.
Pfizer's spending on research and development was up significantly for the quarter and all of 2009, he said, and drug revenue jumped 30 percent in the fourth quarter.
"That's the growth you want to see," Brozak said. "Who cares if the (forecast) numbers are off for a quarter or even a year?"
In the fourth quarter, sales of prescription drugs and vaccines hit $14.61 billion.
Lipitor sales edged up just 1 percent to $3.18 billion in the quarter and blockbuster blood pressure drug Norvasc, which is steadily losing sales to generic competition, was down 10 percent to $486 million. But pain and fibromyalgia treatment Lyrica saw sales climb 17 percent to $820 million, cancer drug Sutent was up 33 percent to $293 million, Viagra was up 9 percent to $549 million and glaucoma treatment Xalatan rose 10 percent to $499 million. Among Wyeth products, sales from much of the fourth quarter brought Pfizer $378 million for biotech rheumatoid arthritis treatment Enbrel, $287 million for the children's meningitis vaccine Prevnar and $184 million for antibiotic Zosyn.
Pfizer's "diversified" division, which sells animal and consumer health products, nutrition items and capsules for medicines, saw revenue jump 83 percent to $1.81 billion, mainly because of the addition of Wyeth's vitamins and other over-the-counter health products.
Pfizer bought Wyeth on Oct. 15 in its biggest acquisition ever and the most expensive of several big deals last year as the pharmaceutical industry consolidates to cut costs because of intensifying generic competition and a limited number of new blockbuster drugs.
Pfizer said the two companies had about 120,700 workers combined when the deal closed. Each had been working on its own cost-cutting programs before the deal was announced last January, when they had about 130,000 workers between them, so more than 9,000 jobs were eliminated by October.
"We are pleased with the rapid pace of integration and our ability to quickly realize the benefits of our combined operation," Pfizer Chief Executive Jeff Kindler said in a statement. "Our results this quarter clearly demonstrate the ability of our colleagues to remain focused and deliver solid operational performance."
For all of 2009, Pfizer reported net income of $8.64 billion, up 7 percent, and total revenue of $50 billion, up 4 percent.
