Pfizer outlook is now negative, was stable-Moody's

NEW YORK Oct 19 (Reuters) - Moody's Investors Service on Friday revised Pfizer's (PFE.N) rating outlook to negative from stable after the drug maker reported a sharp drop in third-quarter earnings.

A negative outlook indicates there is greater chance of a rating downgrade over the next 12 to 18 months.

Pfizer on Thursday said earnings fell to $761 million in the third quarter, down from $3.36 billion a year earlier, after a $2.8 billion charge to end its involvement with the poorly selling insulin drug Exubera. For details, see [ID:nL19450519].

Moody's now rates Pfizer "Aa1," the second-highest investment-grade rating. Pfizer was one of only a handful of industrial companies to carry top "Triple-A" ratings from Moody's before it was downgraded last December.

The negative outlook reflects the write-down for Exubera, continuing pressure on U.S. sales of cholesterol fighter Lipitor, and the loss of U.S. exclusivity for Lipitor in either 2010 or 2011, Moody's said in a statement.

"Although Moody's expectations for Exubera had already been tempered by slow market acceptance, the disappointment represents a key strategic setback, and also highlights the challenges faced by the branded pharmaceutical industry," the rating agency said.

Pfizer still has a strong balance sheet, but it will face challenges in improving shareholder value as patents expire between 2010 and 2012, Moody's said.

Pfizer's 6.6 percent bonds due in 2028 traded on Thursday at 105 basis points over Treasuries, according to MarketAxess. There were no significant trades of those bonds on Friday.