Pfizer names Read chairman, OKs $10 billion in buybacks
NEW YORK (Reuters) - Pfizer Inc (PFE.N), the world's biggest drugmaker, named Chief Executive Ian Read to the additional post of chairman and authorized buying back company stock for up to $10 billion.
Read succeeds George Lorch, who will become lead independent director of Pfizer's board. The appointment is effective immediately. The company, whose best-selling Lipitor cholesterol fighter lost U.S. patent protection on November 30, also raised its quarterly dividend by 10 percent.
As of November 1, Pfizer bought $6.5 billion in company stock this year, or 332 million shares, toward a goal of buying back $7 billion to $9 billion worth of shares during the full year. The new stock repurchases will be in addition to the funds left from the earlier repurchase program, Pfizer said.
The company said it expects to repurchase about $5 billion of its common stock in 2012. It said the remaining amounts would be available for stock repurchases in 2013 and beyond.
Pfizer also announced the election of two new directors to its board: Marc Tessier-Lavigne, president of Rockefeller University in New York and former chief scientific officer at Genentech, and Helen Hobbs, a professor at the University of Texas Southwestern Medical Center.
New York-based Pfizer raised its first-quarter dividend to 22 cents per share, from 20 cents per share in each quarter of 2011.
Pfizer is relying heavily on share buybacks and dividends to retain investors and attract new ones as U.S. sales of Lipitor continue to plunge with the arrival of cheaper generic forms of the $10 billion-a-year drug.
Some investors remain anxious about whether growing sales of other Pfizer drugs and launches of new medicines will adequately offset lost sales of Lipitor.
"The dividend increase and new share repurchase program are a testament to our continued commitment to enhancing shareholder value and our continued confidence in the business," Read said in a statement.
JP Morgan analyst Chris Schott said the size of the dividend increase and the new authorization for stock buybacks were roughly in line with his expectations.
Schott, citing data from IMS Health, said generics represented 14.6 percent of the overall U.S. Lipitor market in their first week after reaching U.S. drugstores. He predicted the copycats will continue gaining ground and capture a 60 percent market share within the next six months.
Pfizer shares closed 0.8 percent lower at $20.39 on the New York Stock Exchange on Monday, performing slightly better than the 1 percent fall in the Arca Pharmaceutical Index .DRG. (Reporting by Ransdell Pierson; additional reporting by Susan Kelly in Chicago; Editing by Tim Dobbyn)