* Pfizer, Lilly 4th-quarter profit top Street view
* Pfizer sees 2013 EPS $2.20-$2.30 excluding items
* Lilly sees 2013 EPS $3.82 to $3.97
* Pfizer shares up 3 percent; Lilly shares up 3.6 percent
By Bill Berkrot and Ransdell Pierson
Jan 29 Pfizer Inc and Eli Lilly and Co
both reported a better-than-expected fourth-quarter
profit as they weathered generic competition for once
top-selling products through deals, cost cutting and strong
sales of newer products.
The U.S. drugmakers also issued 2013 forecasts on Tuesday
that passed muster with investors, sending shares of both
companies up about 3 percent.
Excluding special items, Pfizer earned 47 cents per share,
topping analysts' average expectations by 3 cents, according to
Thomson Reuters I/B/E/S.
But global sales for the largest U.S. drugmaker fell 7
percent to $15.1 billion as sales of Lipitor, formerly the
world's top selling prescription medicine at nearly $13 billion
a year for Pfizer, plunged 71 percent to $584 million with the
market flooded by cheaper generic copies.
Pfizer's net profit quadrupled to $6.32 billion, or 86 cents
per share, due to the November sale of its nutritional products
business to Swiss food group Nestle SA for about $12
billion. It is also preparing to spin off its animal health
business through an initial public offering expected to bring in
"Pfizer is doing exactly what you want them to do," said
Bill Smead, portfolio manager of Seattle-based Smead Value Fund
that owns Pfizer shares. "Pfizer is moving back to their core
with a strong balance sheet and a bright future."
Lilly's fourth-quarter net profit fell more than 3 percent
as sales of its Zyprexa schizophrenia drug - at one time one of
the world's top five sellers - fell 49 percent to $385 million.
Excluding one-time items such as asset impairments and
restructuring charges, Lilly earned 85 cents per share, beating
analysts' expectations by 7 cents per share.
Lilly's results and its 2013 forecast were dependent upon
aggressive companywide cost controls. Strong sales of other
drugs and animal health products helped offset the toll of
generic Zyprexa in the fourth quarter.
"We are absolutely emerging from the loss of Zyprexa," Lilly
Chief Financial Officer Derica Rice said in an interview. "We
feel good where we are."
But the company is facing yet another daunting patent cliff
at the end of this year when its current biggest product, the
antidepressant Cymbalta, begins to face generic competition.
"They're negotiating the Zyprexa patent cliff pretty well by
keeping costs down, but the question is whether they can keep
tightening the belt to offset the patent expiration on
Cymbalta," said Judson Clark, an analyst for Edward Jones. "It's
a $6 billion a year drug, and a tough act to follow."
Lilly updated the 2013 earnings forecast it issued earlier
this month, which was better than Wall Street estimates, to
include 7 cents per share from a delayed research and
development tax credit. It now expects to earn $3.82 to $3.97
per share, which represents growth of 13 percent to 17 percent.
Pfizer forecast 2013 earnings of $2.20 to $2.30 per share,
excluding special items, with a midpoint below the average
analyst estimate of $2.29 per share, according to Thomson
Reuters. Pfizer earned $2.19 a share in 2012.
Pfizer earnings were propped up by rebounding sales in
emerging markets, which rose 17 percent to $2.65 billion, and
strong sales of its Prevnar vaccine for pneumococcal bacteria,
which jumped 19 percent to $993 million. It also recently won
approvals for highly promising new products, including the blood
clot preventer Eliquis, which it shares with Bristol-Myers
Squibb Co, and Xeljanz for rheumatoid arthritis.
"As they pare away non-pharmaceuticals businesses, that will
allow Pfizer's drug pipeline to shine even more because it will
represent a bigger portion of the company going forward," Clark
Smead likes the U.S. pharmaceutical sector as a whole.
"The best business over next 20 years is keeping baby boomers
alive and keeping their animals alive," he said.
Pfizer shares were up 83 cents, or 3 percent, at $27.67,
while Lilly shares rose $1.92, or 3.6 percent, to $54.56 in
midday trading on the New York Stock Exchange.