* Pfizer sees 2013 EPS $2.20-$2.30 excluding items
* Lilly sees 2013 EPS $3.82 to $3.97
* Pfizer, Lilly shares close up 3.2 pct
By Bill Berkrot and Ransdell Pierson
Jan 29 Pfizer Inc and Eli Lilly and Co
reported better-than-expected fourth-quarter profits as
deals, cost cutting and strong sales of new products helped the
pharmaceutical companies weather generic competition for once
The U.S. drugmakers also issued 2013 forecasts on Tuesday
that encouraged investors, who sent shares of both companies up
more than 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, plunged 71 percent to $584 million. Sales of the
cholesterol fighter began tumbling in November 2011, when its
U.S. patent expired and cheaper generics flooded the market.
Pfizer's quarterly 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 billions more.
"I don't think the Lipitor expiration is an issue for our
investors today," Chief Executive Ian Read said in an interview.
"We've done what we needed to do and (investors) are focused on
the future," he added, referring to the company's decision to
spin off the nutritional and animal health units in order to
focus on its more-profitable core pharmaceuticals business.
Pfizer 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
In mid to late-stage trials, it is testing treatments for
cholesterol, psoriasis and numerous types of cancer. Read said
Pfizer's biggest priority is developing the drug pipeline and
getting the products to market.
"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 best-selling 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, 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, up 13-17 percent from a year earlier.
Pfizer forecast 2013 earnings of $2.20 to $2.30 per share,
excluding special items. The average analyst estimate was $2.29
per share, according to Thomson Reuters, and the midpoint of the
company's range is less than that.
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.
"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 closed up 86 cents, or 3.2 percent, at
$27.70, while Lilly shares rose $1.68, or 3.2 percent, to close
at $54.32 on the New York Stock Exchange.