Pfizer Inc (PFE.N) reported higher-than-expected quarterly earnings as improved profit margins and strong sales of its Lyrica nerve-pain drug partly offset plunging demand for its Lipitor cholesterol fighter, now facing cheaper generic rivals.
The global drugmaker said sales of Lipitor, which lost patent protection in November, fell 42 percent to $1.4 billion.
"The story here is that Pfizer is dealing with its Lipitor patent loss surprisingly well," said Morningstar analyst Damien Conover. "When you lose the biggest medicine in the world and your earnings per share only fall 3 percent, that's a lot better than people expected a few years ago. Pfizer is mitigating the patent loss by cutting costs and bringing in good new drugs."
Shares of Pfizer were down 0.7 percent at $22.76 in early trading.
Pfizer earned $1.79 billion, or 24 cents per share, in the first quarter. That compared with $2.2 billion, or 28 cents per share, a year earlier, when results suffered because of a litigation charge and costs of revamping research operations.
Excluding special charges to boost productivity and address legal matters, Pfizer earned 58 cents per share, from 60 cents a year ago. Analysts on average had expected 56 cents, according to Thomson Reuters I/B/E/S.
Citibank analyst Jon Boris said in a research note that U.S. pharmaceuticals sales of $5.19 billion were "solid," coming in about $290 million above his forecast. Overseas pharmaceuticals sales of $7.88 billion, down 1 percent from a year ago, were $230 million below his expectations.
Pfizer, whose research laboratories have produced few big-selling drugs in the past decade, is now eagerly awaiting U.S. approvals of two potential blockbuster treatments: blood clot preventer Eliquis and tofacitinib to treat rheumatoid arthritis.
SQUEEZING GROWTH FROM OLDER DRUGS
In the meantime, it is squeezing good growth out of older medicines, including Lyrica, whose sales jumped 16 percent to $955 million in the quarter, fueled by growing demand in Japan.
Sales of painkiller Celebrex rose 7 percent to $634 million, while sales of arthritis treatment Enbrel rose 3 percent to $899 million. Premarin, its line of female hormone replacement drugs, topped forecasts, with sales rising 11 percent to $261 million.
But sales of its Prevnar vaccines against pneumonia and other infections fell 6 percent to $941 million due to fewer children getting booster shots during the period and a lower U.S. birth rate for eligible patients versus a year ago.
Total company revenue fell 7 percent to $15.41 billion, a bit below Wall Street expectations of $15.47 billion.
The New York drugmaker agreed last week to sell its baby formula business to Nestle SA NESN.VX for $11.85 billion to focus on its core pharmaceuticals business. On Tuesday, Pfizer said it planned to allocate proceeds from the deal to share repurchases and possibly other uses.
In the meantime, Pfizer said it still intends to decide this year whether to divest its animal health unit, with any separation of the business taking place between this July and July 2013. The unit's sales rose 4 percent in the quarter to $1.03 billion.
Should it part with the business, Pfizer has said it would probably be in the form of an initial public offering, a route that would avoid hefty taxes.
(Reporting by Ransdell Pierson in New York; Editing by Michele Gershberg, Lisa Von Ahn)