NEW YORK (Reuters) - Top global drugmakers Pfizer Inc and Roche Holding AG posted disappointing profits and gave lackluster forecasts on Wednesday, sending their shares lower.
The reports underscore a generally uninspiring results season for the pharmaceutical industry, which is being squeezed by the loss of patent protection on many previous blockbuster drugs.
Pfizer, the world’s largest drugmaker, projected 2010 earnings below analysts’ average forecast, saying the strengthening dollar would crimp earnings.
The company also cut its profit and revenue forecasts for 2012, when it will face generic rivals to cholesterol medicine Lipitor. The U.S. patent on the world’s top-selling drug lapses in November 2011.
Pfizer shares fell 2.5 percent to $18.59, and weighed on the overall market.
Investors “don’t so much like seeing the guidance coming down but I think in the out year they have a good chance of exceeding that,” said Tony Scherrer, portfolio manager at Smead Capital Management, which holds about 340,000 Pfizer shares.
Roche missed full-year profit forecasts due to disappointing sales of key cancer drugs. The Swiss drugmaker confirmed its outlook for 2010 of double-digit earnings growth but said sales would rise at a mid-single-digit rate, which Bernstein analysts said was disappointing.
Roche shares slipped 0.6 percent.
Last week, AstraZeneca Plc warned that earnings would fall this year and said it would slash an additional 8,000 jobs as it faces U.S. generic competition to two key drugs. U.S. drugmakers Bristol-Myers Squibb Co and Eli Lilly and Co forecast 2010 earnings to rise in line with Wall Street estimates.
PFIZER FALLS SHORT
New York-based Pfizer reported for the first time quarterly results that included Wyeth, bought last year for $67 billion.
“We have made steady progress. One day does not make a trend,” Chief Financial Officer Frank D’Amelio said in an interview, referring to Wednesday’s decline in Pfizer shares.
Pfizer reported a fourth-quarter profit of $767 million, or 10 cents per share, compared with $266 million, or 4 cents per share, in the year-earlier period.
Excluding special items, Pfizer earned 49 cents per share, a penny short of the average estimate of analysts, according to Thomson Reuters I/B/E/S.
Pfizer’s revenue rose 34 percent to $16.5 billion, above Wall Street expectations of $15.9 billion.
The company said it expects full-year 2010 earnings of $2.10 to $2.20 per share. Analysts on average had expected $2.27 per share. The strengthening dollar, which weakens the value of overseas sales, will crimp earnings 6 cents per share more than Pfizer had expected, the company said.
About 57 percent of Pfizer’s $50 billion in revenue last year came from international markets.
“Overall, Pfizer’s business update was not what we hoped for since we assumed more flexibility on costs (primarily SG&A), non-operating expense, and viewed potential share repurchase activity as upside,” Leerink Swann analyst Seamus Fernandez said in a research note.
Global Lipitor sales rose 1 percent in the quarter to $3.18 billion, as moderate U.S. declines were offset by gains overseas.
Sales of Lyrica -- used to treat seizures, nerve pain and fibromyalgia -- rose 17 percent to $820 million. Sales of impotence treatment Viagra rose 9 percent to $549 million.
Pfizer cut its 2012 revenue view to between $66 billion and $68.5 billion, from a forecast of $70 billion provided a year ago, in part due to a divestiture tied to the Wyeth deal.
Its 2012 profit outlook was cut to between $2.25 and $2.35 per share, excluding special items. A year ago, it had forecast $2.42 per share.
Analysts said the disappointing profit forecasts in 2010 and 2012 were largely due to unexpectedly high spending. But D’Amelio said increased spending to license products, as well as to market and advertise them, is essential to build sales.
“We are clearly spending, with all the capital discipline we always have, because we see opportunities to grow the business,” D’Amelio said.
ROCHE ALSO DISAPPOINTS
Roche is better placed than many of its rivals, given its limited exposure to generic competition, but it just missed on profit forecasts.
Core earnings per share rose 10 percent in 2009 to 12.19 Swiss francs ($11.52), just behind the average forecast of 12.33 francs in a Reuters poll after big sellers Avastin, MabThera and Herceptin netted less than expected.
Customers were working off surplus stock following its buyout of U.S. biotech group Genentech, hurting sales, but Roche expects that process to be finished by the end of 2009.
Roche raised its 2010 sales forecast for flu drug Tamiflu to 1.2 billion from 700 million francs, in contrast to vaccine makers, who will now make less money than expected as the swine flu pandemic fades and countries cut orders.
Britain’s GlaxoSmithKline will report fourth-quarter earnings on Thursday and is expected to paint a picture of a difficult year ahead.
Merck, which reports earnings on February 16, may stand out from peers with promising experimental drugs gained in its $41 billion purchase of Schering-Plough.
Additional reporting by Katie Reid and Sam Cage in Basel, Switzerland, and Ben Hirschler in London; editing by Maureen Bavdek, Gunna Dickson, Gary Hill
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