April 29, 2009 / 11:21 AM / 10 years ago

UPDATE 3-Wyeth profit tops forecast but revenue disappoints

 * Revenue falls 6 pct
 * Cost-cutting, taxes bolster results
 * Wyeth stands by 2009 profit forecast
 * Shares little changed in morning trading  (Adds analyst comments, likelihood of Zosyn generic)
 By Ransdell Pierson
 NEW YORK, April 29 (Reuters) - U.S. drugmaker Wyeth WYE.N reported higher-than-expected first-quarter earnings, boosted by cost-cutting, but revenue fell short of forecasts as the stronger dollar hurt overseas sales.
 Earnings were also helped by a significantly lower tax rate and lower cost of goods sold, a factor that has helped other drugmakers during the quarter and which is sometimes linked to the stronger dollar.
 Sales of anti-depressant Effexor tumbled 20 percent to $819 million as the drug began facing generic competition in Europe. It was also hurt by lingering concerns that such medicines increase the risk of suicidal thoughts.
 The magnitude of the Effexor sales decline was far greater than the 3 percent drop seen in the prior quarter.
 But global revenue from Prevnar, a vaccine to protect children from being infected with pneumococcal bacteria, which has been one of Wyeth’s fastest-growing products, rose 7 percent to $755 million.
 “At the end of the day, Wyeth is executing well,” said Edward Jones analyst Linda Bannister. “Like others in the industry, they beat on the bottom line but missed a little on the top line.”
 Bannister said Prevnar showed decent growth despite the strong dollar and economic downturn, and could grow significantly in coming years if an improved form of the vaccine is approved for children and becomes available for adults.
 The company posted quarterly earnings of $1.2 billion, or 89 cents per share, unchanged from year-earlier results.
 Excluding special charges, profit was 95 cents per share. On that basis, analysts on average expected 89 cents, according to Reuters Estimates.
 Revenue fell 6 percent to $5.38 billion, about $150 million below the Reuters Estimates forecast. Wyeth said revenue would have risen 2 percentage points if not for the stronger dollar.
 Wyeth, which has agreed to be acquired by Pfizer Inc (PFE.N), stood by its full-year earnings forecast of $3.33 to $3.53 per share excluding special items. It earned $3.53 per share last year.
 Sales of rheumatoid arthritis treatment Enbrel rose 3 percent to $627 million outside the United States and Canada, half the growth rate seen in the prior quarter but slightly above forecasts.
 “Some investors were apprehensive about Enbrel and Prevnar revenues heading into the quarter, and today’s results should be met with some relief,” Credit Suisse analyst Catherine Arnold said in a research note.
 But Wyeth’s share of revenue for Enbrel in North America — from an alliance with Amgen Inc (AMGN.O) — fell 26 percent to $240 million due to lower U.S. demand and an unfavorable comparison from last year, when Amgen shifted to wholesaler distribution.
 Revenue from antibiotic Zosyn slipped 9 percent to $310 million. Wyeth cautioned that cheaper generic forms of the blockbuster product could become available in the United States by the third quarter and wrest away sales.
 Sales of nutritional products rose 1 percent to $415 million.
 Wyeth shares were little changed in morning trading on the New York Stock Exchange, amid a 0.6 percent gain for the American Stock Exchange Pharmaceutical Index .DRG of large U.S. and European drugmakers.  (Reporting by Ransdell Pierson; editing by John Wallace and Matthew Lewis)        

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