Traverse City Record-Eagle

Business

July 31, 2013

Pfizer 2Q profit way up

the associated press

Pfizer’s second-quarter net income more than quadrupled, helped by the sale of its animal health business and a gain from settling litigation.

The world’s second-largest drugmaker beat Wall Street’s earnings expectations, though revenue continued to decline due to expired patents on former blockbuster drugs that once brought Pfizer sales of well over $1 billion a year.

Meanwhile, just a day after Pfizer announced it will reorganize into three businesses starting in January, analysts peppered company executives on a conference call with questions about how soon it could split up into multiple companies. Pfizer said that would take at least three years, but it hasn’t decided to do so.

The company noted unfavorable exchange rates cut revenue by 3 percent. Worse yet, Pfizer said growth is slowing in emerging markets such as China and India.

The company now expects that revenue to climb in 2013 by only a mid-single-digit percentage, down from prior forecasts of high-single-digits. That’s worrying because the pharmaceutical industry has pinned most hopes for future growth on those countries, as western governments continue to try to rein in prices.

“The emerging markets did not grow as fast as we expected,” Pfizer CEO Ian Read told The Associated Press in an interview. “This is in part due to some slowing up of purchases and some pricing pressure” by governments in emerging markets.

Still, the biggest problem was a continuing revenue decline due generic competition.

The worst hit has been on cholesterol fighter Lipitor, which was the world’s best-selling drug for nearly a decade until it lost exclusivity in the U.S. late in 2011 and in much of Europe last year. Revenue from Lipitor, which once brought in nearly $13 billion a year, dropped 55 percent to $484 million in the second quarter.

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