Pharmaceutical giant Pfizer, Inc. (PFE) reported Tuesday a profit for the first quarter that surged 53 percent from last year, reflecting gains from Pfizer's joint venture in China as well as lower restructuring charges and acquisition-related costs.
However, total revenues declined 9 percent, as Lipitor sales continued to be hurt by generic competition.
Pfizer lost exclusivity rights on the popular cholesterol drug in the fourth quarter of 2011 in the U.S. and in most of Europe during the second quarter of 2012.
Both adjusted earnings per share and quarterly revenues missed analysts' expectations. Pfizer also lowered its earnings and revenue forecast for the full-year 2013, citing the impact of foreign exchange rates and the Zoetis IPO.
Pfizer spun-off its animal health business as a publicly listed standalone company, Zoetis, Inc. (ZTS) through an initial public offering of a 19.8 percent ownership interest in Zoetis that was completed on February 6, 2013. However, Pfizer continues to consolidate Zoetis as it retains an 80.2 percent ownership interest.
"As we begin 2013, we continue to generate attractive returns for our shareholders. We are clearly seeing the benefits of the investments we've been making in our innovative core, as evidenced by recent key product launches, including Eliquis, Xeljanz and various oncology products, as well as significant progress within our mid-to-late stage product pipeline, most notably palbociclib," Chairman and CEO Ian Read said in a statement.
The New York-based company reported net income of $2.75 billion or $0.38 per share for the first quarter, sharply higher than $1.79 billion or $0.24 per share in the prior-year quarter.
Adjusted net income, which excludes one-time items, totaled $3.91 billion or $0.54 per share, compared to $4.34 billion or $0.57 per share in the year-ago quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share in the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter decreased 9 percent to $13.5 billion from $14.89 billion in the same quarter last year, and missed fifteen Wall Street analysts' consensus estimate $14.00 billion.
Revenues, which includes all Zoetis revenues, primarily declined due to the losses of exclusivity of Lipitor and the unfavorable impact of foreign exchange of 1 percent.
Pfizer's U.S. revenues for the quarter decreased 10 percent on falling Lipitor as well as Prevnar 13/Prevenar 13 sales. International revenues also declined 9 percent from a year ago, primarily on a drop in Liptor sales.
Emerging markets revenues improved 5 percent to $2.42 billion, while established products revenues declined 16 percent to $2.35 billion from last year.
Among main products, cholesterol drug Lipitor's total revenues dropped 55 percent to $626 million, while revenues from Lyrica increased 12 percent year-over-year to $1.07 billion.
Arthritis drug Celebrex revenues grew 3 percent to $653 million, while Prevnar 13/Prevenar 13 revenue declined 10 percent to $846 million from last year. Viagra for erectile dysfunction recorded a 7 percent decline in sales.
Meanwhile, Zoetis or the spun-off animal health unit, revenues grew 5 percent to $1.09 billion and consumer healthcare revenues increased 12 percent to $811 million from last year.
Pfizer received a gain of $490 million associated with its joint venture in China. It also incurred restructuring charges and acquisition-related costs of $138 million, sharply down from $597 million last year.
Looking ahead to fiscal 2013, Pfizer lowered its adjusted earnings guidance to a range of $2.14 to $2.24 per share from the prior forecast in the range of $2.20 to $2.30 per share. The company also now projects revenues between $55.3 billion and $57.3 billion, down from the previous guidance between $56.2 billion and $58.2 billion.
Street is currently looking for full-year 2013 earnings of $2.28 per share, on annual revenues of $57.26 billion.
CFO Frank D'Amelio stated, "With our consistent financial performance and strong cash flows, including the proceeds from the sale of our Nutrition business in November last year and from the IPO of a 19.8% interest in Zoetis and a related debt offering earlier this year, we continue to make prudent capital allocation decisions for the benefit of our shareholders."
Meanwhle, Zoetis, the subsidiary of Pfizer, reported net income of $140 million or $0.28 per share, sharply higher than $111 million or $0.22 per share in the prior-year quarter.
Adjusted net income was $179 million or $0.36 per share, compared to $152 million or $0.30 per share in the year-ago quarter.
On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share in the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter increased 4 percent to $1.09 billion, with U.S. revenues growing 7 percent. Analysts expected revenues of $1.08 billion.
Looking ahead to fiscal 2013, Zoetis expects adjusted earnings in a range of $1.36 to $1.42 per share on projected revenues between $4.425 billion and $4.525 billion. Analysts project earnings of $1.38 per share and revenues of $4.53 billion for the full-year 2013.
PFE closed Monday's regular trading session at $30.43, up $0.31 on a volume of 27.73 million shares. In the past 52-week period, the stock has been trading in a range of $21.40 to $31.15. Meanwhile, ZTS closed at $32.66, down $0.29 on a volume of 0.40 million shares.
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