Drugmaker Pfizer's 4Q profit plunges on lower sales, higher research, legal and other costs

MarketsAssociated Press

Pfizer Inc.'s fourth-quarter profit fell by half as worsening generic competition and unfavorable currency rates reduced sales, and higher research spending and legal costs also hurt the bottom line.

The world's second-biggest drugmaker by revenue reported lower sales for most of its huge portfolio of prescription medicines, with the biggest hit coming from new generic competition to popular painkiller Celebrex.

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Pfizer revenues have been declining amid a long wave of patent expirations, which allows much cheaper generic versions of its drugs to corner the market, while CEO Ian Read looks for a way to return to growth and mollify frustrated investors.

The New York-based company still beat Wall Street expectations, but it forecast 2015 profit and revenue below its 2014 results.

The Viagra maker said Tuesday that it posted net income in the quarter of $1.23 billion, or 19 cents per share. That's down from $2.57 billion, or 39 cents per share, a year earlier.

Excluding one-time items, Pfizer had adjusted income of $3.44 billion, or 54 cents per share. Analysts surveyed by FactSet were expecting 53 cents, on average.

Revenue totaled $13.12 billion, down 3 percent, but above expectations of $12.89 billion.

Recently approved drugs, particularly for various cancer types, are building up sales, but Pfizer remains under pressure from big investors to boost its relatively low stock price. Selling and spinning off big parts of its business over the last few years, including animal health, nutrition and a capsule-making unit, have helped but haven't been enough to satisfy detractors.

That's pushed Read to fall back on Pfizer's oft-used strategy of doing big deals to boost revenue and cut costs right away, but he apparently is still seeking one after being rejected last year by Britain's AstraZeneca PLC. That deal was an attempted "corporate inversion" that would have moved Pfizer's headquarters from the U.S. to Britain — and reduced the company's corporate tax rate.

Total prescription drug sales dipped 3 percent, to $12.08 billon.

Pfizer's top two drugs, Lyrica for fibromyalgia and other pain, and Prevnar vaccines against pneumonia and other infections, grew 10 percent and 16 percent, respectively, with each producing more than $1.3 billion in sales in the quarter.

Sales of consumer health products edged up 1 percent to $953 million.

Read said in a statement that Pfizer had weathered headwinds from new generic competition and the expiration of co-promotions of some partner drugmakers' products, but that this year the company expects approval of a promising drug for breast cancer, Ibrance, along with strong growth in developing markets and for its newest medicines. Those include Eliquis for preventing strokes and heart attacks and Xeljanz for rheumatoid arthritis.


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