Pfizer Inc. reported flat first-quarter sales and shaved its revenue forecasts Tuesday as generic competition eats away at key drugs and pressure builds for the drugmaker to sell or spin off parts of the company.
Despite analysts grilling them on spinoff plans, Pfizer executives say they won't announce any bold moves for several months.
Pfizer shares fell nearly 3 percent, even though lower taxes and production and costs boosted profit 10 percent.
The world's biggest drugmaker by revenue said its net income was $2.22 billion, or 28 cents per share, up from $2.03 billion, or 25 cents per share, in 2010's first quarter. Excluding one-time items, income was $4.81 billion, or 60 cents a share.
The New York-based maker of cholesterol blockbuster Lipitor and impotence pill Viagra said revenue was $16.5 billion, down a half-percent from $16.58 billion a year ago.
Analysts surveyed by FactSet expected earnings per share of 58 cents and revenue of $16.59 billion, excluding one-time items.
Pfizer maintained its January forecast for 2011 adjusted earnings per share of $2.16 to $2.26, but reduced its revenue forecast, to about $66.2 billion from about $67 billion.
Pfizer also reduced its 2012 revenue forecast, to $63.5 billion, from $64.25 billion. That's right after Lipitor, the world's top-selling drug with nearly $11 billion in annual sales, loses U.S. patent protection on Nov. 30 and generic competition starts decimating sales.
"Our performance during the first quarter firmly positions us for achieving our 2011 plan and meeting our financial targets," Chief Executive Ian Read told analysts during a conference call.
Analysts pressed him for any plans to sell or spin off parts of the business to increase shareholder value, particularly the unit that sells older drugs with generic rivals. But Read, who just took over in December, said he couldn't respond until finishing a detailed review of the business.
"I think the market is anxious for us to lay out the results," Read said in an interview. He said plans will come piecemeal, during the last two quarters and maybe early next year.
Pfizer did say last month it will sell its Capsugel capsule-making business to a private equity firm for $2.38 billion. It has been ending research in some disease areas after years of spending billions and failing to produce new blockbusters.
Pfizer shares fell 58 cents, or 2.8 percent, to close at $20.44 Tuesday. The stock has mostly languished in the high teens for the last two years, after trading above $28 five years ago _ one reason the board ousted Read's predecessor, Jeffrey Kindler, in December.
"Institutional investors got ahead of themselves with their enthusiasm about possible divestitures," analyst Les Funtleyder, portfolio manager for the Miller Tabak Health Care Transformation Fund, said of the questions and recent speculation on spinoff targets. He said Pfizer remains squeezed by patent expirations for Lipitor and other drugs, but got some new products with its $3.6 billion purchase in March of pain drug maker King Pharmaceuticals and has a few promising drugs in development.
Those include blood thinner Eliquis, tofacitinib for rheumatoid arthritis, axitinib for kidney cancer and crizotinib for non-small cell lung cancer patients with a specific gene variant. Pfizer also is seeking approval to sell Prevnar, its children's vaccine against pneumonia and other infections, for older adults.
Pfizer bought back about $2.2 billion worth of its stock from January through April 30. It now expects to repurchase $5 billion to $7 billion worth of shares this year.
That's aimed at soothing investors still upset it halved its 32-cent dividend in early 2009 to help finance its $68 billion purchase of rival drugmaker Wyeth. That deal, Pfizer's third megamerger in a decade, brought the company Wyeth's biotech, consumer and veterinary medicines and set off yet another round of layoffs and other cost cuts. Pfizer raised the quarterly dividend to 20 cents in December.
"Selling off pieces is the company's ongoing approach to keeping analysts optimistic," said Erik Gordon, an analyst and professor at the University of Michigan's business school. "They spent a decade buying and now might spend a decade selling. They are every investment banker's fondest dream."
U.S. sales fell 3 percent to $7.02 billion, while foreign sales rose 2 percent to $9.48 billion.
First-quarter sales were driven by strong performances by pain treatment Lyrica, painkiller Celebrex, antidepressant Pristiq, pneumococcal vaccine Prevnar, biotech rheumatoid arthritis treatment Enbrel and the Spiriva inhaler for bronchitis and emphysema. King's drugs boosted revenue by $224 million.
Pfizer noted that Lipitor got generic competition last year in Canada and Spain. In November, Alzheimer's drug Aricept lost U.S. patent protection. Those patent losses reduced revenue by about $590 million. Lipitor sales were flat in the U.S. and down 25 percent elsewhere, at a total of $2.39 billion.
Meanwhile, Pfizer got hit with new generic competition in the first quarter for blockbuster heartburn drug Protonix and Neurontin, for treating seizures and pain caused by shingles.
Total pharmaceutical sales dipped 2 percent, to $14.22 billion, although sales in emerging markets rose 8 percent, to $2.18 billion. Countries including China, India and Brazil are a key target for virtually all international drugmakers, as the U.S. health care overhaul and price pressures from European government health programs have been choking revenue growth in those regions.
Sales of veterinary medicines jumped 16 percent, to $982 million. Sales of consumer health product sales such as ChapStick and Centrum vitamins rose 12 percent to $745 million.