Earnings Preview: Pfizer to report on 2nd quarter

AP News
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Posted: Jul 29, 2011 4:53 PM
Earnings Preview: Pfizer to report on 2nd quarter

Pfizer Inc., which reports second-quarter results before the stock market opens Tuesday, will discuss a few recent drug approvals, new data on some experimental drugs and plans to divest some of its non-core businesses.

WHAT TO WATCH FOR: Pfizer, the world's biggest drugmaker by revenue, needs some new big sellers to offset intensifying generic competition. Its $11 billion-a-year cholesterol fighter, Lipitor, loses U.S. patent protection on Nov. 30 _ the biggest drug patent expiration ever.

The maker of impotence pill Viagra and pain treatment Lyrica also has had some recent setbacks in drug development, and analysts may ask about those.

CEO Ian Read, who took over in December, will discuss his ongoing review of New York-based Pfizer's business, including plans to either spin off or sell its animal health and nutrition divisions. The company also is selling its medicine capsule-making business, for $2.4 billion, in a deal set to close soon.

Read likely will give an update on integration of King Pharmaceuticals Inc., a maker of pain drugs and other products that Pfizer bought for $3.6 billion in March. He probably will discuss Pfizer's progress in boosting sales in emerging markets, plus ongoing cost cuts.

Since buying Wyeth for $68 billion in October 2009, the company has been working to reduce annual costs by $4 billion to $5 billion. It plans to cut research spending by about 20 percent next year, to about $8.25 billion.

Executives will note recent drug approvals, including a new use for cancer drug Sutent, for treating advanced pancreatic tumors. Tamper-resistant narcotic painkiller Oxecta, an immediate-release drug that contains oxycodone, the active ingredient in OxyContin, was approved in the U.S. in June.

And blood thinner Eliquis was approved in the European Union in May for preventing blood clots in patients who have had hip or knee replacement surgery. Pfizer and partner Bristol-Myers Squibb plan to seek U.S. approval later this year. The companies also will seek approvals for much bigger groups of patients at risk of life-threatening blood clots. That gives the drug blockbuster potential.

Pfizer also has recently applied for approval of lung cancer treatment crizotinib and of axitinib, for treating the most common type of kidney cancer, and may review research data on them.

On the downside, the Food and Drug Administration on Friday said it would delay for 90 days a decision on approving sales of children's pneumococcal vaccine Prevnar 13 for adults aged 50 and over. The FDA called new data Pfizer submitted from two studies a major change to the application.

Prevnar 13, which protects against 13 common strains of pneumococcal bacteria, and the original, seven-strain version, had combined sales of nearly $3.7 billion last year, the most sales ever generated by a vaccine. The delay could mean a loss of hundreds of millions of dollars.

WHY IT MATTERS: Pfizer has had four big-selling drugs get generic competition since last July, including blockbusters Effexor for depression, Protonix for severe heartburn and Aricept for Alzheimer's symptoms. Their sales have been falling fast, and the same thing will happen to Lipitor starting in five months.

Despite an annual research budget approaching $10 billion, Pfizer has repeatedly had promising drugs fail in human testing in the last few years. That problem, and Pfizer's lagging stock price, led the board last December to oust Read's predecessor, Jeffrey Kindler, who had temporarily shored up the company with the Wyeth acquisition and intense cost-cutting ever since. Read has to prove he has a better strategy, one for the long term.

WHAT'S EXPECTED: Analysts surveyed by FactSet expect, on average, earnings per share of 59 cents and revenue of $17.02 billion.

LAST YEAR'S QUARTER: Pfizer posted earnings per share of 31 cents, or 62 cents excluding charges, on revenue of $17.33 billion.