Pfizer 1Q profit drops 15% due to lower sales

BY LINDA A. JOHNSON

AP Business Writer

Pfizer Inc. said Monday that its first-quarter profit dropped 15 percent despite sharp cost cutting. The earnings decline reflected cheaper generic competition that continues to reduce sales of its multiple medicines and the end of some partnerships with other drugmakers.

The world’s second-biggest drugmaker by sales fell far short of Wall Street’s modest revenue expectations, but narrowly beat profit expectations.

The company has seen its revenue shrink as inexpensive copycat pills hurt sales of off-patent drugs that once brought in billions annually, particularly cholesterol fighter Lipitor, the top-selling drug of all time with peak revenue of nearly $13 billion.

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Meanwhile, Pfizer has been trying since January to get British rival AstraZeneca Plc to discuss its bid to buy the company, but AstraZeneca continues to rebuff Pfizer. On Friday, AstraZeneca rejected Pfizer’s third offer, a cash-and-stock deal worth about $106 billion, saying it still undervalues the company, particularly its portfolio of drugs in development.

Pfizer said that it still hopes AstraZeneca will discuss the deal, which would include Pfizer moving its official domicile —but not its corporate offices — to London. That move would reduce Pfizer’s income tax rated. The acquisition also would enable Pfizer, which has done three megamergers since 2001, to cut costs with yet another round of employee reductions and other savings.

The maker of Viagra said net income was $2.33 billion, or 36 cents per share, for the January-March period. That’s down from $2.75 billion, or 38 cents per share, a year earlier.

Excluding one-time charges, income was 57 cents per share. Analysts surveyed by FactSet expected 55 cents per share.

Revenue totaled $11.35 billion, down 9 percent. Analysts expected $12.08 billion.

Pfizer confirmed its 2014 profit forecast for earnings per share of $2.20 to $2.30 and revenue of $49.2 billion to $52.3 billion.

For the first time, Pfizer reported separate operating results for each of its three business segments, an effort to give investors more insight into performance as the company considers eventually breaking off some of its business.

All three segments reported sales that were at least slightly lower than in 2013’s first quarter, and income was down for both Pfizer’s newer medicines and its older, mostly off-patent drugs.

The segment that includes vaccines, cancer drugs and consumer health products, though, posted a 6 percent increase in income, to $1.06 billion. Pfizer reported income of $1.77 billion for its newer medicines and $4.05 billion for its older “established” prescription drugs.