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Drug Makers' Earnings Climb

Pfizer's quarterly profit more than doubles, but the firm expects flat sales growth and more cost cuts in the future.

October 20, 2006|From the Associated Press

Four pharmaceutical companies reported higher third-quarter earnings and sales Thursday, but Pfizer Inc., the world's largest drug maker, predicted flat sales growth and more cost cutting ahead.

Pfizer said the challenging operating environment was pushing it to slash costs beyond a program announced last year designed to cut $4 billion in expenses by 2008. Specifics are set to be announced in January.

Jeffrey B. Kindler, who became Pfizer's chief executive over the summer, said the drug maker expected to deliver high single-digit growth in earnings per share in 2007 and 2008. The New York-based company had already pledged to meet those targets and reiterated Thursday that it would earn $2 a share in 2006 -- essentially flat with last year's performance.

Pfizer said the strengthening dollar combined with pricing policies in several European countries meant that the company expected revenue in the next two years to be on par with 2006. Previously, Pfizer had predicted moderate growth.

"We need to transform the way we do business," Kindler told analysts. He said there would be "no sacred cows" during cost cuts, including the company's sales representatives, considered one of its strengths.

Pfizer shares fell 42 cents to $27.68 on Thursday. The stock price was higher earlier in the day, but Pfizer said torcetrapib, an experimental cholesterol-lowering drug that could be crucial to the company's future earnings, might require more than a year's review by regulators. Analysts were expecting a 2008 introduction, but the comments raised concerns about the timeline and the drug's future.

Pfizer said it earned $3.4 billion, or 46 cents a share, compared with $1.6 billion, or 22 cents, a year earlier. In the third quarter of 2005, Pfizer took a $1.4-billion acquisition charge for its purchase of Vicuron Pharmaceuticals Inc.

After tax adjustments, Pfizer earned 54 cents a share in the latest quarter. The profit beat analysts' estimates by 9 cents.

Revenue rose 9% to $12.2 billion, surpassing the $11.4 billion predicted by analysts surveyed by Thomson Financial.

Among Pfizer's competitors, Swiss firm Novartis reported that third-quarter profit rose 12% to $1.87 billion, up from $1.67 billion last year. Novartis shares rose $2.22 to $60.09.

Indianapolis-based Eli Lilly & Co. said its profit rose 10% on modest growth by its bestselling drug, the antipsychotic Zyprexa, and a strong performance by the antidepressant Cymbalta.

Lilly's net income grew to $873.6 million, or 80 cents a share, from $794.4 million, or 73 cents, a year earlier.

Analysts expected earnings of 79 cents a share on revenue of $3.88 billion. Despite beating expectations, Lilly shares fell 76 cents to $57.49.

Wyeth's income climbed 33%, helped by sales of the anti-inflammatory drug Enbrel and its Prevnar vaccine to prevent pneumococcal disease in children. Quarterly profit grew to $1.16 billion, or 85 cents a share, from $869.9 million, or 64 cents.

Analysts expected a profit of 81 cents before one-time items on revenue of $5.03 billion. Shares of Madison, N.J.-based Wyeth fell 14 cents to $53.05.

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