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Earnings Roundup

It's feast or famine for drug firms

July 19, 2007|From Times Wire Services

Pfizer Inc. on Wednesday reported a 48% drop in second-quarter earnings on lower sales of the cholesterol pill Lipitor, while Abbott Laboratories showed a 62% increase on a revenue surge for the arthritis drug Humira.

Competition from cheaper generic copies of Merck & Co.'s rival cholesterol drug Zocor contributed to a 25% plunge in Pfizer's U.S. revenue from Lipitor, the world's best-selling medicine. Abbott, the third-largest U.S. drug maker, also posted sales gains on drugs for HIV, migraines and cholesterol.

New York-based Pfizer missed analysts' estimates and Abbott beat them because of the condition of the drug makers' product pipelines. Abbott, based in Abbott Park, Ill., is benefiting from expanded use of some of its new medicines. Pfizer, the world's largest drug maker, isn't introducing new products as fast as patents expire on old ones.

"Lipitor is eroding faster than Pfizer thought it would," said Les Funtleyder, an analyst with Miller Tabak & Co. in New York.

Although Pfizer Chief Executive Jeffrey Kindler is eliminating jobs and closing factories to offset revenue losses, he said, "you can't cut your way to growth."

Abbott shares rose 31 cents to $53.70. Pfizer shares fell 83 cents to $24.13.

The 3.2% decline was Pfizer's biggest since an 11% drop Dec. 4 that wiped out $21 billion of market value. Pfizer triggered that sell-off by dropping research on a new cholesterol drug intended to replace Lipitor after some patients taking it in a trial died.

Pfizer said net income declined to $1.27 billion, or 18 cents a share, from $2.42 billion, or 33 cents, a year earlier. Excluding $1.1 billion in restructuring and acquisition costs, profit missed analysts' estimates by 8 cents.

Revenue fell 5.6% to $11.1 billion, missing analysts' estimates of $11.5 billion.

The decline in U.S. sales of Lipitor more than offset a 5% increase abroad and resulted in a worldwide drop of 13%, the biggest since the generic version of Zocor became available a year ago. At the same time, newer drugs, including Merck and Schering-Plough Corp.'s Vytorin and Zetia, have gained popularity.

Lipitor accounted for $12.9 billion in sales last year, more than twice as much as the second-ranked drug, GlaxoSmithKline's asthma drug, sold as Seretide and Advair.

Abbott's second-quarter net income rose to $988 million, or 63 cents a share, from $612 million, or 40 cents, a year earlier. Earnings excluding certain expenses beat analysts' estimates by a penny.

Revenue jumped 16% to $6.37 billion, led by a 50% increase in sales for Humira, approved for three new uses in the last year.

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