) reported second quarter earnings that beat analyst estimates.
However, with the loss of Lipitor exclusivity and Viagra next to
go, the future remains challenging.
Pfizer's net income increased in the quarter, jumping 25 percent
to $3.25 billion from $2.61 billion a year ago. Earnings minus
one-time items reached 62 cents a share, beating estimates by eight
Those increases, however, are the result of cost-cutting
measures as opposed to top-line growth. The cost of sales dropped
23 percent, with research and development spending falling 24
percent. Administrative costs decreased 17 percent.
Meanwhile, revenue also fell 9 percent to $15.1 billion, with
Lipitor sales alone dropping 53 percent to $1.22 billion.
Ever since the cholesterol drug lost exclusivity last November,
sales have been in freefall. U.S. sales have been especially hard
hit, falling 79 percent. Without another blockbuster drug in the
pipeline, Pfizer is going to have to work hard to find solid growth
Steps are being made in a positive direction, as Pfizer plans to
spin off up to 20 percent of its animal health business in an
initial public offering (IPO) this August. The goal at that point,
according to CEO Ian Read, is to then focus the company on
development, a renewed quest to find the next Lipitor.
To that end, Pfizer is also selling its nutrition unit to Nestle
for $11.85 billion. The unit mostly makes baby formula.
Slimmed down and streamlined, the new Pfizer may indeed prove as
profitable as analysts expect. However, at the moment the company
lacks any real breakthroughs in its pipeline and it faces
significant headwinds, as Viagra and other moneymaking drugs are
losing exclusivity this year.
Pfizer remains one of the strongest pharmaceutical companies in
the world, but for the short-term foreseeable future there aren't
many things to like at the moment. Growth may have to come from the
acquisition of smaller biotechs with promising drugs. While that
path can work quite well, it will prove more costly than home-grown
Until Pfizer's pipeline replenishes, expect to see plenty of
quarters with solid revenues but few chances for outsized
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