By PETER LOFTUS
Pfizer Inc.'s first-quarter profit declined 19% as sales of its top product, the cholesterol-lowering drug Lipitor, tumbled 71% in the U.S. amid competition from generic copies.
The New York-based drug maker also lowered its forecast for full-year 2012 earnings and revenue to reflect last week's agreement to sell its nutrition unit to Nestlé for $11.85 billion cash. The deal is expected to close by the first half of 2013, and Pfizer will treat the business as a discontinued operation for accounting purposes until then.
The sale of the nutrition unit, which makes baby formula, is part of Pfizer's efforts to retrench after the Nov. 30 loss of its U.S. market exclusivity for Lipitor, which was once the highest-selling prescription drug in the world.
The company is in the process of shedding certain nonpharmaceutical businesses to hone its focus on its core drug business. It continues to cut costs, including a significant reduction in research-and-development spending, while increasing returns of cash to shareholders through dividends and share buybacks.
Pfizer Chief Executive Ian Read said Tuesday the company would continue to allocate cash to share repurchases, as the company plans $5 billion of such buybacks this year. He said the company is open to making "bolt-on" acquisitions, but it doesn't currently see any on the horizon and has no plans for a large-scale acquisition.
Pfizer also may separate its animal-health unit, but probably not in a sale to another company. Chief Financial Officer Frank D'Amelio said Pfizer would most likely launch an initial public offering of a stake in the animal-health unit, followed by a split in which Pfizer shares could be exchanged for shares of the new company. He said plans haven't been completed, however.
For the first quarter, Pfizer reported a profit of $1.79 billion, or 24 cents a share, down from $2.22 billion, or 28 cents a share, a year earlier. The latest quarter included costs such as a charge of $450 million for a pending settlement of a lawsuit in which Brigham Young University claimed a share of profits from pain drug Celebrex under a research agreement. Pfizer said terms of the settlement were confidential.
Excluding items in both periods, per-share earnings fell to 58 from 60 cents but exceeded the mean estimate of analysts surveyed by Thomson Reuters by two cents.
First-quarter revenue declined 7% to $15.41 billion, just short of the Thomson estimate of $15.47 billion.
Sales were hurt by the loss of U.S. market exclusivity for Lipitor. Global sales of the drug fell 42% to $1.4 billion, including $383 million in the U.S. The branded Lipitor's U.S. prescription market share has declined to just over 30%, according to analysts, as competing generic versions from Watson Pharmaceuticals Inc. and Ranbaxy Laboratories Ltd. have taken market share.
Sales of pain drug Lyrica rose 16% to $955 million. Pain drug Celebrex had sales of $634 million, up 7%.
Prevnar 13, which protects against pneumococcal diseases, posted sales of $941 million, down 6%. The vaccine had sharp sales growth after its introduction in 2010, but Pfizer said Tuesday that most patients eligible to receive pediatric "catch-up" doses have already been vaccinated. In addition, U.S. sales were hurt by fewer births than in the year-earlier period.
Sales of the anti-inflammatory drug Enbrel, for which Pfizer has exclusive rights outside the U.S. and Canada, rose 3% to $899 million. Pfizer recently agreed to shift certain U.S. sales activities for Enbrel to its partner Amgen Inc.
Sales of erectile-dysfunction treatment Viagra rose 6% to $496 million.
Pfizer's animal-health products generated sales of $1 billion, up 4%. Consumer health-care sales declined 1% to $735 million, while nutrition sales were up 9% at $513 million.
Meanwhile, Pfizer hopes its drug-research efforts continue to recover from the series of setbacks it had several years ago. A key coming event is a scheduled May 9 meeting of a Food and Drug Administration advisory committee to consider Pfizer's application to market experimental rheumatoid arthritis treatment tofacitinib.
Analysts estimate tofacitinib could eventually generate more than $1 billion in annual sales if it reaches the market. Some analysts say FDA's staff reviewers may identify certain safety concerns with the drug, but that it could still be approved because the safety profile appears to be in line with certain rheumatoid arthritis drugs now on the market. A final FDA decision is due in August.
Geno Germano, head of Pfizer's specialty-care unit, acknowledged the safety risks but said they were predictable and manageable by rheumatologists. Studies have shown the drug reduces signs and symptoms of rheumatoid arthritis, with adverse events including infections.
Pfizer also is awaiting an FDA decision, expected by late June, for the Eliquis anticlotting drug, which Pfizer co-markets with Bristol-Myers Squibb Co.
By midyear, Pfizer expects to receive results of late-stage clinical testing of an experimental drug for Alzheimer's disease, bapineuzumab, which it is codeveloping with Johnson & Johnson.
For full-year 2012, Pfizer now expects to report adjusted earnings of $2.14 to $2.24 per share, on revenue of $58 billion to $60 billion, reflecting the classification of the nutrition unit as discontinued operations. Pfizer previously predicted earnings of $2.20 to $2.30 per share, excluding certain items, on revenue of $60.5 billion to $62.5 billion.
For full-year 2012, analysts predict earnings of $2.26 a share on revenue of $62.14 billion.
—Tess Stynes contributed to this article.
Write to Peter Loftus at firstname.lastname@example.org