Pfizer, Lilly profit hurt by generic competition

Lipitor tablets made by Pfizer are one type of statin. People who took statins were more likely to survive their cancers in a new study. But the study does not prove statins made the difference.
  • Pfizer earnings more than quadrupled because of a one-time gain.
  • Lilly raised its forecast for 2013.
  • Both drug makers beat analysts%27 estimates.
  • NEW YORK (AP) — Two big drug makers saw sales hurt by generic competition in the fourth quarter, but Pfizer’s profit more than quadrupled because of a $4.8 billion gain from selling its nutrition business.

    Eli Lilly’s fourth-quarter earnings slipped 4% as generic competition continued to eat away at sales of its former best-seller, the antipsychotic Zyprexa, but the drugmaker cut expenses again and growth from other products helped it beat analyst expectations. It also raised its forecast for 2013, and its shares edged up in premarket trading.

    Pfizer, the world’s biggest drugmaker, said Tuesday that its net income was $6.32 billion, or 85 cents per share, up from $1.44 billion, or 19 cents per share, a year earlier.

    Excluding one-time items, the Viagra maker would have had a profit of $3.51 billion, or 47 cents per share — 3 cents more than analysts surveyed by FactSet were expecting.

    Revenue fell 7% to $15.1 billion, mainly due to generic competition to cholesterol blockbuster Lipitor. Analysts expected $14.35 billion.

    Lipitor, which had reigned as the world’s top-selling drug ever for nearly a decade, got U.S. Generic competition in December 2011 and now has generic rivals in many major markets. The drug had been bringing Pfizer nearly $11 billion a year before then, down from its peak of $13 billion a year.

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    In the fourth quarter, Lipitor sales plunged 91% in the U.S. And 71% worldwide, to $584 million. A dozen other medicines also had lower sales due to generic competition. But key newer drugs had double-digit sales increases, including fibromyalgia and pain treatment Lyrica, at $1.13 billion, painkiller Celebrex at $750 million, and the Prevnar 13 vaccine against meningitis and other pneumococcal infections, at $993 million.

    Altogether, Pfizer’s prescription drug revenue fell 9% in the quarter, to $12.89 billion. The animal health business, which Pfizer is planning to spin off, saw revenue increase 6%, to $1.17 billion. The consumer health business, which sells Centrum vitamins, had revenue jump 16%, to $936 million.

    Pfizer said this year it expects earnings per share of $2.20 to $2.30, excluding one-time items, and revenue of $56.2 billion to $58.2 billion. Analysts are expecting $2.28 per share and revenue of $57.55 billion.

    For the full year, net income was $14.57 billion, or $1.94 per share. That was up from $10.01 billion, or $1.27 per share, in 2011. Revenue totaled $58.99 billion, down 10% from $65.26 billion in 2011, before generic competition slashed sales of Lipitor and schizophrenia drug Geodon.


    In Lilly’s results, Zyprexa lost U.S. Patent protection in the fall of 2011, which exposed the drug to cheaper generic competition. Sales for that drug that once topped $5 billion annually, dropped steeply throughout last year and fell 49% to $384.8 million in the fourth quarter.

    But revenue from the Indianapolis company’s new best-seller, the antidepressant Cymbalta, climbed 20% to $1.42 billion, and the drugmaker shaved 7% off its marketing, selling and administrative expenses.

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    All told, Lilly said Tuesday that it earned $827.2 million, or 74 cents per share, in the three months that ended Dec. 31, down from $858.2 million, or 77 cents per share, in the final quarter of 2011.

    The company posted adjusted earnings of 85 cents per share, not counting asset impairment, restructuring and other charges. Analysts surveyed by FactSet expected earnings 78 cents per share, on average.

    Revenue fell 1% to $5.96 billion, largely due to Zyprexa. Analysts expected $5.79 billion in revenue.

    Sales of Lilly’s osteoporosis treatment Forteo climbed 20% to $314.6 million, and the drugmaker also saw 33% growth in the quarter from its blood thinner Effient. That drug started slowly after its 2009 launch but has picked up momentum in recent quarters. For 2012, its sales climbed 51% to $457.2 million.

    Lilly also booked a charge of $64.7 million in the fourth quarter as part of its push to cut costs and reduced the company’s workforce.

    The drugmaker also loses U.S. Patent protection for Cymbalta at the end of this year, and it has been cutting costs as part of its plan to offset the revenue loss. Lilly also is pushing to grow international sales, especially in emerging markets like China, and it is counting on its animal health business and its pipeline of drugs under development.

    Lilly reiterated earlier this month that it expects to record at least $3 billion in annual earnings and revenue of at least $20 billion through 2014, when it starts to feel the full impact of the Cymbalta patent expiration.

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    For 2012, Lilly earned $4.09 billion, or $3.66 per share, on $22.6 billion in revenue.

    The company said Tuesday that it now expects 2013 adjusted earnings of $3.82 to $3.97 per share, up from a forecast it made Jan. 4 for earnings of between $3.75 and $3.90 per share. Lilly raised the outlook to reflect a tax credit tied to the agreement Congress reached late last year to avoid hitting the so-called fiscal cliff.

    Analysts expect, on average, earnings of $3.83 per share.

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