Pfizer's ($PFE) second-quarter results came with a split personality. Profits beat analyst estimates, rising by 5.5%--but that increase came from lower charges and a lower tax rate. International sales grew by 3%--but backing out the currency effects, ex-U.S. revenues actually dropped, as did U.S. sales. Pharma sales fell--but drug revenues from emerging markets managed to grow.
The biggest "but" in the whole report, however, was that the core pharma business Pfizer plans to stake its future upon dragged the numbers down, while units that the company plans to shed actually grew. An 18% increase in animal health sales, plus a 4% increase in nutritionals sales, saved the company's top line from drooping. Consumer health growth helped, too, and Pfizer is hanging on to that business.
Part of the pharma revenue problem is Lipitor, which already faces generic competition in some overseas markets. The brand saw sales drop by 8% for the quarter. And bigger declines are coming; the drug loses U.S. exclusivity in November. And generic rivals for other big drugs eroded their numbers, too. One bright spot was Prevnar 13, which delivered growth of more than 40% to $821 million--but that obviously won't be enough to replace Lipitor.
Pfizer's drug sales this quarter weren't too promising. Two growing units are expected to move out the door, whether through sale or spinoff, leaving the pharma business with fewer props to lean on. But we all know what the remedy is: New drugs. "Investors are shifting their focus back to the pipeline," Morningstar analyst Damien Conover told Bloomberg, and away from the divestitures that had so energized them a few months ago. Can Pfizer deliver? That, of course, is the multibillion-dollar question.
- read the release from Pfizer
- get the story from Reuters
- see the Bloomberg coverage
- check out the Dow Jones piece