Pfizer’s quarterly profit jumps 26 percent

Pfizer Inc. today reported a 26 percent jump in third-quarter profit as big cost cuts offset declining sales.

New York-based Pfizer, which completed its $68 billion acquisition of Wyeth last week, said net income in its most recent quarter was $2.88 billion, up from $2.28 billion a year earlier.

Pfizer, which makes cholesterol fighter Lipitor, impotence treatment Viagra, and smoking-cessation drug Chantix, said sales dipped 3 percent, $11.62 billion, in the third quarter from a year earlier.

Last year's third quarter included a $640 million legal charge over promotion of Pfizer's painkillers.

As a result of the acquisition, Pfizer now employs 4,500 former Wyeth employees at facilities in Collegeville and Great Valley. Pfizer plans to close the Great Valley site next year.

Pfizer also has said it will cut 20,000 jobs, 15 percent of the two companies' total. It is not clear how many of those reductions will occur in this region, but Pfizer has said it will keep a large portion of the 4,500 local jobs.

Pfizer's research-and-development budget fell 8 percent to $1.6 billion, Deutsche Bank AG analyst Barbara Ryan said.

Sales were down across all five of Pfizer's business divisions. The worst decline was a 12 percent drop in the established-products business, which sells prescription drugs that are losing sales to generic competition.

The primary-care division, which produces half of Pfizer's revenue, saw sales fall 4 percent to $5.51 billion. Most of Pfizer's biggest sellers saw sales decline - some by double digits because of generic competition, a worsening problem for the whole industry.

The one exception was Lyrica, for nerve pain and seizure control. It saw sales rise 5 percent to $708 million.

Pfizer said that excluding onetime charges, earnings per share would have been 51 cents. Analysts were expecting earnings per share of 48 cents and revenue of $11.41 billion.

Seamus Fernandez, an analyst at investment firm Leerink Swann L.L.C., said Pfizer's results could boost the pharma sector.

Third-quarter sales of Lipitor, the world's top-selling drug, fell 9 percent to $2.85 billion because of lower sales in the United States as consumers and insurers increasingly switched to Zocor, a generic version of another drug in the same class.

Pfizer faces direct generic competition to Lipitor late in 2011, when it will rapidly lose most of the drug's $12-billion-plus annual sales. That is about one-fourth of all Pfizer revenue and was a key impetus for the Wyeth deal, which is expected to diversify revenue streams.

But it will not be clear for years whether the merger creates a company that creates enough new products to maintain profit growth.

With the Wyeth acquisition, Pfizer will have lucrative products in everything from traditional pills and animal- and consumer-health products to biotech drugs and vaccines.

The company updated its earnings forecast to reflect Wyeth's impact. It expects earnings per share of $1.45 to $1.50 for all of 2009, up from prior guidance of $1.30 to $1.45 per share. Revenue is expected to be $49 billion to $50 billion, up from $45 billion to $46 billion, as Pfizer will only receive revenue from Wyeth's products for part of the fourth quarter.

Shares of Pfizer fell 5 cents to close at $17.93.