Pfizer profit dips on charges for Wyeth purchase

 

 

Drugmaker Pfizer Inc. on Tuesday (May 4) reported a huge jump in its first-quarter revenue, thanks to its giant acquisition of Wyeth last October, but charges from the deal weighed down net income for Pfizer.

 

Adjusted income for the first three months totalled US$4.88 billion, or 60 cents per share, rising 33% from US$3.67 billion, or 54 cents a share, a year earlier. Analysts were expecting slightly lower earnings per share of 53 cents and revenue of US$16.58 billion, on average.

 

New York-based Pfizer, which paid US$68 billion for Wyeth, said sales of Wyeth products increased total revenue by US$5.3 billion, or 48%, while the effects of favourable currency exchange rates boosted revenue another US$733 million, or 7%.

 

Pfizer's diversified division, which includes its consumer, nutrition and animal health businesses, posted total revenue of US$2.14 billion; triple the 2009 total because of new Wyeth products.

 

Pfizer chief executive officer Jeff Kindler stressed that Pfizer plans to increase shareholder value in multiple ways, including opportunistic repurchases of Pfizer shares and investment in products and businesses that will generate revenue.

 

Meanwhile, Pfizer is in the process of shuttering six of 20 major research sites and has reduced its work force by 2,700 people in the first quarter and a total of 6,900 since October, leaving a total of 113,800.

 

The company said the US health care overhaul reduced revenue in the first quarter by $56 million.

 

Chief Financial Officer Frank D'Amelio said Pfizer now expects the new health law to reduce revenue by about US$300 million for all of 2010, by about US$900 million in 2011 and by US$800 million in 2012. It also took a US$270 million charge for 2010 due to the health law's elimination of a tax deduction for retiree health benefits.

 

As a result, Pfizer is reducing its 2012 revenue forecast by about US$800 million, to a range of US$65.2 billion to US$67.7 billion, yet sticking with its prior earnings-per-share forecast of US$1.58 to US$1.73, or US$2.25 to US$2.35 excluding one-time charges.

 

For this year, Pfizer is forecasting earnings per share of 95 cents to US$1.10 per share, adjusted income of US$2.10 to US$2.20 per share, and revenue of about US$68 billion.