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Pfizer, hit hard by generic competition and a strong dollar, cuts outlook but is strong in 1Q

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Cost-cutting and sales of new drugs helped Pfizer overcome a strong dollar and patent expirations to beat Wall Street projections for the first quarter, though it cut its outlook for the year, citing the unfavorable currency exchange rates.

The world's second-biggest drugmaker on Tuesday said its 2015 profit forecast includes a negative impact of $3.3 billion from currency exchange, and another $3.5 billion from generic competition. Most major drugmakers have overcome multibillion-dollar revenue hits from the unprecedented wave of patent expirations that began in 2011, but Pfizer isn't out of the woods yet. One of its top sellers, pain and arthritis treatment Celebrex, just got much cheaper generic competition in the U.S.

Still, the New York-based drugmaker reported a 2 percent bump in net income to just under $2.38 billion, or 38 cents per share. Excluding one-time costs and gains, adjusted profit was $3.2 billion, or 51 cents per share, a penny better than expected, according to a survey of analysts by Zacks Investment Research.

Revenue fell 4 percent to $10.86 billion, as the strong dollar cut the value of sales paid for in local currencies by 7 percent, or 4 cents per share. Still, that also edged out Wall Street expectations.

Sales of some recently launched drugs helped lessen that sting. Those include toward arthritis drug Xeljanz, liver cancer drug Xalkori and Ibrance, for women with a common subtype of breast cancer. Stroke and heart attack prevention drug Eliquis, whose profits Pfizer splits with partner Bristol-Myers Squibb Co., had sales more than triple to $355 million over the year-ago quarter.

Pfizer's top seller, pneumococcal vaccine Prevnar for preventing pneumonia and ear and other infections, jumped 41 percent to $1.31 billion after recent approval of Prevnar 13, which prevents infection by more strains of the bacteria. Recent coverage of the vaccine by Medicare and expert recommendations that people 65 and older get the shot boosted U.S. sales by 80 percent in the quarter.

However, Celebrex sales plunged 67 percent to $205 million, and sales of antibiotic Zyvox fell 15 percent to $271 million. The company also terminated its co-promotion of the bronchodilator Spiriva in most countries.

PHOTO: FILE - This May 4, 2014 file photo shows he Pfizer logo on the exterior of a former Pfizer factory in the Brooklyn borough of New York. Pfizer Inc. reports quarterly financial results before the market opens on Tuesday, April 28, 2015. (AP Photo/Mark Lennihan, File)
FILE - This May 4, 2014 file photo shows he Pfizer logo on the exterior of a former Pfizer factory in the Brooklyn borough of New York. Pfizer Inc. reports quarterly financial results before the market opens on Tuesday, April 28, 2015. (AP Photo/Mark Lennihan, File)

"We are in one of the most productive times for our pipeline," with medicines for 30 conditions in late-stage testing, the last stage before seeking approval, CEO Ian Read told analysts during a conference call.

Among other projects, Pfizer and is developing a combination type 2 diabetes pill that would include the blockbuster Januvia from its partner, Merck & Co.

Pfizer said it expects to close its $17 billion purchase of injectable drug maker Hospira Inc. in the second half of the year. That deal also will help Pfizer tap into the growing market for biosimilars, cheaper versions of complex biologic drugs, which are produced in living cells and treat conditions including anemia and immune disorders.

Pfizer noted it is on track to deliver a $2.5 billion reduction in operating expenses, compared with 2012 levels, by year's end.

The company now expects adjusted profit between $1.95 and $2.05 on revenue between $44 billion and $46 billion. Previously, it forecast profit of $2 to $2.10 per share on revenue between $44.5 and $46 billion.

Pfizer shares, which are close to a 10-year high, rose initially but were down 27 cents at $34.32 in early afternoon trading.

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AP Business Writer Damian Troise in New York contributed to this report.


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