Pfizer Inc., the world’s biggest drugmaker, narrowed its 2012 forecast after reporting third- quarter earnings that met analyst estimates and sales that fell short of expectations. The company also said it was buying back as much as $10 billion in shares.
Net income in the third quarter fell 14 percent to $3.21 billion, or 43 cents a share, from $3.74 billion, or 48 cents, a year earlier, New York-based Pfizer said today in a statement. Earnings excluding one-time items matched the 53 cents average of 16 analyst estimates compiled by Bloomberg.
Sales decreased 16 percent to $14 billion, more than $600 million below analyst estimates. The company’s former top seller Lipitor, in the first full quarter facing competition from copycat generics, saw sales fall 71 percent to $749 million from a year earlier. Pfizer has fought to hold on to sales of the cholesterol pill, using discounts and coupons to keep customers.
“We continue to believe that building a pipeline that delivers sustained revenue and profit growth is the most enduring driver of multiple growth,” said Tony Butler, a drug industry analyst with Barclays Plc in New York, in an Oct. 15 note to clients.
Analysts had projected third-quarter revenue of $14.7 billion. The sales miss was due to foreign currency exchange rates that trimmed 4 percent, said Timothy Anderson, an analyst with Sanford C. Bernstein & Co. in New York. In a note to clients today, he called the buyback program “not a surprise.”
The company narrowed its full year adjusted earnings guidance to $2.14 a share to $2.17 a share, from $2.12 to $2.22 a share.
Pfizer also announced a $10 billion share buyback program once the sale of its nutrition unit to Nestle SA for $11.85 billion closes, in the “next few months,” the company said. That means that almost the entire proceeds from the nutrition unit sale will go to buybacks. Pfizer also has $4.1 billion left in its current repurchase program.
The company’s shares fell 1.6 percent to $24.48 at 9:36 a.m. New York time. The shares have gained 29 percent in the past 12 months as of yesterday’s close.
Chief Executive Officer Ian Read blamed loss of patent protection for Lipitor losing its spot as Pfizer’s best-selling drug. “Our results this quarter reflect continued product losses of exclusivity, most notably Lipitor in all major markets,” Read said in a statement announcing the results.
Pfizer is divesting its nutrition and animal health units as part of its plan to refocus the company on developing and selling new prescription drugs. Its two $2 billion-plus prospects include a blood thinner, Eliquis, being co-developed with Bristol-Myers Squibb Co., and a rheumatoid arthritis pill, tofacitinib.
The animal health business will be spun off in an initial public offering and stock swap before the first half of next year. The unit had $4.19 billion in sales last year.
Lyrica, used to treat pain, is now Pfizer’s top product. The pill sold $1.04 billion, up 8 percent from a year earlier. Other top drugs saw their sales decline. Second best-selling was Enbrel, for rheumatoid arthritis, which sold $893 million, down 7 percent, partly on foreign exchange rates. Pneumococcal vaccine Prevnar, which Pfizer is seeking to expand use of in older populations, sold $868 million, down 14 percent.
The drugmaker is waiting on decisions by the U.S. Food and Drug Administration on tofacitinib, expected by Nov. 21, and Eliquis, due in March.
Tofacitinib could sell $2.16 billion by 2017, according to the average of three analyst estimates compiled Bloomberg. Eliquis, meanwhile, could generate $5.2 billion in sales by 2020, which will be split with Bristol-Myers, Catherine Arnold, an analyst with Credit Suisse Group AG, said in a note to clients.