Charges, generic Lipitor cut Pfizer 1Q net 19 pct

Associated Press Modified: May 1, 2012 at 3:15 pm •  Published: May 1, 2012
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Generic competition for Pfizer Inc.'s blockbuster cholesterol pill Lipitor is starting to cut into the bottom line of the world's biggest drugmaker, as expected.

The best-selling drug in the industry's history saw its U.S. patent expire on Nov. 30, ushering in a rival's generic version and an authorized one Pfizer markets with a partner. But brand-name Lipitor hung onto about a third of the market in the first quarter — far more than normally would be expected — thanks to Pfizer offering big insurer rebates and discounts to patients who stayed on its brand for now.

With the first full quarter of generic competition to Lipitor and copycats of two smaller drugs reducing revenue by a combined $1.3 billion, Pfizer said Tuesday that its first-quarter profit fell 19 percent. However, that was mainly due to a whopping $2.64 billion in legal, restructuring and other charges.

The world's biggest drugmaker still beat Wall Street's profit expectations but narrowly missed its sales forecast.

New York-based Pfizer lowered its adjusted profit forecast for 2012 by 6 cents, to $2.14 to $2.24 per share, excluding about 90 cents worth of charges. Analysts had predicted $2.26 per share.

Pfizer said it lowered that forecast and cut its expected 2012 revenue by $2.5 billion to between $58 billion and $60 billion because of its deal to sell its infant-nutrition business to Switzerland's Nestle SA for $11.85 billion early next year.

Previous forecasts had factored in the steep drop in revenue from Lipitor, which had peak sales of $13 billion. Pfizer is offering the rebates and discounts until more generic versions hit drugstores on May 31, when prices will drop much more.

In the latest quarter, Lipitor sales fell from $2.4 billion to $1.4 billion, mainly due to a 71 percent plunge in U.S. revenue. However, CEO Frank D'Amelio said in an interview that U.S. market share was "was 2 1/2 times higher than what we would have expected" without the deals.

The maker of Viagra said net income was $1.79 billion, or 24 cents per share, down from $2.22 billion, or 28 cents a share, a year earlier.

Excluding one-time items, Pfizer would have made $4.43 billion, or 58 cents per share. Analysts expected 56 cents a share, according to FactSet.

After-tax charges included $1.07 billion for adjustments to the value of acquired businesses, $115 million in acquisition-related costs, and $1.45 billion for a mix of restructuring and productivity charges, a write-down on a drug compound acquired when Pfizer bought fellow drugmaker Wyeth in 2009, and legal fees.