Drug makers PfizerInc. and Bristol-Myers SquibbCo. reported mixed first-quarter results, as the stronger U.S. dollar dampened sales growth at both companies and generic competition factored into Pfizer's decline.
But both companies' earnings were higher than Wall Street expectations because of cost-cutting measures that included job cuts.
Pfizer said it remained on track to close its acquisition of Wyeth, a cash-and-stock deal valued at about $68 billion when it was announced in January. Pfizer is acquiring Wyeth as its top-selling drug, cholesterol-fighter Lipitor, is set to lose patent protection in 2011.
In the latest quarter, Pfizer reported net income of $2.73 billion, or 40 cents a share, down 2% from $2.78 billion, or 41 cents a share, a year earlier. A higher provision for income-taxes weighed on earnings related to steps taken to finance the Wyeth deal.
The latest quarter included restructuring and acquisition costs, among other items. Excluding items in both periods, earnings fell to 54 cents a share from 61 cents a share a year earlier. Analysts surveyed by Thomson Reuters expected earnings, excluding items, of 49 cents a share.
"The results were driven primarily by discipline on the cost side," J.P. Morgan analyst Chris Schott wrote in a note to clients.
Revenue fell 8.3% to $10.87 billion, short of analysts' estimate of $11.08 billion, hurt by the stronger dollar.
The company's results continues a first-quarter trend among major drug makers of exceeding earnings estimates but falling short on the top line.
The stronger dollar is of special concern to Pfizer, which gets 54% of total revenue from abroad. Non-U.S. revenue dropped 7%, reflecting a 10 percentage point hit. U.S. revenue took a hit, too, declining 10%.
Pfizer is in intense competition with generic versions of such products as cancer treatment Camptosar, which lost U.S. exclusivity last year.
Lipitor sales, meanwhile, continue to drop as use of generic cholesterol drugs like simvastatin increases. Global sales of Lipitor declined 13% to $2.72 billion, while U.S. sales fell 17%.
Pfizer Chief Executive Jeff Kindler said Pfizer the company faced "a challenging and dynamic economic and competitive environment."
Overall, Pfizer's pharmaceutical sales dropped 7%.
Sales for the Chantix smoking-cessation drug declined 36% amid safety concerns, while arthritis drug Celebrex saw an 8% sales contraction. A continued source of growth was pain drug Lyrica, whose sales rose 17%.
Pfizer's animal-health sales fell 13% to $537 million.
Pfizer lowered its forecast for reported 2009 earnings to reflect costs related to the purchase of Wyeth. It now sees full-year earnings of $1.20 to $1.35 a share, from a prior forecast of $1.34 to $1.49 a share. It still expects earnings, excluding items, of $1.85 to $1.95 a share.
At Bristol-Myers, quarterly net income rose 3.4% to $921 million, or 32 cents a share, compared with $891 million, or 33 cents a share, a year earlier. Per-share earnings declined despite an increase in net income due partly to accounting for earnings "attributable to noncontrolling interest."
The latest quarter included restructuring costs and a charge to cover a settlement of securities litigation stemming from Bristol's attempt to settle a patent dispute over anticlotting drug Plavix in 2006. Excluding items, earnings from continuing operations came to 48 cents a share, compared with 39 cents a share. Analysts had expected 47 cents a share for the latest quarter.
Net sales rose 2.5% to $5.02 billion. Excluding the impact of the stronger dollar, sales were up 8%
Pharmaceutical sales increased 3.2%, rising 13% in the U.S. International sales fell 11%.
Sales of the company's biggest money-maker, anticlotting agent Plavix, rose 9.7% to $1.44 billion. Antipsychotic drug Abilify posted a 30% jump in sales. The product, which has quickly become Bristol's No. 2 seller, is crucial to the company's plan to reduce its dependence on Plavix.
While other pharmaceutical companies have tried to grow bigger and diversify into nonpharmaceutical operations, Bristol has shed nondrug assets and tightened its focus on biotech and so-called specialty-pharmaceutical drugs. In February, Bristol-Myers sold a minority stake in Mead Johnson NutritionCo., which sells Enfamil baby formula, through an initial public offering.
The moves have left Bristol flush with cash -- roughly $8 billion -- that the company plans to use to make acquisitions to beef up its pipeline and product lineup.
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