This summary is based on the first quarter fiscal 2007 earnings call conducted by Pfizer, Inc. (PFE) on April 20, 2007.
Key Investors Issues
- EPS 48 cents a share were compared to 56 cents a share last year.
- Profits fell to $3.39 billion from $4.11billion a year earlier.
- Pfizer expects earnings of $2.08 to $2.15 on an adjusted basis.
First Quarter Highlights
The company was up against nearly $850 million of reduced revenues in United States compared to the year-ago period driven by the recent loss of exclusivity in the U.S., Norvasc, Zoloft, and Zithromax.
- With the exception of Exubera, whose sales remained disappointing, major patent protected products posted strong sales.
- Lipitor sales were up 8% worldwide, despite intense generic and branded competition, and sales of most of other major products grew by double digits.
- Performance this quarter also benefited from the favorable impact of foreign exchange and lower rebates.
With regard to adjusted income, the early impact of cost cutting efforts, the increased focus on productivity throughout the organization, and the phasing of various R&D and promotional programs kept costs essentially flat compared to the year-ago period.
The company completed a major reduction and redeployment of U.S. sales force, announced and began the implementation of substantial position eliminations across all parts of the company around the world, and announced intention to close five R&D and five manufacturing sites.
Lipitor was a positive contributor, posting solid sales growth notwithstanding declining scripts.
- Given the market dynamics, the company is expecting global Lipitor sales this year in the range of modest growth to modest decline.
- The company is taking important steps to maximize the performance of Lipitor.
As for other major products, the company is excited by the early trends for Chantix, Sutent, and Lyrica, all of which are currently exceeding expectations at this relatively early stage of their lifecycles.
On the other hand Exubera is not where the company had hoped it would be by this time.
An unexpected challenge was the adverse Court of Appeals ruling on U.S. patent for Norvasc, which effectively overruled three prior favorable lower court decisions.
This ruling resulted in generic competition for Norvasc six months earlier than planned, with a substantial revenue impact this year and a continuing but lesser impact next year.
The company remains on track to deliver on the priorities outlined in January which are critical to driving Pfizer’s long-term performance and delivering value to owners.
The first of the five immediate priorities is to maximize short and long-term revenues. Beyond inline products, the company has the largest pipeline in history with 249 programs currently underway. At the head of the pipeline is maraviroc, which upon approval will represent the first new oral class of HIV medicines in more than a decade.
The company is excited about oncology pipeline, which holds a number of promising programs. The company plans to demonstrate the breadth and depth of those programs in June when it presents 49 abstracts covering 10 different oncology programs at the Annual Meeting of the American Society of Clinical Oncology.
Focus on building medium to longer-term revenues includes disciplined and focused approach to business development.
The company is stepping up the pace of these activities in an effort to gain access to new product candidates and technologies and pursue new revenue sources. The company has signed more than 30 deals in the past 15 months, including most recently the first quarter acquisition of BioRexis Pharmaceutical Corporation and Embrex.
The second immediate priority is to establish a lower and more flexible cost base, along with the continued implementation of Adapting to Scale productivity initiatives, that have helped keep down expense growth, the company has begun the process of reducing overall operating expenses streamlining infrastructure and reducing head count. All of these efforts are directed toward goal of delivering net cost reductions relative to 2006 levels of at least $1.5 billion to $2 billion in 2008 adjusted income.
