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Pfizer cuts 2013 forecast after weak first quarter

Revenues down 9 per cent as key drugs face generic competition

Revenues at Pfizer dipped 9 per cent in the first quarter of 2013 as the effects of patent expiries on leading brands continued, prompting a cut in outlook for the full year.

Net income rose 53 per cent to $2.75bn - flattered by comparison with the same period in 2012 when Pfizer took considerable charges and boosted by a one-off gain of $490m from the transfer of certain product rights to its China-based joint venture with Hisun.

Sales came in at $13.5bn, pegged back once again by generic competition to cholesterol drug Lipitor (atorvastatin) and antidepressant Geodon (ziprasidone) but also adversely affected by volatility in emerging markets, where Pfizer managed sales gains of just 6 per cent thanks to lower sales of generic medicines.

Also impacting the quarter was a weak performance for vaccine Prevnar 13, sales of which were down 10 per cent at $846m, and lower sales for erectile dysfunction drug Viagra (sildenafil), which fell 7 per cent to $461m.

Pfizer's chief financial officer Frank D'Amelio said the 2013 revenue guidance is being reduced from between $56.2bn and $58.2bn to between $55.3bn and $57.3bn, but stressed this is only a result of adverse currency factors, particularly affecting business in Japan.

Pfizer's chief executive Ian Read pointed to the recent launches of Bristol-Myers Squibb-partnered anticoagulant Eliquis (apixaban) and rheumatoid arthritis drug Xeljanz (tofacitinib) as future growth driver.

While Xeljanz was knocked back in Europe, Read said the product was growing well in the US and "has the potential to become a broad-based product franchise for our speciality care business". Pfizer is seeking a re-examination of the data by the EU's Committee for Medicinal Products for Human Use (CHMP).

Among the company's pipeline products, Read highlighted breast cancer candidate palbociclib - which was recently given a breakthrough designation by the FDA - and the collaboration with Merck & Co on ertugliflozin as key projects for Pfizer as it tries to bring forward replacements for its former top sellers.

Meanwhile, Pfizer has been busy buying back shares - around 6.3bn since the start of the year - to help steady its share price. The buyback has been funded in part by the initial public offering (IPO) of 20 per cent of animal health unit Zoetis which raised $6bn.

Generics divestment?
Much of the discussion on Pfizer's conference call yesterday focused on the potential break-up of further portions of the business in the wake of the Zoetis IPO and the earlier divestment of its infant nutrition unit to Nestle for $11.85bn.

Read said the company was now considering splitting its generic and branded product units, although this could be a drawn-out process taking until at least 2016 to decide.

1st May 2013

From: Sales

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