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Cost-cutting helps Pfizer's bottom line

Published on 22/10/09 at 10:05am

Pfizer's third-quarter results have seen it reap the benefit of its cost-cutting measures, including a reduction in headcount of around 6,500 since the start of the year, with a rise in net profit despite declining sales.

Revenues came in at $11.6 billion for the quarter, down 3% and held back by currency factors, but cutbacks helped the world's number one drug company to a 26% rise in net income to $2.88 billion, or 43 cents a share.

Pfizer's chief executive, Jeff Kindler, described the results as a "solid operational performance in an environment that continues to be challenging".

A contributor to the decline in revenues was once again the pressure on Pfizer's flagship product, the cholesterol-lowerer Lipitor (atorvastatin), which has been affected by the availability of generic versions of rival compound simvastatin.

Sales of Lipitor fell 9% to $2.85bn, with the US market seeing the steepest decline (down 12%), and are expected to fall off dramatically after its upcoming patent expiry in 2011. The drug accounted for 24.5% of Pfizer's total revenues in the third quarter.

The difficulties faced by Pfizer as a result of its fast-maturing pipeline - a primary reason for its just-completed $67 billion merger with Wyeth - are exemplified by the fact that 21 (81%) of its 26 top-selling drugs -those for which it breaks down quarterly sales figures - saw revenues decrease year-on-year.

Other big sellers under the cosh included anti-inflammatory drug Celebrex (celecoxib), which fell 4% to $602 million, the antihypertensive Norvasc (amlodipine), which fell 13% to $488m, and Viagra (sildenafil) for erectile dysfunction, which declined 8% to $466m.

Among Pfizer's newer products, pain treatment Lyrica (pregabalin) managed a sales rise of just 5% to $708m. Sutent (sunitinib) for kidney and stomach cancer did a little better, rising 9% to $246m and emerging as the group's fastest-growing pharmaceutical product in the third quarter.

Disappointingly, Chantix/Champix (varenicline) for smoking cessation - once one of Pfizer's top prospects - retreated 15% to $155m in the quarter as a result of warnings about a risk of suicide with the drug.

Pfizer also gave forecasts for the full-year incorporating the contribution from Wyeth, indicating it expects revenues of $49-$50bn and earnings per share in the $2.00-$2.05 bracket.

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