Pfizer beats in first quarter, reaffirms guidance

Pfizer Inc. (PFE) reported financial results for first-quarter 2009. The big pharmaceutical company's adjusted net income declined 11 percent to $3.7 billion or 54 cents per share, versus 61 cents per share in the year-ago period. Revenues declined 8 percent to $10.9 billion, as foreign exchange unfavorably impacted revenues.

Analysts had been expecting earnings of 49 cents per share, according to First Call.

Except for Specialty Care, Pfizer reported revenue declines in each of its product segments. Pfizer says that other factors that negatively impacted first-quarter 2009 revenues in comparison with the year-ago quarter included the loss of U.S. exclusivity for Zyrtec in January 2008 and Camptosar in February 2008, as well as the revenue declines for Lipitor, as a result of continued intense competition, and for Chantix, mainly due to label changes.

On the bright side, Pfizer managed to reduce costs across the board as well, from cost of sales to R&D as it continued its restructuring plan.

"During the quarter, we continued our ongoing efforts to reshape our operating model, made substantial progress in planning for the Wyeth integration, and faced a challenging and dynamic economic and competitive environment. Yet, we remained focused on meeting our commitments -- generating revenues consistent with our expectations and continuing to streamline our cost structure. We remain on-track to deliver on our full-year 2009 guidance for revenues and adjusted results," stated Jeff Kindler, Chairman and Chief Executive Officer.

Kindler claims the combination with Wyeth will increase long-term shareholder value. Pfizer is in the process of integrating its recent $64 billion acquisition of Wyeth (WYE). Wyeth has reaffirmed full-year 2009 financial guidance for revenues and adjusted results of a range of $1.20 to $1.35 (reduced from $1.34 to $1.49 to reflect certain costs related to Wyeth) and $1.85 to $1.95 excluding items.

Pfizer and GlaxoSmithKline (GSK) have also recently decided to merge their HIV operations. They plan to develop a company focused solely on research, development and commercialization of HIV medicines.

Update: After further reviewing the results, it becomes clear that investors' concerns over Pfizer's cholesterol-fighting Lipitor drug were justified, as its sales declined 13 percent on increased competition from generics. Similarly, sales of Chantix -- the big hope anti-smoking drug -- declined 36 percent as concerns grew over its risks and label changing.

What saved Pfizer this quarter from this abysmal performance in almost every product and drug segment were its significant cost reductions. While Pfizer vows to keep cutting costs, this begs the question of what will drive the company's growth going forward.

According to Pfizer, it's Wyeth. But if Pfizer's track record is any indication, the successful integration of Wyeth and its pipeline along with Pfizer's own inability to come up with new blockbuster products even after mergers, the ability of this merger to drive growth is questionable too. Pfizer needs to show more.

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