Reading the headlines, you might think Pfizer's (PFE) just had the best quarter ever. The biggest of Big Pharma posted big jumps in fourth-quarter sales and profit. Unfortunately, last year's quarter contains a $2.3 billion charge to settle legal claims regarding Bextra and other drugs -- so on an adjusted basis, Pfizer's fourth-quarter earnings actually fell.Pfizer's net income for the quarter was $767 million (10 cents a share), up from $266 million (4 cents a share) a year earlier. Adjusted earnings were 49 cents a share -- a penny below analyst estimates -- compared with 65 cents a year ago.

The maker of cholesterol drug Lipitor and erectile-dysfunction drug Viagra beat analyst estimates with a 34% increase in fourth-quarter revenue, to $16.5 billion. That figure includes sales from Wyeth, which Pfizer acquired on October 15 and which added $3.3 billion, or 27%, to Pfizer's revenues. Sales of legacy Pfizer products increased revenue by 3% and foreign exchange by 4%. For the full year 2009, revenues increased 4% to $50.0 billion.

Losing Patent Protection

Pfizer said it sees 2010 revenue growth at $67 billion to $69 billion and adjusted earnings of $2.10 to $2.20 a share. This was below analyst estimates of full-year earnings of $2.27 a share on revenue of $67.47 billion, according to Thomson Reuters.

But investors looking a few years ahead are concerned about Pfizer's losing patent protection on several drugs. Generic competition for Lipitor, worth $12 billion a year in sales, could start as soon as next year. That led Pfizer to lower its 2012 financial targets to earnings of $2.25 to $2.35 a share on revenue of $66 billion to $68.5 billion. The outlook Pfizer issued a year ago called for earnings of $2.42 a share, and sales of $70 billion, which Pfizer attributed to divestitures of animal-health assets.

Pfizer's biopharmaceutical unit saw sales grow 30% in the quarter. Sales of Lyrica, a pain and fibromyalgia drug, climbed 17% to $820 million; cancer drug Sutent, up 33% to $293 million; Viagra, up 9% to $549 million; and Lipitor, up 1%, to $3.18 billion. Wyeth's rheumatoid arthritis treatment Enbrel added $378 million to fourth-quarter sales, and children's meningitis vaccine Prevnar added $287 million.

Analysts are Concerned

Pfizer's blood-pressure drug Norvasc continued to lose sales to generic competition, with sales down 10% to $486 million. Wyeth's antidepressant Effexor added $530 million in the quarter, but Pfizer may lose its patent protection this year. Pfizer's diversified products, which include animal and consumer health products, nutrition items, and capsugel, saw revenue jump 83% to $1.81 billion after adding Wyeth's over-the-counter staples, like Centrum vitamins and pain relievers Advil and Anacin.

Analysts are concerned that Pfizer projects up to $7 billion in cost-cutting measures by 2012, half of it from research and development. Other concerns include Pfizer's pipeline, most notably the progress of the Prevnar vaccine applications.

Pfizer's CEO Jeff Kindler enthusiastically tried to sell Pfizer's longterm plan, but PFE shares are down over 2% to $18.60.