Pfizer earnings beat estimates on sales of generics

Pfizer reported better-than-expected quarterly results, driven by lower taxes and sales of generic medicines. But revenue from its branded patent-protected medicines disappointed.

The largest US drugmaker did not offer any hints on whether it plans to split into two separate companies, a long-mulled potential decision that has kept investors in suspense.

Pfizer, whose shares fell 2.4 per cent in morning trading, said second quarter revenue rose 11 per cent to $13.15 billion, topping the average analyst estimate of $13.01 billion.

Sales of generic medicines rose 16 per cent to $6.04 billion, helped by Pfizer’s $16 billion purchase last year of generic hospital products company Hospira.

Although generics beat expectations, BMO Capital Markets analyst Alex Arfaei said sales of Hospira products, at $1.14 billion, were 7 per cent below his forecast, and suggested “limited revenue synergies” from that acquisition.

Sales of Pfizer’s patent-protected drugs rose 7 per cent to $7.11 billion, two percentage points below Mr Arfaei’s estimate.

Higher sales of nerve-pain drug Lyrica helped offset disappointing sales of its Prevnar vaccine for pneumococcal infections.

In April, Pfizer terminated a $160 billion deal to acquire Irish drugmaker Allergan after the US treasury department issued new rules restricting tax inversion transactions aimed at slashing taxes.

With collapse of the deal, investors have shifted their focus to whether Pfizer will break up, creating one company specialising in patent-protected drugs and another geared toward branded generic drugs.

Pfizer for several years has weighed whether such a split makes sense, largely because its patent-protected medicines routinely enjoy sales growth, while its portfolio of generics usually post declines. Pfizer said on Tuesday it expects to decide by the end of the year.

Pfizer earned 64 US cents per share, excluding special items, beating the average analyst estimate by two cents.

Net income fell to $2.02 billion, or 33 cents per share, from $2.63 billion, or 42 cents per share, hurt by restructuring charges and acquisition costs.

Pfizer reaffirmed it expects 2016 earnings of $2.38 to $2.48 per share. It earned $2.20 per share in 2015. – Reuters