Pfizer, the world's largest drugmaker and the industry's most aggressive consolidator, hasn't exactly bought its way to success.
Mario Tama/Getty Images
Despite a profit of $767 million in the last quarter of 2009, Pfizer has major problems looming.
Despite a profit of $767 million in the last quarter of 2009, Pfizer has major problems looming. Mario Tama/Getty Images
The drugmaker just reported its earnings for the fourth quarter of 2009, the first full quarter that reflects results since the company acquired Wyeth for $68 billion last October.
Oh sure, quarterly sales were up—34 percent to $16.5 billion—mostly due to the Wyeth addition. And profits rose to $767 million in the quarter, almost triple the figure from the same period last year. Wyeth helped there, too.
But the bigger factor for profits was an easy comparison to a year ago when a $2.3 billion charge Pfizer took to cover the settlement of alleged marketing misdeeds, mainly for the painkiller Bextra, socked profits.
Take a look at the full year's sales of prescription drugs—up just 3 percent—and the problems for Pfizer, even after a little bit of help from the Wyeth buy at the end of 2009, become apparent.
Sales of cholesterol-fighter Lipitor, the best-selling drug ever, slipped 8 percent in 2009 to $11.4 billion. Yes, that's still an enormous amount of money, but it's not going to last long. Generic Lipitor will hit the market late next year.
Wall Street apparently didn't like the overall results or management's outlook, which failed to meet estimates, and the stock opened lower.
So where does Pfizer go from here? Cutting costs, for sure. In the fourth quarter alone, Pfizer lopped off 4,200 jobs. And then there's research, another big target. As the Wall Street Journal's Health Blog points out, Pfizer expects to trim billions of dollars from R&D spending over the next few years
"Overall it is a bit of a disappointment at the initial look," Seamus Fernandez, an analyst with Leerink Swaan told Bloomberg. "With 2010 coming in below and 2012 also being lowered from initial targets, this is obviously not going to generate a lot of enthusiasm."