As Pfizer's (NYSE: PFE) top execs have said before, losing patent protections on many of its top products around the same time makes for a difficult operating environment. Pfizer's third-quarter results, released yesterday, showed just how difficult those losses were.
Revenue for the third quarter was down 2% year over year, as new products like Sutent and smoking-cessation treatment Chantix balanced out the patent losses on drugs like Norvasc and Zoloft, and the continued sales decline of Lipitor. Net income adjusted for restructuring and other charges was up 1% to $3.92 and earnings per share grew four cents to $0.58, thanks to share buybacks.
When asked how Pfizer would try and overcome its future generic troubles, CEO Jeff Kindler stated, "There is not a magic bullet here. There is not a single solution that one day we're going to open the curtain and unveil."
Besides the continued genericization of its top products, the biggest news on the earnings release was the discontinuation of marketing for inhalable insulin product Exubera, and the return of the rights back to Nektar Therapeutics (Nasdaq: NKTR).
Pfizer had forecast $2 billion in eventual sales for Exubera, but revenue from the diabetes treatment has been hypoglycemic since its FDA approval in early 2006. In the third quarter, the drug netted a measly $7 million in sales, and $12 million through the first nine months of 2007.
Exubera-related charges prompted Pfizer to lower its GAAP earnings per share guidance for 2007. It's still sticking to its forecast for 2007 adjusted EPS of $2.15 at the top of the range and 2008 adjusted EPS of $2.45, also at the top of the range.
On the conference call Q&A, some analysts questioned the assumptions bolstering these forecasts. What's interesting is that Pfizer, which couldn't come anywhere close to its sales guidance for Exubera, expects investors to have faith in its overall guidance through 2008. Perhaps Pfizer has a Biogen IDEC (Nasdaq: BIIB) acquisition or some other accreditive deal in the works to help it reach these numbers.
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