Pfizer (NYSE:PFE), the world's largest research-based pharmaceutical company, delivered a mixed fourth-quarter report before the opening bell this morning, highlighting an adjusted EPS increase of 22% to $0.56 at the expense of a 2% decline in reported revenue to $13.56 billion.

On an operation basis, Pfizer's biggest drag came from its primary care and specialty care segments, where revenue declined 8% and 5%, respectively. Primary care revenue was negatively affected by ongoing patent expirations of LDL cholesterol-lowering medication Lipitor in developed markets, while its specialty care segment suffered from the end of a three-year collaboration agreement for rheumatoid arthritis medication Enbrel.

If there was one bright spot, it was Pfizer's oncology division, which saw revenue climb 26% on an operating basis due to a 126% year-over-year increase in Inlyta sales, and a 105% rise in Xalkori sales, excluding the negative effects of currency translation. Unfortunately, Pfizer's oncology division accounts for just 3.5% of total revenue.

Lower expenses were one of the reasons Pfizer was able to boost its adjusted EPS by 22% over the previous year as research and development expenses dipped $94 million, or 5%, from the year-ago quarter. However, the simple fact that Pfizer repurchased $4.6 billion worth of common stock, and $16.3 billion during the course of 2013, certainly helped its EPS rise as well since there are fewer shares now outstanding. Including one-time costs, and the fact that Pfizer recognized a sizable gain last year from the discontinuation of reporting results from its animal health division, Zoetis, which was spun off in February 2013, net income fell by 59%.

Looking ahead, Pfizer anticipates delivering $49.2 billion to $51.2 billion in revenue for the full year in 2014 -- a 2.7% decline from 2013 at the midpoint -- with an adjusted EPS forecast of $2.20 to $2.30, which is essentially flat from the adjusted $2.22 it reported in 2013. This forecast, according to commentary from Pfizer CFO Frank D'Amelio is based on the expected negative impact of $3 billion from increased generic competition and higher R&D expenses, but it should be counteracted by the anticipated repurchase of $5 billion in common stock in 2014.

Pfizer shares were up around 2% as of midday trading. 


Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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