Pfizer's Adjusted Q4 Profit Rises 22% as Generic Competition Erodes Top Line

Share buybacks and cancer drug growth aid Pfizer's fourth-quarter results as generic competition continues to erode its previously best-selling drugs.

Jan 28, 2014 at 12:48PM

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. 

link

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.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers