Pfizer Looks Fine Post-Tornado

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Pfizer's (NYSE: PFE  ) earnings statement is a jumbled mess, like a tornado hit it.

Primary care sales fell 25%, while established products rose 17%. The cause was the same; Lipitor went generic, so it was transferred to the old-timers section. Pfizer said it retained about 2.5 times the market share that a typical drug going off exclusivity captures, but it did that by substantially discounting the drug; U.S. sales still fell 71% year over year.

Specialty care declined 9%. Like primary care, most of the decline can be linked to a shift of generics, mainly Vfend and Xalatan, to the established products division. The unit was also affected by Prevnar's sales decline as kids eligible for a make-up booster have already had their shot. Sales of the vaccine were also affected by a decrease in the birth rate. Health care might be recession-resistant because patients still need drugs even in lackluster economies, but I guess that doesn't hold if the economy is bad enough to reduce the number of patients born.

Last month, Pfizer said it was selling its nutrition business to Nestle, so the company removed sales of the division from its guidance. Adjusted EPS are now expected to come in between $2.14 and $2.24 next year. Until the close of the sale, earnings from the nutrition division will be included in the discontinued operation section.

Emerging from the basement post-storm, the new Pfizer doesn't look too shabby. Despite the loss of Lipitor exclusivity, overall revenue only decreased 7% and cost-cutting measures and share repurchases helped bring that to just a 3% decline on the adjusted EPS level.

Pfizer's breakup, which is expected to include divesting its animal-health division, will create a leaner, more-focused company. But the smaller size means that new drug launches will be increasingly important. Pfizer has two major catalysts coming up: Tofacitinib, an oral rheumatoid arthritis drug that will compete with older injected drugs from Abbott Labs (NYSE: ABT  ) , Johnson & Johnson (NYSE: JNJ  ) , and Amgen (Nasdaq: AMGN  ) is scheduled to face a Food and Drug Administration advisory panel next week. And next month the FDA will make a decision about its heart drug Eliquis, which it'll sell with Bristol-Myers Squibb (NYSE: BMY  ) .

Here's hoping they blow the roof off their launches.

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Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson and Abbott Laboratories. Motley Fool newsletter services have recommended buying shares of Pfizer and Johnson & Johnson and creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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