As I mentioned a couple of weeks ago ("Pfizer Pfaces Its Pfuture"), giant drug-maker Pfizer (NYSE:PFE) is going to go through a multi-year state of transition, in which growth in earnings and revenue will slowly build back toward normal historic levels. With the first quarter of 2005 now in the books, Pfizer has begun what will probably be the tough year before a return to growth.

Sales were up 5% to about $13.1 billion, and more than half of that gain was helped by foreign exchange. Sales in the human health business (prescription pharmaceuticals, mostly) were up 4% to $11.4 billion, while sales in consumer health (over-the-counter brands like Listerine and Sudafed) climbed 17% and animal health sales grew 16%.

Net income, as reported, was $301 million, or $0.04 per share. That figure includes a witch's brew of charges and write-offs related to the Pharmacia purchase, repatriating overseas funds, and recalling Bextra from the market. Setting aside those charges, adjusted net income rose about 1% to $4 billion, and earnings per share climbed 4% to $0.54.

Sales were led once again by Lipitor, as sales of this super-drug grew 23% to nearly $3.1 billion. Norvasc was the second-largest contributor to the quarter, with sales climbing 3% to $1.2 billion. Pfizer also saw good performance from Zithromax (up 71% to $797 million) and newer oncology drugs like Camptosar (up 132% to $212 million).

Generic competition hurt sales from products like Accupril (down 47%), Neurontin (down 74%), and Diflucan (down 55%). In addition, all of the recent concerns and consternation about COX-2 inhibitors translated into 47% lower sales for Celebrex ($411 million) and 79% lower sales for the now-withdrawn Bextra ($56 million).

Despite the more or less flattish top- and bottom-line performance, Pfizer nevertheless managed to repurchase 36 million shares during the quarter for $919 million. Looking into the next quarter, Pfizer management indicated that it planned to purchase up to $2.4 billion in additional stock.

As I've mentioned before, Pfizer spends considerable amounts on R&D (both on its own internal efforts and partnering/acquiring other compounds) and has some interesting late-stage products to show for it.

Lyrica, recently approved, could be a popular option for treating neuropathic pain. Indiplon (partnered with Neurocrine Biosciences (NASDAQ:NBIX)) for insomnia and Oporia (partnered with Ligand Pharmaceuticals (NASDAQ:LGNDW)) for osteoporosis could both be launched later in 2005. In addition, the Exubera inhaled-insulin product (partnered with Sanofi-Aventis (NYSE:SNY) and Nektar Therapeutics (NASDAQ:NKTR)) could be a major winner if and when it's approved by the FDA.

Pfizer might be one of the most popular turnaround picks on Wall Street these days. Of course, investors must do their own research and make their own decisions, but Pfizer hasn't often traded at a PE below 20 and buying at such levels in the past has generally worked out well for investors.

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The Motley Fool's value guru, Philip Durell, chose Pfizer for his Inside Value newsletter. To read more, and to receive two new investment ideas a month, sign up for a free, no-obligation trial today.

Fool contributor Stephen Simpson owns shares of Sanofi-Aventis. The Fool has a disclosure policy.