Pfizer Ltd, a world leader in the pharmaceutical segment, suffered heavy setback during the third quarter of 2007 mainly due to the loss of US exclusivity of Zoloft in June 2006 and for Norvasc in March 2007. The company's net earnings declined sharply by 77 per cent to US $761 million from US $3,362 million in the corresponding period of last year. Its net sales also declined by two per cent to US $22,990 million from US $ 12,280 million. With fall in profits, its earning per share nosedived to US $ 0.12 from US $0.45 in the last period.
The poor performance is marked by loss of exclusivity of two major contributing products as well as a one-time reversal of a sales deduction accrual of US $170 million recorded in the third quarter of 2006 related to a favourable development in a pricing dispute in the US. The lower profit is also due to pre-tax charges of US $2.8 billion related to the decision to exit Exubera, inhaled insulin product to treat diabetes. Further, increased restructuring and implementation expenses associated with its cost-reduction initiatives, and the non-recurrence of prior year income from discontinued operations put pressure on topline as well as bottomline.
Jeff Kindler, chairman and CEO, said, "We are encouraged by our operating results in the third quarter, and we remain on track to achieve our full-year 2007 revenues and adjusted diluted EPS goals. Meanwhile, we made an important decision regarding Exubera, a product for which we initially hade high expectation. Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians. We have therefore concluded that further investment in this product is unwarranted".
"We need to deliver better results, continue to make tough decisions about allocating our capital wisely, and bring more new products to the market as quickly as possible. Doing all of this will put Pfizer on the right course and build value for our shareholders" Kindler added.
Worldwide pharmaceutical revenues for the third quarter of 2007 were down by four per cent to US $11,036 million from US $ 11,485 million in the corresponding period of last year. New product added US $931 million as compared to US $500 million. Revenues for products that lost US marketing exclusivity in 2006 and 2007, Zoloft and Norvasc, declined 54 per cent in the third quarter of 2007 compared to last year.
Lipitor revenues declined by 5 per cent to US $3.2 billion basically fall in the US revenue by 13 per cent. However, Lipitor revenues from international markets rose by 9 per cent due to favourable impact of foreign exchange rather than any operating growth. The company is expecting the fall of 3-5 per cent in Lipitor revenue in 2007.
The company managed to reduce its adjusted Research and Development, and selling, informational and administrative expenses during the third quarter. R&D expenses declined by 5 per cent to US $1.7 billion.
For the first nine months of 2007, the company's revenues declined by one per cent to US $35,548 million from US $35,768 million in the corresponding period of last year. The net profit for the nine months decreased by 45 per cent to US $5,420 million from US $9,888 million. The pharmaceutical sales worked out to US $ 32,722 million during the first three quarters as against US $ 33,417 million, a de-growth of two per cent.