Pfizer Inc., the world’s largest pharmaceutical company is on the decline. The US based pharma giant suffered a major setback in its financial performance during the fourth quarter ended December 2011. The net profit of the company fell by as much as 50 per cent to US$ 1,439 million from $2,890 million in the same period of last year. There was also a drop in the company’s revenue from $17.4 billion to $16,7 billion during the quarter. The main reason for the drop in sales and profits is the fall in its domestic sales. Pfizer’s US revenue declined by 12 per cent to $6.3 billion in the quarter but international sales increased by 3 per cent to $10.4 billion. And the US turnover represented 38 per cent of the total revenues in fourth quarter of 2011 as compared to 41 per cent in the same quarter in the previous year. If one takes the overall performance of the company for the whole of 2011, the picture is not much different. The total revenue increased only marginally by 0.6 per cent to $67.4 billion from $67.1 billion reported in the previous year. And the US revenues declined by 6.9 per cent to $26.9 billion from $28.9 billion whereas its international revenues moved up by 6 per cent to $40.5 billion from $ 38.2 billion. The US sales represented 40 per cent of total sales in 2011 and in 2010 it accounted for 43 per cent.
The key reason for the poor performance of the company is the drop in sales of its top selling patented products during the year. Sales of Lipitor, the company’s largest selling drug declined in the US market by 42 per cent in the last quarter. And its worldwide sales declined by 11 per cent in 2011 to $9,577 million from $10,733 million in the previous year. Sales of two other major products namely Xalatan/Xalacom and Effexor declined by 29 per cent and 61 per cent respectively. Norvasc also registered a decline in sales during last year. The drop in sales in the US and global markets and consequent lower profits was, in fact, expected towards the end of last year with losing of patent protection for Lipitor. The cholesterol drug alone used to contribute almost 20 per cent of the turnover for the multinational for some years. What is disturbing the well wishers of the company is the prospects of not having a strong pipeline of new products for years to come. Its R&D is not producing potential blockbusters any more unlike in the past decades despite the huge spending for this critical activity. And the worst scenario is that management is cutting down on its R&D spend. In the last quarter of 2011, the company reduced R&D expenditure by 58.6 per cent to $ 460 million as against $1,111 million in the same quarter of the previous year. For improving the bottom line of the company, the management may be under pressure to adopt such desperate measures and may also get into generic manufacture on a bigger scale. With that the global pharmaceutical leader may finally lose its once prestigious label of the largest research based drug company.