What Does Pfizer Inc. (NYSE:PFE)’s Net Income Decline Mean?

Posted by Lynn Eisler October 30, 2013 0 Comment 1193 views

Pfizer Inc. (NYSE:PFE) released its 3Q13 earnings on October 29, 2013 with 19% decline in net income. The overall results remained better than expected, aided by stringent cost cutting measures and booming sales of cancer medicines approved over the past couple of years.

World’s largest pharmaceutical company by revenues, ahead of Novartis AG (ADR) (NYSE:NVS) and Sanofi SA (ADR) (NYSE:SNY), reported 2.5% decline in revenues during 3Q13 at $12.64 billion compared to preceding quarter and against the analyst expectations of $12.69 billion. Net income declined to $2.59 billion ($0.39 per share) from $3.21 billion ($0.43 per share) during 3Q12. The company mentioned that the income would have been $3.86 billion ($0.58 per share), excluding $1.27 billion in one-time items, whereas analysts anticipated earnings of $0.56 per share.

The company reported 26% growth in cancer drug sales to $407 million which is comparatively new area for Pfizer and offers much potential for future growth. Sales of consumer health products grew marginally by 1% at $788 million and emerging markets sales increased by 2% to $2.43 billion. However off-patent medicines, primary care and specialty care drugs reported lower sales.

In addition, anticipated as key growth drivers, its new medicines Xeljanz (for rheumatoid arthritis) and Eliquis (anti-clotting drug) pitched with the slow starts. Where Pfizer’s biggest product, Lyrica’s (for nerve pain) sales grew by 10% to $1.14 billion, sales of its popular Lipitor fell 29% to $533 million as the drug faced strife competition from generics in overseas markets.

Pfizer’s venture into oncology has delivered greater returns, especially with introductions of Xalkori (for lung cancer) in 2011 and Inlyta (for kidney cancer) in 2012 and Bosulif (for chronic myelogenous leukemia) in the current year. The company is also engaged in development of other anti-cancer medicines including the therapy for advanced breast cancer with potentially higher sales prospects.

Pfizer also reported development of novel drug therapies for back pain and osteoarthritis, called tanezumab in collaboration with Eli Lilly & Co. (NYSE:LLY). However, its clinical trials have been halted many a times over safety concerns, by regulators. The Chief Executive Officer at Pfizer, Ian Read said that tanezumab could be the potential alternative to opioids and even to standard pain killers that generally cause ulcers and bleeding.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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