Pfizer Inc reported second-quarter earnings slightly ahead of estimates today as the largest U.S. drug-maker lines up a business split that could lead to the spin off of its generics division.
The company, experiencing falling sales of its now left without patent cholesterol fighter Lipitor, reaffirmed its financial outlook for the year. For the second quarter, adjusted income fell 10% to $4.00 billion, or 56 cents a share, from $4.45 billion, or 59 cents a share, a year earlier. Revenue dropped 7% to $12.97 billion. Analysts, on average, expected second-quarter income of 55 cents a share, on revenue of $13.01 billion, according to Thomson Reuters.
According to Atlantic Equities analyst Richard Purkiss improved profit margins added to tight cost controls, were responsible for the slightly better-than-expected profit.
Pfizer stated it planned to separate its commercial operations into two units for branded products and a third for generics. Chief Executive Ian Read has been reviewing the groups structure. The U.S. drug-makers determination to reshape its business is part of a wider trend among pharmaceutical companies around the world to divest slower-growing and maturing operations. Many analysts have voiced opinions that Pfizer should spin off generics so it can focus on core branded pharmaceuticals, although such a move is unlikely before 2016.
Abbott Laboratories decision to split off its innovative drugs into AbbVie Inc, in particular, has fueled a rethinking across the industry as to whether other companies or groups of investors may be better owners for certain assets.
In Europe, GlaxoSmithKline Plc is also selling off certain non-core brands, and in April it took a similar decision as Pfizer by opting to bundle many of its established drugs into a new unit. Last November, Pfizer sold its nutrition business to Nestle SA for $11.85 billion in cash, and in February spun off its animal health business into a new company called Zoetis Inc.
Pfizer reported global sales of $12.97 billion, slightly lower than Wall Street estimates of $13.02 billion. The 7% fall in quarterly revenue reflected an operational decline of 4% and an unfavorable impact from foreign exchange of 3%.
The biggest hit came from losses of exclusivity on Lipitor, while shifts in government purchasing patterns for bulk orders of Pfizers Prevnar pneumococcal vaccine also took a loss.
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