Wyeth Acquisition Pushes Pfizer’s Profit Down

Pfizer reported a huge jump in its first-quarter revenue, thanks to its giant acquisition of Wyeth last October, but charges from the deal weighed down net income.

NEW YORK (AP) -- Drugmaker Pfizer Inc. on Tuesday reported a huge jump in its first-quarter revenue, thanks to its giant acquisition of Wyeth last October, but charges from the deal weighed down net income for the world's biggest drugmaker.

The maker of cholesterol fighter Lipitor and impotence pill Viagra earned $2.03 billion, or 25 cents per share, in the latest quarter, down 26 percent from $2.73 billion, or 40 cents per share.

Adjusted income for the first three months totaled $4.88 billion, or 60 cents per share, rising 33 percent from $3.67 billion, or 54 cents a share, a year earlier.

With the addition of Wyeth blockbusters such as antidepressant Effexor and children's vaccine Prevnar, Pfizer's revenue reached $16.75 million. That's up 54 percent from $10.87 billion a year earlier.

Analysts polled by Thomson Reuters, on average, were expecting slightly lower earnings per share of 53 cents and revenue of $16.58 billion.

New York-based Pfizer, which paid $68 billion for Wyeth, said sales of Wyeth products increased total revenue by $5.3 billion, or 48 percent, while the effects of favorable currency exchange rates boosted revenue another $733 million, or 7 percent.

Pfizer's biopharmaceutical division, which includes prescription drug and vaccine sales, had revenue of $14.51 billion in the first quarter, up 44 percent with the inclusion of new Wyeth products. Lipitor sales grew just 1 percent to $2.76 billion, while fibromyalgia treatment Lyrica rose 6 percent to $723 million and arthritis drug Celebrex inched up 1 percent to $570 million. The combined company now has 16 products on track to bring in at least $1 billion each this year, six of them from Wyeth.

Pfizer's diversified division, which includes its consumer, nutrition and animal health businesses, posted total revenue of $2.14 billion, triple the 2009 total because of the new Wyeth products.

"We have flexibility in our balance sheet, in our spending (control) and in our investments," Pfizer Chief Executive Jeff Kindler told analysts during a conference call.

He repeatedly stressed that Pfizer plans to increase shareholder value in multiple ways, including "opportunistic" repurchases of Pfizer shares and investment in products and businesses that will generate revenue.

"We fully intend to increase the dividend annually, barring unforeseen events," Kindler added.

That should cheer up Pfizer shareholders -- many of whom hold the stock for its dividend -- given its low price the last few years. Pfizer angered shareholders when it halved the dividend a year ago to help pay for the Wyeth acquisition, but has since nudged it up from 16 cents to 18 cents a quarter.

The company said the U.S. health care overhaul reduced revenue in the first quarter by $56 million.

Chief Financial Officer Frank D'Amelio said Pfizer now expects the new health law to reduce revenue by about $300 million for all of 2010, by about $900 million in 2011 and by $800 million in 2012.

As a result, Pfizer is reducing its 2012 revenue forecast by about $800 million, to a range of $65.2 billion to $67.7 billion, yet sticking with its prior earnings-per-share forecast of $1.58 to $1.73, or $2.25 to $2.35 excluding one-time charges. The company's 2012 performance is crucial because Lipitor, the world's top-selling drugs with nearly $12 billion in revenue, is expected to start facing generic competition at the end of 2011.

For this year, Pfizer is forecasting earnings per share of 95 cents to $1.10 per share, adjusted income of $2.10 to $2.20 per share, and revenue of about $68 billion.

In midday trading, Pfizer shares rose 35 cents, or 2.1 percent, to $17.26, making it the top gainer in the Dow Jones industrial average and one of only three positive stocks in the benchmark.

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