Pfizer Inc.'s third-quarter profit dropped 19 percent as competition from generic drugs continued to cut sales, while lower operating expenses failed to offset higher taxes and charges.
Like many other drugmakers, Pfizer is suffering as cheaper generic versions erode sales of older drugs, no longer protected by patents, that once brought in billions annually. That's costing the company $3 billion to $4 billion a year. Those are led by cholesterol fighter Lipitor, which lost patent protection in November 2011 after nearly a decade as the world's top-selling drug.
Like other drugmakers this quarter, Pfizer said unfavorable currency exchange rates cut revenue, in its case by 2 percentage points. Pfizer and its rivals also have been hurt by the weak global economy and growing pressure for lower prices in many countries.
However, Pfizer has several promising experimental drugs in mid- or late-stage patient testing, including palbociclib for advanced breast cancer and a new type of cholesterol drug for patients at high risk of heart attack not helped enough by drugs like Lipitor. The company also is developing drugs similar, but not identical, to five pricey biologic medicines. Those could start entering the U.S. market in 2017.
The maker of Viagra and fibromyalgia treatment Lyrica said Tuesday that net income fell to $2.59 billion, or 39 cents per share, from $3.21 billion, or 43 cents per share, a year earlier.
Excluding $1.27 billion in one-time items, the world's second-largest drugmaker said income would have been $3.86 billion, or 58 cents per share. Analysts expected 56 cents.
Revenue declined 2 percent to $12.64 billion. Analysts expected $12.69 billion.
Three of Pfizer's business segments —primary care and specialty care drugs and off-patent medicines — had lower sales. Sales of consumer health products such as Centrum vitamins rose just 1 percent at $788 million, sales in emerging markets increased 2 percent to $2.43 billion.
Cancer drug sales rose 26 percent to $407 million. That's a relatively new area for Pfizer, and could eventually turn into a huge franchise.
But two new medicines seen as key to growth — anticlotting drug Eliquis and rheumatoid arthritis pill Xeljanz — are off to slow starts.
With generic competition costing Pfizer billions of dollars a year, its limited prospects for short-term revenue growth have investors pushing for the company to break up, even after it's divested its infant nutrition and animal health businesses.
CEO Ian Read told The Associated Press in an interview that he first wants to see how well Pfizer does, and how investors react, after Pfizer's new operating structure begins in January. The company will then run three divisions: two selling products with patent protection beyond 2015 in different disease categories, and a third marketing products with generic competition here that still sell well elsewhere.
U.S. prescription drug sales were flat at $4.75 billion. But international sales fell 5 percent, including the effect of exchange rates, to $7 billion.
"International sales aren't producing the growth Pfizer and other drug companies predicted and need," noted Erik Gordon, an analyst and professor at University of Michigan's Ross School of Business.
Lipitor sales plunged 29 percent in the quarter to $533 million. At its peak, it brought in nearly $13 billion a year.
Top seller Lyrica posted a 10 percent sales jump, to $1.14 billion, and sales of immune disorder treatment Enbrel, painkiller Celebrex and several other drugs all climbed 5 percent or more. But generic competition hurt many older drugs.
New York-based Pfizer lowered its 2013 profit forecast to $3.05 to $3.15 per share, down from $3.07 to $3.22, but raised the lower end of its adjusted forecast, which excludes one-time items, by a nickel and now expects $2.15 to $2.20 per share. The company also reduced the top end of its revenue forecast for the year by $1 billion. It now anticipates $50.8 billion to $51.8 billion.
Analysts expect earnings per share of $2.17 and revenue of $51.51 billion, according to FactSet.
In afternoon trading, Pfizer shares rose 55 cents, or 1.8 percent, to $31.28.
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