Earnings Preview: Pfizer works to integrate Wyeth

By LINDA A. JOHNSON

posted: 39 DAYS 9 HOURS AGO

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TRENTON, N.J. -Pfizer, the world's biggest pharmaceutical company, reports earnings for the third quarter on Tuesday morning. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Pfizer just completed a $68 billion acquisition of Wyeth, which cements the combined company's position as the top-selling drugmaker in the world. It will have about $57 billion a year in revenue, with top products and expertise in everything from traditional pills and animal and consumer health products to biotech drugs and vaccines. To meet approval of U.S. and European regulators, Pfizer is divesting some animal health products and facilities, though.

Last month, Pfizer finalized a record-breaking $2.3 billion settlement with the Justice Department over charges it illegally marketed several drugs. The agreement, which included $1 billion in civil penalties, was the fourth Pfizer has reached with the government in the last decade for similar behavior.

In July, Pfizer started late-stage human testing of Dimebon, for patients with Huntington's disease. It also agreed to a $75 million payment to Nigeria to resolve a decade-long legal dispute over allegations children there were harmed in a Pfizer study of an experimental antibiotic during a meningitis outbreak.

In August, the New York-based company launched a program called Maintain that provides its prescription medicines free to people who have lost their jobs and health insurance. It also agreed to put a stronger warning on its smoking-cessation drug Chantix, stating its side effects include depression and suicidal thoughts.

The same month, in a project with the Clinton Foundation, Pfizer said it would reduce the cost of a tuberculosis drug to $90 per treatment course in developing countries, where TB is the top killer of patients with HIV.

Earlier this month, federal health advisers recommended approving Pfizer's HIV drug Selzentry for new patients. So far, the Food and Drug Administration has only approved it as a secondary option for HIV patients who are not responding to other antiviral drugs.

BY THE NUMBERS: Analysts polled by Thomson Reuters expect, on average, earnings per share of 48 cents and revenue of $11.42 billion. In the year-earlier period, earnings per share were 34 cents and revenue was $11.97 billion.

ANALYST TAKE: Leerink Swann analyst Seamus Fernandez says international sales will be crucial because data on U.S. sales in the quarter look weak for major products, including cholesterol fighter Lipitor, pain treatments Celebrex and Lyrica, impotence pill Viagra and smoking-cessation drug Chantix. In addition, Fernandez expects unfavorable currency exchange rates to reduce revenue by 3 percent. He thinks the company's conference call with analysts Tuesday will focus on the Wyeth deal and recent failures of some Pfizer cancer drugs in human testing.

Citi Investment Research analyst John Boris rates Pfizer shares "high risk."

"Declining volumes for its pharmaceutical products, a substantial 2011-13 period of generic risk, coupled with a limited late-stage pipeline, are challenging Pfizer's ability to return to long-term sustainable growth," he wrote in a recent report.

WHAT'S AHEAD: Executives, along with shareholders and analysts, will be focused on Pfizer's integration of Wyeth, from eliminating thousands more employees and closing or selling off facilities to combining two huge research operations and deciding which projects get priority.

Company executives also may discuss whether they will raise Pfizer's quarterly dividend. The company cut it in half at the beginning of the year, from 32 cents to 16 cents a share, to help pay for Wyeth.

STOCK PERFORMANCE: Shares rose about 10 percent to $16.55 during the third quarter. In the first nine months of 2009, shares fell nearly 7 percent.

2009-10-16 14:47:56