Pfizer Buys Back Billions in Stock as It Beats Estimates

Bloomberg News

, the biggest U.S. drugmaker, beat analysts' estimates after sales of top vaccine and pain products grew and the company continued to buy back billions of dollars in stock.

Third-quarter rose 3 percent to $2.67 billion, or 42 cents a share, from $2.59 billion, or 39 cents, a year earlier. Earnings excluding one-time items of 57 cents a share beat by 2 cents the average of 18 analysts' estimates compiled by Bloomberg.

Pfizer is in the middle of a strategic transformation, and has split its business into three internal units that it may eventually break into individual companies. It has tried to do major deals, including a purchase of AstraZeneca Plc that would have been the largest in industry history.

That deal failed, and a breakup of New York-based Pfizer isn't likely to happen until at least 2017, according to Chief Executive Officer Ian Read. Instead, the company has announced share buybacks worth at least $46 billion since February 2011. Of that, $31 billion has come within last two years, according to .

Sales of Pfizer's highest-selling drugs, the pain drug Lyrica and the vaccine Prevnar, which helps prevent pneumococcal infections, rose. Lyrica sales grew 16 percent to $1.32 billion and Prevnar grew 19 percent to of $1.14 billion.

Deal or Breakup

Pfizer still needs to either do a deal or consider a breakup because its pipeline of new drugs is only enough to keep revenue growth flat in coming years, said Ashtyn Evans, health-care analyst at Edward Jones, in a telephone interview.

'They could acquire attractive assets to supplement their different segments currently so that it makes more sense to break them up,' she said, or opt to do one large deal. 'They've got both of those strategies in their back pocket right now.'

Pfizer walked away from a $114 billion attempt to buy London-based AstraZeneca this year, a purchase that would have boosted the company's pipeline and cut its tax bill by moving its legal address overseas.

Last month, Pfizer was said to have approached about an acquisition. Actavis is run from Parsippany, New Jersey, but obtained an Irish domicile by acquiring Warner Chilcott Plc last year.

Blockbusters Needed

Pfizer's newest drugs are growing, though still aren't large enough yet to replace multibillion-dollar medicines like Celebrex, an arthritis treatment, which is losing patent protection this year.

'This was a strong quarter, they beat on earnings and sales and the beat was mostly driven by their pharmaceutical sales,' Evans said. 'Key products such as Lyrica beat, but importantly some of their newly launched products are off to a strong start.'

That includes Xeljanz, a rheumatoid arthritis medicine approved for sale in the U.S. in November 2012. It sold $85 million, more than double a year ago.

Pfizer lowered its full-year sales and earnings for the second straight quarter.

Revenue for the third quarter fell 2 percent to $12.4 billion. Full-year sales will be as much as $49.7 billion this year, compared to a prior forecast of $50.7 billion, the company said. Profit excluding one-time items will be in a range of $2.23 to $2.27, narrowing from a prior forecast of $2.20 to $2.30.

The reduced forecast reflects foreign exchange impacts and the anticipated impact of generic competition for Celebrex in the U.S., Chief Financial Officer Frank D'Amelio said.

To contact the reporter on this story: Cynthia Koons in New York at ckoons@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Drew Armstrong, John Lear

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