Pfizer (PFEFree Pfizer Stock Report), a leading drugmaker, reported share net of $0.28 in the opening quarter of 2011, which was modestly lower than our $0.30 estimate and just a few pennies above the year-earlier tally of $0.25. Sales of top-selling pharmaceutical, Lipitor, dropped in the quarter. The loss of market exclusivity in Canada and Spain in May and July, 2010, respectively, drew increased competition from generic drug manufacturers. To make matters worse, the patent for Lipitor is set to expire in the United States this year. As a result of this weakness, Pfizer's top-line was relatively flat in the first quarter, coming in at $16.5 billion, well below our estimate of $17.6 billion.

There were some positives in the quarter, however, including healthy demand for a variety of products, including Enbrel, Lyrica, Zyvox, and Sutent. Another plus was the recent acquisition of King Pharmaceuticals, as it bolstered Pfizer's position in the rapidly expanding pain relief market, with the addition of such products as Avinza and Flector Patch. (We estimate that this purchase will add a couple of pennies annually to 2011 and 2012 share net, and be increasingly accretive to the bottom line thereafter.)

Despite weaker Lipitor sales, benefits from acquisitions, especially Wyeth and, to a lesser extent, King Pharmaceuticals, ought to provide something of an offset. At this juncture, earnings per share for 2011, as a whole, stand to advance about 16%, to $1.20. Assuming further expansion of operating margins, Pfizer's bottom line may well climb around 25%, to $1.50 a share, in 2012. Although these figures represent solid year-to-year growth, they are 4% and 6% below our previous earnings estimates for 2011 and 2012, respectively.

Following the release of Pfizer's first-quarter results, the stock price fell modestly, losing more than 2% by mid-session. Investors seem to be concerned about the impact the upcoming patent expiration of Lipitor in the United States will have on the company's earnings. The flat year-over-year sales performance was also a disappointment, as noted.

About The Company: Pfizer is a major producer of pharmaceuticals, hospital products, consumer products, and animal health lines. Important product names include Norvasc (cardiovascular); Zoloft (antidepressant); Zithromax (antibiotic); Lipitor (cholesterol); Aricept (Alzheimer’s); Cardura (cardiovascular); Diflucan (antifungal); Zyrtec (antihistamine); Viagra (impotence); and Celebrex (rheumatoid arthritis and osteoarthritis). International business accounts for about 57% of total sales.


At the time of this article’s writing, the author did not have positions in any of the companies mentioned.