Drug makers Pfizer Inc. and Schering-Plough Corp. posted mixed third-quarter results, as both companies cut costs amid weakness in the market for cholesterol drugs.Pfizer's profit tripled from a year-earlier period weighed down by heavy costs for a scrapped product, but flat quarterly sales reflected generic competition in the U.S. Schering-Plough's profit declined 21% from a year-earlier quarter that was boosted by one-time gains, while sales increased 63% thanks to its acquisition of Organon BioSciences late last year. Both companies reported earnings that, excluding one-time items, were ahead of analysts' expectations.
Pfizer and Schering-Plough displayed their "ability to manage their cost structure," said Edward Jones analyst Linda Bannister. Also, both companies posted strong sales outside the U.S., partly because of favorable exchange rates.
New York-based Pfizer said it was ahead of schedule in a cost-cutting program launched last year, and boosted its targeted reductions for 2008. Among other measures, Pfizer has cut its work force by 14,600 positions since January 2007.
Pfizer, the world's biggest drug maker by sales, has been battling generic competition for its top drugs, and its best-selling drug, the cholesterol-lowering Lipitor, loses patent protection in 2011. At the same time, it has had trouble bringing new products to market and has responded by cutting costs and revamping its drug-research efforts.
For the third quarter, Pfizer said net income rose to $2.28 billion, or 34 cents a share, from $761 million, or 11 cents a share, a year earlier. The latest quarter included a charge of $640 million for Pfizer's settlement of litigation surrounding its pain drugs Celebrex and Bextra, and a charge of $150 million tied to product-returns liabilities. The year-earlier quarter included a charge of $2.1 billion related to Pfizer's decision to stop selling inhaled insulin Exubera.
Excluding the one-time items, earnings would have been 62 cents a share in the latest quarter, up from 58 cents a share a year earlier. The mean earnings estimate of analysts surveyed by Thomson Reuters was 60 cents a share.
Pfizer's third-quarter revenue eased to $11.97 billion from $11.99 billion. U.S. revenue declined 15% to $4.9 billion, while sales outside the U.S. rose 13% to $7.1 billion.
Lipitor sales fell 1% to $3.1 billion, reflecting a 13% decline in the U.S. The drug's sales have been under pressure from the availability of cheaper, generic options for cholesterol treatment.
Pfizer also said the global market for cholesterol drugs is facing decelerating market growth "and increasing cost constraints."
Schering-Plough, Kenilworth, N.J., reported third-quarter net income of $589 million, or 34 cents a share, down from $750 million, or 45 cents a share, a year earlier. Excluding a divestiture-related gain and acquisition-related costs, earnings rose to 39 cents a share from 28 cents. The mean earnings estimate of analysts surveyed by Thomson Reuters was 31 cents a share. Sales rose to $4.58 billion from $2.81 billion.
Combined sales of Vytorin and Zetia, the cholesterol drugs Schering-Plough co-markets with Merck & Co., dropped 15% to $1.1 billion, with lower U.S. sales partly offset by increased sales outside the U.S.
