NEW YORK (Reuters) –
Pfizer Inc (PFE.N) and Bristol-Myers Squibb (BMY.N) reported lower earnings that beat expectations on Tuesday, but the U.S. drugmakers relied on aggressive cost cuts to make up for disappointing sales.
Pfizer cholesterol fighter Lipitor, the company's biggest product, lost ground to cheaper generic forms of Merck & Co's (MRK.N) Zocor. And Chantix, a new smoking-cessation drug Pfizer had hoped would become a blockbuster, crumbled on concerns that it causes suicidal thoughts.
Although many Bristol drugs scored revenue gains, sales of its Erbitux colon cancer medicine fell sharply on continued confusion about which patients it is most likely to help.
"Pfizer and Bristol-Myers, in the face of a very challenging environment, continue to beat expectations and to maintain growing cash flows," said Deutsche Bank analyst Barbara Ryan.
She noted that they, like U.S. rivals that have already reported quarterly earnings, had cut costs sharply and were therefore able to beat forecasts despite the strengthening dollar, which hurts the value of overseas sales.
Pfizer, the world's largest drugmaker, said net profit fell 2 percent to $2.73 billion, or 40 cents per share, from a year earlier, when the company took acquisition-related charges.
Excluding special items, Pfizer earned 54 cents per share. Analysts on average expected 49 cents, according to Reuters Estimates.
Global revenue fell 8 percent to $10.87 billion, about $180 million below expectations. It would have fallen only 3 percent if not for the stronger dollar.
Marketing and administrative expenses and the cost of goods fell significantly, bolstering results. But the tax rate rose 6 percentage points due to costs of financing Pfizer's planned purchase of Wyeth (WYE.N).
Pfizer's operating expenses were $1 billion lower than expected, according to Sanford Bernstein analyst Tim Anderson.
Lipitor sales fell 13 percent to $2.72 billion. Chantix sales dropped 36 percent to $177 million.
Sales of Pfizer oncology drugs fell 13 percent to $552 million, as colon cancer treatment Camptosar faced generic competition. The drug's sales fell 43 percent to $109 million.
One of the few important Pfizer drugs posting higher revenue was Lyrica. Sales of the neuropathic pain treatment rose 17 percent to $684 million.
Pfizer has been one of the most poorly performing drugmakers over the past decade, its sales and shares ravaged by an inability to develop big-selling new medicines despite costly mergers with U.S. rivals Warner-Lambert and Pharmacia.
The company is back on the megamerger trail, with plans later this year to scoop up Wyeth in a deal valued at $68 billion when announced in late January. It is hoping Wyeth's drugs will offset an anticipated drop in Lipitor sales when the product faces generic competition in 2011.
Bristol-Myers said its quarterly profit slipped 3 percent as the strong dollar and lower sales of Erbitux more than offset higher revenue from other medicines.
Earnings fell to $638 million, or 32 cents per share, from $661 million, or 33 cents per share, a year earlier. Excluding special items, profit was 48 cents per share, a tad better than the 47 cents analysts had forecast.
The company said sales rose 3 percent to $5.02 billion, about $125 million shy of Wall Street expectations.
Sales of blood clot preventer Plavix jumped 10 percent to $1.44 billion, while schizophrenia treatment Abilify soared 30 percent to $589 million.
But Erbitux revenue fell 12 percent to $164 million, hurt by confusion over whether patients should first take a genetic test to better predict whether the medicine would be effective.
Bristol-Myers shares were down 62 cents, or 3 percent, at $19.92 on the New York Stock Exchange, while Pfizer slipped 28 cents, or 2.1 percent, to $13.21.
(Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Derek Caney and Lisa Von Ahn)