Pfizer announced that the company’s net income increased by 25% in the second quarter. The company posted net income of $3.25 billion, or $0.43 a share, in the latest quarter. This was up from $2.61 billion, or $0.33 a share, a year earlier. Revenue was down 9% to $15.06 billion, which was above expectations of $14.93 billion.
Excluding $2.1 billion in charges before taxes, adjusted net income for the company was $4.67 billion, or $0.62 a share. Charges affecting the income results included a $1.2 billion charge for asset write-downs and $474 million in legal charges. The adjusted net income was $0.08 more than analysts expected.
Timothy Anderson, a Sanford C. Bernstein & Company analyst, wrote that Pfizer’s strong profit was a result of several factors, including better revenue, better gross margins, and lower selling, general and administrative spending. Aggressive cost-cutting and lower charges for reorganizing and other items reduced the expected plunge in revenue from generic competition to Pfizer’s blockbuster drug Lipitor, the world’s top-selling drug. Pfizer has also trimmed its work force to 101,000, down from around 110,600 people at the end of 2010. The results easily beat analysts’ expectations and Pfizer’s stock hit a 52-week closing high.
Competition from generics reduced sales of Lipitor by nearly $1.8 billion. Lipitor sales in the United States dropped to $296 million during the quarter, down from $1.4 billion a year earlier. Global sales plummeted 53%, to $1.22 billion. At its peak, Lipitor has annual global sales of $13 billion. Pfizer also makes Viagra and the painkiller Celebrex, among other drugs.
The patent for Lipitor expired in November. For consumers, prices plunged from about $175 a month for Lipitor to about $15 for generics. Commenting on the effect of Lipitor’s patent expiring, Pfizer’s chief executive, Ian C. Read, said, “We kept three times more share than has traditionally occurred. We added hundreds of millions of dollars of profitability to the company, as well as enabling patients to stay on the brand.”
