Pfizer swings to loss due to restructuring, asset writedowns

Drug maker Pfizer lost US$394 million in the fourth quarter as it booked billions in charges for lay-offs and losses related to the acquisition of a trouble-plagued business that makes sterile injectable medicines.

While Pfizer edged past Wall Street’s profit expectations, its financial forecast for 2019 was far below what analysts were anticipating, disappointing investors. In pre-market trading on Tuesday, shares dropped 3.5 per cent to US$38.15.

The biggest US drugmaker posted a US$12.3-billion profit for 2017’s fourth quarter, when it got a huge boost from the US tax overhaul late that year.

Tuesday’s weak report, the first under new Chief Executive Albert Bourla, overshadowed Pfizer’s impressive streak of getting four new cancer drugs, all likely billion-dollar sellers, approved in the last 14 weeks of 2018.

Pfizer has been struggling for a couple years to upgrade sterile injectable drug factories it bought from Hospira. Those sites are in such bad shape, repairs have dragged on far longer than Pfizer expected. Production shutdowns have reduced sales and caused lingering nationwide shortages of crucial injected painkillers, antibiotics and other medicines needed by hospitals.

The New York company lost seven cents per share in the latest quarter. But earnings, adjusted for all the one-time charges, amounted to 64 cents per share, one cent more than expected.

Pfizer Inc posted revenue of US$13.98 billion in the quarter, up two per cent. The strong dollar trimmed revenue by three per cent, Pfizer said.

The maker of Viagra and pain treatment Lyrica said it expects full-year 2019 earnings in the range of US$2.82 to US$2.92 per share, while industry analysts had expected US$3.04.

The company is projecting revenue of between US$52 billion and US$54 billion, also short of the US$54.3 billion Wall Street anticipated.

For all of 2018, Pfizer reported sales of US$53.65 billion, up two per cent from a year earlier, and net income of US$11.15 billion, or US$1.87 per share.

Sales of Pfizer’s growing portfolio of cancer drugs jumped 27 per cent to US$1.91 billion.

Pfizer, known for drugs for the masses like Viagra, cholesterol fighter Lipitor and pain reliever Celebrex, didn’t get its first cancer drug – kidney and stomach cancer medicine Sutent – approved until 2006. Now more focused on vaccines, oncology medicines and rare disease treatments that command high prices, Pfizer today sells 17 cancer drugs.

Fourth-quarter sales of stroke-preventing Eliquis jumped 28 per cent to US$910 million, while sales of top seller Prevnar 13, a vaccine against pneumococcal infections, dipped 1 per cent, to US$1.5 billion. Lyrica sales rose eight per cent to US$1.2 billion, but Pfizer’s second-most lucrative drug will get generic competition starting on July 1, which will wipe out much of that revenue.

Sales of consumer health products such as ChapStick and Centrum vitamins rose three per cent to US$974 million. Pfizer is forming a joint venture combining that business with GlaxoSmithKline’s consumer business.

“We enter 2019 with confidence in the competitive position of our businesses,” Bourla said in a statement.

Pfizer shares have fallen slightly more than nine per cent since the beginning of the year, while the Standard & Poor’s 500 index has climbed 5.5 per cent.