Pfizer Inc’s new CEO on Tuesday outlined plans to reduce the company’s spending and work force and focus more sharply on promising drugs as it faces slowing sales of some of its blockbuster medicines.
In the latest quarter, a tax benefit and rising sales from products gained in its Wyeth acquisition helped Pfizer just beat Wall Street expectations. Profits nearly quadrupled, compared with a 2009 quarter hurt by big restructuring charges, but overall sales are slowing and the company said its revenue will drop next year.
Still, shares rose more than 5 percent on Tuesday as chief executive Ian Read announced a US$5 billion stock buyback and an ambitious overhaul of operations that will cut jobs and research spending while aiming to boost research productivity and emerging market sales. Pfizer will cut its 110,600-person work force by up to 5 percent.
The strategy outlined by Read includes many elements being tested across the pharmaceutical industry and tried by his predecessor, Jeffrey Kindler. He was ousted by Pfizer’s board unexpectedly on Dec. 6 after four years of languishing share prices and several failures of promising drugs in late testing, including a successor to cholesterol fighter Lipitor, the world’s top-selling drug.
“A lot of what we are doing individually you can see in different companies,” Read said, citing plans to increase external collaborations and prune the research portfolio to diseases with the best medical and financial payoffs. “I think we have a holistic game plan that is functioning as a total engine” to drive productivity.
The world’s largest drugmaker by revenue, Pfizer said fourth-quarter net income was US$2.89 billion, or US$0.36 per share, up from US$767 million, or US$0.10 a share, a year ago.
Adjusted net income was down 1 percent, at US$3.77 billion, or US$0.47 per share. Numerous one-time items brought a total gain of US$0.11 per share, including a US$2 billion benefit from a tax settlement, legal costs, and a host of restructuring and other expenses from Pfizer’s US$68 billion purchase of Wyeth in October 2009.
Revenue totaled US$17.56 billion, up 6 percent, as a dip in US sales was more than offset by higher sales elsewhere. For all of last year, Pfizer reported a 4 percent decline in net income, to US$8.26 billion, or US$1.02 per share. Revenue totaled US$67.81 billion, up 36 percent, thanks to US$18.1 billion from sales of Wyeth products.
Pfizer gave its first financial forecast for this year, for earnings per share of US$2.16 to US$2.26, excluding just over US$1 in one-time items. It expects flat revenue, at about US$67 billion.
Pfizer plans to cut research spending next year by US$1.5 billion, to about US$8.25 billion. The research cuts will come mainly from phasing out work in four disease areas: allergy and respiratory, urology, general medicine and tissue repair.