Pfizer’s Q2 earnings beat forecasts as it plans split

Reuters

Wed, Jul 31, 2013 - Page 15

Pfizer Inc yesterday reported second-quarter earnings slightly ahead of forecasts as the largest US drugmaker lines up a business split that could lead to the spin-off of its generics division.

The company reaffirmed its financial outlook for the year.

For the second quarter, Pfizer’s adjusted income fell 10 percent to US$4 billion, or US$0.56 a share, from US$4.45 billion, or US$0.59 a share, a year earlier. Revenue fell 7 percent to US$12.97 billion.

Analysts, on average, were expecting second-quarter income of US$0.55 a share, on revenue of US$13.01 billion, according to Thomson Reuters I/B/E/S.

Pfizer, whose CEO Ian Read has been reviewing the group’s structure after divesting its nutrition and animal health businesses, said on Monday that it planned to separate its commercial operations into two units for branded products and a third for generics.

Pfizer’s new model would help revitalize its innovation-based core drugs business, while enhancing the value of consumer and off-patent established brands, and maximizing the use of capital, Read said..

Pfizer’s generics business, which represents 17 percent of total sales, has far lower profit margins than its patent-protected drugs. Many analysts have urged Pfizer to spin off its generics business so it can focus on its core branded pharmaceuticals business, although any spin-off of a division is unlikely before 2016.

Within the core drugs division, revenues from cancer medicines increased by 28 percent in the second quarter.

Read also said he expected business in emerging markets to accelerate in the second half of the year, led by China.