By Jonathan D. Rockoff And Michael Calia
Pfizer Inc. said a strong U.S. dollar and recent drug-patent
losses contributed to a 52% drop in net income in the fourth
quarter and would depress results this year.
Pfizer estimates foreign exchange will hurt 2015 sales by $2.8
billion, or 17 cents a share, if the dollar remains at its current
high levels, Chief Financial Officer Frank D'Amelio said.
Johnson & Johnson and some rival health-products companies
based in the U.S. have similarly warned about the strong dollar's
effects on 2015 performance. The expected weakness shows the
downside to the industry's search for faster growth in overseas
markets. More than 60% of Pfizer's sales come from outside the
U.S.
In addition, Pfizer has faced the loss of roughly $26 billion in
sales between 2010 and this year from drugs losing patent
protection. In December, its painkiller Celebrex began facing
generic competition. To cope, the company has cut $5.5 billion in
operating expenses over the last few years while trying to restock
its R&D pipeline with heart and cancer drugs and vaccines.
Pfizer explored two big deals last year, but AstraZeneca PLC
succeeded in rebuffing a $120 billion bid, and talks with Actavis
PLC also foundered. Chief Executive Ian Read said Tuesday that the
company remained open to doing a big deal, even one designed to
lower its taxes, despite new rules the U.S. Treasury established to
deter such transactions.
Yet, Mr. Read said Pfizer's "strong base business" didn't
require such a large deal. "We don't have to do a deal. If we had
to do a deal, we would have bought AstraZeneca. We didn't buy
AstraZeneca" because Pfizer doesn't need to overpay, Mr. Read said
in an interview.
Mr. Read said Pfizer was more inclined to do transactions that
net the company products that are "close to market or on the
market," rather than drugs in earlier stages of development.
Despite Pfizer's challenges, Mr. Read expressed optimism about
the company's long-term future without a big acquisition, citing
growing sales of new drugs like the blood-thinner Eliquis and
rheumatoid-arthritis pill Xeljanz. He also described bright
prospects for the company's drugs in development, including
breast-cancer therapy palbociclib, which could be approved this
year.
Pfizer's net income fell by 52% in the fourth quarter, to $1.23
billion from $2.57 billion in the prior-year period, largely due to
sales lost on aging drugs and a stronger U.S. dollar.
The strong U.S. dollar accounted for nearly all of Pfizer's 3.3%
revenue drop in the quarter, to $13.12 billion. Foreign exchange
accounted for a 3% or $450 million hit to revenues, Mr. D'Amelio
said.
Pfizer, of New York, N.Y., said it expected to post $2 to $2.10
a share in earnings and $44.5 billion to $46.5 billion in revenue
for the new year.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Michael Calia at michael.calia@wsj.com
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