Pfizer Inc. (NYSE:PFE) just can't quite get it up anymore. Analysts are calling for a hold and estimating a 42 cent-a-share earnings report for the fourth quarter of 2006. This is the same as year-ago numbers and three cents less than third quarter earnings of 45 cents-a-share.
Little wonder analysts are unenthusiastic -- Pfizer is a big player that's been going through some seriously deflating times recently.
In early December, the company was forced to call off clinical trials of its "good cholesterol" drug Torcetrapib, due to safety concerns. The company had hoped to pair this drug with its main revenue driver Lipitor, the best-selling cholesterol drug ever, which brings in some $12 billion in annual revenue, when Lipitor's patent protection runs out in 2010.
Big Pharma lives and dies by its blockbuster drugs. But by the end of this year, New York-based Pfizer will have limped through three years of patent protection losses on big-name drugs like its anti-depressant Zoloft and blood pressure pill Norvasc.
The company has said it doesn't foresee being able to lift revenue -- $51 billion in 2005 -- until at least 2009 when new products will hopefully be able to pick up the slack.
Without something sexy coming down the pipeline soon, Pfizer is now relying on reactive measures like big layoffs to trim costs. The company already announced in November that it planned to cut some 20% of its U.S. sales force, and just today (Jan. 16) Pfizer said it would make deeper cuts when it announces its 2006 earnings next Monday (Jan. 22).
Deutsche Bank analyst Barbara Ryan told MarketWatch today that she expects at least 2,000 layoffs in foreign sales, particularly in Europe. She also estimates another 4,000 to 5,000 workers could be eliminated elsewhere in the company. The R&D budget should remain flattish, she said.
Big Pharma watchers know that the loss of torcetrapib was a body blow and that it will take some time for Pfizer to regain its footing. Analysts are unlikely to be surprised if the company misses its earnings by a bit. But what next? Good question.
Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.
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Reader Comments (Page 1 of 1)
1-22-2007 @ 4:18PM
jose said...
Well the beat the streets expectation what do you say now.
1-22-2007 @ 10:09PM
Robert G. Turich said...
When Pfizer does their due diligence to see what avenues to take for their final cost reduction decisions, I think they should consider moving their operations like their Research Headquarters to an area where the cost of operation would be lower.
This would benefit both the company and their employees, since their present locations are all located in the most expensive areas of the USA.
The Research Triangle Park, NC, situated between Durham and Raleigh, NC, would be the ideal spot to relocate their Manufacturing and Research Headquarters. The cost of living is lower and the State of NC would offer great Tax Incentives to Pfizer. This could and would be one big cost reduction and a place where employees could afford to live and the company would benefit with great Tax Benefits!
Besides that, with Duke University, UNC and NC State University, as well as other fine colleges in the area, along with a pool of highly educated, experienced and highly qualifed people already in the area, Pfizer would benefit greatly.
So, if Mr. Jeffrey Kindler,CEO of Pfizer is looking to cut cost, this is the way to go Jeff old boy!