Generic Lipitor took a large bite out of Pfizer’s (NYSE:PFE) third-quarter profit.
On Thursday, the pharmaceutical manufacturer reported that for the three month period ended in September, both revenue and net income fell due to a significant decrease in sales. Net income was $3.21 billion, or 43 cents per share, down from $3.74 billion or 48 cents per share in the year-ago quarter. Revenue fell 16 percent to $13.98 billion and missed analysts’ expectations of $14.66 billion.
Excluding unfavorable exchange rates, which Pfizer said cut worldwide revenue by 4 percent, total international sales fell 7 percent to $8.35 billion. In the United States, the drop was worse; sales decreased by 18 percent to $5.63 billion for the quarter. In particular, sales for primary care and specialty care medicines dropped most, while cancer drugs fell by a percent or two. Only the company’s established products business, which sells off-patent drugs, saw sales rise.
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“Overall, our results this quarter reflect continued product losses of exclusivity, most notably Lipitor in all major markets,” said the company’s Chairman and Chief Executive Officer Ian Read in a statement.
Lipitor’s patent expiration was the primary cause for the sales drop. Long the world’s top-selling drug, the cholesterol-lowering medication once generated $13 billion a year for Pfizer. However, the company lost the patent on November 30, 2011. Since then, competition has been on the rise. Through May the effect was slight, as the U.S. Food and Drug Administration gave approval for only a limited number of companies to begin selling the generic version of the drug. Furthermore, Pfizer gave rebates to insurers that continued to cover Lipitor and offered $4 co-payment deals to patients staying on the drug. But competition has now begun in earnest and prices dropped after multiple generics flooded the market in late May. In the third quarter, sales of Lipitor fell 71 percent worldwide to $749 million and 87 percent in the United States.
The drug was not the only one of Pfizer’s medicines to see declines; sales for more than two-thirds of the company’s drugs dropped, most by 10 percent or more, because of generic competition. However sales did increase for Viagra, the painkiller Celebrex, and the fibromyalgia drug Lyrica, which is the company’s new top-selling drug.
Even with the significant drop in sales, Pfizer increased its profit forecast for the year to $1.30 to $1.38 per share from $1.21 to $1.36 per share. In support of the company’s higher expectations, Read noted in the earnings statement that three new medicines were approved in recent months and two others are expected to receive approval shortly.
“Given our demonstrated ability to advance our strategic initiatives, I believe we are well-positioned to deliver attractive returns for our shareholders over time,” he said.