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AZN Astrazeneca Plc

10,678.00
-64.00 (-0.60%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Astrazeneca Plc LSE:AZN London Ordinary Share GB0009895292 ORD SHS $0.25
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -64.00 -0.60% 10,678.00 10,688.00 10,690.00 10,780.00 10,674.00 10,756.00 1,773,970 16:35:09
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Pharmaceutical Preparations 45.81B 5.96B 3.8415 27.83 165.72B

Pfizer Hit by Stronger Dollar, Patent Losses, Lawsuit Settlement -- 3rd Update

27/01/2015 11:36pm

Dow Jones News


Astrazeneca (LSE:AZN)
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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.

Foreign exchange will hurt 2015 sales by $2.8 billion, or 17 cents a share, if the dollar remains at its current high levels, Pfizer Chief Financial Officer Frank D'Amelio said.

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.

Aging drugs have been another big problem. Pfizer is facing 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.

Among the items affecting Pfizer's performance in the quarter was a $400 million charge to settle a class-action securities lawsuit alleging that the illegal marketing of several medicines, including the painkiller Bextra, artificially inflated the company's stock. Pfizer denied wrongdoing, saying, "This resolution reflects a desire by the company to avoid the distraction of continued litigation and focus on the needs of patients and prescribers."

The lawsuit alleged that, between January 2006 and January 2009, Pfizer marketed several drugs for unapproved uses and a resulting sales boost prompted company executives to make "false and misleading statements about Pfizer's financial performance," which in turn artificially inflated the stock price. Pfizer stock then dropped on Jan. 26, 2009, after the drug maker disclosed plans to pay $2.3 billion to resolve criminal and civil allegations that certain drugs were marketed illegally. (Doctors are allowed to prescribe drugs for off-label or unapproved uses, but companies can't market them that way.)

Pfizer reported that net income fell by 52% in the fourth quarter, to $1.23 billion from $2.57 billion a year earlier. The New York-based company also 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.

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 revenue, Mr. D'Amelio said.

Ed Silverman contributed to this article

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Michael Calia at michael.calia@wsj.com

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