Pfizer turns heads in third quarter

October 21, 2009 12:00 am • Last Updated: October 21, 2009 8:25 am

By By LEE HOWARD Day Staff Writer

Global job cuts numbering about 6,500 since the first of the year helped Pfizer Inc. outperform Wall Street financial expectations Tuesday, when the pharmaceutical behemoth reported third-quarter earnings up 26 percent compared with a year ago.But the best news for the 5,000 employees at research-and-development campuses in Groton and New London couldn't be found in any financial report. It occurred when Pfizer spokeswoman Joan Campion confirmed that the job reductions already accomplished leave only 1,500 more legacy Pfizer personnel in jeopardy of losing their jobs out of a total of 75,400 employees the company had at the end of the third quarter.

But the best news for the 5,000 employees at research-and-development campuses in Groton and New London couldn't be found in any financial report. It occurred when Pfizer spokeswoman Joan Campion confirmed that the job reductions already accomplished leave only 1,500 more legacy Pfizer personnel in jeopardy of losing their jobs out of a total of 75,400 employees the company had at the end of the third quarter.By contrast, about 11,500 Wyeth Pharmaceuticals employees were expected to lose their jobs - through layoffs and attrition - as the final details of a merger completed last week between the two companies begin to emerge in the coming months. It's unclear how many Wyeth employees left before the merger was made final.

By contrast, about 11,500 Wyeth Pharmaceuticals employees were expected to lose their jobs - through layoffs and attrition - as the final details of a merger completed last week between the two companies begin to emerge in the coming months. It's unclear how many Wyeth employees left before the merger was made final.Jeffrey B. Kindler, Pfizer's chairman and chief executive, promised in a Webcast Tuesday that when the layoffs come "we will move quickly, act fairly, communicate openly and retain critical experience and talent."

Jeffrey B. Kindler, Pfizer's chairman and chief executive, promised in a Webcast Tuesday that when the layoffs come "we will move quickly, act fairly, communicate openly and retain critical experience and talent."Chief Financial Officer Frank D'Amelio said all divisions of Pfizer would face targeted work-force reductions, including outsourcing in such areas as information technology. Hundreds of local contractors in Groton and New London already have faced outsourcing moves, many losing their jobs toward the end of last year and early this year, but several remain.

Chief Financial Officer Frank D'Amelio said all divisions of Pfizer would face targeted work-force reductions, including outsourcing in such areas as information technology. Hundreds of local contractors in Groton and New London already have faced outsourcing moves, many losing their jobs toward the end of last year and early this year, but several remain.Kindler said Pfizer has moved remarkably quickly in its combination with Wyeth given the scale and complexity of the $66.9 billion merger.

Kindler said Pfizer has moved remarkably quickly in its combination with Wyeth given the scale and complexity of the $66.9 billion merger."We are only just getting started," he added.

"We are only just getting started," he added.Les Funtleyder, a health care strategist for Miller Tabak & Co. in New York City, said in his morning commentary that he remains concerned by the company's "lackluster" growth in its various product lines, figuring any further improvements in profits will come from "head count reductions."

Les Funtleyder, a health care strategist for Miller Tabak & Co. in New York City, said in his morning commentary that he remains concerned by the company's "lackluster" growth in its various product lines, figuring any further improvements in profits will come from "head count reductions."An analysis by Leerink Swann of Boston, on the other hand, praised Pfizer's "solid cost management" in the third quarter, a period during which the company reported reducing staff by about 1,100.

An analysis by Leerink Swann of Boston, on the other hand, praised Pfizer's "solid cost management" in the third quarter, a period during which the company reported reducing staff by about 1,100.While Pfizer reported a stronger earnings quarter than most analysts predicted, the company said it expects even better results ahead. Pfizer increased its projected earnings per share at year-end by more than 10 percent, based partially on expected results from Wyeth products.

While Pfizer reported a stronger earnings quarter than most analysts predicted, the company said it expects even better results ahead. Pfizer increased its projected earnings per share at year-end by more than 10 percent, based partially on expected results from Wyeth products."With Wyeth, the sustainability of Pfizer's business is upgraded significantly," said an analysis of the quarterly financials prepared by Seamus Fernandez of Leerink Swann.

"With Wyeth, the sustainability of Pfizer's business is upgraded significantly," said an analysis of the quarterly financials prepared by Seamus Fernandez of Leerink Swann.But Pfizer's results this year look impressive partly because of a one-time charge the company had to take in last year's third quarter. Pfizer pointed out that last year's third-quarter earnings took a hit because of nearly $900 million in litigation charges involving "non-steroidal anti-inflammatory pain medicines," a veiled reference to lawsuits over Celebrex and Bextra.

But Pfizer's results this year look impressive partly because of a one-time charge the company had to take in last year's third quarter. Pfizer pointed out that last year's third-quarter earnings took a hit because of nearly $900 million in litigation charges involving "non-steroidal anti-inflammatory pain medicines," a veiled reference to lawsuits over Celebrex and Bextra. When discounting the one-time charge and making other adjustments, Pfizer's third-quarter income was down 17 percent and its earnings per share were off 18 percent.

When discounting the one-time charge and making other adjustments, Pfizer's third-quarter income was down 17 percent and its earnings per share were off 18 percent.Pfizer also reported revenue of $11.6 billion compared to nearly $12 billion during the same period in 2008, a 3 percent decrease. The company said more than $600 million in reduced revenue, or about 5 percent of the total, could be blamed on unfavorable foreign currency exchanges because of the stronger dollar this year.

Pfizer also reported revenue of $11.6 billion compared to nearly $12 billion during the same period in 2008, a 3 percent decrease. The company said more than $600 million in reduced revenue, or about 5 percent of the total, could be blamed on unfavorable foreign currency exchanges because of the stronger dollar this year.This was Pfizer's first earnings report since the merger, but it didn't reflect any of Wyeth's revenues because the deal didn't conclude until the fourth quarter. This also was the first financial report after Pfizer announced its agreement to pay a $2.3 billion fine for illegal marketing tactics, but most of the money for the penalty had been set aside in a previous quarter's earnings report.

This was Pfizer's first earnings report since the merger, but it didn't reflect any of Wyeth's revenues because the deal didn't conclude until the fourth quarter. This also was the first financial report after Pfizer announced its agreement to pay a $2.3 billion fine for illegal marketing tactics, but most of the money for the penalty had been set aside in a previous quarter's earnings report.Among Pfizer's new business units, only the specialty care division showed an increase in revenues. All other units - oncology, emerging markets, established markets, animal health and primary care - showed losses.

Among Pfizer's new business units, only the specialty care division showed an increase in revenues. All other units - oncology, emerging markets, established markets, animal health and primary care - showed losses.Kindler called the earnings "solid" and pointed out that most of the business units would have reported positive results if foreign exchange rates had been more favorable.

Kindler called the earnings "solid" and pointed out that most of the business units would have reported positive results if foreign exchange rates had been more favorable.Pfizer reported net income of $2.9 billion for the quarter and diluted earnings per share of 43 cents.

Pfizer reported net income of $2.9 billion for the quarter and diluted earnings per share of 43 cents.Health care stock analyst Funtleyder said Pfizer likely will "show some signs of improvement" in its 2010 stock performance as worries over health care reform recede.

Health care stock analyst Funtleyder said Pfizer likely will "show some signs of improvement" in its 2010 stock performance as worries over health care reform recede. l.howard@theday.com

l.howard@theday.com