Celebrex settlement cuts into Pfizer profits
Pfizer Inc.'s settlement of a lawsuit filed by Brigham Young University over the development of pain medication Celebrex cut into first-quarter profits, the company reported Tuesday.
Pfizer, which has its largest worldwide research site in Groton, wouldn't break down how much the Brigham Young settlement cost. But its quarterly financials noted that the Celebrex litigation combined with settlements related to the legacy Wyeth hormone-replacement therapy Prempro had cost the company $450 million in the quarter.
Pfizer's first full quarter without a patent-protected Lipitor cholesterol drug in its war chest led to a profit shortfall in the first quarter of 19 percent when compared with the same period a year ago. The company also reduced its profit forecast for the year, saying the lower expectations were based mainly on the sale of its baby-nutrition unit to Nestle for $11.85 billion.
Utah-based Brigham Young had charged that Monsanto, which Pfizer acquired in 2003, had used research by BYU professor Daniel Simmons that proved integral to the creation of Celebrex, a so-called Cox-2 inhibitor. The university sought $9 billion from Pfizer out of an estimated $35 billion the company has made from Celebrex, a substitute for aspirin.
As part of the settlement, Pfizer agreed to establish the Dan Simmons Chair at BYU to support continued drug research there.
"We are pleased to resolve this matter and the uncertainty of litigation, and to be in a position to support Dr. Simmons' research efforts at BYU," Pfizer said in a statement.
Pfizer's announcement of the BYU settlement continued the company's trend of commingling news of large legal charges with quarterly financial reports.
Pfizer reported profits of $1.79 billion, or 24 cents per share, for the quarter, down from $2.22 billion, or 28 cents a share, in the same period a year earlier. The company's adjusted earnings of 58 cents a share, taking out one-time legal charges, was slightly above Wall Street expectations.
"We believe this beat was driven primarily by strong cost controls across the board," said Seamus Fernandez, an analyst for Leerink Swann, in a note to investors.
But Pfizer's long-term profit outlook was adjusted downward by 6 cents. The company now expects annual earnings per share of $2.14 to $2.24.
"I am pleased with our first-quarter 2012 financial performance, which was driven by growth in certain brands including Celebrex, Enbrel and Lyrica," Pfizer chairman and chief executive Ian Read said in a statement.
Revenues in the quarter hit $15.4 billion, a 7 percent decrease. Six percent of the decrease was attributable to operational declines, while 1 percent was because of unfavorable foreign exchange rates.
Lipitor sales fell by 71 percent in the United States, leading to a 42 percent fall in the drug's revenue worldwide. The drug, which once accounted for more than $10 billion in annual revenue, now accounts for only $1.4 billion in quarterly sales.
Pfizer said it expects its stock repurchase plan would total $5 billion this year, the same as last year's buyback program.
"There may be some disappointment that the repurchase was not stepped up in 2012," analyst Fernandez said.
Pfizer's stock price closed down 12 cents on the day, off about half a percent and now standing at $22.78 a share.
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