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Pfizer CEO expected to share new strategy
With over-the-counter unit up for sale, planned meeting will address challenges
Thursday, February 09, 2006
BY GEORGE E. JORDAN
Star-Ledger Staff
Although its share price surged yesterday, Pfizer still has some explaining to do.
The stock was up nearly 6 percent after the pharmaceutical giant said it may sell or spin off its over-the-counter products division.
The announcement was made in advance of a meeting tomorrow with analysts and investors, the first since the company abruptly pulled its 2006 and 2007 earnings guidance last fall, sending the stock price plunging.
Under pressure from investors, Hank McKinnell, Pfizer's chief executive, is expected to announce new 2006 earnings projections and detail the strategy to solve complex issues facing the world's largest drug company -- among them, generic competition and sluggish sales of some key drugs.
In an effort to boost earnings, Pfizer announced Tuesday that its Morris County-based over-the-counter business might be for sale. The company said more details would be released tomorrow.
J.P. Garnier, chief executive of GlaxoSmithKline, yesterday said the British drugmaker was a likely bidder. "If an acquisition gets us into a fast-growing business, we are very interested," Garnier said after announcing the company's earnings per share in 2005 ere up 21 percent on sales of $37.8 billion.
Other possible suitors, analysts say, include Johnson & Johnson, Procter & Gamble, Norvartis and Unilever. The companies all declined to comment.
Pfizer's OTC division markets such popular brands as Lubriderm, Listerine, Rogaine, Benadryl and Sudafed, which together accounted for about 7.6 percent of Pfizer's revenue last year.
Over-the-counter products are hot. They provide healthy profit margins without the expense and risks of prescription drug discovery and testing. Foreign companies are charging into the business. Last year, Bristol-Myers Squibb sold its consumer products business to Novartis for $660 million.
GlaxoSmithKline's interest gives Pfizer momentum going into tomorrow's meeting in Midtown Manhattan, where the company last year announced a company-wide realignment and $4 billion in sales staff reductions and other spending cuts.
Last month, Pfizer reported that earnings and revenue fell in the fourth quarter, but saw increased sales of its most lucrative drug, Lipitor, a cholesterol-lowering agent that is the world's No.1-selling medicine with sales last year of $12.2 billion. Lipitor's sales weakened, however, in the second half of the year.
This year, Lipitor could face additional pressure. Merck's Zocor, a rival drug, is set to lose patent protection, and some analysts speculate generic versions of Zocor could dampen sales of Lipitor.
Barbara Ryan, an analyst at Deutsche Banc, suggested Pfizer could announce even more spending cuts tomorrow "that will push total projected savings beyond the previously announced $4 billion target."
She also suggested Pfizer must prove its net income is "not strictly a function of Lipitor sales."
Analysts estimate Pfizer could fetch between $6 billion and $11 billion from the sale of its over-the-counter portfolio, money that could be reinvested in prescription drug discovery or in acquiring companies with late-state drug candidates.
"With more cash on hand, we would expect Pfizer to engage in more deals," wrote JP Morgan analyst Chris Shibutani in a note to investors. He said "a prudent use of cash" would be to acquire drug candidates.
New products, said Robert Hazlett, an analyst with SunTrust Robinson Humphrey, plays to Pfizer's strong suit. "What this company does well is bring products to market," he said in a telephone interview. "It is able to execute on the sales and marketing side."
Hazlett predicted sales of Pfizer's recently approved inhalable insulin and Sutent, a cancer drug, "will surpass some people." He also predicted Pfizer's "cost cutting will be well received," though the company has refused to disclose, so far at least, how many jobs have been eliminated and where.
New products must emerge from Pfizer's drug pipeline if the company is to replace blockbusters facing patent expiration by 2008, including the antidepressant Zoloft, allergy treatment Zyrtec and Norvasc, a blood pressure treatment that is Pfizer's No. 2 seller.
Pfizer CEO expected to share new strategy
With over-the-counter unit up for sale, planned meeting will address challenges
Thursday, February 09, 2006
BY GEORGE E. JORDAN
Star-Ledger Staff
Although its share price surged yesterday, Pfizer still has some explaining to do.
The stock was up nearly 6 percent after the pharmaceutical giant said it may sell or spin off its over-the-counter products division.
The announcement was made in advance of a meeting tomorrow with analysts and investors, the first since the company abruptly pulled its 2006 and 2007 earnings guidance last fall, sending the stock price plunging.
Under pressure from investors, Hank McKinnell, Pfizer's chief executive, is expected to announce new 2006 earnings projections and detail the strategy to solve complex issues facing the world's largest drug company -- among them, generic competition and sluggish sales of some key drugs.
In an effort to boost earnings, Pfizer announced Tuesday that its Morris County-based over-the-counter business might be for sale. The company said more details would be released tomorrow.
J.P. Garnier, chief executive of GlaxoSmithKline, yesterday said the British drugmaker was a likely bidder. "If an acquisition gets us into a fast-growing business, we are very interested," Garnier said after announcing the company's earnings per share in 2005 ere up 21 percent on sales of $37.8 billion.
Other possible suitors, analysts say, include Johnson & Johnson, Procter & Gamble, Norvartis and Unilever. The companies all declined to comment.
Pfizer's OTC division markets such popular brands as Lubriderm, Listerine, Rogaine, Benadryl and Sudafed, which together accounted for about 7.6 percent of Pfizer's revenue last year.
Over-the-counter products are hot. They provide healthy profit margins without the expense and risks of prescription drug discovery and testing. Foreign companies are charging into the business. Last year, Bristol-Myers Squibb sold its consumer products business to Novartis for $660 million.
GlaxoSmithKline's interest gives Pfizer momentum going into tomorrow's meeting in Midtown Manhattan, where the company last year announced a company-wide realignment and $4 billion in sales staff reductions and other spending cuts.
Last month, Pfizer reported that earnings and revenue fell in the fourth quarter, but saw increased sales of its most lucrative drug, Lipitor, a cholesterol-lowering agent that is the world's No.1-selling medicine with sales last year of $12.2 billion. Lipitor's sales weakened, however, in the second half of the year.
This year, Lipitor could face additional pressure. Merck's Zocor, a rival drug, is set to lose patent protection, and some analysts speculate generic versions of Zocor could dampen sales of Lipitor.
Barbara Ryan, an analyst at Deutsche Banc, suggested Pfizer could announce even more spending cuts tomorrow "that will push total projected savings beyond the previously announced $4 billion target."
She also suggested Pfizer must prove its net income is "not strictly a function of Lipitor sales."
Analysts estimate Pfizer could fetch between $6 billion and $11 billion from the sale of its over-the-counter portfolio, money that could be reinvested in prescription drug discovery or in acquiring companies with late-state drug candidates.
"With more cash on hand, we would expect Pfizer to engage in more deals," wrote JP Morgan analyst Chris Shibutani in a note to investors. He said "a prudent use of cash" would be to acquire drug candidates.
New products, said Robert Hazlett, an analyst with SunTrust Robinson Humphrey, plays to Pfizer's strong suit. "What this company does well is bring products to market," he said in a telephone interview. "It is able to execute on the sales and marketing side."
Hazlett predicted sales of Pfizer's recently approved inhalable insulin and Sutent, a cancer drug, "will surpass some people." He also predicted Pfizer's "cost cutting will be well received," though the company has refused to disclose, so far at least, how many jobs have been eliminated and where.
New products must emerge from Pfizer's drug pipeline if the company is to replace blockbusters facing patent expiration by 2008, including the antidepressant Zoloft, allergy treatment Zyrtec and Norvasc, a blood pressure treatment that is Pfizer's No. 2 seller.
posted by Jones Lang LaSalle NJ News Blog at 10:53 AM
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