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Market Update

Pfizer Holds Up in Face of Patent Losses

Firm's first quarter is in line with our expectations, as cost-cutting, a diversified portfolio, and share buybacks offset patent losses.


 Pfizer (PFE) reported first-quarter results that largely matched our expectations, and we don't anticipate any changes to our fair value estimate. Excluding the impact of foreign exchange rates, total sales fell 1% year over year as patent losses weighed on overall growth. Earnings per share growth was flat with the prior-year period as increased share buybacks helped offset minor cost increases. Pfizer confirmed its full-year EPS guidance of $2.16-$2.26, which we expect it to meet.

Pfizer's diversified portfolio of drugs helped offset generic competition to several key drugs. In particular, the patent loss on antidepressant Effexor and international patent losses on cholesterol-lowering drug Lipitor caused close to a 5% drop in total sales for the company. Despite this hit, several of Pfizer's remaining drugs, including neuroscience drug Lyrica and vaccine Prevnar 13, posted steady growth, helping to offset the patent losses. We expect this trend to continue through 2012 as Pfizer faces several more patent losses.

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.