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In the wake of megamergers and healthcare reform, Pfizer and Merck both produce fairly positive first quarter results
Megamergers and healthcare reform be damned, Merck and Pfizer both met or exceeded sales expectations, even if the companies’ actual net incomes weren’t exactly stellar.
Pfizer saw revenue spike from $10.9 billion to $16.8 billion, exceeding analyst expectations and proving that the addition of Wyeth’s product line was a smart move. Its net income, however, was down 26 percent from $2.7 billion in 2009 to $2 billion this year.
The bad news: The company’s own product line isn’t raking in a ton of cash, and its pipeline might not be ready for prime time in 2010. While revenues for drugs were a healthy $14.5 billion (up from $10.1 billion in 2008), most of that increase came from newly acquired Wyeth products.
“US demand for most major products, including Lipitor, Lyrica, Viagra, Celebrex, and
Xalatan, remains weak, with many experiencing double digit percentage declines in TRx units in the quarter,” stated Deutsche Bank Analyst Barbara Ryan in an investor report.
Pfizer stated that its merger with Wyeth will cover the $800 million it expects to lose in 2012 due to the healthcare reform bill, and the increased Medicaid rebating that comes with it.
“During the quarter, many of our in-line products performed well, including key legacy Wyeth assets such as Enbrel, Effexor, the Prevnar/Prevenar franchise, and the Consumer Healthcare and Nutrition businesses,” stated Jeff Kindler, Pfizer’s chairman and CEO. “We are excited about our more diverse in-line product portfolio, including Prevnar/Prevenar 13 for infants and toddlers, which has been approved in more than 40 markets, and our expanded pipeline.”
For its part, Merck finally felt the hit it took with last year’s purchase of Schering-Plough. The company reported a 79-percent decrease in profits, with blame placed largely on the cost of acquiring SP in the $41 billion deal. The company expects the merger to reap $3.5 billion in savings by 2012.
As with every other drug company, Merck is predicting that healthcare reform will cost the firm: $170 million in 2010, and up to $350 in 2011. The good news is that if you add Schering and Merck’s sales from first quarter 2009, the combined company is up 7 percent for the quarter.
On the product side, Singulair saw a 10 percent increase in sales to $1.16 billion, Remicade was up 30 percent, and sales of Vytorin remained flat even after the hoopla over the ENHANCE trial.