Declining Lipitor sales hurt Pfizers FY10 net income

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Despite posting a very strong 2010 fourth quarter, Pfizer reported losses for its income in the fiscal year of 2010, which were somewhat negatively impacted by declining sales of atorvastatin (Lipitor).

Since the acquisition of Wyeth was completed on Oct 15, 2009, Pfizer pointed out that the fourth quarter and full year results from the 2009 results reflect the legacy Wyeth operations, and results for all periods in 2010 reflect the legacy Wyeth operations.

For the 2010 fourth quarter, the New York City-based company posted reported net income of $2.9 billion, an increase of 277 percent compared with $767 million in the prior-year quarter. For the fiscal year of 2010, the net income was $8.3 billion, a decline of 4 percent compared with $8.6 billion in the fiscal year of 2009.

The 2010 fourth quarter was “favorably impacted by revenues from legacy Wyeth products and substantially lower restructuring charges associated with the Wyeth acquisition, and negatively impacted primarily by lower revenues from legacy Pfizer products, expenses associated with the legacy Wyeth operations and an additional charge for asbestos litigation related to our wholly owned subsidiary Quigley.”

For 2010, the results were favorably impacted by the “foreign exchange and unfavorably impacted by impairment charges related to certain intangible assets acquired in connection with the Wyeth acquisition, higher purchase accounting adjustments and integration charges associated with the Wyeth acquisition as well as higher net interest expense primarily due to borrowings used to partially fund the Wyeth acquisition.”

Additionally, in 2010 fourth quarter, Pfizer reached a settlement with the U.S. Internal Revenue Service related to its appeal regarding the audits of the Pfizer and Pharmacia tax returns for various years. As a result of this settlement, the company reduced its unrecognized tax benefits by approximately $1.4 billion in tax and approximately $600 million in interest and recorded a corresponding tax benefit to its income tax provision in the 2010 fourth quarter, resulting in a favorable impact on net income.

The 2010 fourth quarter revenues were $17.6 billion, an increase of 6 percent compared with the year-ago quarter. Compared with the year-ago quarter, Pfizer said that revenues for 2010 fourth quarter were favorably impacted by $2.3 billion from the legacy Wyeth products, negatively impacted by $1.2 billion due to legacy Pfizer products and negatively impacted by $70 million due to foreign exchange. For fourth-quarter 2010, U.S. revenues were $7.2 billion, a decrease of percent compared with the year-ago quarter, and international revenues were $10.3 billion, an increase of 13 percent compared with the prior-year quarter.

For fiscal year of 2010, revenues were $67.8 billion, an increase of 36 percent compared with the fiscal year of 2009. Compared with 2009, Pfizer said revenues were favorably impacted by $18.1 billion due to legacy Wyeth products, by $1.1 billion due to foreign exchange and negatively impacted by $1.4 billion due to legacy Pfizer products. U.S. revenues were $29 billion, an increase of 34 percent compared with 2009; and the international revenues were $38.8 billion, an increase of 37 percent compared with 2009.

For the 2010 fiscal year, atorvastatin (Lipitor) recorded a drop of 6 percent in its total worldwide revenue, compared with 2009. Likewise, Lipitor’s 2010 yearlong international and U.S. revenues dropped 6 percent in comparison to the previous year’s results.

For the 2010 fourth quarter, the drug decreased its total worldwide revenue 17 percent to $2.63 billion, compared with the previous-year quarter. Internationally, Lipitor’s sales dropped 25 percent in the 2010 fourth quarter and 7 percent in the U.S.—both compared with the 2009 fourth quarter.