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news.Pfizer's hotly-anticipated 2006 earnings projections have proved somewhat disappointing, falling below analysts' forecasts and causing some to question the benefit of the company's recent restructuring efforts.
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Pfizer said its 2006 revenues will be comparable to 2005, as growth of current and new products offsets revenue declines from loss of exclusivity and adverse foreign exchange. The company expects 2006 reported diluted earnings per share (EPS) of $1.52 to $1.56.
Pfizer also said it expects to see a modest improvement in adjusted gross margins in 2006, compared to 2005, and cost savings from its adapting to scale productivity initiative of about $2 billion in 2006.
Pfizer outlined its drivers of value for 2006 to 2008, including growth of its key in-line medicines, an increasingly substantial contribution from new medicines, enhanced R&D productivity, and streamlining to reduce costs and speed decision-making across the company.
Pfizer expects sustained growth from key medicines – especially Lipitor, Celebrex and Lyrica – and an increasingly large contribution from new medicines – such as Sutent and Exubera – which will offset the impact of loss of exclusivity. The company said it is reallocating resources to ensure the highest growth from its portfolio of important medicines.
The company also said it will continue to use its strong cash flow from operations to enhance shareholder value. Three important initiatives will be used to leverage cash flow: increasing dividend payout and yield, purchasing shares, and changing Pfizer’s business portfolio, including the recently announced decision to explore strategic alternatives for Pfizer Consumer Healthcare.
Pfizer is also targeting three additional new drug application (NDA) filings in 2007, including torcetrapib/atorvastatin for cholesterol management, the schizophrenia medicine asenapine and ticilimumab, a new therapy for serious and life-threatening cancers.
“Pfizer is changing, our industry is changing, and healthcare systems around the world are changing,” commented Pfizer chairman and CEO Hank McKinnel. “We believe that future healthcare will be rooted in prevention and wellness and early diagnosis and treatment of chronic diseases. All of these approaches play to Pfizer’s strengths.”
While the company has done its best to reassure investors, however, there is still doubt among analysts and investors as to whether its cost-cutting initiatives and upcoming product launches will be able to counteract the ongoing threat posed by increased generic competition.