Pfizer Forecasts Double-Digit Growth in ’06

Pfizer Inc. on Tuesday forecast double-digit profit growth in 2006 and 2007 on aggressive cost cutting and revenue from new medicines, but the world’s biggest drug maker said generic competition and falling arthritis drug sales would drag down 2005 earnings.

The better-than-expected 2007 forecast helped spark a 4% rise in Pfizer shares, which remain near seven-year lows because of concerns about the safety of its Celebrex and Bextra arthritis medicines and patent expirations for key drugs.

Company executives said at an analysts conference in New York that earnings in the “transition year” of 2005, including charges of more than $6 billion, would fall 22%. Excluding special items, profit is expected to fall 6%.

“We are not satisfied with the 2005 expected performance; on the other hand, we feel it will be short-lived,” Chief Financial Officer David Shedlarz said.

Pfizer’s downturn this year will be largely due to cheaper generic forms of its anti-fungal drug Diflucan, epilepsy treatment Neurontin and antibiotic Zithromax, the company said.

Pfizer said annual cost savings of $4 billion by 2008, including reductions in its 38,000-member sales force and plant closings, would restore profit growth beginning in 2006.

The company did not say how many jobs would be lost but said many would be from retirements and not filling vacant positions.

New York-based Pfizer gave Wall Street its initial earnings view for 2005 and beyond, but investors focused on expectations for a return to double-digit profit growth in 2006, driven by cost cuts, and accelerating growth in 2007, driven by growing sales of old and new drugs.

“The big news here is that the 2007 profit guidance is very good -- perhaps 15% higher than expected,” said Sam Isaly, portfolio manager of OrbiMed Advisors’ Eaton Vance Worldwide Healthcare Fund.

Many analysts, who had expected little or no profit growth in 2007, said Pfizer gave few specifics on how it would achieve its goals.

Pfizer forecast 2005 earnings of $2 a share excluding one-time items, compared with expectations of $1.99 to $2.35 a share among analysts polled by Reuters Estimates. Last year, the company earned $2.12 a share before special items.

Weighing on 2005 results are plunging sales of Celebrex and Bextra after studies linked them to increased risk of heart attack and stroke. The drugs have also been hurt by the recall of Merck & Co.’s Vioxx, which works the same way as Pfizer’s products.

The company forecast first-quarter earnings of 53 cents a share excluding certain items, in line with Wall Street estimates, but did not give specific per-share forecasts beyond 2005.

Pfizer shares rose 97 cents to $26.90 on Tuesday on the New York Stock Exchange.