Pfizer Sees Net Income Decline 52%

Pfizer Inc. said Thursday that new safety warnings on its two most popular drugs drove third-quarter profit down 52%, prompting it to lower estimates for this year and withdraw guidance for 2006 and 2007.

Eli Lilly & Co., meanwhile, reported a 5.2% rise in net income as higher sales on new products helped it overcome a decline in Zyprexa sales.

Pfizer, the world’s biggest drug maker, said third-quarter net income fell to $1.59 billion, or 22 cents a share -- compared with $3.34 billion, or 44 cents, a year earlier -- on lower sales of its Celebrex painkiller and Viagra impotence drug, both of which carry new warnings.

Lilly’s net income rose to $794.4 million, or 73 cents a share, compared with $755.2 million, or 69 cents, a year earlier. The increase occurred despite a 10% drop in U.S. revenue for its sales leader, the Zyprexa schizophrenia drug.

Pfizer and Lilly sought to compensate for safety issues by getting strong results from other drugs, and with cost cutting. Pfizer’s Lipitor cholesterol treatment fell short, with sales rising only 6% in the quarter. Lilly’s Cymbalta antidepressant had a sixfold increase and its Alimta cancer drug jumped threefold.

Pfizer’s “going to need to come up with other growth drivers,” said Dan Popowics, an analyst at Cincinnati-based Fifth Third Asset Management. “Sales growth was stronger at Lilly. Growth wasn’t as strong as I would’ve liked to be real positive on the shares.”

Pfizer’s revenue fell for the first time in four years, to $12.2 billion. Demand for Celebrex dropped 44% to $466 million after U.S. regulators added a warning of heart risks to the drug’s label.

Sales of Pfizer’s Viagra declined 4% to $386 million. The New York-based company agreed to change the pill’s label to warn doctors of a potential for sudden vision loss in some men. Viagra, the first pill to treat impotency, has been taken by 27 million men and had $1.68 billion in sales last year.

This year, Pfizer also had generic rivals for epilepsy drug Neurontin and anti-fungal treatment Diflucan. Neurontin’s third-quarter sales fell to $155 million from $764 million a year earlier.

“We figured there would be some deterioration, but not like this,” said Les Funtleyder, a Miller Tabak & Co. strategist in New York.

Lilly’s sales rose 10% to $3.6 billion, and its cost to produce new medicines rose 4% to $845.7 million, the Indianapolis-based company said.

Higher sales of two drugs approved in the last 20 months helped offset a U.S. drop for Zyprexa. Cymbalta had $182.8 million in sales and the Alimta cancer drug had revenue of $122.3 million.

Since doctors have become more aware of Zyprexa’s link to diabetes, Lilly has also cut its sales workforce.

Baxter International Inc. also reported third-quarter earnings, saying profit fell 58% to $116 million, or 18 cents a share, down from $276 million, or 45 cents, after it paid $163 million in taxes on cash returned from overseas and a recall halted sales of its Colleague drug infusion pump.

Genetically engineered drugs such as Advate for hemophilia helped lift global sales for Baxter, the world’s biggest maker of treatments for blood diseases.

Even so, U.S. sales fell as the recall kept the infusion pumps off the market. Baxter, based in Deerfield, Ill., also paid $163 million in taxes on $2 billion in foreign profit and had costs to stop making dialysis instruments.

Shares of Pfizer fell $2.07 to $21.90. Lilly lost 35 cents to $51.25 and Baxter declined 48 cents to $37.85.