Pfizer earnings drop 77% on insulin drug write-down

Pfizer Inc., the world’s largest drug maker, said third-quarter profit fell 77% on costs for discontinuing its inhaled insulin treatment Exubera.

New York-based Pfizer said Thursday that it wrote off $2.8 billion to abandon Exubera, which didn’t catch on with doctors and patients because of its price and the cumbersome device used to deliver the drug.

Net income declined to $761 million, or 11 cents a share, Pfizer’s lowest profit in more than two years.

The loss of Exubera, once expected by analysts to generate more than $1 billion in annual sales, leaves Pfizer with one fewer product to make up for sales lost to cheaper copies. Pfizer Chief Executive Jeffrey Kindler is facing pressure from investors to spend $23 billion in cash for acquisitions.

Earnings per share beat analysts’ estimates by 6 cents on lower marketing costs for Exubera, a share buyback and favorable foreign exchange rates.

“This is not a good quarter,” said Michael Obuchowski, a principal at Altanes Investments in New York. “The company is in crisis, and the company is not behaving like they are in crisis. They are not replacing the revenue they are losing.”

Pfizer paid $1.3 billion to Paris-based Sanofi-Aventis in 2006 for the rights to Exubera and an insulin production plant in Germany. The product had $4 million in sales in the second quarter, a disappointing result, the company said. Pfizer had begun airing television ads in recent months to stimulate demand.

Pfizer’s net income was its smallest since the first quarter of 2005, when it had a profit of $301 million. Excluding costs of the Exubera write-off, expenses associated with closing laboratories and firing 10,000 workers, Pfizer earned 58 cents a share, beating the 52-cent average estimate of analysts surveyed by Bloomberg. The adjusted number was also boosted by share buybacks.

“There isn’t a magic bullet here. There isn’t a single solution that we are going to one day open the curtain and unveil, and I’m very sorry if some people find that disappointing,” Kindler said during a conference call with analysts.

Pfizer has eliminated 11,000 jobs this year, with 87,000 employees remaining. Kindler has fired more than 2,000 salespeople and is closing four research centers and 45 manufacturing plants.

Revenue fell 2.4% to $12 billion, above analysts’ estimates. Pfizer will lose patent protection in the next four years on drugs accounting for about half of its 2006 revenue.

Shares of Pfizer fell 1 cent to $24.54.