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Useless Drug Sells Billions Because Of Insurance and Fraud

Source

	January 19, 2005 11:55 a.m. EST

Pfizer's Profit Increases
Amid Strong Lipitor Sales

By SCOTT HENSLEY
Staff Reporter of THE WALL STREET JOURNAL
January 19, 2005 11:55 a.m.

Pfizer Inc. reported a quadrupling in fourth-quarter net income, lifted by strong sales of cholesterol-fighter Lipitor and arthritis medicines and fewer charges compared with a year earlier.

The world's largest drug maker said quarterly net income climbed to $2.83 billion, or 38 cents a share, from $602 million, or eight cents, in the year-earlier period. Revenue increased 7% to $14.92 billion from $13.98 billion.

The company cautioned that patent expirations on some big-selling drugs and other factors could soon begin to crimp sales and profit growth in the near term, but said prospects for long-term growth ''remain excellent.'' Officials didn't provide any guidance on earnings expectations for 2005, saying they would do so at an analyst meeting in April.

1 MORE ON EARNINGS   Have a peek2 at what to expect in the fourth-quarter reports of some major corporations.

Excluding $1.56 billion in charges and special items for the quarter, Pfizer`s operating income was $4.39 billion, or 58 cents a share, compared with $3.78 billion, or 50 cents a share, in the fourth quarter of 2003. During that quarter, Pfizer took more than $3 billion in charges, stemming mainly from its purchase of Pharmacia Corp. in April 2003.

Lipitor, the world's best-selling drug and a potent pill against cholesterol, continued as the engine of New York-based Pfizer's earnings. Sales of the drug increased 23% to $3.26 billion in the quarter from $2.65 billion a year earlier, fueled in part by new studies showing the benefits of aggressive cholesterol-lowering. Overseas sales rose 29% to $1.24 billion, compared with a 20% domestic increase to $2.02 billion.

Merck & Co.'s withdrawal of pain reliever Vioxx in late September led to a surge in demand for competing medicines from Pfizer. Despite concerns that the problems with Vioxx might signal trouble for the entire class of so-called Cox-2 pills, Celebrex sales climbed 24% to $1 billion while Bextra rocketed up 57% to $417 million in the quarter. Those gains may be short-lived, however, as evidence that Celebrex and Bextra carry a higher risk of cardiovascular side effects, like Vioxx, weighed on doctors and patients late in the quarter.

Several other of Pfizer's biggest brands were less robust. Revenue from Norvasc, a blood-pressure pill, was nearly flat at $1.25 billion, while antidepressant Zoloft sales rose 7% to $959 million. Impotence drug Viagra continued to suffer from competition; its world-wide sales slid 8% to $469 million. The drop was due to a sharp decline in U.S. sales, which fell 18% to $248 million. International sales rose 6% to $221 million.

The first signs of pain for what could be several years of sluggish sales and profit growth emerged in the quarter. Sales of epilepsy and pain medicine Neurontin plunged 39% to $481 million in the quarter, as generics approved for sale last year took hold. Diflucan, an antifungal drug that lost patent protection, had a 56% drop in sales to $139 million from $319 million, which a successor medicine called Vfend failed to offset. Vfend sales rose 35% to $83 million.

Overall, Pfizer said revenue from its prescription drug unit rose 6% to $13.10 billion in the quarter. Sales of consumer products, such as Listerine mouthwash, jumped 13% to $992 million, and animal health products' sales increased 11% to $566 million.

In a prepared statement, David Shedlarz, the company's chief financial officer, said Pfizer could repatriate as much as $29 billion in overseas profits this year to take advantage of a one-time reduction in the tax rate for such moves. An additional $8.6 billion in accumulated earnings from Pharmacia could also be brought home, subject to further guidance from the U.S. Treasury Department, he said.

Write to Scott Hensley at scott.hensley@wsj.com⁷

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