Pfizer's near future

Pfizer forecasts flat growth for next two years

By FT.COM

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Pfizer's revised outlook for 2006 – after suddenly withdrawing forecasts in October, leaving shareholders to question management's credibility – was mainly flat. This year, the world's largest pharmaceuticals group expects earnings, adjusted for exceptional items, to remain at about $2 per share compared with 2005. It also expects similar revenue to last year at about $51.3bn.

Pfizer trumpeted its $4bn restructuring scheme to improve flexibility, as well as a rapidly changing drug pipeline that focuses on biotechnology and oncology science, at its annual meeting for Wall Street.

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Pfizer's revised forecasts for 2007 and 2008 were lower than the estimates withdrawn last year. It now expects about 7-9 per cent earnings per share increases for the period.

David Shedlarz, vice-chairman, said Pfizer planned to spend some of the $19bn in cash flow expected in 2008 buying new products and technologies, but warned big acquisitions were unlikely.

The cash flow estimates include gains from its consumer products business, for which Pfizer is mulling a sale or spin-off potentially worth $10bn. It expects to make a decision on the sale in the third quarter.

The company expects new drugs, such as Lyrica for epilepsy and inhaled insulin Exubera, to help spur growth. Meanwhile, several experimental drugs could see approval this year, including anti-smoking treatment Champix and indiplon for insomnia.

The drug group's strategic plans include being more innovative – and increasingly price sensitive – as the federal government begins its drug subsidy in Medicare, a health programme for the elderly. Pfizer estimated that 20 per cent of its total US sales this year would come from Medicare sales, reaching about 40 per cent in 2008.

Shareholders are uncertain over the group's growth prospects because of patent expiries on its biggest drugs, and competitive and political challenges.

Pfizer is trying to reward shareholders for patience after a difficult two years and a share price moving off eight-year lows and trading at a discount to many competitors. Pfizer's shares were trading 2 per cent lower at $25.76 in New York lunchtime trading yesterday.