Drugmakers Eli Lilly and Pfizer both topped Wall Street expectations for second-quarter earnings and raised their profit outlooks for the full year, while British counterpart GlaxoSmithKline bucked the tough economy with an 11 percent rise in quarterly profit.
But a strong dollar hurt overseas sales for both Indianapolis-based Lilly, which reported a 21 percent profit increase, and New York-based Pfizer, which saw earnings plunge 19 percent on unfavorable exchange and tax rates.
London-based Glaxo reported a 15 percent revenue increase. But the maker of antidepressants Wellbutrin XL and Paxil CR said U.S. sales fell by the same amount, and it was hurt by generic competition.
Pfizer, the world’s biggest drugmaker by sales, said unfavorable exchange rates reduced revenue by $1.1 billion, or 9 percent.
Due to exchange rates, revenue for virtually all Pfizer drugs declined. Sales were down in all five of Pfizer’s business units, dropping the most, 20 percent, in the one marketing established products that have lost patent protection and whose sales are generally eroding.
“Our results this quarter demonstrate our ability to continue to deliver solid operational performance despite a challenging and dynamic economic and operating environment,” Pfizer Chief Executive Jeff Kindler said in a statement.
The impact of generic competition and foreign exchange rates aside, drug companies sales have actually held up well in the quarter, according to Morningstar analyst Damien Conover.
“I think that speaks to the inelastic nature of drugs, meaning even in challenging times, when folks have less disposal income, drugs are one of the last things to get cut,” he said, adding that insurance coverage shields drug sales somewhat from income fluctuations.
Lilly saw sales of its top-seller, the antipsychotic Zyprexa, slip 3 percent. But sales for it’s second-best seller, the antidepressant Cymbalta, rose 14 percent.
Conover also said several companies showed aggressive cost cutting, as they continue to whittle away at sales forces that became bloated earlier in the decade.
“I’d say, across the industry, this theme of cost cutting is definitely coming out in the quarter,” he said.
Lilly trimmed U.S. advertising and said a stronger dollar helped contain its marketing, selling and administrative expenses, which rose slightly to $1.71 billion.
Pfizer cut spending on research and on marketing and administration by double digits, and eliminated 3,750 jobs in the second quarter, leaving about 76,500 employees worldwide. It spent $330 million on cost cutting in the quarter.
Pfizer also is working to close the biggest deal in the industry this year, its $68 billion purchase of Wyeth, which it expects to complete late in the third quarter or in the fourth quarter.
The drugmaker spent $491 million in the quarter on financing and other acquisition-related costs.
Pfizer said its net income in the quarter ended June 28 was $2.26 billion, or 34 cents per share. That’s down from net income of $2.78 billion, or 41 cents per share, in the same quarter last year.
Excluding charges, Pfizer’s earnings per share were 48 cents, topping analyst estimates by a penny.
Lilly earned $1.16 billion, or $1.06 per share, in the second quarter, up from $958.8 million, or 88 cents per share, a year earlier. The drugmaker also topped Wall Street expectations with adjusted earnings of $1.12 per share.
Both companies raised their full-year earnings forecasts. Lilly now expects adjusted earnings of $4.20 to $4.30 per share this year versus a prior range of $4 to $4.25 per share.
Pfizer now expects adjusted earnings-per-share in a range of $1.90 to $2, up from $1.85 to $1.95.
Copyright 2009 The Associated Press.