Pfizer revenue worse than expected as generic competition weighs

By Tamara Mathias and Michael Erman

(Reuters) - Pfizer Inc on Tuesday reported worse-than-expected third quarter revenue and lowered the top end of its full-year sales forecast as generic competition and drug pricing pressure in the United States hurt its older drugs business.

Investor attention has been increasingly focused on the company post-2020, with a view toward drugs they hope will be on the market by then. The company has touted its pipeline, which it believes contains 15 drugs with annual sales potential that could exceed $1 billion launching within the next five years.

Credit Suisse analyst Vamil Divan said shareholders are keen to know how Pfizer plans to bridge the gap until 2020 with products such as breast cancer medicine Ibrance and rheumatoid arthritis drug Xeljanz underperforming this quarter.

Both drugs slightly missed analysts estimates in the quarter, with Ibrance sales coming in at $1.03 billion and Xeljanz bringing in $432 million.

Pfizer retreated from some planned price hikes earlier this year under pressure from U.S. President Donald Trump. Last week, Trump announced a plan to try to reduce what the government pays for some physician-administered prescription drugs by basing Medicare spending for the medications on lower prices paid in other countries.

Pfizer Chief Executive Ian Read, who will be succeeded in that role by Chief Operating Officer Albert Bourla in January, said in a phone interview that the plan is "flawed in its conception."

"It is effectively importing into an innovative-based society the prices of free riders," Read said.

The largest U.S. drugmaker said it now expects 2018 revenue of between $53 billion and $53.7 billion, compared with an earlier forecast of $53 billion to $55 billion.

Revenue rose 1 percent in the quarter to $13.30 billion. Analysts had expected $13.53 billion.

Pfizer shares were down 1.2 percent at $42.73 in afternoon trading.

Excluding one-time items, Pfizer earned 78 cents per share, topping analysts' average expectations by 3 cents, according to Refinitiv estimates. Net income rose 45 percent to $4.11 billion.

Supply problems at facilities making Pfizer's sterile injectables, as well as competition from cheaper generic medicines in the United States, hit sales at the company's Essential Health business.

Sales from the unit, which Pfizer plans to reorganize into a new division that sells off-patent medicines and generic drugs, fell 4.4 percent.

The company benefited from a 13.3 percent tax rate on adjusted income, well below the 23.7 percent it paid last year before the U.S. Congress passed a bill that significantly lowered corporate taxes.

(Reporting by Tamara Mathias and Aakash Jagadeesh Babu in Bengaluru and Michael Erman in New York; Editing by Sai Sachin Ravikumar and Bill Berkrot)