Pfizer unveils plan to save $4 billion

As it undertakes its cost-cutting strategy, Pfizer’s challenges are formidable: The company is slated to lose as much as $9 billion in revenue in the next four years when patents expire on some of its most lucrative drugs, including anti-depressant Zoloft, allergy medicine Zyrtec and blood-pressure medicine Norvasc.

Pfizer is also struggling with sagging sales of arthritis-drug Celebrex, its fourth biggest-selling medicine, which brought in $3.3 billion in sales last year. Like Merck & Co.’s Vioxx — also a Cox-2 inhibitor — Celebrex has been linked to an increased risk of heart attack and strokes. Analysts see revenues in the range of $2 billion this year.

“We are facing the toughest years ever,” Karen Katen, Pfizer’s Human Health division president, told analysts at Tuesday’s conference. “... We do get it. We understand the issues. We spend a lot of time and energy thinking about how we can deal with them.”

Katen, however, said the company believes that sales of Celebrex and Bextra will resume growing in the future.

Meanwhile, Pfizer is still facing financial hurdles in the near term, with 2005 revenue expected to be nearly unchanged from last year’s $52.52 billion. Analysts are concerned that Pfizer does not have enough products in the pipeline to bolster its top line — much less fatten revenues — with the patent losses and other problems looming.

At the meeting, Chief Financial Officer David Shedlarz said the company is planning to step up its search for new products, validating speculation by analysts that Pfizer would expand through acquisitions.

“We expect to intensify our effort to find new products,” Shedlarz said.

Pfizer is expecting to repatriate more than $28 billion in overseas profits under a provision in the American Jobs Creation Act that provides a significant tax break this year to U.S. companies who do business overseas but intend to return those funds to its domestic operations.

“This will strengthen Pfizer’s ability to pursue strategic opportunities while enhancing the company’s flexibility to invest in our research and development pipeline and new product potential in the United States,” Shedlarz said.

A tax charge of $2.2 billion will be recorded in first-quarter results, but pending changes to the law could reduce the expense by about $850 million, the company said.

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