Pfizer Inc, Novartis AG and Wyeth all saw quarterly earnings hit by charges on Thursday, while Eli Lilly and Co exceeded Wall Street expectations as third-quarter sales of several of its drugs outpaced analysts' estimates.
Pfizer, the world's largest drug maker, took a $2.8 billion charge to cut its ties to the inhaled insulin drug Exubera, a sensational failure of a product once touted as a can't-miss blockbuster.
In addition to the Exubera charge, Pfizer's results were hurt by restructuring expenses tied to cost-reduction initiatives and competition from cheaper generic medicines.
Swiss drugmaker Novartis, which was also hit by competition from cheaper versions of its medicines and saw a 12 percent drop in net profit, appears to be heading down a similar path as it announced 1,260 job cuts.
Higher sales of Wyeth's drugs were offset by charges tied to productivity initiatives and its third-quarter profit fell slightly.
Of the quartet reporting on Thursday, Lilly stood out as its once-flagging top-seller Zyprexa for schizophrenia grew by 8 percent, sales of the anti-depressant Cymbalta jumped 47 percent and the company raised it full-year earnings per share forecast.
Excluding a one-time charge related to insurance recoveries, Lilly earned 91 cents per share, topping analysts' average expectations by 4 cents, according to Reuters Estimates.
Pfizer's revenue fell 2 percent and net earnings fell sharply to $761 million from $3.36 billion a year ago. Excluding special items, however, Pfizer's profit topped analysts' diminished expectations by 6 cents a share.
While slashing its 2007 net earnings forecast, Pfizer slightly raised the low end of its outlook, excluding special items. And it maintained its 2008 earnings forecast, excluding items.
They're delivering on their guidance, which can be viewed as a meaningful positive considering all the challenges the company is facing, said Deutsche Bank analyst Barbara Ryan.
Wyeth matched Wall Street expectations of 90 cents per share, excluding items, as sales of its Prevnar vaccine to prevent childhood infections and the arthritis drug Enbrel jumped 24 percent and 39 percent, respectively.
Everyone in large cap pharma is benefiting from foreign exchange, said Oppenheimer & Co analyst Scott Henry.
He said Lilly investors are likely to remain on the sidelines as the company awaits important data on experimental drugs that could dramatically affect the share price one way or the other.
The stock is probably reacting more neutral than it would have because the focus now shifts to the data, Henry said. The good numbers are now in the rear view mirror.
Lilly shares were down 6 cents to $56.89, Wyeth shares were up 66 cents, or 1.4 percent, to $47.01 and Pfizer shares rose 7 cents to $24.62, all on the New York Stock Exchange. Novartis shares were off slightly in Switzerland.
(Additional reporting by Ransdell Pierson, Lewis Krauskopf and Ed Tobin)