Three of the world's biggest drugmakers posted better-than-expected quarterly earnings on Wednesday and gave bullish forecasts for the rest of the year, demonstrating the industry's resilience in the weak economy.

Results from the world's top two drugmakers -- Pfizer Inc and GlaxoSmithKline -- and Eli Lilly and Co follow the upbeat report earlier this week from another industry titan, Merck & Co .

The big theme is that pharmaceutical sales are largely holding up in this economic downturn, Morningstar analyst Damien Conover said. It reiterates the point that healthcare and pharmaceuticals specifically are largely resilient to economic downturns.

The strong forecasts contrast with doubts about the industry's long-term outlook, as a dearth of new products and generic competition are forcing the companies to rely on mega mergers and cost cutting to shore up profits.

Such cost-control efforts buoyed Pfizer, the world's largest drugmaker, which symbolizes the industry's woes.

Pfizer's shares rose 3.4 percent after it reported better-than-expected earnings as cost-cuts took hold, and the company raised its full-year forecast.

Shares of global No. 2 drugmaker GlaxoSmithKline rose less than 1 percent as it posted profit slightly ahead of targets and predicted flu vaccine sales would spur second-half strength.

Lilly boosted its full-year forecast, although its shares gave back initial gains after the Indianapolis-based drugmaker cautioned that a currency benefit to international inventories that boosted first-half results would not be repeated.

Despite the solid results, the outcome of U.S. health reform efforts and fears of drug price controls remain a big question mark hanging over the pharmaceutical industry and preventing investors from diving in, said Peter Jankovskis, co-chief investment officer with OakBrook Investments

It's certainly encouraging that they've held up well and are able to advance forecasts going forward, Jankovskis said. Perhaps once this cloud lifts, it will bring people back to the sector and to the industry.

Rival drugmakers Roche , Bristol-Myers Squibb and Wyeth are due to report on Thursday.

THE NUMBERS

Pfizer's second-quarter earnings fell 19 percent as the strong dollar crimped revenue across its product line.

The world's largest drugmaker earned $2.26 billion, or 34 cents per share, compared with $2.78 billion, or 41 cents per share, in the year-earlier period.

Excluding special items, the New York-based drugmaker earned 48 cents per share, a penny better than analyst expectations, according to Reuters Estimates.

Pfizer sales fell 9 percent to $10.98 billion, shy of the $11.26 billion estimate, but revenue would have been generally unchanged without the impact of the strong dollar, which weakens the value of overseas sales.

Pfizer has been cutting jobs and other costs to shore up profits as its top-selling medicines endure generic competition and other pressures.

As expected, Pfizer delivered solid cost management in the second quarter, Leerink Swann analyst Seamus Fernandez said in a research note.

Glaxo's pretax, pre-restructuring profit in the second quarter was 2.25 billion pounds ($3.7 billion), equivalent to earnings per share before major restructuring charges of 31 pence (about 51 cents), up 14 percent, on sales up 15 percent at 6.75 billion pounds ($11.07 billion).

Analysts had forecast Glaxo EPS of 29.8 pence (about 50 cents) and sales of just under 6.7 billion pounds ($10.99 billion), according to a Reuters poll.

The British drugmaker said growing sales of new products and its portfolio of flu products should help drive its improving performance into the second half of the year as the heavy impact of generic competition to its formerly patented drugs begins to abate.

Lilly's net income rose 21 percent to $1.16 billion, or $1.06 per share, in the second quarter. That compared with $959 million, or 88 cents per share, in the year-earlier period, when Lilly had a favorable tax rate.

Excluding special items, Lilly earned $1.12 per share. Analysts on average expected $1.02 per share, according to Reuters Estimates.

Lilly said it expects to launch its long-awaited blood clot-preventer Effient, which will vie with Sanofi-Aventis and Bristol's Plavix, in the United States in early August.

But Leerink's Fernandez noted that overseas sales of the drug showed no growth in the second quarter, despite introduction in several new countries.

($1=.6103 pound)

(Additional reporting by Ransdell Pierson, Sam Cage and Ben Deighton; Editing by Maureen Bavdek)

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