Pfizer drugs wilt, lower-margin units shine

NEW YORK (Reuters) - Pfizer Inc reported lower-than-expected quarterly revenue on a decline in sales of its prescription drugs, exposing the risks the company faces should it divest its better performing animal health, consumer products and nutritional products units.

Sales of Pfizer's core business of prescription drugs fell 2 percent to $14.2 billion. Cholesterol fighter Lipitor, the company's biggest product, led the downturn, as its revenue tumbled 13 percent to $2.39 billion due to generic competition in overseas markets.

The world's largest drugmaker, whose shares fell 1.8 percent in premarket trading, said it earned $2.22 billion, or 28 cents per share, in the first quarter. That compared with $2.03 billion, or 25 cents per share, in the year-earlier period, when Pfizer took charges related to its late 2009 purchase of rival U.S. drugmaker Wyeth.

Excluding special items, including its Capsugel business that is being sold and is now considered to be a discontinued operation, Pfizer earned 60 cents per share. Analysts on average expected 59 cents per share, according to Thomson Reuters I/B/E/S.

Global company revenue of $16.5 billion was a bit lower than the year-earlier quarter and slightly trailed Wall Street expectations of $16.63 billion.

Revenue would have fallen 2 percentage points if not for the weaker dollar, which boosts the value of overseas sales, and for new products obtained in Pfizer's recent purchase of specialty drugmaker King Pharmaceuticals.

Many investors fear Pfizer, which has bought three of the largest U.S. drugmakers over the past decade, will be far too big to deliver strong profit growth once Lipitor faces cheaper U.S. generics in November, and more than a half dozen other Pfizer drugs lose U.S. patent protection in the next few years.

Wall Street expects Pfizer's new chief executive, Ian Read, will eventually sell off one or more of its non-pharmaceutical businesses, or perhaps even its generic drugs operation.

By divesting such products, which have far lower profit margins than branded prescriptions drugs, the hope is that newly approved medicines will have a better chance to bolster overall earnings of the smaller company.

Pfizer on Tuesday said it aims in the second half of the year to complete its ongoing assessment of what businesses it may sell.

Sales of animal-health products -- mainly for livestock and pets -- jumped 16 percent to $982 million in the quarter, while sales of consumer healthcare products rose 12 percent to $745 million. Nutritional product sales rose 3 percent to $470 million.

(Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Maureen Bavdek, Dave Zimmerman)