Pfizer, Merck results beat estimates, shares rise

NEW YORK (Reuters) - U.S. drugmakers PFIZER (PFE.NY)Inc and MERCK (MRK.NY)& Co posted better-than-expected first-quarter results on Tuesday and stood by their long-term forecasts, sending their shares up 2 percent.

The shares rose even as the broader market sank and Merck gave a 2010 earnings forecast that could fall short of Wall Street's target.

Pfizer and Merck -- the world's top two drugmakers by 2009 sales, according to IMS Health -- are counting on huge cost savings over the next few years from their respective recent acquisitions of U.S. rivals Wyeth and Schering-Plough.

"It looks like both companies are already getting leverage from merger-related cost savings, and it's going right to the bottom line," said Morningstar analyst Damien Conover. "This is a trend that we'll see continue going forward."

Also on Tuesday, Teva Pharmaceutical Industries , the world's biggest generic drugmaker, said strong sales of its Copaxone multiple sclerosis drug and new generic products gave it a forecast-beating profit.

Drugmaker results in the quarter have been pinched by the new U.S. reform law, which requires companies to provide heftier price rebates to patients in the government Medicaid insurance program for the poor.

"The results for Merck and Pfizer also complete that theme we've seen for other drugmakers this quarter, that largely good results are offsetting the costs of healthcare reform," Conover said.

Merck Chief Executive Richard Clark told investors on a conference call the reforms should actually boost his company's results over the long term.

Merck earned $299 million, or 9 cents per share, in the first quarter with results hurt by special charges and a tax expense related to the healthcare reform law. That compared with $1.43 billion, or 67 cents per share in the year-earlier period.

Excluding special items, Merck earned 83 cents per share. Analysts on average expected 75 cents per share, according to Thomson Reuters I/B/E/S.

Merck's revenue more than doubled to $11.42 billion on the strength of the Schering deal. Analysts looked for $11.18 billion.

Sales of the Januvia diabetes franchise jumped 32 percent to $712 million, including explosive growth outside the United States, well ahead of the consensus estimate of $622.2 million of six analysts, according to Thomson Reuters I/B/E/S.

Sales of the Singulair asthma pill rose 10 percent to $1.17 billion, just ahead of the consensus estimate.

Merck also said the quarterly results were helped by a $75 million to $100 million inventory buildup of its vaccines in the United States, as well as lower-than-expected research spending that should not be expected in coming quarters.

The company expects 2010 earnings of $3.27 to $3.41 per share, excluding special items. Analysts were expecting $3.41 per share. The forecast reflects flat earnings to a decline of 4.2 percent, largely due to plunging sales of its Cozaar blood pressure drug that began facing generic rivals last month.

Merck continues to target high single-digit compound annual earnings growth for the newly combined company, excluding special items, from 2009 to 2013, when compared with Merck's 2009 earnings.

The company, based in Whitehouse Station, New Jersey, said it remains on track to achieve annual cost savings of $3.5 billion from the merger in 2012.

Merck is hosting a highly anticipated meeting for analysts next week to showcase its research pipeline for the first time since its takeover of Schering-Plough in November.

Pfizer earned $2.03 billion, or 25 cents per share in the quarter. That compared with $2.73 billion, or 40 cents per share, in the year-earlier period.

Excluding special items, Pfizer earned 60 cents per share. Analysts on average expected 53 cents per share.

Pfizer posted revenue of about $16.75 billion. Analysts looked for $16.58 billion.

Sales of its Lipitor cholesterol fighter inched up 1 percent to $2.76 billion, above the consensus estimate of $2.64 billion of eight analysts.

Sales of Lyrica, for neuropathic pain, rose 6 percent to $723 million, roughly in line with the consensus estimate.

Pfizer backed its 2010 profit forecast of $2.10 to $2.20 per share, excluding items, despite a revenue hit from the new U.S. health reform law. The forecast reflects growth of 4 percent to 9 percent.

The New York-based drugmaker affirmed its 2012 profit forecast of $2.25 to $2.35 per share, excluding items. The outlook tracks Wall Street's expectations for 2011, suggesting the Wyeth merger will prevent Pfizer earnings from plunging once Lipitor goes generic as soon as late 2011.

Pfizer said it remains on track to achieve cost reductions of about $4 billion to $5 billion by the end of 2012, compared with 2008 combined costs of Pfizer and Wyeth.

(Reporting by Ransdell Pierson and Lewis Krauskopf, editing by Dave Zimmerman)

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