Pfizer beats estimates as its takeover bid for AstraZeneca continues
Pfizer, the drugmaker trying to buy UK firm AstraZeneca in what would be one of the biggest deals ever, reported profit that beat analyst earnings estimates as the company cut costs to offset falling sales.
Pfizer, which employs about 3,200 people in Ireland, reported first-quarter earnings, excluding one-time items, of 57 cents a share, 2 cents above the average expected by analysts. First-quarter net income fell 15pc to $2.33bn (€1.65bn).
Sales totalled $11.4bn (€8.2bn), below the $12.1bn (€8.7bn) analysts estimated, as foreign exchange rates reduced sales by 3pc.
"Around half of the revenue miss was foreign exchange- driven, but many product lines were also weak," said Mark Schoenebaum, an analyst with ISI Group.
Pfizer is in the middle of the drug industry's most dramatic transition. The company has split internally into three separate businesses – one of older products and two brand-name medicine units – while also pursuing the $100bn-plus (€72bn-plus) AstraZeneca acquisition that would make it once again the biggest pharmaceutical maker in the world after falling behind Novartis this year.
Pfizer has offered London-based AstraZeneca about £63.1bn (€76.7bn) in cash and stock, a bid that was rejected last week as too low.
The deal is being looked at closely by the UK government, over concerns that it could reduce British pharmaceutical industry jobs.
Pfizer would use the deal to relocate for tax purposes to the UK, where the rate on corporate profits would be 15 percentage points lower than in the US next year.
Billionaire investor Warren Buffett said that sort of move was becoming more common as companies looked to cut taxes and raise profits.
"You are getting more mergers that are tax driven," Mr Buffett said yesterday.
"It will gather momentum and my guess is that when you get to companies of this size, this prominence, and with this speed-up of momentum, my guess is that Congress one way or another will addresses this. But that could go either direction in terms of how they address it."
Mr Buffett said he wasn't criticising Pfizer, and said the company was following the law – though the policy likely needed to change.