Big Pharma Earnings Preview: US Drug Makers May Report Lower 3Q Profits

Stocks Mentioned in this article: 
Johnson and Johnson (JNJ)
Eli Lilly and Co.  (LLY)
Merck  (MRK)
Pfizer  (PFE)

EARNINGS PREVIEW: US Drug Makers May Report Lower 3Q Profit


TAKING THE PULSE: Analysts expect most major U.S. drug makers to post third- quarter earnings slightly lower than those a year earlier, as sales of several big-name drugs have declined recently after some consumers cut back on health- care costs. Health-care reform and European national health programs imposing price cuts on drugs also offer added pressure for companies. Results in recent quarters have been skewed by big acquisitions, either boosting companies' revenue or sagging their bottom lines because of charges. Several of the industry bigwigs have also been subject to downbeat credit-ratings news because of recent problems with supply and pipeline issues, as well as upcoming patent expiry.


Johnson & Johnson (JNJ) - reports Oct. 19

Wall Street Expectations: Analysts polled by Thomson Reuters most recently forecast earnings of $1.15 a share and revenue of $15.18 billion. A year earlier, the company earned $1.20 on $15.08 billion of revenue.

Key Issues: Johnson & Johnson, whose products range from Band-Aids to the Procrit anemia drug, cut its 2010 earnings forecast in August because of ongoing recalls of various over-the-counter medicines. J&J this month began shipping bottles of grape-flavored children's liquid Tylenol, which had been off the market for months because of the recall, which has put a chink in the company's reputation.

Eli Lilly & Co. (LLY) - reports Oct. 21

Wall Street Expectations: Analysts anticipate $1.15 of earnings and $5.77 billion in revenue. A year ago, the company reported an 86 cents profit, or $ 1.20 excluding restructuring impacts, as revenue totaled $5.56 billion.

Key Issues: Lilly has seen troubles of late, in August halting the development of one of its Alzheimer's disease treatments as two late-stage studies showed it didn't slow the disease's progression and may have even worsened patients' conditions. Two days later, Standard & Poor's Ratings Services downgraded Lilly amid its development and patent woes and the impending "patent cliff" facing the company.

Merck & Co. (MRK) - reports Oct. 29

Wall Street Expectations: The company is seen reporting earnings of 82 cents and $11.24 billion in revenue. A year earlier, the company earned $1.61 a share, or 90 cents minus items like a gain from the sale of its stake in an animal- health joint venture, as revenue was $6.05 billion.

Key Issues: Merck's results will once again be boosted by last fall's acquisition of Schering-Plough. Sales of its key drugs, which had been a strong point in recent quarters, tailed off slightly in the spring, so investors will be looking at whether they rebounded during the summer. The company has also seen pricing pressure in Europe, where national health programs have been cutting prices to help close budget gaps.

Pfizer Inc. (PFE) - reports Nov. 2

Wall Street Expectations: Analysts have Pfizer pegged for 51 cents of profit and $16.7 billion of revenue. The company posted a profit of 43 cents--51 cents excluding acquisition and other charges--a year earlier, with revenue of $11.62 billion.

Key Issues: The world's biggest drug maker made another big acquisition splash Tuesday, saying it will buy King Pharmaceuticals Inc. (KG) for $3.6 billion. Pfizer's bottom line has been stung because of costs in digesting its year-ago $ 68 billion acquisition of Wyeth. Fitch Ratings recent cut its outlook on Pfizer to negative, saying the patent-expiration impacts are likely to be worse than expected.

(The Thomson Reuters estimates and year-earlier earnings may not be comparable due to one-time items and other adjustments.)

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@ dowjones.com

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