Earnings season is a wrap for many of the brightest stars of the health care sector: Big pharma's big disappointments and successes are in the books, and investors are looking ahead to the future. Patent expirations have been taking their toll on sales of some of the industry's biggest blockbuster drugs lately, putting pharmaceutical firms on the defensive as they try to boost pipeline stockpiles and stave off revenue losses. With that in mind, how did five of big pharma's biggest names grade out this earnings season?
Earnings season's big winner: Pfizer Inc. (NYSE:PFE) After a great 2012, Pfizer Inc. (NYSE:PFE) has opened up 2013 with a bang. The company's $11.85 billion sale of its nutrition business to Nestle last year has rewarded shareholders, as Pfizer reported fourth-quarter profit that more than quadrupled last year's total. Earnings per share of $0.85 -- drastically up from $0.19 a year ago -- made investors happy, although adjusted EPS that removed one-time items fell slightly by $0.02 to $0.47; still, that beat analyst profit projections of $0.44 per share for the quarter.
All the talk now surrounds Pfizer's recent debut of former animal health business Zoetis Inc (NYSE:ZTS) as a publicly traded company following its recent IPO, but Pfizer's still dealing with issues of its own. The company faces plenty of generic competition for drugs -- particularly blockbuster Lipitor, which lost patent protection last year -- in what's become an industrywide trend. However, with a massive pipeline of 87 drugs to bolster the future, Pfizer could make up for falling revenues, which declined 7% this past quarter, by scoring a few timely FDA approvals.
Ultimately, Pfizer could be one of the better-positioned companies for the future after it scored one of the industry's best earnings reports, particularly as its rivals have struggled as of late.
Future imperfect: Merck & Co., Inc. (NYSE:MRK) Fellow Dow Jones member Merck & Co., Inc. (NYSE:MRK) hasn't had so much to cheer about recently despite a strong 2012. The company actually reported an earnings beat despite the negativity that's surrounded it in past days; Merck's earnings per share came in at $0.83, $0.02 higher than analysts projected, while revenue of $11.7 billion also beat expectations. Both fell from a year ago -- and it's the future, not the present, that has investors so concerned.
The company warned investors that generic competition will cut into 2013 profits as Merck continues to feel the pain from patent expirations, particularly on blockbuster drug Singulair. The company's still got a handle on strong products for the future, such as blockbuster diabetes therapies Januvia and Janumet and fast-growing cervical cancer vaccine Gardasil -- each of which posted strong double-digit sales growth this past quarter -- but the caution wasn't what shareholders wanted to hear.
Singulair sales flopped by 67% this past quarter -- and by 30% for 2012 as a whole -- showing just how bad the patent cliff is hurting Merck's sales. With the company delaying its filing for FDA approval on promising osteoporosis drug odanacatib until 2014, the year ahead for Merck has become considerably tougher.