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Pfizer to pay $20M fine
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July 19, 1999: 12:48 p.m. ET
Drug maker pleads guilty to federal antitrust violations; 2Q results beat Street
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NEW YORK (CNNfn) - Pharmaceutical maker Pfizer Inc. agreed Monday to plead guilty to federal antitrust violations and reported second-quarter results that exceeded Wall Street estimates despite a decline in sales of its famous anti-impotence drug Viagra.
The company will pay a $20 million fine in connection with its former food additive business.
New York-based Pfizer said it will plead guilty in federal district court in San Francisco to one count of price fixing and one count of market allocation in connection with sales of the food additive sodium erythorbate and flavor enhancers called maltols.
The products were manufactured by Pfizer's Food Science Group, which the company sold in January 1996.
"Pfizer deeply regrets these actions, which were contrary to the company's clear, long-standing values, policies and practices," the company said. Pfizer said it doesn't believe the settlement will have a material effect on its operations.
No Pfizer employees will be charged and no further antitrust charges are pending, the company said.
2Q beats estimates
The news of the $20 million fine was followed by Pfizer's release of second-quarter results. Strong global sales helped the company post a 13 percent jump in net income and earnings per share that beat the Street by a penny.
For the quarter ended July 4, 1999, Pfizer reported net income of $709 million, or 18 cents per diluted share, up from the $628 million, or 15 cents a diluted share, in the year-ago period.
Analysts' consensus estimate was 17 cents a share.
Revenue for the quarter reached $3.78 billion, a 14 percent increase over the $3.31 billion a year ago.
Worldwide pharmaceutical revenue rose 16 percent to $3.47 billion.
"Our in-line products -- including Norvasc, Zoloft, Zithromax, Zyrtec, Diflucan and Cardura -- again showed solid growth. The co- promoted products Aricept and Lipitor reinforced their category-leading positions. And Celebrex, launched in February with G.D. Searle, the company that developed the drug, is off to a truly exceptional start," said William C. Steere Jr., chairman and CEO.
Worldwide sales of Viagra, however, fell 25 percent to $310 million from the year-ago period when the anti-impotence remedy was launched. But sales were still 61 percent higher compared with first-quarter results.
In April, the company had warned, incorrectly as it turned out, that a waning in Viagra sales could cause the company to report second-quarter per-share earnings growth in the single digits.
Worldwide sales of its antibiotic Trovan, which has been found to cause serious liver problems in some users, rose to $35 million from $22 million reported in the second quarter of 1998. Nevertheless, in light of a health advisory issued by the Federal Drug Administration in June and a 12-month suspension of Trovan product licenses in the European Union, sales for the drug are expected to decline sharply in the coming months.
Growth still in line with estimates
For the first six months of 1999, Pfizer posted net income of $1.52 billion, or 39 cents a diluted share, up from 1.32 billion, or 33 cents a share.
Revenue rose 21 percent to $7.71 billion.
Looking ahead to the rest of the year, Pfizer said it remains comfortable with analysts' estimates that the company will earn between 80 and 83 cents per diluted share, adjusted to reflect a recent 3-for-1 stock split.
Nevertheless, the company is eyeing several factors that could have a negative impact on year-end results, including Trovan.
"The company's financial performance for the remainder of 1999 will depend on such factors as the sales of new, in-line and alliance products; the size and timing of investments; the impact of foreign exchange; the effective tax rate; potential inventory and other charges related to Trovan; and changes in trade buying patterns, including the potential impact of the Year-2000 issue," David L. Shedlarz, executive vice president and chief financial officer, said.
Pfizer (PFE) stock was trading down 3/8 at 37-7/16 by midday Monday. 
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