Pfizer's business development focus has turned to smaller, "bolt-on" acquisitions now that its integration of Wyeth is well under way, Chief Financial Officer Frank D'Amelio said during the company's earnings call Aug. 3.

With M&A speculation swirling in the pharmaceutical industry, most notably rumors that Sanofi-Aventis is making a play for Genzyme, analysts pressed Pfizer on its appetite for deals.

"We are continuing to look at bolt-on transactions," D'Amelio said, valuing such acquisitions at a "few billion up to several billion" dollars. That effectively takes Genzyme off the table for Pfizer, since Sanofi is reportedly preparing a bid for the biotech that is somewhere in the ballpark of $19 billion (Also see "Sanofi-Aventis Offer To Buy Genzyme Seen As Starting Point For Long Negotiation" - Pink Sheet, 3 August, 2010.).

Pfizer's deal-making strategy targets padding its emerging markets and established products businesses and key therapeutic areas, including pain, inflammation, oncology, Alzheimer's disease and neuroscience, the exec added.

The addition of Wyeth's revenues led to a strong second quarter showing for the pharma giant. Pfizer reported second quarter revenues of $17.33 billion, up 58 percent year over year, with the addition of Wyeth contributing $5.4 billion, or 50 percent to the gain. Pfizer completed the acquisition of Wyeth in October 2009.

Those added revenues, plus stronger sales of core products, including the legacy Pfizer drugs Lipitor , Lyrica and Viagra , and a foreign exchange tailwind contributed to a reassuring report for Pfizer investors. The company reaffirmed 2010 earnings-per-share guidance, despite increased pricing pressure in Europe, and said it expects to hit the high-end of the guidance due to strict belt-tightening.

Financial targets for 2012, the critical year after Pfizer loses its best-seller Lipitor (atorvastatin) to generic competition in 2011, were also reaffirmed, a relief to investors after Pfizer lowered 2012 revenue guidance earlier this year (Also see "Pfizer Lowers Targeted Revenues for 2012; Wall Street Remains Skeptical" - Pink Sheet, 3 February, 2010.). Pfizer maintained expectations for revenues of $65.2 billion to $67.7 billion and reported diluted earnings-per-share of between $1.58 and $1.73 in 2012. The company also said it is on track to achieve target savings of $4 billion to $5 billion by the end of 2012 from the integration.

Credit Suisse analyst Catherine Arnold said in a same-day research note that the "surprisingly strong second quarter should improve sentiment on Pfizer." The positive news gave a boost to Pfizer's stock, which increased 5 percent to close the day at 16.29.

Nonetheless, Pfizer needs to come through with pipeline successes ahead of the 2011 patent cliff to keep investors happy. The company's recent R&D news has been mixed. In July, the company had to halt the late-stage development of a nerve growth factor inhibitor for chronic pain (Also see "No Relief For Pfizer As It Shuts Down Additional Tanezumab Trials" - Pink Sheet, 20 July, 2010.). In more positive news, Pfizer, with partner Bristol-Myers Squibb ended a Phase III study of the anticoagulant apixaban early due to positive efficacy at preventing stroke compared to aspirin (Also see "Bristol/Pfizer Offer Some Good Apixaban Results, With Key Study Against Warfarin On Track To Report 2H 2011" - Pink Sheet, 11 June, 2010.).

Each of the core pharmaceutical business units, with the exception of Oncology, reported strong gains: Primary Care (up 15 percent), Specialty Care (up 165 percent), Established Products (up 63 percent) and Emerging Markets (up 55 percent). Specialty Care benefited from the addition of Wyeth products like the pneumococcal vaccine Prevnar and the tumor necrosis factor inhibitor Enbrel . Thanks to Wyeth, specialty care has become a more substantial part of Pfizer's business, representing 22 percent of sales in the second quarter compared to 13 percent a year ago. Net income was $2.48 billion versus $2.26 billion a year ago.

-Jessica Merrill (j.merrill@elsevier.com)

Pfizer's Focus Is On "Bolt-On" Acquisitions After Wyeth Merger

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