Pfizer reports 15% fall in profits

A man walks past the world headquarters in New York Pfizer made a £63bn bid for UK rival AstraZenica

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US pharmaceutical giant Pfizer has reported a 15% fall in profits in the three months to the end of March compared with a year earlier, to $2.3bn (£1.3bn).

The results come a week after Pfizer made a £63bn bid for UK rival AstraZeneca.

The US drugmaker also reported falling revenue, as patents which protect the exclusivity of its products expire.

Revenues fell 9%, or $1.1bn, in the quarter to $11.35bn.

Pfizer's first-quarter revenues were $730m lower than Wall Street analysts had expected.

It blamed the end of a "co-promotion period" for its arthritis drug Enbrel in the US and Canada, as well as the development of cheaper generic versions of its cholesterol treatment Lipitor. Sales of Viagra have also taken a hit since the drug was opened up to competition in Europe last summer.

Frank D'Amelio, Pfizer's chief financial officer, said the company's financial performance reflected the "continuing impact of product losses of exclusivity, the expiration and near-term termination of certain collaborations".

He added that adding Pfizer's operating environment "remains challenging".

AstraZeneca takeover

On Sunday, Labour leader Ed Miliband called for an inquiry into whether Pfizer's planned takeover of AstraZeneca was in the UK's national interest.

Mr Miliband has written to Prime Minister David Cameron to urge a stronger public interest test for takeovers of important businesses.

Downing Street has denied Labour accusations that it is acting as a "cheerleader" for the deal, saying it is fighting for British jobs and British science.

But since news of Pfizer's attempts to buy AstraZeneca first emerged, there have been fears that jobs could be put at risk.

Pfizer made a first offer for AstraZeneca of £58.8bn, which was rejected by the board.

The US drugs giant then made a second improved offer of £63bn on Friday for its UK rival which was once again rejected by AstraZeneca.

The UK firm said the takeover terms were "inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer".

AstraZeneca employs more than 51,000 staff worldwide, with 6,700 in the UK. Pfizer has a global workforce of more than 70,000, with 2,500 in the UK.

Pfizer chairman and chief executive Ian Read said the firm believed there was "a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for shareholders and stakeholders of both companies."

On Monday he said Pfizer was "very disappointed" with AstraZeneca's "unwillingness to engage in conversations".

He added it was: "in the best interests of both companies, and Pfizer and AstraZeneca shareholders that we pursue a friendly negotiated transaction, that can be recommended by both our boards."

"We have made public our offer to the board, and we remain open to considering all options on progressing those discussions," Mr Read said.

Research threat

Scientists have also warned the possible takeover could damage development of new drugs.

In a statement, four scientific bodies said recent mergers and acquisitions had led to lab closures, threatening the UK's research base.

The statement was jointly issued by the Society of Biology, the Biochemical Society, the British Pharmacological Society and the Royal Society of Chemistry.

Dr Melanie Lee, a fellow of the Academy of Medical Sciences, said the takeover could be a "nail in the coffin" of the UK drug industry.

By purchasing AstraZeneca, Pfizer would bolster its pipeline of cancer drugs currently in development.

It would also allow it to make the UK its home headquarters for tax purposes, allowing it to take advantage of significantly lower tax rates compared to the US.

US federal corporation tax is 35%, while the UK's rate is 21% and is due to be cut to 20% in 2015.

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