Research & Innovation

Pfizer has reported quarterly revenue well below Wall Street expectations on falling sales of key brands and generic drugs.

The figures underscored its interest in pursuing a $106 billion bid for rival AstraZeneca to promote new business growth.

Pfizer said it raised its bid last week in response to what it had heard from AstraZeneca shareholders and believed it to be a “compelling” offer.

AstraZeneca quickly rejected the sweetened bid, saying it “substantially” undervalued the company, and has  declined to comment on Pfizer’s substantial revenue shortfall in the first quarter.

“We are very disappointed with their unwillingness to engage in conversations,” Pfizer chief executive Officer Ian Read said of AstraZeneca’s management.

Pfizer said total first-quarter revenue fell 9% to $11.35 billion, which was $730m below Wall Street expectations. Revenue would have fallen 6%, if not for the stronger dollar, which lowers the value of sales outside the US.

To assuage concerns about potential layoffs of researchers in Britain, Pfizer vowed that 20% of the research and development workforce of a combined company would remain in the UK. That created fears that US researchers would bear the brunt of expected job cuts.

Read, on a conference call with analysts, said the company will maintain “a massive presence” of researchers in the US, but did not provide specifics.

The largest US drugmaker earned $2.33 billion, or 36 cents per share, in the quarter. That compared with $2.75 billion, or 38 cents, the same time last year, when the company reported gains from the transfer of product rights.

Excluding special items, Pfizer earned 57 cents per share. Analysts, on average, expected 55 cents, according to Thomson Reuters I/B/E/S.

Pfizer said it still expects 2014 adjusted earnings of $2.20 to $2.30 per share, but the forecast assumes that painkiller Celebrex will not face US generic competition this year. Sales of the drug fell 4% to $624m in the quarter, and could be jeopardised by ongoing US patent battles in the United States.

Analysts said that a number Pfizer’s key medicines, including Celebrex and impotence treatment Viagra “undershot” sales hopes in the quarter.

Global sales of cholesterol fighter Lipitor, which is now facing cheaper US generics, also disappointed.

Pfizer first approached AstraZeneca in January with an offer that valued AstraZeneca at £46.61 a share. It made its second spurned approach on April 26, with an offer valued at £50 a share.

If the merger goes through, it would be the largest acquisition of a British company by a foreign business.

Under British takeover rules, Pfizer has until May 26 to announce a firm intention to make an offer or give up.