Uncertainty over consumer healthcare business impacts sales.

Pfizer’s key pharmaceutical businesses posted a lacklustre performance in the quarter ended May 31, 2007, owing to supply-related issues of a product, according to senior company executive.

Furthermore, sales in its consumer healthcare business were sluggish on a y-o-y basis in the last quarter over uncertainties as this division is expected to be divested shortly.

Consequently, its operating profit (including service income) declined 3.5 per cent y-o-y to Rs 41.1 crore in the previous quarter and the total operational income reduced 1.3 per cent to Rs 170.55 crore. The pharma major’s operating profit margin also came down 60 basis points y-o-y to 24.1 per cent in the March 2007 quarter.

However, the company had executed the sale deed related to its Chandigarh property in the last quarter which boosted its other income.

It realised a profit of Rs 273.69 crore from the on property sale, which enabled its profit before exceptional items and taxation jumping 473.8 per cent y-o-y to Rs 323.3 crore. The stock rose almost 2 per cent to Rs 826 on Thursday.

Though not strictly comparable, in the February 2007 quarter the company’s operating profit margin had fallen 147 basis points y-o-y to 26.6 per cent owing to reduced sales in its consumer healthcare business.

In the May 2007 quarter, the company’s segment revenues in its pharma division declined 3.65 per cent y-o-y to Rs 146.78 crore.

The US parent had earlier announced that it had sold its worldwide consumer healthcare business to Johnson & Johnson and Pfizer India was also expected to exit from this business soon.

For the Indian arm, analysts said, this business was contributing 21.8 per cent of the company’s total revenues in the year ended November 2006. With lukewarm results, the Pfizer stock has underperformed the market over the past year.

Without considering the transfer of the consumer healthcare business and the Chandigarh property sale, the Pfizer India stock trades at 24 times estimated November 2007 earnings, and is not expensive.