PFIZER’S third-quarter profit dropped 19 per cent as competition from generic drugs continued to cut sales, while lower operating expenses failed to offset higher taxes and charges.

Like many other drugmakers, Pfizer is suffering as cheaper generic versions erode sales of older drugs, no longer protected by patents, that once brought in billions annually. Those are led by cholesterol fighter Lipitor, which lost patent protection at the end of 2011 after reigning as the world’s top-selling drug for nearly a decade.

Like other drugmakers this quarter, Pfizer said unfavourable currency exchange rates significantly cut revenue, in this case by two percentage points. Pfizer and its rivals also have been hurt by the weak global economy and growing pressure for lower prices in many countries.

The maker of Viagra and fibromyalgia treatment Lyrica yesterday said that its net income fell to US$2.59 billion, or 39 cents per share, from US$3.21 billion, or 43 cents per share, a year earlier.

Excluding US$1.27 billion in charges for restructuring, asset write-downs and other items, the world’s second-largest drugmaker said income would have been US$3.86 billion, or 58 cents per share. Analysts surveyed by FactSet expected 56 cents per share.

Revenue totalled US$12.64 billion, down two per cent from US$12.95 billion a year ago. Analysts expected US$12.69 billion.

Three of Pfizer’s six business segments — primary care and specialty care drugs and off-patent medicines — had lower sales. Sales of consumer health products such as Centrum vitamins rose just 1 per cent at US$788 million, sales in emerging markets increased two per cent to US$2.43 billion, and sales of cancer drugs rose 26 per cent off a small base, to US$407 million.

Cancer treatments are a relatively new area for Pfizer, and its recent successes in developing drugs for rare cancers could eventually turn that into a huge franchise.

US medicine sales were flat at US$4.75 billion. But international sales — nearly 60 per cent of Pfizer’s business — fell five per cent, including the effect of exchange rates, to US$7 billion.

“International sales aren’t producing the growth Pfizer and other drug companies predicted and need,” noted Erik Gordon, an analyst and professor at University of Michigan’s Ross School of Business.

Lipitor sales plunged 29 per cent in the quarter to US$533 million — still at blockbuster levels, with more than US$1.7 billion in annual sales for the first nine months, but well below its peak rate of nearly US$13 billion a year.

Top seller Lyrica posted a 10 per cent sales jump, to US$1.14 billion, and sales of immune disorder treatment Enbrel, painkiller Celebrex and several other drugs all climbed by five per cent or more. But many more older drugs with generic competition continued to post big declines. Even erectile dysfunction drug Viagra, while still under patent in the US, saw sales fall 11 per cent to US$460 million due to recent generic competition in much of Europe.

New York-based Pfizer lowered its 2013 profit forecast to US$3.05 to US$3.15 per share, down from US$3.07 to US$3.22, but raised the lower end of its adjusted forecast, which excludes one-time items, by a nickel and now expects US$2.15 to US$2.20 per share. The company also reduced the top end of its revenue forecast for the year by US$1 billion, saying it now anticipates between US$50.8 billion and US$51.8 billion.

Analysts expect earnings per share of US$2.17 and revenue of US$51.51 billion.