By Ransdell Pierson and Bill Berkrot
NEW YORK (Reuters) - Pfizer Inc reported quarterly revenue well below Wall Street expectations on falling sales of generic medicines, underscoring its interest in pursuing a $106 billion bid for rival AstraZeneca to promote new business growth.
Pfizer said on Monday it hoped its sweetened offer for AstraZeneca, which was made on Friday, would help the British drugmaker "engage with Pfizer and enter into discussions relating to a possible combination of the two companies."
AstraZeneca quickly rejected the sweetened bid, saying it "substantially" undervalued the company.
Pfizer shares fell 2.4 percent to $30 in morning trading.
Total first-quarter revenue fell 9 percent to $11.35 billion, which was $730 million below Wall Street expectations. Revenue would have fallen 6 percent, if not for the stronger dollar, which lowers the value of sales outside the United States.
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The largest U.S. drugmaker earned $2.33 billion, or 36 cents per share, in the quarter. That compared with $2.75 billion, or 38 cents, in the year-earlier period, 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.
"Definitely the results on the top line came in weaker than we were anticipating," said Morningstar analyst Damien Conover, who cited disappointing sales of generics outside the United States.
Pfizer's earnings ultimately met his expectations because the company was able to cut costs, Conover said.
Pfizer still expects 2014 adjusted earnings of $2.20 to $2.30 per share, but the forecast assumes that painkiller Celebrex will not face U.S. generic competition this year. Sales of the drug fell 4 percent to $624 million in the quarter, and could be jeopardized by ongoing U.S. patent battles in the United States.
GENERICS, BIG MEDICINES STUMBLE
"What we're seeing is an unusually weak first quarter, but I'm not sure it will be reflective of the full year," said Richard Purkiss, an analyst with Atlantic Equities in London who noted the company did not lower its full-year sales forecast.
Purkiss said 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 U.S. generics, disappointed.
Pfizer first approached AstraZeneca in January with an offer that valued AstraZeneca at 46.61 pounds per share. It made its second spurned approach on April 26, with an offer valued at 50 pounds 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.
Sales in all three of Pfizer's operating segments declined from a year ago. Its established products unit, made up of hundreds of generic medicines and those about to lose patent protection, suffered the biggest fall. Sales slid 13 percent to $5.99 billion.
Pfizer provided detailed financial results for the business units for the first time as a prelude to possibly divesting one or more of them by 2017.
Many analysts and investors hope Pfizer divests the established pharmaceuticals unit. It recently spun off its animal health and infant formula businesses in order to focus on the more lucrative patent-protected medicines. Proceeds from those deals also enabled Pfizer to aggressively buy back shares and boost its dividend.
Pfizer has said, however, it could not divest any of its units until 2017, after it has compiled three years of sales and earnings data for each.
In its earnings report, Pfizer said it still expected to buy back about $5 billion worth of its shares this year, with $1.7 billion already repurchased.
Sales at its Vaccines, Oncology and Consumer Healthcare unit dipped by $20 million to $2.17 billion, while sales of global innovative pharmaceuticals, involving drugs that still have patent protection, fell 7 percent to $3.07 billion.
(Editing by Jeffrey Benkoe)