Top 2 drug makers say future’s bright

“I’d say there’s some relief involved’’ after their profit forecasts, said a Miller Tabak analyst, Les Funtleyder. He said investors “are rotating back into pharma,’’ which is generally seen as a low-volatility sector.

That comes despite significant revenue losses due to the US health care overhaul and costs exceeding $2 billion each for Pfizer to integrate Wyeth, bought in October for $68 billion, and for Merck to absorb Schering-Plough, bought in November for $41 billion.

Pfizer said it expects health law changes, including higher rebates for drugs bought through the Medicaid program, to reduce revenue by about $300 million this year, $900 million in 2011, and $800 million in 2012.

Merck expects the changes to cost $170 million this year and roughly $325 million next year.

Starting in 2014, millions more Americans are expected to be insured because of the overhaul, boosting prescription drug sales.

Costs are bigger after 2010 because additional requirements begin in January, including one that drug makers pick up part of the cost of the Medicare “doughnut hole’’ prescription coverage gap.

Executives at Pfizer and Merck said they believe they can absorb those costs, and the related reductions in revenue, without hurting the bottom line.

Other major drug makers generally had similar expectations, or reduced their earnings forecasts by a small amount.

“I’d say it was a good quarter’’ for the pharmaceutical industry, Funtleyder said.

Pfizer said charges related to the Wyeth purchase pulled down earnings 26 percent to $2.03 billion, or 25 cents per share.

However, adjusted income totaled $4.88 billion, or 60 cents per share, up 33 percent and 7 cents better than analysts expected.

Merck reported net income of $298.8 million, or 9 cents per share, down 79 percent. Excluding charges totaling $2.31 billion, Merck would have earned 83 cents a share, or 8 cents more than analysts expected.