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(Updates with comments from analyst in second paragraph.)
Sept. 23 (Bloomberg) -- Pfizer Inc.’s credit rankings were cut by Fitch Ratings for failing to pay off more of its debt since the world’s biggest drugmaker acquired Wyeth in 2009.
The London-based rating service reduced Pfizer to an A+ from AA- saying its leverage level “is still not commensurate with” the higher rating. Fitch expected the New York-based company to reduce its debt to 1.3 times earnings before interest, taxes, depreciation and amortization, said Michael Zbinovec, a Fitch analyst based in Chicago. Instead, the New York-based company cut its debt to 1.5 times Ebitda, he said.
Zbinovec said Pfizer had tripled its debt load after the $68 billion acquisition of Wyeth in 2009. A combination of the debt and a reduction in revenue growth prevented the drugmaker from reaching the target, he said.
“Pfizer’s ability to pay its debt obligation is somewhat constrained,” Zbinovec said. “But the new rating should be good for the next year and a half even with the acceleration in patent expirations that will affect Pfizer.”
The patent on Pfizer’s best-selling drug Lipitor expires in November. The cholesterol medicine generated $10.7 billion in 2010.
Fitch also revised its outlook to stable from negative.
--Editors: Andrew Pollack, Angela Zimm
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