Pfizer (PFE), the world's largest drugmaker, reported better-than-expected​ results Tuesday despite the significant hit it took from generic Lipitor competition. The company's cost-cutting efforts and strong sales by its non-pharmaceutical units helped offset the declining sales of its bestselling cholesterol drug. But Pfizer also lowered its 2012 outlook, blaming currency issues.

Pfizer shares were down 1.5% at midday as investors digested the magnitude of the loss of Lipitor exclusivity.

Lipitor, which at its prime had annual sales of more than $10 billion, lost patent protection on Nov. 30, causing a significant drop in Pfizer's revenue. Losses of exclusivity in general cost the company $5 billion, CEO Ian Read said.

The Lipitor losses, plus a one-time charge, caused the pharmaceutical giant's fourth-quarter profit to fall by half. Net income was $1.44 billion, or 19 cents per share, down from $2.89 billion, or 36 cents per share, the prior year.

Excluding one-time items, adjusted income was $3.86 billion, or 50 cents a share, up from $3.74 billion, or 47 cents a share, a year earlier. Analysts expected Pfizer to earn 47 cents a share. Similarly, despite the 3.5% drop in revenue to $16.7 billion, Pfizer also topped the expected $16.61 billion in revenues. 

But while the company managed to beat estimates, it also significantly trimmed its 2012 forecast, blaming the strengthening of the dollar. The new forecast is below Wall Street estimates, according to Reuters.

What's next?

The effect of the loss of exclusivity on Lipitor is staggering. With only one month left in the quarter after the patent expired, Lipitor sales still fell 42% in the U.S. and 24% worldwide.

It seems that all of its deals, such as the one with Watson Pharmaceutical (WPI), as well as incentives to insurance companies and patients, were of little help to stem the tide of generic Lipitor. That will only get worse as more generics are allowed to enter the market and prices drop even further. Already last week Bloomberg and The Wall Street Journal reported that Pfizer's efforts are not bearing the expected fruit and its market share keeps declining.

Pfizer has long talked about several moves it was going to take to handle the expected loss of sales, including cost-cutting through layoffs. The company reduced costs by 9% in the quarter, but this was far from enough.

Pfizer also talked about refocusing on its prescription drug division by selling non-pharma units, specifically animal health and nutrition (mostly baby formula). But what's interesting is that these two divisions helped the company offset declines in its prescription drugs as their revenues grew. Animal health unit sales increased by 13% and nutrition revenue was up by 22%.

In the meantime, Pfizer awaits several drug approvals, such as for anti-clot drug Eliquis. And just Friday, Pfizer's Inlyta drug for patients with advanced kidney cancer was approved. Already, several other drugs have picked up some of the Lipitor slack. Sales of pain drug Lyrica increased 22% to just under $1 billion. Sales of arthritis treatment Enbrel and the Celebrex painkiller rose 7% each, to $925 million and $667 million, respectively, while sales of impotence treatment Viagra were up 5%. Also, sales of vaccine Prevnar 13 rose 1%.

Whether these moves and improvements are enough to offset the lost Lipitor sales is yet to be seen. Pfizer can also always look to boost its offerings with certain biotechs. Let's not forget, also, that for some investors, the yield of more than 4% is very attractive.

Since Nov. 30, the day Pfizer lost patent protection on Lipitor, the stock actually climbed 10%, and it gained about 24% last year. Unless investors were completely unprepared, the Lipitor issues should be finally fully priced in by now. For investors with a long-term horizon, Pfizer can certainly offer stability and income.

Melly Alazraki is a freelance financial writer who frequently covers the pharmaceutical industry.