Pfizer Inc reported disappointing quarterly revenue on declining demand for its prescription medicines, exposing the risks the world's biggest drugmaker would face if it sells better-performing units like its nutritional products business.

Ian Read, the company's new chief executive officer, told analysts on a conference call that although Pfizer will provide rough outlines by year's end on which units might be sold or spun off, it will take longer to develop full-fledged plans.

There will be no Big Bang this year, he said.

Many investors fear Pfizer will be far too big to deliver strong profit growth once Lipitor and other top drugs lose their exclusive marketing status in the next few years.

Cholesterol fighter Lipitor, Pfizer's biggest product, led drug sales lower in the first quarter. Its revenue tumbled 13 percent to $2.39 billion due to generic competition in overseas markets, foreshadowing the drug's even worse plight once it loses U.S. patent protection in November.

Wall Street expects Read to eventually sell off nonpharmaceutical businesses like animal health, consumer products and nutritional products.

But these businesses performed well in the quarter, shoring up overall results and underscoring the dilemma Pfizer faces in becoming a leaner company. Its shares were down 2.5 percent at $20.50 in midday trading.

Pfizer is most likely to sell its nutritionals business and could get as much as $7 billion for it, which could be used to buy back more company shares, said Morningstar analyst Damien Conover. He said a sale of the consumer products business is a bit less likely, but could fetch $6 billion.

The company earned $2.22 billion, or 28 cents per share, in the first quarter. That compared with $2.03 billion, or 25 cents per share, a year earlier, when Pfizer took charges for its late 2009 purchase of U.S. rival Wyeth.

Earnings came to 60 cents per share, excluding special items and the Capsugel business that is being sold. Analysts on average expected 59 cents, according to Thomson Reuters I/B/E/S.

Results benefited from a weaker dollar that boosted the value of sales abroad, new products obtained by the purchase of King Pharmaceuticals and a sharply lower tax rate.

Revenue of $16.5 billion was a bit lower than a year earlier and trailed Wall Street expectations of $16.63 billion. Prescription drug sales fell 2 percent to $14.2 billion.

Sales of animal-health products -- mainly for livestock and pets -- jumped 16 percent to $982 million. Sales of consumer products, including Centrum vitamins and painkiller Advil, rose 12 percent to $745 million. Nutritional product sales rose 3 percent to $470 million.

A GAMBLE ON DRUGS

Pfizer, which has bought three of the largest U.S. drugmakers over the past decade, is now considering how to trim its portfolio.

By divesting nonpharmaceutical products, which have far lower profit margins than branded prescriptions drugs, Pfizer may have a better chance to bolster overall earnings with newly approved medicines.

The company has already slimmed down its operations considerably. Three months ago, Read delighted investors by vowing to slash the company's research budget by up to $2 billion, to between $6.5 billion and $7 billion, eliminating thousands of jobs.

The move allowed Pfizer to stick to its 2012 profit forecast, which calls for earnings similar to what it reported for 2010.

In early April, Pfizer announced plans to sell Capsugel, the world's largest maker of hard capsules, to private equity firm KKR & Co for $2.38 billion. The deal will enable Pfizer to make up to $2 billion in share repurchases this year beyond its previous plans for $5 billion.

Even with Tuesday's decline, Pfizer shares have risen more than 10 percent since February 1, when Read pointed his ax at the company's R&D budget. The company turned over the reins to him in December after the abrupt departure of Jeffrey Kindler.

(Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Maureen Bavdek, Dave Zimmerman and Lisa Von Ahn)

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