N) reported higher than expected quarterly earnings on Tuesday, due largely to lower spending on research and marketing, and said it may fully divest its animal health unit following an initial public offering of up to 20 percent of the business.

Atlantic Equities analyst Richard Purkiss said Pfizer’s operating profit margins improved four percentage points beyond expectations in the second quarter, helped by cost cuts related to its $67 billion acquisition in October 2009 of US rival Wyeth.

“That means management is doing a good job in integrating Wyeth and restructuring the pharmaceuticals business,” said Purkiss.

Pfizer’s experimental drugs, which include a promising treatment for rheumatoid arthritis now awaiting US approval, are another reason to hold Pfizer shares, he said.

Wall Street is focusing most intently on Pfizer’s experimental treatment for Alzheimer’s disease, bapineuzumab, deemed to have blockbuster sales potential if it can slow progression of the memory robbing disease.

Earlier this month, Pfizer said the drug had failed to help cognition in one of two large North American trials, but the company and partner Johnson & Johnson (JNJ.

N) are hoping for better results in another late stage North American study, the results of which could be announced before September 11.

That compared with $1.94 billion, or $1.23 per share, in theyear earlier period, when Abbott recorded big tax related gains.

Excluding special items, profit was 62 cents per share, compared with analysts’ average forecast of 54 cents, according to Thomson Reuters we/B/E/S.

Pfizer plans to sell the animal health business shares inthe first half of next year, Read said.

Along with the Initial public offering,Pfizer plans to give current shareholders stock in the animal health business, to be named Zoetis, he has said previously.

Sales of veterinary medicines edged up 3 percent to $1.09 billion, while sales of consumer health care products, such as ChapStick and Centrum vitamins, increased 8 percent to $768 million.

If the Initial public offering is successfully completed, which we are targeting for the first half of 2013, we will have a variety of options to achieve a potential full separation of Zoetis.

Pfizer shares have risen 25 percent in the past year, in large part because of the company’s plan to divest its infant formula business and animal health unit and return much of the proceeds to shareholders through share buybacks and dividends.

In April, the company agreed to sell its baby formula business to Nestle SA (NESN.

Pfizer’s global revenue fell 9 percent to $15.06 billion, hurt by generic competition against cholesterol fighter Lipitor, but it topped Wall Street expectations of $14.87 billion.

They would have risen 6.7percent if not for the stronger dollar, which hurts the valuesof sales in overseas markets.

Most other big US drugmakers were hurt by foreign exchange factors in the quarter, including Johnson & Johnson, which cut its 2012 profit view as a consequence.

But Pfizer stuck to its 2012 earnings forecast of $2.14 to $2.24 per share, excluding special items, a decline of no more than 7 percent from a year earlier despite plunging demand for Lipitor.

That is largely because of huge cost cuts, especially to Pfizer’s research budget.

“The company maintained all 2012 guidance despite the forex headwinds, which suggests underlying confidence in demand and ability to manage expenses,” ISI Group analyst Mark Schoenebaum said in a research note.

Sales of Lipitor, which lost patent protection in November, fell 53 percent to $1.22 billion in the quarter.

Sales of nerve pain treatment Lyrica jumped 14 percent to $1.04 billion, while sales of rheumatoid arthritis drug Enbrel rose 8 percent to $988 million, helping cushion the Lipitor declinePfizer shares rose to $24.21 on the New York Stock Exchange, amid a moderate decline for the drug sector.

(Reporting by Ransdell Pierson in New York; Editing by Lisa Von Ahn and John Wallace).

Jacqui McIntyre is a business journalist based in London, UK. Jacqui has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Jacqui spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.