Pfizer's earnings increased by 7% but forecasts for 2016 are disappointing

US pharmaceutical company Pfizer, reported better than expected earnings for the quarter, supported by demand for vaccine against pneumonia and the acquisition of Hospira.

The company, however, posted forecasts of annual revenue and earnings below analyst estimates, mainly because of the strong dollar.

The company's shares fell slightly even though soaring sales of pneumonia vaccine Prevnar and recently approved breast cancer treatment Ibrance led to a stronger-than-expected fourth quarter.

Pfizer, which plans to buy Botox maker Allergan Inc in the second half of this year, said it expected earnings of $2.20 to $2.30 per share in 2016. That would not be much different from 2015 and falls short of the analysts' average estimate of $2.36 compiled by Thomson Reuters I/B/E/S.

Pfizer attributed its cautious 2016 outlook largely to the stronger dollar, which hurts the value of sales outside the United States. It forecast 2016 revenue of $49 billion to $51 billion, up from $48.9 billion in 2015 but shy of Wall Street expectations of $52.49 billion.

Pfizer's forecasts do not include the planned $160 billion Allergan purchase.

Pfizer said on Nov. 23 that it would buy Allergan to slash its U.S. tax bill and obtain faster-growing medicines.

Based in Dublin, the combined company's tax rate would be 17 percent to 18 percent by 2017, well below Pfizer's current 25 percent rate.

Allergan shares are trading at about a 17 percent discount to their value under the all-stock deal as some investors still fear the U.S. government could stop the deal.

But Chief Executive Officer Ian Read, in a conference call with analysts on Tuesday, said he still expected Pfizer to complete the merger as planned.

"Under current law, I don't believe there's any reason why this deal won't close," Read said.

Fourth-quarter revenue rose 7 percent to $14.05 billion, beating the analysts' average estimate of $13.56 billion. Sales were bolstered by medicines from Hospira, a hospital products company acquired in September.

Global vaccine revenue rose 45 percent to $1.92 billion, with Prevnar sales doubling in the United States, amid increased use by adults and the timing of government purchases of the product for children. Excluding special items, including costs from acquisitions and restructurings, the company earned 53 cents per share, toppingthe analysts' average estimate of 52 cents.