UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
December 31, 2002 1-1225
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Wyeth
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(Exact name of registrant as specified in its charter)
Delaware 13-2526821
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Five Giralda Farms, Madison, NJ 07940-0874
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (973) 660-5000
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Securities registered pursuant to
Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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$2 Convertible Preferred Stock, $2.50 New York Stock Exchange
par value
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Common Stock, $0.33 - 1/3 par value
(including Preferred Stock Purchase New York Stock Exchange
Rights)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes X No
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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter.
Aggregate market value at June 30, 2002 $67,830,556,262
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Outstanding at
March 3, 2003
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Common Stock, $0.33 - 1/3 par value 1,326,558,410
Documents incorporated by reference: List hereunder the following documents if
incorporated by reference and the Part of the Form 10-K into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statements; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes.
(1) 2002 Annual Report to Stockholders - In Parts I, II and IV
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(2) Proxy Statement filed on March 18, 2003 - In Part III
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PART I
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ITEM 1. BUSINESS
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General
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Unless stated to the contrary, or unless the context otherwise
requires, references to the Company in this report include Wyeth and
subsidiaries.
Wyeth, a Delaware corporation (the "Company") organized in 1926,
which on March 11, 2002 changed its name from American Home Products
Corporation, is currently engaged in the discovery, development,
manufacture, distribution and sale of a diversified line of products
in two primary businesses: Pharmaceuticals and Consumer Healthcare.
Pharmaceuticals include branded human ethical pharmaceuticals,
biologicals, nutritionals, and animal biologicals and
pharmaceuticals. Principal products include women's health care
products, neuroscience therapies, cardiovascular products,
nutritionals, gastroenterology drugs, anti-infectives, vaccines,
oncology therapies, musculoskeletal therapies, hemophilia treatments
and immunological products. Principal animal health products include
vaccines, pharmaceuticals, endectocides and growth implants.
Consumer Healthcare products include analgesics, cough/cold/allergy
remedies, nutritional supplements, lip balm, and hemorrhoidal,
antacid, asthma and other relief items sold over-the-counter.
Prior to July 15, 2002, the Company was the beneficial owner of
223,378,088 shares of common stock of Immunex Corporation
("Immunex"). On July 15, 2002, Amgen Inc. ("Amgen") completed its
acquisition of Immunex in a merger transaction. Under the terms of
the acquisition agreement, each share of Immunex common stock was
exchanged for 0.44 shares of Amgen common stock and $4.50 in cash.
Accordingly, the Company received 98,286,358 shares of Amgen common
stock (representing approximately 7.7% of Amgen's outstanding common
stock) and $1.005 billion in cash in exchange for all of its shares
of Immunex common stock. The Company began selling its Amgen shares
in the 2002 fourth quarter and completed the sales of all such
shares as of January 21, 2003 for aggregate net proceeds of $4.831
billion. The Company and Amgen continue to co-promote ENBREL in the
United States and Canada with the Company having exclusive
international rights to ENBREL. The financial aspects of the
existing licensing and marketing rights to ENBREL remain unchanged.
In October 2000, the Company had increased its ownership in Immunex
(subsequently acquired by Amgen) from approximately 53% to
approximately 55% by converting a $450 million convertible
subordinated note into 15,544,041 newly issued shares of common
stock of Immunex. In November 2000, through a public equity
offering, the Company sold 60.5 million shares of Immunex common
stock. Proceeds to the Company were approximately $2.405 billion
resulting in a pre-tax gain on the sale of $2.061 billion. The
public equity offering reduced the Company's ownership in Immunex,
at that time, from approximately 55% to approximately 41%, which
represented the ownership at December 31, 2000. As a result of the
reduction in ownership below 50%, the Company included the financial
results of Immunex on an equity basis retroactive to January 1,
2000.
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On June 30, 2000, the Company completed the sale of its Cyanamid
Agricultural Products business, a manufacturer, distributor, and
seller of crop protection and pest control products worldwide, to
BASF Aktiengesellschaft ("BASF") for $3.8 billion in cash and the
assumption of certain debt. The Company recorded an after-tax loss
on the sale of this business and reflected this business as a
discontinued operation in the 2000 first quarter. The loss on the
sale was determined based on the difference in the book value of the
net assets sold compared with the price received for these net
assets. The sale of the Cyanamid Agricultural Products business
produced a gain for tax purposes and a loss for book purposes, as
the Company did not get a step-up in cost basis for tax purposes.
This divergence, primarily caused by goodwill, was included in the
basis for book purposes but was not included in the basis for tax
purposes. The lower tax basis created a taxable gain that required a
tax provision of approximately $855.2 million. This tax provision
was combined with the pre-tax book loss of approximately $717.8
million for a total after-tax loss on the sale of the business of
$1,573.0 million.
In July 1998, the Company purchased the vitamin and nutritional
supplement products business of Solgar Vitamin and Herb Company Inc.
and its related affiliates ("Solgar") for approximately $425 million
in cash.
In February 1998, the Company sold the Sherwood-Davis & Geck medical
devices business for approximately $1.770 billion. This transaction
completed the Company's exit from the medical devices business.
Additional information relating to Immunex/Amgen common stock
transactions and the Cyanamid Agricultural Products business
disposition is set forth in Note 2 of the Notes to Consolidated
Financial Statements in the Company's 2002 Annual Report to
Stockholders and is incorporated herein by reference. Also included
in Note 2 are descriptions of the 2002 first quarter sale of the
Company's Rhode Island facility to Immunex (subsequently acquired by
Amgen) and the 2002 fourth quarter sale of the Company's generic
human injectables product line to Baxter Healthcare Corporation.
Reportable Segments
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Financial information, by reportable segment, for each of the three
years ended December 31, 2002 is set forth in Note 15 of the Notes
to Consolidated Financial Statements in the Company's 2002 Annual
Report to Stockholders and is incorporated herein by reference.
The Company has three reportable segments: Pharmaceuticals, Consumer
Healthcare, and Corporate. The Company's Pharmaceuticals and
Consumer Healthcare reportable segments are strategic business units
that offer different products and services. The reportable segments
are managed separately because they manufacture, distribute and sell
distinct products and provide services, which require various
technologies and marketing strategies. The Company sells its
diversified line of products to wholesalers, pharmacies, hospitals,
physicians, retailers and other health care institutions located in
various markets in more than 140 countries throughout the world.
Wholesale distributors and large retail establishments account for a
large portion of the Company's trade receivables and consolidated
net revenue, especially in the United States. The Company's top
three
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customers in the United States accounted for 25% of the Company's
consolidated net revenue in 2002, as is typical in the
pharmaceutical industry. In light of this concentration, the
Company continuously monitors the creditworthiness of its
customers and has established internal policies regarding
customer credit limits. The product designations appearing in
differentiated type herein are trademarks.
PHARMACEUTICALS SEGMENT
The Pharmaceuticals segment manufactures, distributes, and sells
branded human ethical pharmaceuticals, biologicals, nutritionals,
and animal biologicals and pharmaceuticals. These products are
promoted and sold worldwide primarily to wholesalers, pharmacies,
hospitals, physicians, retailers, veterinarians, and other human and
animal health care institutions. Some of these sales are made to
large buying groups representing certain of these customers.
Principal product categories for human use and their respective
products are: women's health care products including PREMARIN,
PREMPRO, PREMPHASE, and TRIPHASIL (marketed as TRINORDIOL
internationally); neuroscience therapies including ATIVAN, EFFEXOR
(marketed as EFEXOR internationally) and EFFEXOR XR; cardiovascular
products including ALTACE and INDERAL: nutritionals including S26,
2ND AGE PROMIL and 3RD AGE PROGRESS (international markets only);
gastroenterology drugs including ZOTON (international markets only)
and PROTONIX (U.S. market only); anti-infectives including MINOCIN
and ZOSYN (marketed as TAZOCIN internationally); vaccines including
PREVNAR (marketed as PREVENAR internationally); oncology therapies;
musculoskeletal therapies including ENBREL (which, under an
agreement, is co-promoted by Wyeth and Amgen in the United States
and Canada with Wyeth having exclusive international rights to the
product) and SYNVISC; hemophilia treatments including BENEFIX
Coagulation Factor IX (Recombinant) and REFACTO albumin-free
formulated Factor VIII (Recombinant); and immunological products
including RAPAMUNE. Principal animal health product categories
include pharmaceuticals, vaccines including WEST NILE - INNOVATOR
and endectocides including CYDECTIN, and growth implants. The
Company manufactures these products in the United States and Puerto
Rico, and in 18 foreign countries.
Accounting for more than 10% of consolidated net revenue in 2002,
2001 and 2000, were sales of women's health care products totaling
$2.5 billion, $2.8 billion and $2.7 billion, respectively, which
includes sales of the PREMARIN family of products of $1.9 billion,
$2.1 billion and $1.9 billion, respectively. In addition, aggregate
sales of the EFFEXOR family of products of $2.1 billion and $1.5
billion accounted for more than 10% of consolidated net revenue in
2002 and 2001, respectively. Except as noted above, no other single
pharmaceutical product or category of products accounted for more
than 10% of consolidated net revenue in 2002, 2001 or 2000.
CONSUMER HEALTHCARE SEGMENT
The Consumer Healthcare segment manufactures, distributes and sells
over-the-counter health care products. Principal consumer healthcare
product categories and their respective products are: analgesics
including ADVIL; cough/cold/allergy remedies
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including ALAVERT, ROBITUSSIN and DIMETAPP; nutritional
supplements including CENTRUM products, CALTRATE and SOLGAR
products; hemorrhoidal, antacid, asthma and other relief items
including CHAP STICK. These products are generally sold to
wholesalers and retailers and are promoted primarily to consumers
worldwide through advertising. These products are manufactured in
the United States and Puerto Rico, and in 11 foreign countries.
No single consumer healthcare product or category of products
accounted for more than 10% of consolidated net revenue in 2002,
2001 or 2000.
CORPORATE SEGMENT
Corporate is responsible for the treasury, tax and legal operations
of the Company's businesses and maintains and/or incurs certain
assets, liabilities, income, expenses, gains and losses related to
the overall management of the Company which are not allocated to the
other reportable segments. These items include interest expense and
interest income, gains on the sales of investments and other
corporate assets, other miscellaneous items, and unusual items,
including: gains relating to Immunex/Amgen common stock
transactions, the Warner-Lambert Company termination fee, certain
litigation provisions, including the REDUX and PONDIMIN litigation
charges, goodwill impairments, if any and any special charges. See
Note 15 of the Notes to Consolidated Financial Statements in the
Company's 2002 Annual Report to Stockholders for corporate segment
information as well as additional disclosure relating to the unusual
items listed above.
Sources and Availability of Raw Materials
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Generally, raw materials and packaging supplies are purchased in the
open market from various outside vendors. The loss of any one source
of supply would not have a material adverse effect on the Company's
future results of operations. However, finished dosage forms of
SYNVISC and PROTONIX are in each case produced by a single
third-party manufacturer, and raw materials for ZOTON, ZOSYN and
oral contraceptives are sourced from sole third-party suppliers.
Patents and Trademarks
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Patent protection is, in the aggregate, considered to be of material
importance to the Company's marketing of pharmaceutical products in
the United States and in most major foreign markets. Patents may
cover products, formulations, processes for, or intermediates useful
in, the manufacture of products, or the uses of products. The
Company owns, has applied for, or is licensed under, a large number
of patents, both in the United States and other countries.
Protection for individual products extends for varying periods in
accordance with the date of grant and the legal life of patents in
countries in which patents are granted. The protection afforded,
which may also vary from country to country, depends upon the type
of patent, its scope of coverage, and the availability of legal
remedies in the country. There is no assurance that the patents the
Company is seeking will be granted or that the patents the Company
has been granted would be found valid if challenged. Moreover,
patents relating to particular products,
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uses, formulations, or processes do not preclude other manufacturers
from employing alternative processes or from marketing alternative
products or formulations that might successfully compete with our
patented products.
Patent portfolios developed for products introduced by the Company
normally provide market exclusivity. The Company considers patent
protection for certain products, processes, and uses to be important
to its operations. For many of its products, in addition to compound
patent protection, the Company holds other patents on manufacturing
processes, formulations, or uses that may extend exclusivity beyond
the expiration of the compound patent. Patents are in effect for the
following major products in the United States. SYNVISC, a visco
supplementation for treatment of osteoarthritis of the knee, has
patent protection until at least 2010. The anti-infective ZOSYN has
patent protection until at least 2007. ENBREL (which, under an
agreement, is co-promoted by Wyeth and Amgen in the United States
and Canada with Wyeth having exclusive international rights to the
product) has patent protection until at least 2014. The
anti-depressant EFFEXOR and EFFEXOR XR have patent protection until
at least 2008 (Refer herein for discussion of Abbreviated New Drug
Application ("ANDA") filing being submitted by a generic competitor
relating to EFFEXOR XR). PREMPRO, a combination estrogen and
progestin product, has patent protection until at least 2015.
BENEFIX Coagulation Factor IX (Recombinant), a blood-clotting factor
for hemophilia B, has patent protection until at least 2011.
REFACTO, a recombinant Factor VIII product without human serum
albumin, has patent protection until at least 2010. PREVNAR, the
Company's seven-valent pneumococcal conjugate vaccine has patent
protection until at least 2004 and patent extension under the
Hatch-Waxman Act has been applied for, which would extend
exclusivity until 2007. PROTONIX, the Company's product for the
short-term treatment of erosive esophagitis, is expected to have
patent protection until 2010, based on a pending Hatch-Waxman
application.
The Company has other patent rights covering additional products
that have smaller net revenues. Patents on some of its newest
products and late-stage product candidates could become significant
to the Company's business in the future.
While the expiration of a product patent normally results in a loss
of market exclusivity for the covered product, commercial benefits
may continue to be derived from: later-expiring patents on processes
and intermediates (for example, those related to economical methods
of manufacture of the active ingredient of such product), patents
relating to the use of products, patents relating to novel
compositions and formulations; manufacturing trade secrets;
trademark use; and marketing exclusivity that may be available under
pharmaceutical regulatory laws. The effect of product patent
expiration also depends upon many other factors such as the nature
of the market and the position of the product in it, the growth of
the market, the complexities and economics of the process for
manufacture of the active ingredient of the product and the
requirements of new drug provisions of the Federal Food, Drug and
Cosmetic Act or similar laws and regulations in other countries.
Additions to market exclusivity are sought in the United States and
other countries through all relevant laws, including laws increasing
patent life. Some of the benefits
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of increases in patent life have been partially offset by a general
increase in the number of, incentives for and use of generic
products. In addition, improvements in intellectual property laws
are sought in the United States and other countries through reform
of patent and other relevant laws and implementation of
international treaties.
Outside the United States, the standard of intellectual property
protection for pharmaceuticals varies widely. While many countries
have reasonably strong patent laws, other countries currently
provide little or no effective protection for inventions or other
intellectual property rights. Under the Trade-Related Aspects of
Intellectual Property Agreement ("TRIPs") administered by the World
Trade Organization ("WTO"), over 140 countries have now agreed to
provide non-discriminatory protection for most pharmaceutical
inventions and to assure that adequate and effective rights are
available to all patent owners. However, in many countries, this
agreement will not become fully effective for many years. It is
possible that changes to this agreement will be made in the future
that will diminish or further delay its implementation in developing
countries. It is too soon to assess how much, if at all, the Company
will benefit commercially from these changes.
The Drug Price Competition and Patent Term Restoration Act of 1984,
commonly known as "Hatch-Waxman," made a complex set of changes to
both patent and new-drug-approval laws in the United States. Before
Hatch-Waxman, no drug could be approved without providing the U.S.
Food and Drug Administration ("FDA") complete safety and efficacy
studies, i.e., a complete New Drug Application ("NDA"). Hatch-Waxman
authorizes the FDA to approve generic versions of innovative
medicines without such information by filing an ANDA. In an ANDA,
the generic manufacturer must demonstrate only pharmaceutical
equivalence and bioequivalence between the generic version and the
NDA-approved drug - not safety and efficacy. Absent a successful
patent challenge, the FDA cannot approve an ANDA until after the
innovator's patents expire. However, after the innovator has
marketed its product for four years, a generic manufacturer may file
an ANDA alleging that one or more of the patents listed in the
innovator's NDA are invalid or not infringed. This allegation is
commonly known as a "Paragraph IV certification." The innovator must
then file suit against the generic manufacturer to protect its
patents. If one or more of the NDA-listed patents are successfully
challenged, the first filer of a Paragraph IV certification may be
entitled to a 180-day period of market exclusivity over all other
generic manufacturers. In recent years, generic manufacturers have
used Paragraph IV certifications extensively to challenge patents on
a wide array of innovative pharmaceuticals, and the Company expects
this trend to continue. Proposals have been introduced in Congress
to amend various aspects of Hatch-Waxman. In general, the proposals
appear to be principally designed to encourage more Paragraph IV
challenges to innovator patents. The Company cannot predict whether
any changes will be made to Hatch-Waxman or what impact they would
have on its business.
The Company has filed a suit against Teva Pharmaceuticals, USA
("Teva") alleging that the filing of an ANDA by Teva seeking FDA
approval to market 37.5 mg, 75 mg and 150 mg Venlafaxine HCl
Extended-Release Capsules infringes certain of the Company's
patents. Venlafaxine is the generic name for EFFEXOR XR. This matter
is more fully described in Item 3. Legal Proceedings, which
discussion is incorporated herein by reference.
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Aventis Pharma Deutchland ("Aventis") and King Pharmaceuticals,
Inc. ("King") have filed suit against Cobalt Pharmaceuticals
("Cobalt"). The complaint relates to allegations that the filing
of an ANDA by Cobalt seeking FDA approval to market generic 1.25
mg, 2.5 mg, 5 mg, and 10 mg ramipril capsules infringes an
Aventis patent. The Company co-promotes ALTACE (ramipril)
together with King. This matter is more fully described in Item 3.
Legal Proceedings, which discussion is incorporated herein by
reference.
Sales in the consumer healthcare business are largely supported by
the Company's trademarks and brand names. These trademarks and brand
names are a significant part of the Company's business and in some
countries have a perpetual life as long as they remain in use. In
some other countries, trademark protection continues as long as
registered. Registration is for a fixed term and can be renewed
indefinitely. In the aggregate the value of these trademarks and
brand names are important to the Company's operations.
Seasonality
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Sales of consumer healthcare products are affected by seasonal
demand for cough/cold products and, as a result, second quarter
results for consumer healthcare products tend to be lower than
results in other quarters.
Competition
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PHARMACEUTICALS SEGMENT
The Company operates in the highly competitive pharmaceutical
industry, which includes the human ethical pharmaceutical and animal
health businesses. Within these businesses, the Company has many
major multinational competitors and numerous smaller domestic and
foreign competitors. Based on net revenue, the Company believes it
ranks within the top 10 competitors within both the global human
ethical pharmaceutical and global animal health industries.
The Company's competitive position is affected by several factors
including prices, costs and resources available to develop, enhance
and promote products, customer acceptance, product quality and
efficiency, patent protection, development of alternative therapies
by competitors, scientific and technological advances, the
availability of generic substitutes and governmental actions
affecting pricing and generic substitutes. In the United States, the
growth of managed care organizations, such as health maintenance
organizations and pharmaceutical benefit management companies, has
resulted in increased competitive pressures. Moreover, the continued
growth of generic substitutes is further promoted by legislation,
regulation and various incentives enacted and promulgated in both
the public and private sectors.
PREMARIN, the Company's principal conjugated estrogens product
manufactured from pregnant mare's urine, and related products
PREMPRO and PREMPHASE (which are single tablet combinations of the
conjugated estrogens in PREMARIN and the progestin
medroxyprogesterone acetate) are the leaders in their categories and
contribute significantly
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to net revenue and results of operations. PREMARIN's natural
composition is not subject to patent protection (although PREMPRO
has patent protection). The principal uses of PREMARIN, PREMPRO
and PREMPHASE are to manage the symptoms of menopause and to
prevent osteoporosis, a condition involving a loss of bone mass
in postmenopausal women. Estrogen-containing products
manufactured by other companies have been marketed for many years
for the treatment of menopausal symptoms, and several of these
products also have an approved indication for the prevention of
osteoporosis. During the past several years, other manufacturers
have introduced products for the treatment and/or prevention of
osteoporosis. New products containing different estrogens and/or
different progestins than those found in PREMPRO and PREMPHASE,
utilizing various forms of delivery and having one or more of the
same indications also have been introduced. Some companies have
attempted to obtain approval for generic versions of PREMARIN.
These products, if approved, would be routinely substitutable for
PREMARIN and related products under many state laws and
third-party insurance payer plans. In May 1997, the FDA announced
that it would not approve certain synthetic estrogen products as
generic equivalents of PREMARIN given known compositional
differences between the active ingredient of these products and
PREMARIN. Although the FDA has not approved any generic
equivalent to PREMARIN to date, PREMARIN will continue to be
subject to competition from existing and new competing estrogen
and other products for its approved indications and may be
subject to generic competition from either synthetic or natural
conjugated estrogens products in the future. At least one other
company has announced that it is in the process of developing a
generic version of PREMARIN from the same natural source, and the
Company currently cannot predict the timing or outcome of these
or any other efforts.
The Company continues to experience inconsistent results on
dissolution testing of certain dosage forms of PREMARIN and is
working with the FDA to resolve this issue. Until this issue is
resolved, supply shortages of one or more dosage strengths may
continue to occur. Although these shortages may adversely affect
PREMARIN sales in one or more accounting periods, the Company
believes that, as a result of current inventory levels and the
Company's enhanced process controls, testing protocols and the
ongoing formulation improvement project, as well as reduced demand,
overall PREMARIN family sales will not be significantly impacted by
the dissolution issues.
The marketing exclusivity for CORDARONE I.V. ended on October 11,
2002, and, accordingly, sales of CORDARONE I.V. materially decreased
due to the subsequent introduction of several generic products,
several of which have been approved by the FDA. CORDARONE I.V. had
net sales of $265 million during the year ended December 31, 2002.
Market demand for ENBREL is strong; however the sales growth had
been constrained by limits on the existing source of supply. In
December 2002, the retrofitted Rhode Island facility owned by Amgen
was completed and manufacturing production was approved by the FDA.
Consequently, manufacturing capacity for ENBREL has since increased
significantly. Market demand is expected to continue to grow and
additional manufacturing supply is projected to be required. In
April 2002, Immunex (prior to being
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acquired by Amgen) announced it entered into a manufacturing
agreement with Genentech, Inc. to produce ENBREL beginning in
2004, subject to FDA approval. The current plan for the longer
term includes an additional manufacturing facility, which is
being constructed by the Company in Ireland and expansion of the
Rhode Island facility, both of which are expected to be completed
during 2005.
Sales of PREVNAR have been affected by manufacturing related
constraints on product availability. The Company is continuing to
implement manufacturing improvements and has allocated additional
personnel and equipment to increase the production of PREVNAR.
Additional manufacturing capacity, principally in fill/finish
capacity, will also become available in 2003 and beyond. While the
Company's efforts are expected to significantly increase the
available supply for the market in 2003; the manufacturing processes
for this product are very complex, and there can be no assurance
that unanticipated manufacturing-related difficulties will not
constrain PREVNAR sales in 2003 or beyond.
Refer to "Patents and Trademarks" section, herein for discussion of
ANDA filings being submitted by generic competitors relating to
EFFEXOR XR and ALTACE.
Health care costs will continue to be the subject of attention in
both the public and private sectors in the United States. Similarly,
health care spending, including pharmaceutical pricing, is subject
to increasing governmental review in international markets. While
the Company cannot predict the impact future health care initiatives
may have on the Company's worldwide results of operations, the
Company believes that the pharmaceutical industry will continue to
play a very positive role in helping to contain global health care
costs through the development of innovative products.
CONSUMER HEALTHCARE SEGMENT
The consumer healthcare business has many competitors. Based on net
sales, the Company believes it ranks within the top five competitors
within the global consumer healthcare industry. The Company's
competitive position is affected by several factors including
resources available to develop, enhance and promote products,
customer acceptance, product quality, development of alternative
therapies by competitors, growth of generic and store brands, and
scientific and technological advances.
GENERAL
In all business segments, advertising and promotional expenditures
are significant costs to the Company and are necessary to
effectively communicate information concerning the Company's
products to health professionals, the trade and consumers.
Research and Development
------------------------
Worldwide research and development activities are focused on
discovering, developing and bringing to market new products to treat
and/or prevent some of the most serious health care problems. During
2002, several major collaborative research and
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development arrangements were initiated or continued with other
pharmaceutical and biotechnology companies. Research and
development expenditures totaled approximately $2.080 billion in
2002, $1.870 billion in 2001 and $1.688 billion in 2000 with
approximately 95%, 96% and 96% of these expenditures in the
pharmaceutical area in 2002, 2001 and 2000, respectively.
At December 31, 2002, the Company's significant new product
opportunities included 4 New Drug Applications, one preliminary
market approval application and one biologics license application
filed with the FDA for review, and 61 active Investigational New
Drug Applications. Additionally, the Company has filed 9
Supplemental Drug Applications seeking approval for significant new
uses of existing products.
During 2002, FDA approval was granted for PROTONIX Delayed-Release
tablets for the long-term treatment of pathological hypersecretory
conditions, including Zollinger-Ellison Syndrome. Also during 2002,
the European Commission approved INDUCTOS (rhBMP-2/ACS) (which,
under an agreement, is co-developed and promoted by Wyeth and
Yamanouchi Europe, B.V.), which consists of a unique recombinant
protein that stimulates bone growth to facilitate the healing of
long-bone fractures requiring open surgical management. The European
Commission also approved ENBREL for the treatment of psoriatic
arthritis in December 2002. In February 2003, FDA approval was
granted for EFFEXOR XR for the treatment of patients with social
anxiety disorder and in March 2003 a new lower dose form of PREMPRO
was approved for postmenopausal symptomatic women. Additionally, in
December 2002, the FDA approved ALAVERT, the first over-the-counter
non-sedating antihistamine competitor to Claritin(R).
In November 2002, the Orthopedic and Rehabilitation Panel of the FDA
Medical Devices Advisory Committee recommended that the FDA approve
rhBMP-2, to be applied to an absorbable collagen sponge ("ACS") to
treat open long-bone fractures. In addition, the FDA's Vaccines and
Related Biological Products Advisory Committee recommended that the
FDA approve FLUMIST to prevent influenza in healthy children,
adolescents and adults ages 5 through 49.
Regulation
----------
The Company's various health care products are subject to regulation
by government agencies throughout the world. The primary emphasis of
these regulatory requirements is to assure the safety and
effectiveness of the Company's products. In the United States, the
FDA, under the Federal Food, Drug, and Cosmetic Act and the Public
Health Service Act, regulates many of the Company's health care
products, including human and animal pharmaceuticals, vaccines, and
consumer health care products. The Federal Trade Commission ("FTC")
has the authority to regulate the promotion and advertising of
consumer health care products including over-the-counter drugs and
dietary supplements. The USDA regulates the Company's domestic
animal vaccine products. The FDA's enforcement powers include the
imposition of criminal and civil sanctions against companies,
including seizures of regulated products, and criminal sanctions
against individuals. The FDA's enforcement powers also include its
inspection of the numerous facilities operated by the Company. To
facilitate compliance, the Company from time to
I-10
time may institute voluntary compliance actions such as product
recalls when it believes it is appropriate to do so. In addition,
many states have similar regulatory requirements. Most of the
Company's pharmaceutical products, and an increasing number of
its consumer healthcare products, are regulated under the FDA's
new drug approval processes, which mandate pre-market approval of
all new drugs. Such processes require extensive time, testing and
documentation for approval, resulting in significant costs for
new product introductions. The Company's U.S. pharmaceutical
business is also affected by the Controlled Substances Act,
administered by the Drug Enforcement Administration, which
regulates strictly all narcotic and habit-forming drug substances.
In addition, in the countries where the Company does business
outside the United States, it is subject to regulatory and
legislative climates that, in many instances, are similar to or
more restrictive than that described above. The Company devotes
significant resources to dealing with the extensive federal,
state and local regulatory requirements applicable to its
products in the United States and internationally.
Federal law also requires drug manufacturers to pay rebates to state
Medicaid programs in order for their products to be eligible for
federal matching funds under the Social Security Act. Additionally,
a number of states are, or may be, pursuing similar initiatives for
rebates and other strategies to contain the cost of pharmaceutical
products. The federal Vaccines for Children entitlement program
enables states to purchase vaccines at federal vaccine prices and
limits federal vaccine price increases in certain respects. Federal
and state rebate programs are expected to continue.
The FDA Modernization Act, which was passed in 1997, as extended by
the Best Pharmaceuticals for Children Act, which was passed in 2002,
includes a Pediatric Exclusivity Provision that may provide an
additional six months of market exclusivity in the United States for
new or currently marketed drugs, if certain pediatric studies
requested by FDA are completed by the applicant. The Company is
considering seeking exclusivity based on pediatric studies for
certain of the Company's products.
The Company's Wyeth Pharmaceutical division, a related subsidiary
and certain employees (including an executive officer of the
Company) are subject to a consent decree entered into with the FDA
in October 2000 following the seizure in June 2000 from the
Company's distribution centers in Tennessee and Puerto Rico of a
small quantity of certain of the Company's products manufactured at
the Company's Marietta, Pennsylvania facility. The seizures were
based on FDA allegations that products were not manufactured in
accordance with current Good Manufacturing Practices. Prior to the
seizure, the Company had ceased production at portions of the
Marietta facility in order to implement process and facility
improvements. The consent decree, which has been approved by the
U.S. District Court for the Eastern District of Tennessee, does not
represent an admission by the Company or the employees of any
violation of the Federal Food, Drug, and Cosmetic Act or its
regulations. Under the consent decree, the Company paid $30 million
to the U.S. government in 2000. The consent decree allows the
continued manufacture of all of the products that the Company
intends to manufacture at its Marietta, Pennsylvania facility, as
well as the Company's Pearl River, New York facility, subject to
review by independent consultants of manufacturing records prior to
distribution of individual lots. In addition, as provided in the
consent decree, an expert consultant has conducted a comprehensive
inspection of the Marietta and Pearl River
I-11
facilities and the Company has identified various actions to
address the consultant's observations. The Company is in the
process of obtaining verification of the Company's actions by the
expert consultant. The verification process is subject to review
by the FDA.
Environmental
-------------
Certain of the Company's operations are affected by a variety of
federal, state and local environmental protection laws and
regulations and the Company has, in a number of instances, been
notified of its potential responsibility relating to the generation,
storage, treatment and disposal of hazardous waste. In addition, the
Company has been advised that it may be a responsible party in
several sites on the National Priority List created by the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), commonly known as Superfund (See Item 3. Legal
Proceedings). In connection with the spin-off in 1993 by American
Cyanamid Company ("Cyanamid") of Cytec Industries Inc. ("Cytec"),
Cyanamid's former chemicals business, Cytec assumed the
environmental liabilities relating to the chemicals businesses,
except for the former chemical business site at Bound Brook, New
Jersey, and certain sites for which there is shared responsibility
between Cyanamid and Cytec. This assumption is not binding on third
parties, and if Cytec were unable to satisfy these liabilities, they
would, in the absence of other circumstances, be enforceable against
Cyanamid. The Company has no reason to believe that it has any
practical exposure to any of the liabilities against which Cytec has
agreed to assume and indemnify Cyanamid. Cyanamid was acquired by
the Company in 1994.
Additional information on environmental matters is set forth in Note
7 of the Notes to Consolidated Financial Statements in the Company's
2002 Annual Report to Stockholders and is incorporated herein by
reference.
Employees
---------
At the end of 2002, the Company had 52,762 employees worldwide, with
29,361 employed in the United States including Puerto Rico.
Approximately 16% of worldwide employees are represented by various
collective bargaining groups. Relations with most organized labor
groups remain relatively stable.
Financial Information about the Company's Domestic and International
--------------------------------------------------------------------
Operations
----------
Financial information about domestic and international operations
for each of the three years ended December 31, 2002 is set forth in
Note 15 of the Notes to Consolidated Financial Statements in the
Company's 2002 Annual Report to Stockholders and is incorporated
herein by reference.
The Company's operations outside the United States are conducted
primarily through subsidiaries. International net revenue in 2002
amounted to 37% of the Company's total worldwide net revenue.
I-12
The Company's international businesses are subject to risks of
currency fluctuations, governmental actions and other governmental
proceedings, which are inherent in conducting business outside of
the United States. The Company does not regard these factors as
deterrents to maintaining or expanding its non-U.S. operations.
Additional information about international operations is set forth
under the caption "Quantitative and Qualitative Disclosures about
Market Risk" in Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Company's 2002 Annual
Report to Stockholders and is incorporated herein by reference.
Availability of Information
---------------------------
The annual report on Form 10-K and all other Company periodic
reports (including quarterly reports on Form 10-Q, current reports
on Form 8-K and all amendments thereto) are available promptly after
filing with the Securities and Exchange Commission on the Company's
internet website (www.wyeth.com) without charge.
ITEM 2. PROPERTIES
----------
The Company's corporate headquarters and the headquarters of its
consumer healthcare business are located in Madison, New Jersey. The
Company's domestic and international human ethical pharmaceutical
operations are currently headquartered in leased facilities located
in Radnor, Pennsylvania and owned facilities in Collegeville and
Great Valley, Pennsylvania. Radnor pharmaceutical operations are
expected to move to Collegeville in 2003. The Company's animal
health business is headquartered in Overland Park, Kansas, a leased
facility. The Company's international subsidiaries and affiliates,
which generally own their properties, have manufacturing facilities
in 18 countries outside the United States.
The properties listed below are the principal manufacturing plants
(M) and research laboratories (R) of the Company as of December 31,
2002, listed in alphabetical order by state or country. All of these
properties are owned except certain facilities in Guayama, Puerto
Rico, which are under lease. The Company also owns or leases a
number of other smaller properties worldwide, which are used for
manufacturing, research, warehousing and office space.
Pharmaceuticals and Consumer Healthcare:
United States:
Charles City, Iowa (M)
Fort Dodge, Iowa (M, R)
Andover, Massachusetts (M, R)
Cambridge, Massachusetts (R)
St. Louis, Missouri (M, R)
Princeton, New Jersey (R)
Chazy, New York (R)
Pearl River, New York (M, R)
Rouses Point, New York (M, R)
Sanford, North Carolina (M, R)
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Collegeville, Pennsylvania (R)
Carolina, Puerto Rico (M)
Guayama, Puerto Rico (M)
Richmond, Virginia (M, R)
International:
St. Laurent, Canada (M, R)
Suzhou, China (M)
Havant, England (M, R)
Ghatkopar, India (M)
Askeaton, Ireland (M, R)
Newbridge, Ireland (M)
Catania, Italy (M, R)
Shiki, Japan (M, R)
Vallejo, Mexico (M)
Cabuyao, Philippines (M)
Tuas, Singapore (M)
Gerona, Spain (M, R)
Hsin-Chu Hsien, Taiwan (M)
All of the above facilities are exclusively pharmaceutical
facilities, except for Pearl River, New York, Rouses Point, New
York, Guayama, Puerto Rico, Richmond, Virginia, St. Laurent, Canada,
Suzhou, China, Havant, England, Newbridge, Ireland, Vallejo, Mexico
and Hsin-Chu Hsien, Taiwan, which are both pharmaceutical and
consumer healthcare facilities.
The Company has a pharmaceutical manufacturing facility under
construction in Grange Castle, Ireland. Further, the Company is
working to support larger scale manufacturing in Sanford, North
Carolina and Carolina, Puerto Rico.
The Company believes that its properties are adequately maintained
and suitable for their intended use. The facilities generally have
sufficient capacity for existing needs and expected near-term growth
and expansion projects are undertaken as necessary to meet future
needs.
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Company and its subsidiaries are parties to numerous lawsuits
and claims arising out of the conduct of its business, including
product liability and other tort claims.
On October 7, 1999, the Company announced that it had reached a
comprehensive, nationwide class action settlement (the "settlement")
to resolve litigation against the Company brought by people who used
REDUX (dexfenfluramine hydrochloride) capsules C-IV or PONDIMIN
(fenfluramine hydrochloride) tablets C-IV. The Company's Wyeth
Pharmaceutical Division had announced a voluntary and immediate
withdrawal of these products in September 1997. The Company took
this action on the basis of new, but preliminary, information
provided to the Company on September 12,
I-14
1997 by the FDA regarding heart valve abnormalities in patients
using these medications. The Company estimates that approximately
5.8 million people used these medications in the U.S.
The settlement is open to all PONDIMIN (which in combination with
phentermine, a product that was not manufactured, distributed or
sold by the Company, was commonly referred to as "fen-phen") and
REDUX users in the United States and offers a range of benefits
depending on a participant's particular circumstances, including: a
refund program for the cost of the drugs; medical screening;
additional medical services or cash payments; and compensation in
the event of serious heart valve problems. The settlement terms are
reflected in a settlement agreement executed on November 19, 1999.
(In Re Diet Drugs Products Liability Litigation, MDL No. 1203;
Brown, et al. v. AHPC, No. 99-20593, U.S.D.C., E.D. Pa.). The
settlement covers all claims arising out of the use of REDUX or
PONDIMIN except for claims of Primary Pulmonary Hypertension
("PPH"). Payments by Wyeth into the settlement funds will continue
until 2018, if needed, to provide settlement benefits to members of
the class. In the aggregate, all payments under the settlement
cannot exceed $3.75 billion in present value. Future payments will
be made only as and if needed. The settlement states that it shall
not be construed to be an admission or evidence of any liability or
wrongdoing whatsoever by the Company or the truth of any of the
claims alleged.
Diet drug users choosing to opt out of the settlement class were
required to do so by March 30, 2000. The Company has resolved the
claims of all but a small percentage of these initial opt outs and
continues to work toward resolving those that remain. As originally
designed, the settlement agreement also gives class members who
participate in the settlement the opportunity to opt out of the
settlement at two later stages, although there are restrictions on
the nature of claims they can pursue outside of the settlement.
Class members who are diagnosed with certain levels of valvular
regurgitation within a specified time frame can opt out following
their diagnosis and prior to receiving any further benefits under
the settlement ("intermediate" opt outs). Class members who are
diagnosed with certain levels of regurgitation and who elect to
remain in the settlement, but who later develop a more severe
valvular condition, may opt out at the time the more serious
condition develops ("back-end" opt outs). Under either of these
latter two opt out alternatives, class members may not seek or
recover punitive damages, may sue only for the condition giving rise
to the opt out right, and may not rely on verdicts, judgments or
factual findings made in other lawsuits. In March 2003, the Court
approved a Sixth Amendment to the settlement agreement, discussed
below, which provides certain class members with an additional
limited opt out right.
On November 23, 1999, United States District Judge Louis C. Bechtle,
the judge then overseeing the federal MDL litigation in
Philadelphia, granted preliminary approval of the settlement and
directed that notice of the settlement terms be provided to class
members. The notice program began in December 1999. On August 28,
2000, Judge Bechtle issued an order approving the settlement. On
August 15, 2001, the United States Court of Appeals for the Third
Circuit affirmed the approval of the settlement. When no petitions
to the United States Supreme Court for certiorari were filed by
January 2, 2002, the settlement was deemed to have received Final
Judicial Approval on January 3, 2002.
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On January 18, 2002, as collateral for the Company's financial
obligations under the settlement, the Company established a security
fund in the amount of $370 million. In April 2002, pursuant to an
agreement among the Company, class counsel and representatives of
the settlement trust, an additional $45 million (later reduced to
$35 million) was added to the security fund, bringing the total
amount in the security fund to $405 million.
Under the terms of the nationwide class action settlement, the
period during which class members could register to receive a
screening echocardiogram from the settlement trust ended on August
2, 2002. Those echocardiograms must be completed by July 3, 2003,
unless that date is further extended by the court. Class members
whose trust-supplied echocardiograms demonstrate FDA-positive levels
of heart valve regurgitation (mild or greater aortic valve
regurgitation or moderate or greater mitral valve regurgitation)
will have 120 days to elect either to remain in the settlement or to
withdraw from the settlement and proceed as an intermediate opt out
(with specific rights and limitations defined in the settlement).
Class members who chose to obtain their own echocardiogram outside
of the settlement were required to have completed those
echocardiograms by January 3, 2003; the date by which any of those
class members whose echocardiograms show FDA-positive levels of
regurgitation must make such an election is May 3, 2003.
As originally designed, the settlement was comprised of two
settlement funds. Fund A (with a present value at the time of
settlement of $1 billion) was created to cover refunds, medical
screening costs, additional medical services and cash payments,
education and research costs, and administration costs. Fund A has
been fully funded by contributions by the Company. Fund B (which was
to be funded by the Company on an as-needed basis up to a total of
$2.55 billion) would compensate claimants with significant heart
valve disease according to a settlement matrix. Any funds remaining
in Fund A after all Fund A obligations were met are to be added to
Fund B to be available to pay Fund B injury claims.
In December 2002, following a joint motion by the Company and
plaintiffs' counsel, the Court approved an additional amendment to
the settlement agreement. This Fifth Amendment to the settlement
provided for the merger of Funds A and B into a combined fund which
will now cover all expenses and injury claims in connection with the
settlement. The effect of the merger is to accelerate the spillover
of the expected remainder in Fund A, which will now be available to
pay Fund B claims. The merger of the two funds took place in January
2003. In February 2003, as required by the amendment to the
settlement agreement merging the two funds, an additional $535.2
million was added to the security fund described above.
In March 2003, following another joint motion by the Company and
plaintiffs' counsel, the Court approved the Sixth Amendment to the
settlement agreement. Under this amendment, any class member who
claims a matrix benefit by May 3, 2003 (rendering them ineligible to
exercise a back-end opt out) would be permitted to exercise a new
"Sixth Amendment Opt Out" right under certain specified conditions.
First, the settlement trust must have determined that the claimant
qualifies for a matrix benefit which the trust does not have
adequate funds to pay. Second, the Company must have elected not to
deposit additional funds into the settlement to pay the matrix
benefit.
I-16
Third, the claimant must exercise this new opt out right within
120 days of being notified that he or she is eligible to do so.
This new opt out right has all of the same limitations -
including those on punitive, multiple or exemplary damages - as
intermediate or back-end opt outs. An additional limitation on
the Sixth Amendment Opt Out right is the claimant's agreement to
name only Wyeth as a defendant in any ensuing litigation and to
be the sole plaintiff in such litigation.
The Company recorded an initial litigation charge of $4.75 billion,
net of insurance, in connection with the REDUX and PONDIMIN
litigation in 1999, and additional charges of $7.5 billion in 2000,
$950 million in 2001 and $1.4 billion in 2002. The principal reason
for the charge taken in 2002 was that the volume and size of the
claims filed in the nationwide settlement were greater than
anticipated. The combination of these four charges represents the
estimated total amount required to resolve all diet drug litigation,
including anticipated funding requirements for the nationwide class
action settlement, anticipated costs to resolve the claims of any
members of the settlement class who in the future may exercise an
intermediate or back-end opt out right, costs to resolve the claims
of PPH claimants and initial opt out claimants, and administrative
and litigation expenses.
On February 7, 2003, a jury in Santa Fe, New Mexico hearing the
REDUX lawsuit of Garcia v. Wyeth-Ayerst Laboratories Division of
American Home Products Corporation, et al., No. D-0101-CV-2000-1387
(1st Jud. Dist. Ct., Santa Fe Cty.) rendered a verdict in favor of
the Company. Plaintiff has indicated that she intends to pursue an
appeal.
Based upon the information available at this time, the Company
believes that its reserves will be adequate to cover the remaining
obligations relating to the diet drug litigation. However, in light
of the inherent uncertainty in estimating litigation exposure and
the fact that substantial additional information will become
available in the coming months, it is possible that additional
reserves will be required.
The Company was also named as a nominal defendant in a shareholder
lawsuit arising out of the REDUX and PONDIMIN withdrawal. Grill v.
Stafford, et al., (No. MRS-L-164-98, N.J. Sup. Ct., Morris Cty.),
which was commenced on January 14, 1998, was a shareholder
derivative action filed against the Company, certain directors, a
former director and officer of the Company, and certain officers
which sought to recover any losses or damages sustained by the
Company, as well as profits from the sale of stock by present and
former officers and directors, as a result of alleged intentional,
reckless or negligent breaches of fiduciary duty by the defendants.
The complaint contained allegations that the defendants made
material misstatements or omissions regarding alleged adverse events
associated with REDUX and/or PONDIMIN (and in particular an alleged
association between those two products and valvular heart disease),
exposing the Company to liability for personal injury lawsuits and
securities claims. On August 28, 2001, the New Jersey Superior
Court, Chancery Division, granted the defendants' motion to dismiss
the Grill case on the grounds that the plaintiffs had failed to make
a demand on the Company's Board of Directors to pursue the
litigation, as required by Delaware law, and dismissed plaintiffs'
Amended Complaint without leave to replead. The dismissal without
leave to replead was affirmed by the Appellate Division in January
2003.
I-17
The Company is a party to various lawsuits involving alleged
injuries as a result of the use of the NORPLANT SYSTEM, the
Company's implantable contraceptive containing levonorgestrel. By
final judgment dated August 14, 2002, United States District Judge
Richard A. Schell granted in part and denied in part the Company's
motion for summary judgment in the cases pending before him in the
federal multidistrict NORPLANT litigation. In re: Norplant
Contraceptive Products Liability Litigation, MDL No. 1038, U.S.D.C.,
E.D. Tex. Judge Schell concluded that the learned intermediary
doctrine barred plaintiffs claims relating to any of 26 "Adverse
Reactions" included on the NORPLANT product labeling and that there
was insufficient evidence to support plaintiffs' allegations
relating to any side effects not among those 26 listed in the
labeling. The effect of Judge Schell's ruling was to grant summary
judgment against 2,960 plaintiffs in 710 cases (virtually all of the
plaintiffs asserting claims in the MDL). Eighteen plaintiffs
appealed this judgment to the United States Court of Appeals for the
Fifth Circuit. Seventeen of those appellants subsequently dropped
their appeals. The appeal is now fully briefed.
The Louisiana Court of Appeals for the Fourth Circuit has recently
affirmed a lower court's certification of a statewide class of
Louisiana NORPLANT users. Davis v. American Home Products
Corporation, No. CDC 94-11684, Orleans Parish. The Company plans to
appeal that decision to the Louisiana Supreme Court. The Company
continues to believe that it has compelling appellate arguments
against class certification, which has been denied in all other
federal and state cases.
The Company continues to defend several individual NORPLANT cases
alleging disparate injuries, including complications stemming from
the removal of NORPLANT capsules, miscarriage and stroke.
On July 9, 2002, interim findings from the Women's Health
Initiative ("WHI") study evaluating hormone replacement therapy
were released. The estrogen plus progestin arm of the study (in
which the Company's PREMPRO product was used as the study drug)
was stopped early because of findings of slightly increased risks
of breast cancer, stroke and coronary heart disease among the
women taking the drug compared to those in the placebo group. The
Company is currently defending thirteen class action lawsuits
relating to the product: Lewers, et al. v. Wyeth, No. 02C 4970,
U.S.D.C., N.D. Ill.; Cyrus, et al. v. Wyeth, No. 03 CV 754,
U.S.D.C., S.D.N.Y.; Dooley, et al. v. Wyeth, No. 03-2034 KHV,
U.S.D.C., D. Kan.; Krznaric, et al. v. Wyeth, No. EDCV 02-953 VAP
SGL, U.S.D.C., C.D. Ga.; Szabo, et al. v. Wyeth, No. SA02-757,
U.S.D.C., C.D. Cal.; Favela et al., v. Wyeth, No. 02-5893DT,
U.S.D.C., C.D. Cal.; Cook, et al., v. Wyeth, No.
4-02-CV-00529WRW, U.S.D.C., E.D. Ark.; Koenig, et al., v. Wyeth,
No. 02-18165 CA 27, U.S.D.C., S.D. Fla.; Gallo, et al. v. Wyeth,
No. 02857, Ct. Comm. Pleas, Phil. Cty., PA; Kuhn, et al. v.
Wyeth, No. 02C4970, Cir. Ct., Brooke Cty., WV; Paul, et al. v.
Wyeth, No. 03-2-17002-0 SEA, Super. Ct., King Cty., WA; Crosby,
et al. v. Wyeth, No. 03CH04774, Cir. Ct., Cook Cty., IL; and
Albertson, et al., v. Wyeth, No. 002944, Ct. Comm. Pleas, Phil.
Cty., PA. Plaintiffs in seven of the cases (Lewers, Cyrus,
Dooley, Krznaric, Crosby, Szabo and Favela) each seek to
represent a nationwide class of women who have ever ingested
PREMPRO. They generally seek similar relief on behalf of the
putative class: 1) purchase price refunds; 2) personal injury
damages; 3) medical monitoring expenses and 4) an order requiring
the Company to inform the public of the reported risks of
PREMPRO. The plaintiffs in the Albertson and Gallo cases seek to
I-18
represent classes of Pennsylvania women who have ingested the
drug and seek purchase price refunds and medical monitoring
expenses on their behalf. Plaintiffs in the Cook, Koenig, Paul
and Kuhn cases seek similar relief on behalf of putative classes
of Arkansas, Florida, Washington and West Virginia users of the
product, respectively.
In addition to the class actions, the Company is defending
approximately 40 individual actions (with a total of approximately
60 named plaintiffs) in various courts for personal injuries
including breast cancer, stroke and heart disease.
The federal Judicial Panel on Multidistrict Litigation ("JPML") has
ordered that all federal PREMPRO cases be transferred for
coordinated pretrial proceedings to the United States District Court
for the Eastern District of Arkansas, before United States District
Judge William R. Wilson, Jr.
In the litigation involving DURACT, the Company's non-narcotic
analgesic pain reliever which was voluntarily withdrawn from the
market in 1998, one putative personal injury class action remains
pending. Chimento, et al. v. Wyeth-Ayerst, et al., No. 982488, Dist.
Ct., St. Bernard Parish, LA, seeks the certification of a class of
Louisiana residents who were exposed to and who suffered injury from
DURACT. Plaintiffs seek compensatory and punitive damages, the
refund of all purchase costs, and the creation of a court-supervised
medical monitoring program for the diagnosis and treatment of liver
damage and related conditions allegedly caused by DURACT. There are
also five individual lawsuits pending involving ten former DURACT
users alleging various injuries, including kidney failure,
hepatitis, liver transplant and death.
The Company has been named as a defendant in four lawsuits in
which plaintiffs purport to represent a statewide class of health
care workers who have been injured by needle and syringe devices
manufactured by the Company's former Sherwood-Davis & Geck
("Sherwood") subsidiary. The complaints have been filed in New
York (Benner v. AHPC, et al., 99 Civ. 4785 (WHP), U.S.D.C.,
S.D.N.Y.), Oklahoma (Palmer v. AHPC, et al., No. CJ-98-685, Dist.
Ct., Sequoyah Cty.), Texas (Usrey v. Becton Dickinson, et al.,
No. 342-173329-98, Dist. Ct., Tarrant Cty.), and South Carolina
(Bales v. AHPC et al., No. 98-CP-40-4343, Circ. Ct., Richland
Cty.) and all contain virtually identical allegations. Each names
the Company, Becton Dickinson and Company, Sherwood's largest
competitor, and Tyco International (U.S.) Inc. ("Tyco"),
Sherwood's current corporate owner, as well as several
distributors of medical devices. The complaints allege that the
needle and syringe devices designed and manufactured by Sherwood
are defective in that they expose health care workers to the risk
of accidental needlesticks and the resultant possibility of
acquiring blood-borne diseases. Each named plaintiff seeks to
represent a statewide class of healthcare workers who have
sustained a "contaminated" needlestick, reported the incident to
their employer and have tested negative for a blood-borne
disease. The complaints seek recovery for the costs of medical
testing and treatment for the needlesticks, although plaintiffs
in the New York case also seek emotional distress damages
allegedly arising out of the fear of contracting a disease from
the incidents. Similar actions brought in Alabama, California,
New Jersey, Ohio, Pennsylvania and Florida have each been
dismissed. The Company is being defended and indemnified in each
of these cases by Tyco with respect to injuries alleged to have
occurred after
I-19
February 27, 1998, the date of the Company's divestiture of the
business of Sherwood. The Company remains responsible for
injuries occurring prior to that date and is defending and
indemnifying Tyco for those injuries.
In January 2000, the trial court in the Usrey matter certified a
class of Texas health care workers who, during the period January
18, 1997 to January 18, 2000, sustained a contaminated needlestick
while using one of the defendants' products, reported the incident
and tested negative for any blood-borne disease. In October 2001,
the Texas Court of Appeals reversed the class certification order
and remanded the case to the District Court for further proceedings.
Plaintiffs have not pursued the matter on remand. The cases pending
in Oklahoma and South Carolina remain dormant. No discovery has been
undertaken in those matters and no class certification hearing dates
have been set. In March 2003, class certification was denied in the
Benner case in New York.
In November 2000, the Company withdrew from the market those
formulations of its DIMETAPP and ROBITUSSIN cough/cold products,
which contained the ingredient phenylpropanolamine ("PPA") at the
request of the FDA. The FDA's request followed the reports of a
study that raised a possible association between PPA-containing
products and the risk of hemorrhagic stroke. Effective November
6, 2000, the Company announced that it would no longer ship
products containing PPA to its retailers. The Company has since
been named as a defendant in approximately 700 lawsuits (on
behalf of a total of approximately 2,500 plaintiffs) filed in
federal and state courts throughout the United States, as well as
one case filed in the Ontario Superior Court of Justice. All
federal cases involving PPA claims have been transferred to the
United States District Court for the Western District of
Washington before United States District Judge Barbara Jacobs
Rothstein. (In re Phenylpropanolamine (PPA) Products Liability
Litigation, MDL No. 1407). Four of the PPA lawsuits are putative
class actions. One of the putative class actions (the lawsuit
pending in Canada) alleges claims for personal injury and
economic loss. McColl, et al. v. Whitehall-Robins Inc., No.
02-CV-239690CF, Ontario Superior Court of Justice. The other
three putative class action lawsuits allege misrepresentations
regarding the risks involved with products containing PPA and
seek disgorgement or restitution of any moneys acquired by means
of the alleged misrepresentation, as well as attorneys' fees, on
behalf of the putative classes. These cases include: Guinta, et
al. v. American Home Products Corporation, No. MID-L-010277-01,
Super. Ct., Middlesex Cty., NJ; Horne, et al. v. American Home
Products, Inc., et al., No. CV-02-0894, U.S.D.C., W.D. Wash.; and
Risti, et al. v Novartis Consumer Health, Inc., et al., No.
MID-L-4053-01 Super. Ct., Middlesex Cty., NJ. Class certification
has not yet been decided in any of these four cases. In every
instance to date in which class certification has been decided in
a PPA case (in 14 cases in federal and state courts),
certification has been denied.
Three of the individual personal injury PPA cases are currently
scheduled for trial later in 2003.
The Company has been served with approximately 230 lawsuits, ten
of which are putative class actions, alleging that the cumulative
effect of thimerosal, a preservative used in
I-20
certain vaccines manufactured and distributed by the Company as
well as by other vaccine manufacturers, causes severe
neurological damage, including autism in children. The class
actions and relief sought are as follows: Daigle, et al. v.
Aventis Pasteur Inc., et al., No. 02-2131F, Super. Ct., Suffolk
Cty., MA (statewide class for medical monitoring, a fund for
research and compensation for personal injuries); Demos, et al.
v. Aventis Pasteur, et al., No. 01-22544CA15, Circ. Ct., Dade
Cty., FL (nationwide class for medical monitoring, personal
injuries and injunctive relief against future sales); Cyr, et al.
v. Aventis Pasteur, Inc., et al., No. 01-C-663, Super. Ct.,
Hillsborough Cty., NH (statewide class for personal injuries and
injunctive relief); King, et al. v. Aventis Pasteur, Inc., et
al., No. 01-CV-1305, U.S.D.C., D. Ore. (nationwide class for
personal injuries and injunctive relief); Mead, et al. v. Aventis
Pasteur, Inc., et al., No. 01-CV-1402, U.S.D.C., D. Ore.
(nationwide class for medical monitoring); Garcia, et al., v.
Abbott, et al., No. C02-168C, District Court, Western District of
Seattle, WA (nationwide class on behalf of all individuals who
purchased any childhood vaccine containing thimerosal); Shadie,
et al. v. Abbott, et al., No. 3-CV-02-0702, U.S.D.C., M.D., Pa.
(nationwide class on behalf of all childhood vaccinated with
thimerosal-containing vaccines from 1990 to present); Ashton, et
al. v. Aventis Pasteur Inc., et al., Class Action Complaint
004026, Ct. Comm. Pleas, Philadelphia Cty., PA (nationwide class
action for medical monitoring, personal injuries and injunctive
relief); Wax, et al. v. Abbott, et al., No. CV 02 2018, U.S.D.C.,
E.D.N.Y. (nationwide class on behalf of all persons residing in
the U.S. who were exposed to thimerosal); Castaldi et al. v.
Aventis Pasteur Inc., et al., Master Complaint No. 2,
Coordination Proceeding, The Vaccine Cases, No. 4246, Super. Ct.,
Los Angeles Cty., CA (statewide class for medical monitoring).
The Company is in the process of filing motions to dismiss in all of
the cases for failure of the minor plaintiffs to file in the first
instance under the National Vaccine Injury Compensation Program (the
"Vaccine Act"). The Vaccine Act mandates that plaintiffs alleging
injury from childhood vaccines first bring a claim under the Vaccine
Act. At the conclusion of that proceeding, the plaintiff may bring a
lawsuit in state or federal court. In July 2002, the United States
Court of Federal Claims, which handles all cases brought under the
Vaccine Act, issued Autism General Order #1 (the "Order") accepting
jurisdiction of the thimerosal matters by establishing an Omnibus
Autism Proceeding, which allows petitioners who claim to suffer from
autism or autism spectrum disorder as a result of receiving
thimerosal-containing childhood vaccines the chance to proceed
pursuant to a two-step procedure that will occur over a period of
two years. The first step will be an inquiry into the general
causation issues involved in the cases; the second step will entail
the application of the general causation conclusions to the
individual cases. Petitioners claiming injury from thimerosal in
childhood vaccines are not required, however, to proceed under the
Order and may continue to pursue claims under the Vaccine Act in the
normal course, which may allow petitioners to proceed in state or
federal court after the expiration of 240 days. In addition to the
claims brought by or on behalf of children allegedly injured by
exposure to thimerosal, certain of the approximately 230 thimerosal
cases have been brought by parents in their individual capacities,
for loss of services and loss of
I-21
consortium of the injured child. These claims are not currently
covered by the Vaccine Act, although every court that has
addressed this issue has determined that it is appropriate to
stay such claims when there is a related claim pending under the
Vaccine Act. To the extent a claim is asserted for loss of
consortium that is not linked to a claim filed under the Vaccine
Act, it is possible that courts will allow such parental claims
to proceed in state or federal court.
The Company is unable at the present time to estimate a range of
potential exposure, if any, with respect to the NORPLANT, PREMPRO,
DURACT, needlestick, PPA, and thimerosal litigations.
In 2000, the Company entered into a consent decree with the FDA
relating to the manufacturing of products by the Company at its
facilities in Marietta, Pennsylvania and Pearl River, New York. This
matter is discussed in greater detail under the caption
"Regulation," herein, which discussion is incorporated herein by
reference.
On July 7, 1997, plaintiffs were awarded $44 million in
compensatory damages and $1 million in punitive damages in an
action, which was commenced in U.S. District Court in August 1993
(University of Colorado et al. v. American Cyanamid Company, Docket
No. 93-K-1657, U.S.D.C., D. Col.). The plaintiffs had accused
American Cyanamid Company of misappropriating the invention of,
and patenting as its own, the formula for the current MATERNA
multi-vitamins. The complaint also contained allegations of
conversion, fraud, misappropriation, wrongful naming of inventor,
and copyright and patent infringement. The patent, whose ownership
and inventorship is in dispute, was granted to Cyanamid in 1984. The
Court had previously granted Cyanamid's summary judgment motions
dismissing all counts for relief except for unjust enrichment and
fraud, which were the issues tried before the court in a three-week
bench trial in May 1996. Although the plaintiffs had earlier been
granted summary judgment on their copyright infringement claim, the
court declined to award plaintiffs damages on that claim.
Plaintiffs' post-trial motions seeking to increase the damages to
approximately $111 million (allegedly representing Cyanamid's
gross profit for 1982-1995 from the sale of the reformulated MATERNA
product) and to recover approximately $0.8 million of attorneys'
fees were denied. In November 1999, the Court of Appeals affirmed in
part and vacated in part the District Court's judgment, and remanded
this case to the District Court for further proceedings. Under this
ruling, the $45 million judgment against the Company was vacated.
Following remand, the District Court conducted an oral hearing on
the inventorship issue and, in March 2001, a trial on damages issues
was held. The District Court concluded that University of Colorado
employees are the sole inventors of the disputed patent. In August
2002, the District Court handed down its final findings of fact and
conclusion of law and entered its judgment awarding plaintiffs
compensatory damages of $55.7 million plus punitive damages of $1
million. The Company has appealed to the U.S. Court of Appeals for
the Federal Circuit, appealing the District Court's earlier holding
of liability (i.e., that the University of Colorado employees are
the sole inventors of the MATERNA formulation patent) as well as the
damage awards.
In September 2002, Israel Bio-Engineering Project ("IBEP") filed
an action against Amgen, Immunex, the Company and one of the
Company's subsidiaries (Israel Bio-Engineering Project v. Amgen,
Inc. et al., Docket No.02-6860 RGK, U.S.D.C., C.D.Ca.) alleging
infringement of U.S. Patent 5,981,701, by the manufacture, offer
for sale, distribution and sale of ENBREL. IBEP is not the
assignee of record of this patent, but is alleging ownership.
IBEP has requested a jury trial. IBEP seeks an accounting of
I-22
damages and of any royalties or license fees paid to a third
party and seeks to have the damages trebled on account of alleged
willful infringement. IBEP also seeks to require the defendants
to take a compulsory non-exclusive license. The matter is in a
preliminary stage. The Company intends, and Amgen has advised the
Company that it intends, to vigorously defend this litigation.
Under its agreement with Amgen for the promotion of ENBREL, the
Company has an obligation to pay a portion of the patent
litigation expenses related to ENBREL in the U.S. and Canada as
well as a portion of any damages or other monetary relief awarded
in such patent litigation.
On March 24, 2003, the Company filed suit in the United States
District Court for the District of New Jersey against Teva
Pharmaceuticals, USA (Wyeth v. Teva Pharmaceuticals, USA, Inc.,
Docket No. 03-CV-1293 (KSH), U.S.D.C., D. N.J.) alleging that the
filing of an ANDA by Teva seeking FDA approval to market 37.5 mg,
75 mg and 150 mg Venlafaxine HCl Extended-Release Capsules
infringes certain of the Company's patents. Venlafaxine is the
generic name for EFFEXOR. The patents involved in the litigation
relate to extended release formulations of venlafaxine and/or
methods of their use. These patents expire in 2017. Teva has
asserted that these patents are invalid and/or not infringed.
Under the 30-month stay provision of the Hatch-Waxman Act, any
FDA approval of Teva's ANDA cannot be made effective before
August 2005 unless the court earlier decides that the patents are
invalid or not infringed. Teva has not, to date, made any
allegations as to the Company's patent covering the compound,
venlafaxine. Accordingly, Teva's ANDA may further not be approved
until the expiration of that patent, and its associated pediatric
exclusivity period, on June 13, 2008.
On March 14, 2003, Aventis Pharma Deutchland and King
Pharmaceuticals, Inc. filed a patent infringement suit against
Cobalt Pharmaceuticals in the United States District Court for
the District of Massachusetts (Aventis Pharma Deutschland GmbH
and King Pharmaceuticals, Inc. v. Cobalt Pharmaceuticals Inc.,
Docket No. 03-10492JLT, U.S.D.C., D. Mass.) alleging that Cobalt
infringes an Aventis patent, which expires in October 2008, by
filing an ANDA with the FDA seeking approval to market generic
1.25 mg, 2.5 mg, 5 mg and 10 mg ramipril capsules. The Company
co-promotes ALTACE (ramipril) together with King Pharmaceuticals,
Inc. The patent at issue in this litigation concerns the compound
ramipril. Cobalt has alleged that this patent is invalid. Under
the 30-month stay provision of the Hatch-Waxman Act, any FDA
approval of Cobalt's ANDA cannot be made effective before August
2005, unless the court earlier finds the patent invalid or not
infringed. The suit does not concern a second patent, which also
covers ramipril, that expires in January 2005. Cobalt has stated
that it is not seeking FDA approval until this second patent
expires in January 2005.
Schering Corporation has appealed to the U.S. Court of Appeals
for the Federal Circuit the decision in August 2002 in favor of
the Company by the U.S. District Court for the District of New
Jersey that claims 1 and 3 of Schering's patent claiming a
metabolite of loratadine were invalid. Schering Corp. v. Geneva
Pharmaceuticals, Inc., et al., Docket Numbers 02-1545 and
02-1549, U.S.C.A., Fed. Cir. The Company had been sued by
Schering for infringing this patent as a result of filing
applications with the FDA seeking
I-23
to market generic and over-the-counter loratadine products. Oral
argument on Schering's appeal is scheduled for April 8, 2003.
The Company has been named as a defendant in eight lawsuits
alleging Medicare fraud arising out of the alleged manipulation
of the Average Wholesale Price ("AWP") of Medicare Part B
"Covered Drugs." The first case, Citizens for Consumer Justice,
et al. v. Abbott Laboratories, Inc., et al., No. OICV-12257,
U.S.D.C., E.D. Mass., is a putative class action filed in
December 2001 by several consumer public interest groups and
names as defendants the Company and 27 other pharmaceutical
manufacturers. Each of the companies is alleged to have
artificially inflated the AWP of its Medicare Covered Drugs. AWP
is the basis for the price at which Medicare reimburses
practitioners for drugs and the complaint alleges that it is
often significantly higher than the actual price paid by the
practitioner. Plaintiffs claim that their members who purchased
Covered Drugs and paid a 20% co-payment under the Medicare
reimbursement rules were injured by the allegedly-inflated AWPs.
The Complaint alleges that defendants have engaged in a civil
conspiracy under the Racketeer Influenced and Corrupt
Organizations Act ("RICO") and also alleges violations of federal
antitrust laws. Recently, plaintiffs in the Citizens for Consumer
Justice case filed an Amended Consolidated Complaint that does
not name Wyeth as a defendant. No claims are therefore currently
pending against the Company in this matter. The Company has,
however, been named as a defendant in several similar cases, as
described below. The federal Judicial Panel on Multidistrict
Litigation has ordered that these cases be transferred to
the Honorable Patti Saris, U.S.D.J., the judge handling the
Citizens for Consumer Justice case. Rice, et al. v. Wyeth, et
al., No. CO2-3925 MJJ, U.S.D.C., N.D. Cal.; Virag, et al. v.
Wyeth, et al., No. 02-8417 RSWL (VBK), U.S.D.C., N.D. Cal.; and
Turner, et al. v. Wyeth, et al., No. 412357, Super. Ct., San
Francisco Cty., CA, are all putative class actions on behalf of
California patients and third party payers who allegedly have
been injured by the defendants' alleged manipulation of the AWPs
for their pharmaceutical products. All these cases seek equitable
and injunctive relief, including restitution under California's
unfair and deceptive practices statute. A similar case, Swanston,
et al., v. Abbott Laboratories, Inc., et al., No.
CV-03-0062-PHX-SMM, U.S.D.C., D. Ariz., seeks similar relief on
behalf of a putative class of Arizona residents. In addition, the
Company has been named as a defendant in three lawsuits
instituted by state attorneys general claiming injuries on behalf
of both the state and its citizens. State of Montana v. Wyeth, et
al., No. CV 02-09-H-DWM, U.S.D.C., D. Mont.; State of Nevada v.
Wyeth et al., No. CV-N-02-0202, U.S.D.C., D. Nev.; State of
California, et al. v. Wyeth, et al., No. BC 287198 A, Super. Ct.,
Los Angeles Cty., CA. A suit making similar claims has been
instituted by Suffolk County, New York: County of Suffolk v.
Wyeth, et al., No. CV 03 229, U.S.D.C., E.D.N.Y. With the
exception of the State of California case, all of these cases are
either now or shortly will be pending in federal court and are in
the process of being transferred to the United States District
Court for the District of Massachusetts pursuant to order of the
JPML. Plaintiffs are resisting the removal of these matters to
federal court and the subsequent transfers to the MDL
proceedings, so far without success.
In September 2000, Duramed Pharmaceuticals, Inc., a manufacturer
of a hormone replacement therapy called Cenestin(R) that has
since been acquired by Barr Laboratories, Inc., filed a complaint
against the Company (Duramed Pharmaceuticals, Inc. v.
Wyeth-Ayerst Laboratories, Inc., No.-C-1-00-735, U.S.D.C., S.D.
Ohio), alleging that the
I-24
Company violated the antitrust laws through the use of exclusive
contracts and "disguised" exclusive contracts in the sale of
PREMARIN to managed care organizations. The complaint also alleges
that the Company attempted to monopolize and monopolized the hormone
replacement therapy market in violation of the antitrust laws
through the use of such alleged exclusive contracts. The District
Court has dismissed allegations that the Company misled the FDA
about Cenestin(R) in order to exclude competition to PREMARIN.
The Company and Barr Laboratories, Inc. have reached an agreement in
principle to enter into a transaction in which, inter alia, Barr
will acquire rights to several currently marketed Wyeth products and
a sublicense for a compound in development. As part of that
agreement in principle, the Company and Barr also agreed to settle
the Duramed action. The proposed transaction has cleared the
mandatory waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. Based on the parties' agreement in
principle to settle the litigation, the Court dismissed the Duramed
action with prejudice. The amended dismissal order provides that
either party may reopen the action by May 15, 2003 if the settlement
is not consummated.
Following the filing of the Duramed case, seven putative class
action lawsuits were filed on behalf of "end-payors" (defined as the
last persons and entities in the chain of distribution) and direct
purchasers in federal district courts in Ohio and New Jersey and in
California state courts alleging that the Company violated federal
and state antitrust laws through alleged exclusionary practices
involving PREMARIN and the Company's contracts with managed care
organizations and pharmacy benefit managers. Due to certain
consolidations in the Ohio federal district court, four putative
class actions are presently pending against the Company. Two
putative class actions, one direct purchaser and one indirect
purchaser, are pending in Ohio federal district court, and two
putative indirect purchaser class actions are pending in California
state courts. Plaintiffs' motions for class certification are
pending and have yet to be addressed by the courts. The complaints
seek injunctive relief, damages, and disgorgement of profits. The
Company believes that its contracts involving PREMARIN do not
violate state or federal laws.
The Company has been a party to a number of lawsuits brought on
behalf of retail pharmacies and retail drug and grocery chains,
which were filed in various federal and state courts against many
pharmaceutical manufacturers and wholesalers. These cases allege
that the Company and other defendants provided discriminatory prices
and promotional allowances to managed care organizations and others
in violation of the Robinson-Patman Act and/or that the defendants
engaged in collusive conduct related to the alleged discriminatory
pricing in violation of the Sherman Antitrust Act as well as certain
other violations of common law principles of unfair competition.
These cases are similar to litigation previously settled by the
Company, including a class action suit settled in 1996, In re Brand
Name Prescription Drugs Antitrust Litigation, MDL 997 (N.D. Ill.).
Cases with similar allegations have been filed in state courts on
behalf of purported classes of consumer purchasers. In 2002, the
Company settled or was dismissed from all remaining state court
cases. Three cases remain pending in federal court against the
Company. These cases involve plaintiffs that had opted out of the
federal class action settlements. The Company believes that its
pricing practices did not violate antitrust or other laws and is
defending the remaining cases.
I-25
Plaintiffs have filed numerous lawsuits in federal and state courts
alleging civil claims relating to the settlement by the Company of
patent infringement litigation with Schering-Plough Corporation
concerning a generic version of Schering-Plough's K-Dur potassium
chloride product. The Company is aware of approximately forty-five
such lawsuits that have been filed against the Company. Forty-one of
these lawsuits are currently pending in federal court. Thirty-five
of these federal cases have been consolidated as part of federal
multidistrict litigation being conducted in the United States
District Court for the District of New Jersey (In re K-Dur Antitrust
Litigation, MDL 1419, D. N.J.). The remaining federal cases have
been or will be coordinated as part of the multidistrict
consolidated litigation.
In two of these cases, plaintiffs allege to be direct purchasers of
K-Dur, or claim to be assignees of direct purchasers of K-Dur. One
of these direct-purchaser cases is brought as a purported class
action on behalf of direct purchasers of K-Dur nationwide. In
forty-one cases, plaintiffs claim to be indirect purchasers or
end-payors of K-Dur or to be bringing suit on behalf of such
indirect purchasers. These indirect-purchaser cases are brought as
purported class actions on behalf of various groups of indirect
purchasers. Some of these cases claim to be brought on behalf of
indirect purchasers nationwide, while others purport to be brought
on behalf of indirect purchasers from specified states or groups of
states. One case is brought by the Commonwealth of Pennsylvania,
through its Attorney General, on behalf of all persons, departments,
agencies, and bureaus of the Commonwealth who purchased K-Dur or
reimbursed such purchases.
Generally, plaintiffs claim that a 1998 settlement agreement between
the Company and Schering-Plough that resolved a patent infringement
action unlawfully delayed the market entry of generic competition
for K-Dur, and that this caused plaintiffs and others to pay higher
prices for potassium chloride supplements than plaintiffs claim they
would have paid without the patent case settlement. Plaintiffs claim
that this settlement restrained trade and constituted an agreement
to allow Schering-Plough to monopolize the potassium chloride
supplement markets.
Based on these allegations, plaintiffs assert claims under federal
and state antitrust laws, various other state statutes including
unfair competition laws and consumer protection statutes, and under
common law theories such as unjust enrichment. Plaintiffs seek
various forms of relief including damages in excess of $100 million,
treble damages, restitution, disgorgement, declaratory and
injunctive relief, and attorneys' fees. The Company has reached a
settlement with direct purchasers representing approximately 23% of
direct purchases.
The Florida Attorney General's Office has initiated an inquiry into
whether the Company's settlement with Schering-Plough violates
Florida's antitrust laws. The Company has cooperated with the
Attorney General's requests for documents and other information.
The Company believes that its settlement of the patent infringement
action with Schering-Plough did not violate any laws, including
federal or state antitrust laws.
I-26
In 1999, the Brazilian Administrative Economic Defense Agency
("SDE") and local police authorities initiated investigations of
Laboratories Wyeth-Whitehall Ltda. and other pharmaceutical
companies concerning possible violation of Brazilian competition
laws. SDE alleges that the companies sought to establish uniform
commercial policies regarding wholesalers and refused to sell
product to wholesalers that distribute generic products manufactured
by certain Brazilian pharmaceutical companies. Additionally,
administrative investigations by SDE are looking at allegations that
the Company and other pharmaceutical companies violated Brazilian
antitrust and consumer protection laws by raising prices unlawfully.
The Company has provided information both to SDE and to police
authorities. The police authorities have terminated their
investigation, concluding that the companies were not engaged in any
illegal action. The SDE investigation is still being carried out.
Following a 1999 application from certain drug wholesalers alleging
that Wyeth South Africa Pty. Ltd. and certain other pharmaceutical
companies violated South Africa's competition law, the Competition
Commission in South Africa filed a referral with the Competition
Tribunal, which alleges that International Health Distributors
("IHD") has violated South Africa's competition law. IHD, which is a
joint venture of eleven pharmaceutical companies (including Wyeth
South Africa), provides distribution services for the joint venture
members. The Commission's referral alleges that IHD members have
engaged in various prohibited practices. Certain wholesalers in
South Africa also sued IHD and its members based on similar
allegations. Generally, the Commission's referral and the
wholesalers' action seek changes in distribution practices, certain
structural changes in the joint distribution company, and civil
penalties or damages. Wyeth South Africa has reached an agreement to
settle the claims alleged by the wholesalers. The Competition
Commission's action is still pending.
Based on a referral from the United Kingdom Office of Fair Trading,
which conducted a year-long inquiry, the UK Competition Commission
is investigating the pricing and distribution practices of Fort
Dodge Animal Health and other animal health suppliers in the UK. The
inquiry is focusing on the rebate practices of animal health
suppliers, the price differential between certain animal health
products sold in the UK as opposed to other European countries and
the industry practice of selling to wholesalers but not directly to
pharmacists or veterinarians. The inquiry also is examining transfer
pricing for animal health products. The Commission has the authority
to order changes in business practices. The Company expects issuance
of the Competition Commission's final report in the near future.
The Antitrust Division of the United States Department of Justice
has impaneled a grand jury and has issued a subpoena to the Company
in connection with its investigation into allegations of collusive
activities with another pharmaceutical company. These allegations
relate to commission rates paid to a broker for a small segment of
the over-the-counter drug business, principally sales to off-shore
oil rigs, during 2001 and 2002. The Company is cooperating with the
Antitrust Division and believes that its activities regarding
brokers have not violated the antitrust laws.
I-27
The Securities and Exchange Commission ("SEC") is conducting an
investigation into allegations raised by a former employee of the
Company in a lawsuit claiming retaliation and constructive
discharge. These allegations relate, among other things, to
certain compensation-related tax issues in several foreign
jurisdictions. The Company is cooperating fully with the SEC and
believes that these mattters will not result in material
liability to the Company.
The Federal Trade Commission is conducting a preliminary
investigation into licensing agreements involving other
pharmaceutical companies and the Company relating to the research,
manufacture and sale of Recombinant Factor VIII products. The
Company is cooperating with the Commission and believes that its
agreements concerning its Recombinant Factor VIII products do not
violate the antitrust laws.
As discussed in Item 1., the Company is a party to, or otherwise
involved in, legal proceedings under CERCLA and similar state laws
directed at the cleanup of various sites including the
Cyanamid-owned Bound Brook, N.J. site. The Company's potential
liability varies greatly from site to site. For some sites, the
potential liability is de minimis and, for others, the final costs
of cleanup have not yet been determined. As assessments and cleanups
proceed, these liabilities are reviewed periodically and are
adjusted as additional information becomes available. Environmental
liabilities are inherently unpredictable. The liabilities can change
substantially due to such factors as additional information on the
nature or extent of contamination, methods of remediation required
and other actions by governmental agencies or private parties.
The Company's Wyeth Medica Ireland ("WMI") subsidiary has received a
summons filed in the Irish High Court in Dublin by Schuurmans & Van
Ginneken ("SvG"), a Netherlands-based molasses and liquid storage
concern. The summons puts WMI on notice that SvG intends to file a
formal complaint with the High Court alleging, inter alia, that WMI
conspired with its waste disposal contractors to improperly dispose
of a sugar water process stream that contained medroxyprogesterone
acetate ("MPA"). SvG purchased sugar recovered from that process
stream for use in its molasses refining operations. SvG has
indicated that it seeks compensation for the contamination and
disposal of up to 26,000 tons of molasses allegedly contaminated
with MPA. SvG further seeks compensation on behalf of an unspecified
number of its animal feed customers who are alleged to have used
contaminated molasses in their livestock feed formulations. The
summons does not specify the amount of damages sought.
On July 26, 2002, a Brazilian Federal Public Attorney filed a public
civil action against the Federal Government of Brazil, Laboratorios
Wyeth-Whitehall Ltda. ("LWWL"), a Brazilian subsidiary of the
Company, and Colgate Palmolive Company, as represented by its
Brazilian subsidiary, Kolynos do Brasil Ltda. ("Kolynos"), seeking
to nullify and overturn the April 11, 2000 decision by the Brazilian
First Board of Tax Appeals which had found that the capital gain of
LWWL from its divestiture of its oral healthcare business was not
taxable in Brazil. The action seeks to hold LWWL jointly and
severally liable with Kolynos and the Brazilian Federal Government.
The amount of taxes originally attributable to the transaction was
approximately $80 million. Management believes that this action is
without merit.
I-28
On January 10, 2003, the U.S. Court of Appeals for the District
of Columbia Circuit reversed a decision of the District Court
holding that the Company was entitled to refunds with respect to
taxes paid in the amount of approximately $227 million and
interest thereon (approximately $155 million) with respect to
losses claimed as a deduction for federal income tax purposes
arising from a partnership investment in Boca Investerings
Partnership (Boca Investerings Partnership v. U.S., Docket No.
01-5429, 314 F. 3rd 625, D.C. Cir. 2003). On March 26, 2003, the
Company's Petition for Panel Rehearing and Rehearing En Banc to
the U.S. Court of Appeals for the District of Columbia Circuit
were denied and remanded to the District Court for additional
proceedings consistent with the U.S. Court of Appeals' opinion.
The Company is considering a writ for certiorari to the U.S.
Supreme Court.
The Company intends to defend all of the foregoing litigation
vigorously.
In the opinion of the Company, although the outcome of any
litigation cannot be predicted with certainty, the ultimate
liability of the Company in connection with pending litigation and
other matters described above will not have a material adverse
effect on the Company's financial position but could be material to
the results of operations and cash flows in any one accounting
period.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
I-29
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF MARCH 15, 2003
- ---------------------------------------------------------
Each officer is elected to hold office until a successor is chosen or until
earlier removal or resignation. None of the executive officers is related to
another:
Elected to
Name Age Offices and Positions Office
---- --- --------------------- ------
Robert Essner 55 Chairman of the Board, President May 2001
and Chief Executive Officer
Member of Executive Committee,
Chairman of Management,
Law/Regulatory Review,
Operations, Human Resources and
Benefits and Retirement
Committees
Business Experience: To March 1997, President,
Wyeth-Ayerst Laboratories, U.S.
Pharmaceuticals Business
March 1997 to September 1997,
President, Wyeth-Ayerst Global
Pharmaceuticals
September 1997 to July 2000,
Executive Vice President
July 2000 to May 2001, President
and Chief Operating Officer
May 2001 to December 2002,
President and Chief Executive
Officer
January 2003 to date, Chairman of
the Board, President and Chief
Executive Officer
Louis L. Hoynes, Jr. 67 Executive Vice President and July 2000
General Counsel
Member of Management,
Law/Regulatory Review,
Operations, Human Resources
and Benefits and Retirement
Committees
Business Experience: 1991 to July 2000, Senior Vice
President and General Counsel
July 2000 to date, Executive Vice
President and General Counsel
I-30
Elected to
Name Age Offices and Positions Office
---- --- --------------------- ------
Kenneth J. Martin 49 Executive Vice President and February 2000
Chief Financial Officer
Member of Management,
Law/Regulatory Review,
Operations, Human Resources
and Benefits and Retirement
Committees
Business Experience: To October 1996,
President, American Home Foods
November 1996 to February 1997,
President, International Home
Foods, Inc.
February 1997 to March 1997,
Executive Vice President,
Wyeth-Ayerst International
March 1997 to September 1998,
President, Whitehall-Robins
October 1998 to January 2000,
Senior Vice President and Chief
Financial Officer, Wyeth-Ayerst
Pharmaceuticals
February 2000 to June 2002,
Senior Vice President and
Chief Financial Officer
June 2002 to date, Executive Vice
President and Chief Financial
Officer
Bernard J. Poussot 51 Executive Vice President and January 2001
President,
Wyeth Pharmaceuticals
Member of Management,
Law/Regulatory Review,
Operations and Human Resources
and Benefits Committees
Business Experience: January 1996 to September 1997,
President, Wyeth-Ayerst
International
September 1997 to January 2001,
President, Wyeth-Ayerst
Pharmaceuticals
January 2001 to June 2002, Senior
Vice President and President,
Wyeth Pharmaceuticals
June 2002 to date, Executive Vice
President and President, Wyeth
Pharmaceuticals
I-31
Elected to
Name Age Offices and Positions Office
---- --- --------------------- ------
Lawrence V. Stein 53 Senior Vice President and Deputy June 2001
General Counsel
Member of Law/Regulatory Review
and Operations Committees
Business Experience: November 1992 to September 1997,
Senior Vice President and
General Counsel, Genetics
Institute
September 1997 to July 2000,
Associate General Counsel and
Senior Vice President and Chief
Legal Counsel, Wyeth-Ayerst and
Genetics Institute
July 2000 to June 2001, Vice
President and Deputy
General Counsel
June 2001 to date, Senior Vice
President and Deputy
General Counsel
Paul J. Jones 57 Vice President and Comptroller April 1995
Member of Law/Regulatory Review
and Operations Committees
Business Experience: April 1995 to date, Vice President
and Comptroller
Rene R. Lewin 56 Vice President - Human Resources May 1994
Member of Management,
Law/Regulatory Review,
Operations, Human Resources and
Benefits and Retirement
Committees
Business Experience: May 1994 to date, Vice President -
Human Resources
I-32
Elected to
Name Age Offices and Positions Office
---- --- --------------------- ------
Marily H. Rhudy 55 Vice President - Public Affairs September 1997
Member of Management and
Operations Committees
Business Experience: April 1994 to March 1997, Vice
President - Public Affairs,
Wyeth-Ayerst Laboratories
Division
March 1997 to September 1997, Vice
President - Global Public
Affairs, Wyeth-Ayerst Global
Pharmaceuticals
September 1997 to date, Vice
President - Public Affairs
E. Thomas Corcoran 55 President, Fort Dodge Animal September 1995
Health Division
Member of Management,
Operations and Human Resources
and Benefits Committees
Business Experience: September 1995 to date, President,
Fort Dodge Animal Health
Division
Ulf Wiinberg 44 President, Wyeth Consumer February 2002
Healthcare
Member of Management,
Law/Regulatory Review,
Operations, and Human Resources
and Benefits Committees
Business Experience: To May 1997, Area Vice President
for Africa and the Middle East,
Wyeth-Ayerst
May 1997 to February 2002, Managing
Director of the United Kingdom
subsidiary of Wyeth-Ayerst
Pharmaceuticals
February 2002 to date, President,
Wyeth Consumer Healthcare
I-33
Elected to
Name Age Offices and Positions Office
---- --- --------------------- ------
Joseph M. Mahady 49 Senior Vice President and September 1997
President, Wyeth
Pharmaceuticals - North America
Member of Management and
Operations Committees
Business Experience: September 1997 to June 2002,
President, Wyeth
Pharmaceuticals - North America
June 2002 to date, Senior Vice
President and President, Wyeth
Pharmaceuticals - North America
Robert R. Ruffolo, Jr. 52 Senior Vice President and June 2002
President, Wyeth Research
Member of Management,
Law/Regulatory Review,
Operations and Human Resources
and Benefits Committees
Business Experience: To November 2000, Senior Vice
President and Director,
Biological Sciences, SmithKline
Beecham
November 2000 to June 2002,
Executive Vice President,
Pharmaceutical Research and
Development, Wyeth Research
June 2002 to date, Senior Vice
President and President, Wyeth
Research
Robert N. Power 46 President, Wyeth Pharmaceuticals - June 2002
International
Member of Management and
Operations Committees
Business Experience: March 1998 to June 2002, President,
Wyeth Pharmaceuticals -
Europe/Middle East/Africa
June 2002 to date, President, Wyeth
Pharmaceuticals - International
I-34
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
------------------------------------------------
STOCKHOLDER MATTERS
-------------------
The New York Stock Exchange is the principal market on which the
Company's Common Stock is traded. Tables showing the high and low
sales price for the Common Stock, as reported in the consolidated
transaction reporting system, and the dividends paid per common
share for each quarterly period during the past two years, as
presented in Market Prices of Common Stock and Dividends on page 54
of the Company's 2002 Annual Report to Stockholders, are
incorporated herein by reference.
There were 61,111 holders of record of the Company's Common Stock as
of the close of business on March 3, 2003.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The data with respect to the last five fiscal years, appearing in
the Ten-Year Selected Financial Data presented on pages 26 and 27 of
the Company's 2002 Annual Report to Stockholders, are incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations, appearing on pages 55 through 68 of the
Company's 2002 Annual Report to Stockholders, is incorporated herein
by reference.
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The Market Risk Disclosures as set forth in Management's Discussion
and Analysis of Financial Condition and Results of Operations,
appearing on page 65 of the Company's 2002 Annual Report to
Stockholders, are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The Consolidated Financial Statements and Notes to Consolidated
Financial Statements on pages 28 through 51 of the Company's 2002
Annual Report to Stockholders, the Reports of Independent
Accountants on page 52, and Quarterly Financial Data (Unaudited) on
page 54, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None.
II-1
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
(a) Information relating to the Company's directors is incorporated
herein by reference to pages 3 through 5 of a definitive proxy
statement filed with the Securities and Exchange Commission on March
18, 2003 ("the 2003 Proxy Statement").
(b) Information relating to the Company's executive officers as of March
15, 2003 is furnished in Part I hereof under a separate unnumbered
caption ("Executive Officers of the Registrant as of March 15,
2003").
(c) Information relating to certain filing obligations of directors and
executive officers of the Company under the federal securities laws
set forth on page 9 of the 2003 Proxy Statement under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Information relating to executive compensation is incorporated
herein by reference to pages 11 through 22 (excluding the
performance graph on page 19 and the Equity Compensation Plan
Information included on page 20) of the 2003 Proxy Statement.
Information with respect to compensation of directors is
incorporated herein by reference to pages 6 and 7 of the 2003 Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------
Information relating to security ownership is incorporated herein by
reference to pages 10 and 11 of the 2003 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
None.
ITEM 14. CONTROLS AND PROCEDURES
-----------------------
Within the 90 days prior to the date of filing this annual report on
Form 10-K, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management,
including the Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure
controls and procedures are reasonably effective in design and
practice to alert them, in a timely manner, to material information
relating to the Company (including its consolidated subsidiaries)
required to be included in the Company's periodic SEC filings.
Subsequent to the date of that evaluation, there have
III-1
been no significant changes in the Company's internal controls or
in other factors that could significantly affect internal
controls, nor were any corrective actions required with regard to
significant deficiencies or material weaknesses.
III-2
PART IV
-------
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
----------------------------------------------------------------
(a)1. Financial Statements
--------------------
The following Consolidated Financial Statements, Notes to
Consolidated Financial Statements and Reports of Independent
Accountants, included on pages 28 through 52 of the Company's 2002
Annual Report to Stockholders, are incorporated herein by reference.
Pages
-----
Consolidated Balance Sheets as of
December 31, 2002 and 2001 28
Consolidated Statements of Operations
for the years ended December 31,
2002, 2001 and 2000 29
Consolidated Statements of Changes in
Stockholders' Equity for the years ended
December 31, 2002, 2001 and 2000 30
Consolidated Statements of Cash Flows
for the years ended December 31, 2002,
2001 and 2000 31
Notes to Consolidated Financial Statements 32-51
Reports of Independent Accountants 52
(a)2. Financial Statement Schedule
----------------------------
The following consolidated financial information is included in
Part IV of this report:
Pages
-----
Reports of Independent Accountants on
Supplemental Schedule IV-10
Schedule II - Valuation and Qualifying Accounts
for the years ended December 31, 2002,
2001 and 2000 IV-11
Schedules other than those listed above are omitted because they are
not applicable.
IV-1
ITEM 15. (Continued)
(a)3. Exhibits
--------
Exhibit No. Description
----------- -----------
(2.1) Amended and Restated Agreement and Plan of Merger, dated as
of December 16, 2001, by and among Amgen, AMS Acquisition Inc.
and Immunex (filed as Annex A to Amendment No. 1 to Amgen's
Registration Statement on Form S-4 (File No. 333-81832) on March
22, 2002 and incorporated by reference to Exhibit 2.1 of the
Company's Form 10-Q for the quarter ended June 30, 2002).
(2.2) First Amendment to Amended and Restated Agreement and Plan of
Merger dated as of July 15, 2002, by and among Amgen, AMS
Acquisition Inc. and Immunex (filed as Exhibit 2.2 to
Post-Effective Amendment No. 1 to Amgen's Registration Statement
on Form S-4 (file No. 333-81832) on July 15, 2002 and incorporated
by reference to Exhibit 2.2 of the Company's Form 10-Q for the
quarter ended June 30, 2002).
(3.1) The Company's Restated Certificate of Incorporation is
incorporated by reference to Exhibit 3.1 of the Company's Annual
Report on Form 10-K for the year ended December 31, 2001.
(3.2) The Company's By-Laws is incorporated by reference to Exhibit 3.2
of the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
(4.1) Indenture, dated as of April 10, 1992, between the Company and The
Chase Manhattan Bank (successor to Chemical Bank), as Trustee, is
incorporated by reference to Exhibit 2 of the Company's Form 8-A
dated August 25, 1992 (File 1-1225).
(4.2) Supplemental Indenture, dated October 13, 1992, between the
Company and The Chase Manhattan Bank (successor to Chemical Bank),
as Trustee, is incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1992 (File 1-1225).
(4.3) Second Supplemental Indenture, dated as of March 30, 2001, between
the Company and The Chase Manhattan Bank (as successor to
Manufacturers Hanover Trust Company) is incorporated by reference
to Exhibit 4.3 of the Registration Statement of Form S-4 of the
Company filed on April 27, 2001.
(4.4) Third Supplemental Indenture, dated as of February 14, 2003,
between the Company and JPMorgan Chase Bank (as successor to
Manufacturers Hanover Trust Company).
(4.5) Amended and Restated Rights Agreement, dated as of January 8,
2002, by and between the Company and The Bank of New York, as
Rights Agent, with the form of Certificate of Designation attached
as Exhibit A thereto and the form of Right Certificate attached as
Exhibit B thereto is incorporated herein by reference to Exhibit
4.1 of the Company's Form 8-A/A, Amendment No. 2, dated January 8,
2002.
IV-2
(4.6) Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company is incorporated herein by reference
to Exhibit 4.2 of the Company's Form 8-A, dated October 14, 1999.
(10.1) Purchase Agreement, by and among American Cyanamid
Company, American Home Products Corporation and BASF
Aktiengesellschaft, dated as of March 20, 2000 is incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 2000 (Confidential
Treatment Requested - confidential portions have been omitted and
filed separately with the Commission).
(10.2) First Amendment to the Purchase Agreement, by and among American
Cyanamid Company, American Home Products Corporation, and BASF
Aktiengesellschaft dated as of June 30, 2000 is incorporated by
reference to Exhibit 10.2 to the Company's Current Report on Form
8-K filed on July 17, 2000 (Confidential Treatment Requested -
confidential portions have been omitted and filed separately with
the Commission).
(10.3) Exchange and Registration Rights Agreement, dated March
30, 2001, among the Company and Chase Securities Inc., Salomon
Smith Barney Inc., as Representatives of the several Initial
Purchasers, is incorporated by reference to Exhibit 4.4 of the
Registration Statement on Form S-4 of the Company filed on April
27, 2001.
(10.4) Second Amendment to the Purchase Agreement, by and among American
Cyanamid Company, American Home Products Corporation, and BASF
Aktiengesellschaft dated as of December 9, 2000 is incorporated by
reference to Exhibit 10.5 of the Company's Annual Report on Form
10-K for the year ended December 31, 2001. (Confidential Treatment
Requested - confidential portions have been omitted and filed
separately with the Commission).
(10.5) 3-Year Credit Agreement, dated as of March 3, 2003 among the
Company, the banks and other financial institutions from time to
time parties thereto and JPMorgan Chase Bank, as administrative
agent for the lenders thereto.
(10.6) 364 Day Credit Agreement, dated as of March 3, 2003 among the
Company, the banks and other financial institutions from time to
time parties thereto and JPMorgan Chase Bank, as administrative
agent for the lenders thereto.
(10.7) Stockholders' Rights Agreement, dated as of December 16,
2001, by and among Amgen, the Company, MDP Holdings, Inc. and
Lederle Parenterals, Inc. (filed as Annex C to Amendment No. 1 to
Amgen's Registration Statement on Form S-4 (File No. 333-81832)
on March 22, 2002 and incorporated by reference to Exhibit 10.1
of the Company's Form 10-Q for the quarter ended June 30, 2002).
(10.8) Shareholder Voting Agreement, dated as of December 16,
2001, among Amgen Inc., Wyeth (formerly American Home Products
Corporation), MDP Holdings, Inc. and Lederle Parenterals, Inc.
(incorporated by reference to Exhibit 2.2 of Immunex's Current
Report on Form 8-K filed December 17, 2001).
IV-3
(10.9)* 1990 Stock Incentive Plan is incorporated by reference to Exhibit
28 of the Company's Form S-8 Registration Statement File No.
33-41434 under the Securities and Exchange Act of 1933, filed June
28, 1991 (File 1-1225).
(10.10)* Amendment to the 1990 Stock Incentive Plan is incorporated by
reference to Exhibit 10.13 of the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (File 1-1225).
(10.11)* Amendment to the 1990 Stock Incentive Plan is incorporated by
reference to Exhibit 10.21 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (File 1-1225).
(10.12)* Amendment to the 1990 Stock Incentive Plan is incorporated by
reference to Exhibit 10.19 of the Company's Annual Report on Form
10-K for the year ended December 31, 2001.
(10.13)* 1993 Stock Incentive Plan, as amended to date, is incorporated by
reference to Appendix III of the Company's definitive Proxy
Statement filed March 18, 1999.
(10.14)* Amendment to the 1993 Stock Incentive Plan is incorporated by
reference to Exhibit 10.21 of the Company's Annual Report on Form
10-K for the year ended December 31, 2001.
(10.15)* 1996 Stock Incentive Plan, as amended to date, is incorporated by
reference to Appendix II of the Company's definitive Proxy
Statement filed March 18, 1999.
(10.16)* Amendment to the 1996 Stock Incentive Plan is incorporated by
reference to Exhibit 10.23 of the Company's Annual Report on Form
10-K for the year ended December 31, 2001.
(10.17)* 1999 Stock Incentive Plan is incorporated by reference to Appendix
I of the Company's definitive Proxy Statement filed March 18,
1999.
(10.18)* Amendment to 1999 Stock Incentive Plan is incorporated by
reference to Exhibit 10.25 of the Company's Annual Report on Form
10-K for the year ended December 31, 2001.
(10.19)* Form of Stock Option Agreement (phased vesting).
(10.20)* Form of Special Stock Option Agreement (three-year vesting) is
incorporated by reference to Exhibit 10.28 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 (File
1-1225).
(10.21)* Amendment to Special Stock Option Agreement is incorporated by
reference to Exhibit 10.30 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (File 1-1225).
(10.22)* Form of Stock Option Agreement (transferable options).
*Denotes management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
IV-4
(10.23)* Form of Restricted Stock Performance Award Agreement under the
1996 Stock Incentive Plan, 1999 Stock Incentive Plan and 2002
Stock Incentive Plan (initial award).
(10.24)* Form of Restricted Stock Performance Award Agreement under the
1996 Stock Incentive Plan, 1999 Stock Incentive Plan and 2002
Stock Incentive Plan (subsequent award).
(10.25)* Form of Special Stock Option Agreement with Robert Essner dated
June 21, 2001 (transferable option).
(10.26)* Form of Restricted Stock Award Agreement with Robert Essner dated
June 21, 2001 (cliff vesting).
(10.27)* Form of Restricted Stock Award Agreement with Robert Ruffolo dated
January 23, 2001 (phased vesting).
(10.28)* Restricted Stock Trust Agreement under the 1993 Stock Incentive
Plan is incorporated by reference to Exhibit 10.23 of the
Company's Annual Report on Form 10-K for the year ended December
31, 1995 (File 1-1225).
(10.29)* Management Incentive Plan, as amended to date is incorporated by
reference to Exhibit 10.27 of the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
(10.30)* 1994 Restricted Stock Plan for Non-Employee Directors, as amended
to date, is incorporated by reference to Exhibit 10.3 of the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2001.
(10.31)* Stock Option Plan for Non-Employee Directors is incorporated by
reference to Exhibit 10.2 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2001.
(10.32)* Form of Stock Option Agreement under the Stock Option Plan for
Non-Employee Directors is incorporated by reference to Exhibit
10.30 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.
(10.33)* Savings Plan, as amended, is incorporated by reference to Exhibit
10.37 of the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.
(10.34)* Retirement Plan for Outside Directors, as amended on January 27,
1994, is incorporated by reference to Exhibit 10.12 of the
Company's Annual Report on Form 10-K for the year ended December
31, 1993 (File 1-1225).
(10.35)* Directors' Deferral Plan as amended to date.
*Denotes management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
IV-5
(10.36)* Executive Incentive Plan is incorporated by reference to Appendix
D of the Company's definitive Proxy Statement, filed March 20,
2002.
(10.37)* Deferred Compensation Plan is incorporated by reference to Exhibit
10 of the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002.
(10.38)* Executive Retirement Plan is incorporated by reference to Exhibit
10.5 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002.
(10.39)* Supplemental Employee Savings Plan is incorporated by reference to
Exhibit 10.43 of the Company's Annual Report on Form 10-K for the
year ended December 31, 2001.
(10.40)* Supplemental Executive Retirement Plan is incorporated by
reference to Exhibit 10.6 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002.
(10.41)* 2002 Stock Incentive Plan is incorporated by reference to Appendix
C of the Company's definitive Proxy Statement, filed March 20,
2002.
(10.42)* American Cyanamid Company's Supplemental Executive Retirement Plan
is incorporated by reference to Exhibit 10K of American Cyanamid
Company's Annual Report on Form 10-K for the year ended December
31, 1988 (File 1-3426).
(10.43)* American Cyanamid Company's Supplemental Employees Retirement Plan
Trust Agreement, dated September 19, 1989, between American
Cyanamid Company and Morgan Guaranty Trust Company of New York is
incorporated by reference to Exhibit 10K of American Cyanamid
Company's Annual Report on Form 10-K for the year ended December
31, 1989 (File 1-3426).
(10.44)* American Cyanamid Company's ERISA Excess Retirement Plan is
incorporated by reference to Exhibit 10N of American Cyanamid
Company's Annual Report on Form 10-K for the year ended December
31, 1988 (File 1-3426).
(10.45)* American Cyanamid Company's Excess Retirement Plan Trust
Agreement, dated September 19, 1989, between American Cyanamid
Company and Morgan Guaranty Trust Company of New York is
incorporated by reference to Exhibit 10M of American Cyanamid
Company's Annual Report on Form 10-K for the year ended December
31, 1989 (File 1-3426).
(10.46)* Form of Severance Agreement entered into between the Company and
all executive officers is incorporated by reference to Exhibit
10.43 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 (File 1-1225).
*Denotes management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
IV-6
(10.47)* Agreement, dated as of March 6, 2001, by and between the Company
and John R. Stafford is incorporated by reference to Exhibit 10.1
of the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001.
(10.48)* Amendatory Agreement, dated as of March 6, 2001, by and between
the Company and John R. Stafford is incorporated by reference to
Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2001.
(10.49)* Union Savings Plan is incorporated by reference to Exhibit 10.54
of the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
(10.50)* Equity Loan Agreement and Promissory Noted, dated April 9, 2002,
between the Company and Ulf Wiinberg.
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) 2002 Annual Report to Stockholders. Such report, except for those
portions thereof which are expressly incorporated by reference
herein, is furnished solely for the information of the Commission
and is not to be deemed "filed" as part of this filing.
(16) Letter from Arthur Andersen LLP to the Securities and Exchange
Commission, dated March 18, 2002, is incorporated by reference to
Exhibit to the Company's Current Report on Form 8-K, dated March
18, 2002.
(21) Subsidiaries of the Company.
(23) Consent of Independent Public Accountants, PricewaterhouseCoopers
LLP, relating to their report dated January 27, 2003, except for
Note 16 which is as of March 3, 2003, consenting to the
incorporation thereof in Registration Statements on Form S-3
(File Nos. 33-45324 and 33-57339), Form S-4 (File No. 333-59642)
and on Form S-8 (File Nos. 2-96127, 33-24068, 33-41434, 33-53733,
33-55449, 33-45970, 33-14458, 33-50149, 33-55456, 333-15509,
333-76939, 333-67008, 333-64154, 333-59668, 333-89318, 333-98619
and 333-98623) by reference to the Form 10-K of the Company filed
for the year ended December 31, 2002.
(99) Cautionary Statements regarding "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995.
(99.1) Letter to the Securities and Exchange Commission regarding Arthur
Andersen LLP (pursuant to Temporary Note 3T) is incorporated by
reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.
(99.2) Final Nationwide Class Action Settlement Agreement, dated November
18, 1999, as amended to date is incorporated by reference to
Exhibit 99.1 of the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2000.
*Denotes management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
IV-7
(99.3) Fifth Amendment, dated November 21, 2002, to Final Nationwide
Class Action Settlement Agreement, dated November 18, 1999, as
amended.
(99.4) Sixth Amendment, dated January 10, 2003, to Final Nationwide Class
Action Settlement Agreement, dated November 18, 1999, as amended.
(99.5) Consent Decree, dated October 3, 2000, is incorporated by
reference to Exhibit 99.2 of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2000.
(99.6) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
incorporated by reference to Exhibit 99.1 of the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002.
(99.7) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
incorporated by reference to Exhibit 99.2 of the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002.
(99.8) Statement Under Oath made by Robert Essner, dated August 8, 2002,
pursuant to the Securities and Exchange Commission Order Requiring
the Filing of Sworn Statements pursuant to Section 21 (a)(1) of
the Securities Exchange Act of 1934 (SEC File No. 4-460)
incorporated by reference to Exhibit 99.1 of the Company's Current
Report on Form 8-K, dated August 8, 2002.
(99.9) Statement Under Oath made by Kenneth J. Martin, dated August 8,
2002, pursuant to the Securities and Exchange Commission Order
Requiring the Filing of Sworn Statements pursuant to Section 21
(a)(1) of the Securities Exchange Act of 1934 (SEC File No. 4-460)
incorporated by reference to Exhibit 99.2 of the Company's Current
Report on Form 8-K, dated August 8, 2002.
(99.10) Press Release reporting Wyeth's earnings results for the 2002
Fourth Quarter and Full Year is incorporated by reference to
Exhibit 99 of the Company's Current Report on Form 8-K dated
January 28, 2003.
(99.11) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
incorporated by reference to Exhibit 99.4 of the Company's
Amendment to Form 10-K Annual Report for the year ended December
31, 2001 on Form 10-K/A, dated December 23, 2002.
(99.12) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
incorporated by reference to Exhibit 99.5 of the Company's
Amendment to Form 10-K Annual Report for the year ended December
31, 2001 on Form 10-K/A, dated December 23, 2002.
(99.13) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.14) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
IV-8
(99.15) Amended and Restated Promotion Agreement, dated as of December 16,
2001, by and between Immunex, the Company and Amgen Inc. (filed as
Exhibit 10.1 to Amgen's Registration Statement on Form S-4 (File
No. 333-81832) on January 31, 2002 and incorporated by reference
to Exhibit 99.2 of the company's Current report on form 8-K, dated
July 29, 2002).
(b) Reports on Form 8-K
-------------------
The following Current Reports on Form 8-K or Form 8-K/A were filed
by the Company:
o December 12, 2002 relating to the exchange of Immunex shares
for Amgen common stock in the acquisition of Immunex by
Amgen and the subsequent sales of a portion of the Company's
Amgen common stock holdings (including disclosure on Item
2).
o December 23, 2002 to amend the March 13, 2002 current report
on Form 8-K to delete Item 5 and replace it with Item 9.
o January 28, 2003 relating to the exchange of Immunex shares
for Amgen common stock in the acquisition of Immunex by
Amgen and the subsequent sales of the Company's remaining
Amgen common stock holdings (including disclosure on Item
2).
o January 28, 2003 to file the Company's 2002 Fourth Quarter
and Full Year Press Release.
o March 13, 2003 relating to furnishing Wyeth's 2002 Annual
Report to Stockholders.
IV-9
REPORTS OF INDEPENDENT ACCOUNTANTS
----------------------------------
To the Board of Directors of Wyeth:
Our audit of the consolidated financial statements referred to in our report
dated January 27, 2003, except for Note 16 which is as of March 3, 2003,
included in Wyeth's Annual Report to Stockholders incorporated by reference in
the Form 10-K also included an audit of the financial statement schedule listed
in Item 15(a)2 of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. The 2000 financial statement schedule information of the Company was
audited by other independent accountants who have ceased operations. Those
independent accountants expressed an unqualified opinion on that financial
statement schedule information in their report dated January 24, 2002.
PricewaterhouseCoopers LLP
Florham Park, NJ
January 27, 2003
The following is a copy of a report issued by Arthur Andersen LLP and included
in the 2001 Form 10-K report filed on March 29, 2002. This report has not been
reissued by Arthur Andersen LLP and Arthur Andersen LLP has not consented to its
use in this Annual Report on Form 10-K.
To the Board of Directors and Stockholders of Wyeth:
We have audited in accordance with auditing standards generally accepted
in the United States, the consolidated financial statements included in Wyeth's
(formerly American Home Products Corporation) Annual Report to Stockholders
incorporated by reference in this Form 10-K, and have issued our report thereon
dated January 24, 2002. Our audit was made for the purpose of forming an opinion
on those statements taken as a whole. The schedule listed in the accompanying
index is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. The schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
January 24, 2002
IV-10
Wyeth and Subsidiaries
Schedule II - Valuation and Qualifying Accounts For the
Years Ended December 31, 2002, 2001 and 2000
(Dollars in thousands)
Column A Column B Column C Column C Column D Column E
(1) (2)
Balance at Additions- Balance
Beginning Charged to at end of
Description of Period Expense Adjustments(A) Deductions Period
- ------------------------------------ ---------- ---------- ----------- ---------- ---------
Year ended 12/31/02:
- ------------------------------------
Allowance for doubtful accounts $ 99,300 $ 5,969 $ - $ 1,354 $ 103,915
Allowance for cash discounts 31,434 219,354 - 222,361 28,427
---------- ---------- ----------- ---------- ---------
Total accounts receivable allowances $ 130,734 $ 225,323 $ - $ 223,715 $ 132,342
========== ========== =========== ========== =========
Allowance for deferred tax asssets $ 49,582 $ - $ - $ 945 $ 48,637
========== ========== =========== ========== =========
Year ended 12/31/01:
- ------------------------------------
Allowance for doubtful accounts $ 114,003 $ 17,257 $ - $ 31,960 $ 99,300
Allowance for cash discounts 30,147 219,995 - 218,708 31,434
---------- ---------- ----------- ---------- -- ------
Total accounts receivable allowances $ 144,150 $ 237,252 $ - $ 250,668 $ 130,734
========== ========== =========== ========== =========
Allowance for deferred tax asssets $ 51,153 $ - $ - $ 1,571 $ 49,582
========== ========== =========== ========== =========
Year ended 12/31/00:
- ------------------------------------
Allowance for doubtful accounts $ 113,640 $ 30,187 $ 94 $ 29,918 $ 114,003
Allowance for cash discounts 28,119 204,032 (1,787) 200,217 30,147
---------- ---------- ----------- ---------- ---------
Total accounts receivable allowances $ 141,759 $ 234,219 $ (1,693) $ 230,135 $ 144,150
========== ========== =========== ========== =========
Allowance for deferred tax asssets $ 151,409 $ 74 $ (100,330) $ - $ 51,153
========== ========== =========== ========== =========
(A) Represents adjustments to the beginning balance as a result of the consolidation of pharmaceutical
operations in India and Japan, effective January 1, 2000, which were previously accounted for on an
equity basis.
IV-11
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WYETH
-----
(Registrant)
March 31, 2003 By /S/ Kenneth J. Martin
---------------------------------------
Kenneth J. Martin
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
Principal Executive Officer:
/S/ Robert Essner Chairman of the Board, March 31, 2003
- --------------------------------- President and
Robert Essner Chief Executive Officer
Principal Financial Officer:
/S/ Kenneth J. Martin Executive Vice President March 31, 2003
- --------------------------------- and Chief Financial Officer
Kenneth J. Martin
Principal Accounting Officer:
/S/ Paul J. Jones Vice President and March 31, 2003
- --------------------------------- Comptroller
Paul J. Jones
Directors:
/S/ Clifford L. Alexander, Jr. Director March 31, 2003
- ---------------------------------
Clifford L. Alexander, Jr.
/S/ Frank A. Bennack, Jr. Director March 31, 2003
- ---------------------------------
Frank A. Bennack, Jr.
/S/ Richard L. Carrion Director March 31, 2003
- ---------------------------------
Richard L. Carrion
/S/ John D. Feerick Director March 31, 2003
- ---------------------------------
John D. Feerick
/S/ John P. Mascotte Director March 31, 2003
- ---------------------------------
John P. Mascotte
IV-12
/S/ Mary Lake Polan,
M.D., Ph.D., M.P.H. Director March 31, 2003
- ---------------------------------
Mary Lake Polan,
M.D., Ph.D., M.P.H.
/S/ Ivan G. Seidenberg Director March 31, 2003
- ---------------------------------
Ivan G. Seidenberg
/S/ Walter V. Shipley Director March 31, 2003
- ---------------------------------
Walter V. Shipley
/S/ John R. Torell III Director March 31, 2003
- ---------------------------------
John R. Torell III
IV-13
Certifications
--------------
I, Robert Essner, certify that:
1. I have reviewed this annual report on Form 10-K of Wyeth (the
registrant);
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
By /s/ Robert Essner
--------------------------------
Robert Essner
Chairman, President and Chief Executive Officer
Date: March 31, 2003
Certifications
--------------
I, Kenneth J. Martin, certify that:
1. I have reviewed this annual report on Form 10-K of Wyeth (the
registrant);
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation
Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
By /s/ Kenneth J. Martin
-----------------------------------
Kenneth J. Martin
Executive Vice President and Chief Financial Officer
Date: March 31, 2003
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
----------- -----------
(4.4) Third Supplemental Indenture, dated as of February 14, 2003,
between the Company and JPMorgan Chase Bank (as successor to
Manufacturers Hanover Trust Company).
(10.5) 3-Year Credit Agreement, dated as of March 3, 2003 among the
Company, the banks and other financial institutions from time to
time parties thereto and JPMorgan Chase Bank, as administrative
agent for the lenders thereto.
(10.6) 364 Day Credit Agreement, dated as of March 3, 2003 among the
Company, the banks and other financial institutions from time to
time parties thereto and JPMorgan Chase Bank, as administrative
agent for the lenders thereto.
(10.19)* Form of Stock Option Agreement (phased vesting).
(10.22)* Form of Stock Option Agreement (transferable options).
(10.23)* Form of Restricted Stock Performance Award Agreement under the
1996 Stock Incentive Plan, 1999 Stock Incentive Plan and 2002
Stock Incentive Plan (initial award).
(10.24)* Form of Restricted Stock Performance Award Agreement under the
1996 Stock Incentive Plan, 1999 Stock Incentive Plan and 2002
Stock Incentive Plan (subsequent award).
(10.25)* Form of Special Stock Option Agreement with Robert Essner dated
June 21, 2001 (transferable option).
(10.26)* Form of Restricted Stock Award Agreement with Robert Essner dated
June 21, 2001 (cliff vesting).
(10.27)* Form of Restricted Stock Award Agreement with Robert Ruffolo dated
January 23, 2001 (phased vesting).
(10.35)* Directors' Deferral Plan as amended to date.
(10.50)* Equity Loan Agreement and Promissory Note, dated April 9, 2002,
between the Company and Ulf Wiinberg.
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) 2002 Annual Report to Stockholders. Such report, except for those
portions thereof which are expressly incorporated by reference
herein, is furnished solely for the information of the Commission
and is not to be deemed "filed" as part of this filing.
*Denotes management contract or compensatory plan or arrangement required
to be filed as an exhibit hereto.
(21) Subsidiaries of the Company.
(23) Consent of Independent Public Accountants, PricewaterhouseCoopers
LLP, relating to their report dated January 27, 2003, except for
Note 16 which is as of March 3, 2002, consenting to the
incorporation thereof in Registration Statements on Form S-3
(File Nos. 33-45324 and 33-57339), Form S-4 (File No. 333-59642)
and on Form S-8 (File Nos. 2-96127, 33-24068, 33-41434, 33-53733,
33-55449, 33-45970, 33-14458, 33-50149, 33-55456, 333-15509,
333-76939, 333-67008, 333-64154, 333-59668, 333-89318, 333-98619
and 333-98623) by reference to the Form 10-K of the Company filed
for the year ended December 31, 2002.
(99) Cautionary Statements regarding "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995.
(99.3) Fifth Amendment, dated November 21, 2002, to Final Nationwide
Class Action Settlement Agreement, dated November 18, 1999, as
amended.
(99.4) Sixth Amendment, dated January 10, 2003, to Final Nationwide Class
Action Settlement Agreement, dated November 18, 1999, as amended.
(99.13) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.14) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.