IMMEDIATE RELEASE
Media Contact: Investor Relations Contact:
Lowell Weiner Justin Victoria
(973) 660-5013 (973) 660-5340
Wyeth Reports
Earnings Results for the
2004 First Quarter
>> Worldwide Net Revenue for the 2004 First Quarter Increases 9% to $4 Billion
Driven by Strong Growth of Effexor, Enbrel, Protonix, Zosyn and Rapamune
>> Agreement Signed with Solvay Pharmaceuticals to Co-Develop and
Co-Commercialize Four Neuroscience Product Candidates, Including
Bifeprunox, a Late-Stage Compound for Schizophrenia and Bipolar Disorder
>> Wyeth to Hold R&D Presentation with Investment Community on June 2
Madison, New Jersey, April 21, 2004 - Wyeth (NYSE: WYE) today reported results
for the first quarter ending March 31, 2004. Worldwide net revenue increased 9%
to $4.0 billion for the 2004 first quarter. Excluding the favorable impact of
foreign exchange, worldwide net revenue increased 4% for the 2004 first quarter.
"We are very pleased with the performance of Wyeth's growth drivers this
quarter," said Robert Essner, Chairman, President and Chief Executive Officer.
"Our key marketed
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products, most notably Effexor(R), Enbrel(R), Protonix(R), Zosyn(R) and
Rapamune(R) made excellent progress in the 2004 first quarter. Sales of these
five products collectively increased 32%. These products are not subject to
generic competition for several years and have tremendous opportunity for
continued growth."
"As significant as the growth we achieved with our marketed products is the
progress we are making in our development pipeline, augmented by in-licensing
opportunities, such as our recent agreement with Solvay Pharmaceuticals to bring
bifeprunox to market for schizophrenia, a market that continues to have
significant unmet medical needs. We look forward to sharing the exciting
progress in R&D at Wyeth and discussing the highly innovative products we are
developing at our R&D presentation with the investment community on June 2nd,"
Essner continued.
Reported net income and diluted earnings per share for the 2004 first quarter
were $749.7 million and $0.56, respectively, compared with $1.28 billion and
$0.96 in the prior year. The 2004 first quarter includes a charge of $145.5
million ($94.6 million after-tax or $0.07 per share-diluted) within Research and
Development Expenses related to an upfront milestone payment to Solvay
Pharmaceuticals (Solvay). The upfront milestone payment was made in connection
with an agreement entered into between Wyeth and Solvay to co-develop and
co-commercialize four neuroscience compounds, most notably, bifeprunox. The 2003
first quarter includes a gain of $860.6 million ($558.7 million after-tax or
$0.42 per share-diluted) from the sale of 31,235,958 shares of the Company's
Amgen common stock holdings.
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The 2004 Solvay milestone payment and the 2003 Amgen gain are considered to be
certain significant items for purposes of analyzing our results of operations.
Net income and diluted earnings per share, before certain significant items,
were $844.3 million and $0.63 for the 2004 first quarter compared with $719.2
million and $0.54 in 2003. A reconciliation of net income and diluted earnings
per share as reported under generally accepted accounting principles (GAAP) to
net income and diluted earnings per share before certain significant items is
presented below. The 2004 increases in net income and diluted earnings per
share, before certain significant items, were due primarily to higher net
revenue and other income (including $140.7 million and $3.2 million of pre-tax
gains from product divestitures in 2004 and 2003, respectively) offset, in part,
by higher cost of goods sold, as a percentage of net revenue, higher research
and development spending and higher selling, general and administrative
expenses.
Gains from product divestitures are not considered certain significant items
because they constitute an integral part of the Company's analysis of divisional
performance. However, they are important to understanding changes in our
reported net income. Excluding the certain significant items and the gains from
product divestitures described above, net income and diluted earnings per share
were $751.8 million and $0.56 for the 2004 first quarter as compared to $717.1
million and $0.54 in the 2003 first quarter.
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A reconciliation of reported net income and diluted earnings per share as
reported under GAAP to net income and diluted earnings per share before certain
significant items is presented in the following table:
Net Income Diluted EPS
(In millions except per share amounts) --------------------- ---------------------
Item Description 3/31/2004 3/31/2003 3/31/2004 3/31/2003
- --------------------------------------- --------- --------- --------- ---------
As reported $749.7 $1,277.9 $0.56 $0.96
Gain on sale of Amgen common stock - (558.7) - (0.42)
Co-development / co-commercialization
charge 94.6 - 0.07 -
--------- --------- --------- ---------
As adjusted, before certain significant
items * $844.3 $719.2 $0.63 $0.54
========= ========= ========= =========
* Wyeth calculates net income before certain significant items by excluding the
after-tax effect of items considered by management to be unusual from the net
income reported under GAAP. Wyeth's management uses these measures to manage
and evaluate the Company's performance and believes it is appropriate to
disclose these non-GAAP measures to assist investors with analyzing business
performance and trends. The Amgen gain and previous gains related to the
Immunex/Amgen common stock transactions have been excluded due to the fact
that Wyeth had not previously nor does it currently hold a position for
investment purposes in an entity that, if acquired by another entity, would
impact Wyeth's financial position or results of operations to the significant
extent of the Immunex/Amgen common stock transactions. Additionally, the
significant upfront milestone payment related to the co-development and
co-commercialization of the four neuroscience compounds being developed with
Solvay was immediately expensed and included in Research and Development
Expenses. Excluding the payment from our results provides a better view of
the Company's operations for this accounting period.
These measures should not be considered in isolation or as a substitute for
the results of operations and diluted earnings per share prepared in
accordance with GAAP.
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Segment Information
- -------------------
The following table sets forth worldwide net revenue by reportable segment
together with the percentage changes from the comparable period in the prior
year:
Three Months Ended 03/31/04
---------------------------
Reportable Segment ($ in 000's) Increase
- ------------------- ------------ --------
Pharmaceuticals $3,207,586 8%
Consumer Healthcare 588,351 11%
Animal Health 218,852 20%
------------ --------
Consolidated Total $4,014,789 9%
============ ========
Pharmaceuticals
---------------
Worldwide Pharmaceuticals net revenue increased 8% for the 2004 first quarter
due primarily to higher sales of core products and increased alliance revenue as
discussed below. Wyeth Pharmaceuticals revenue growth was particularly strong in
the European market where Wyeth is currently the fastest growing company among
the major global pharmaceutical companies. Excluding the favorable impact of
foreign exchange, worldwide Pharmaceuticals net revenue increased 3% for the
2004 first quarter.
Product Highlights
- ------------------
Effexor, Wyeth's SNRI (serotonin-norepinephrine reuptake inhibitor)
antidepressant achieved worldwide sales of $776 million for the first quarter,
an increase of 31%. In the U.S., Effexor XR total prescription volume grew 18%
over the corresponding period in the prior year. Additionally, Effexor XR has
now become the number one antidepressant brand in dollar sales outside the U.S.,
excluding Japan where Effexor is not yet marketed.
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Wyeth has significantly enhanced its marketing and sales support for Effexor.
Effexor is on track to exceed its longstanding goal of $3 billion in sales in
2004.
Protonix, Wyeth's proton pump inhibitor (PPI) indicated for the healing and
symptomatic relief of erosive esophagitis (severe heartburn), reached $411
million in sales in the first quarter, an increase of 14%. Although net sales
have been impacted by additional rebating and discounting, Protonix remains one
of the fastest growing brands in the highly competitive and price sensitive PPI
marketplace. Protonix continues to grow in both new and total prescription
volume as well as market share. Protonix is well positioned in this evolving
marketplace as a result of its leadership in managed care formulary status and
its strong clinical profile.
Enbrel, a breakthrough product approved in the treatment of chronic inflammatory
diseases, including rheumatoid arthritis, juvenile rheumatoid arthritis,
ankylosing spondylitis and psoriatic arthritis, continued to post strong sales
in the first quarter. First quarter Enbrel sales in North America are expected
to be reported on April 22 by Wyeth's marketing partner Amgen. Wyeth has
exclusive marketing rights to Enbrel outside of North America where sales for
the first quarter reached $135 million, an increase of more than 200%. The
Company continues its efforts to expand global Enbrel capacity paving the way
for additional launches outside of the U.S. and further penetration into
existing markets.
Important findings from the Enbrel TEMPO (Trial of Etanercept and Methotrexate
with Radiographic Patient Outcomes) study were published in the February 28,
2004 issue of The Lancet. The data show that patients receiving combination
therapy with Enbrel plus
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methotrexate achieved superior outcomes compared with patients receiving therapy
with Enbrel or methotrexate alone. In the TEMPO study, 80% of patients treated
with Enbrel plus methotrexate experienced no radiological progression and 35% of
patients experienced clinical remission demonstrating the significant response
to the combination therapy.
Also contributing to Wyeth's growth in the first quarter were Zosyn and
Rapamune. Sales of Zosyn, an injectable antibiotic, increased 30% to $181
million for the first quarter, building on last year's strong performance and
reflecting growth both in the U.S. and internationally. Rapamune sales for the
quarter were $58 million, an increase of 31%. Rapamune is currently the fastest
growing immunosuppressant in the transplantation market.
Sales of Prevnar(R), a vaccine for invasive pneumococcal disease, were $173
million for the first quarter, a decrease of 24%. The decrease reflects the
impact of the extended plant shutdown related to upgrades and improvements
necessary to be performed to the filling line that began late last year. That
filling line is operational and additional vial filling capacity is now
available through a third party manufacturer, which has just received FDA
approval. Supply will be constrained at least through mid-year. Wyeth continues
to address the Prevnar supply issue and expects that most children who
experienced delays in receiving the third and fourth dose will be able to
receive the full Prevnar vaccination schedule as supply improves throughout the
year. Efforts to further enhance all stages of Prevnar manufacturing are
underway.
Sales of the Premarin(R) family of products were $266 million, down 34%, but
consistent with the 2003 fourth quarter sales, demonstrating the stability
occurring in this
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business. Wyeth does not believe that the recently published findings from the
estrogen-alone arm of the Women's Health Initiative (WHI) study will have a
negative impact on the future prospects of this franchise.
Consumer Healthcare
-------------------
Worldwide Consumer Healthcare net revenue increased 11% for the 2004 first
quarter showing continued solid performance in the U.S. and internationally. The
results were attributable to a number of factors, including global growth in the
division's core Advil(R), Centrum(R) and Caltrate(R) brands. Excluding the
favorable impact of foreign exchange, worldwide Consumer Healthcare net revenue
increased 6% for the 2004 first quarter.
Animal Health
-------------
Worldwide Animal Health net revenue increased 20% for the 2004 first quarter due
primarily to higher sales of ProHeart(R) 6. Excluding the favorable impact of
foreign exchange, worldwide Animal Health net revenue increased 13% for the 2004
first quarter.
2004 Earnings Guidance
- ----------------------
The Company had previously indicated 2004 full year guidance for diluted
earnings before certain significant items of $2.60 - $2.70 per share. Excluding
the impact of the $145.5 million upfront payment to Solvay, the Company
reaffirms the $2.60 - $2.70 per share range.
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Wyeth is one of the world's largest research-driven pharmaceutical and health
care products companies. It is a leader in the discovery, development,
manufacturing and marketing of pharmaceuticals, vaccines, biotechnology products
and non-prescription medicines that improve the quality of life for people
worldwide. The Company's major divisions include Wyeth Pharmaceuticals, Wyeth
Consumer Healthcare and Fort Dodge Animal Health.
The statements in this press release that are not historical facts, including
the entire section under the caption "2004 Earnings Guidance", are
forward-looking statements based on current expectations of future events that
involve risks and uncertainties including, without limitation, risks associated
with the inherent uncertainty of the timing and success of pharmaceutical
research, product development, manufacturing, commercialization, economic
conditions including interest and currency exchange rate fluctuations, changes
in generally accepted accounting principles, the impact of competitive or
generic products, trade buying patterns, wars or terrorist acts, product
liability and other types of lawsuits, the impact of legislation and regulatory
compliance and obtaining reimbursement, favorable drug pricing, access and other
approvals, environmental liabilities, and patent, and other risks and
uncertainties, including those detailed from time to time in the Company's
periodic reports, including current reports on Form 8-K, quarterly reports on
Form 10-Q and the annual report on Form 10-K, filed with the Securities and
Exchange Commission. Actual results may vary materially from the forward-looking
statements. The Company assumes no obligation to publicly update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
The Company will hold a conference call with research analysts at 8:00 a.m.
Eastern Time today. The purpose of the call is to review the financial results
of the Company for the first quarter. Interested investors and others may listen
to the call live or on a delayed basis through the internet webcast, which may
be accessed by visiting the Company's Internet website at www.wyeth.com and
clicking on the "Investor Relations" hyperlink. Also, for recent announcements
and additional information including product sales information, please refer to
the Company's Internet website.
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The comparative results of operations are as follows:
(In thousands except per share amounts)
Three Months Ended
----------------------------
3/31/2004 3/31/2003
---------- ----------
Net Revenue $4,014,789 $3,689,057
Cost of Goods Sold 1,097,916 928,304
Selling, General and Administrative Expenses 1,354,210 1,291,470
Research and Development Expenses 705,302 513,514
Interest Expense, Net 26,932 27,000
Other (Income) Expense, Net (113,462) 6,735
Gain on Sale of Amgen Common Stock - (860,554)
---------- ----------
Income Before Federal and Foreign Taxes 943,891 1,782,588
Provision for Federal and Foreign Taxes 194,188 504,706
---------- ----------
Net Income (1)(3) $749,703 $1,277,882
========== ==========
Basic Earnings Per Share $0.56 $0.96
========== ==========
Average Number of Common Shares Outstanding
During Each Period - Basic(2) 1,332,926 1,327,131
Diluted Earnings Per Share(1)(3) $0.56 $0.96
========== ==========
Average Number of Common Shares Outstanding
During Each Period - Diluted(2) 1,337,743 1,331,413
(1) Net income and diluted earnings per share for the 2004 first quarter were
$749,703 and $0.56, respectively, compared with $1,277,882 and $0.96 in
the prior year. The 2004 first quarter net income and diluted earnings
per share includes a charge of $145,500 ($94,575 after-tax or $0.07 per
share-diluted) within Research and Development Expenses related to the
upfront milestone payment to Solvay in connection with the co-development
and co-commercialization of four neuroscience compounds. The 2003 first
quarter net income and diluted earnings per share includes a gain of
$860,554 ($558,694 after-tax or $0.42 per share-diluted) related to the
sale of the remaining 31,235,958 shares of the Company's Amgen common
stock holdings.
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(2) The average number of common shares outstanding for diluted earnings per
share is higher than for basic earnings per share due to the assumed
conversion of outstanding stock options into common stock equivalents
using the treasury stock method.
(3) Net income and diluted earnings per share have not been adjusted to
reflect the impact of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act), which was passed into law in December
2003. In accordance with applicable accounting guidance, the Company has
made an election to defer accounting for the effects of the Act. As a
result, the impact of the Act is likely to result in a reduction in net
postretirement benefit costs for 2004 as compared with 2003.
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