Exhibit 99
Pfizer Delivers Solid First-Quarter 2007 Results,
Updates Full-Year Expectations for 2007 and 2008
-- First-Quarter 2007 Revenues Grew 6 Percent to $12.5 Billion,
Driven by Growth of New and In-Line Products, Foreign
Exchange, and Other Factors
-- First-Quarter 2007 Adjusted Diluted EPS(1) Increased 15
Percent to $.68, Reflecting Revenue Growth and Relatively Flat
Operating Expenses; First-Quarter 2007 Reported Diluted EPS
Decreased 14 Percent to $.48, Primarily Reflecting
Restructuring Costs and 2006 One-Time Tax Benefit
-- Pfizer Updates Guidance for Full-Year 2007 Revenues and
Full-Year 2007 Reported Diluted EPS and Adjusted Diluted
EPS(1) in Light of Earlier-than-Anticipated Loss of U.S.
Exclusivity for Norvasc
-- Pfizer Provides Updated Guidance Range for Full-Year 2008
Revenues and Reconfirms Guidance for Full-Year 2008 Reported
Diluted EPS and Adjusted Diluted EPS(1)
-- Ten Product Candidates in Cancer Portfolio to be Highlighted
at June 2007 ASCO Meeting in 21 Oral Presentations and 49
Abstracts
-- Transformational Efforts Beginning to Show Benefits
NEW YORK--(BUSINESS WIRE)--April 20, 2007--Pfizer:
($ billions, except per-share First Quarter
amounts)
- ------------------------------------------------------------
2007 2006
- ------------------------------------------------------------
Revenues $12.474 $11.747
- ------------------------------------------------------------
Reported Net Income $3.392 $4.111
- ------------------------------------------------------------
Reported Diluted EPS $0.48 $0.56
- ------------------------------------------------------------
Adjusted Income(1) $4.804 $4.350
- ------------------------------------------------------------
Adjusted Diluted EPS(1)
(see end of text prior to tables
for footnote) $0.68 $0.59
- ------------------------------------------------------------
Pfizer today announced that revenues for the first quarter of 2007
increased 6 percent, versus the comparable quarter of 2006.
First-quarter 2007 adjusted diluted EPS(1) grew 15 percent. Reported
diluted EPS decreased 14 percent, mainly due to restructuring costs in
this quarter as well as a one-time tax benefit recorded in the first
quarter of 2006.
"We had a good quarter, with adjusted income(1) driven by a number
of factors: growth in our key in-line and new medicines, the favorable
impact of foreign exchange, lower sales rebates, and relatively flat
operating expenses compared to the year-ago period," said Jeffrey
Kindler, chairman and chief executive officer. "We posted sales
increases for Lipitor and Celebrex, and we were particularly pleased
by the continuing strong performances of Chantix for smoking
cessation, Sutent for advanced kidney cancer and stomach cancer, and
Lyrica for the treatment of diabetic peripheral neuropathy and
post-herpetic neuralgia, two of the most common types of neuropathic
pain, and epilepsy. The low level of expense growth in the quarter
reflected both the early benefits of our cost-cutting programs and the
timing of investments in R&D and promotional programs this year.
"We are especially encouraged by the performance our Pfizer
colleagues delivered, given that we also initiated significant
organizational and cultural changes this quarter to enhance our
performance and our return to shareholders in the future. Among other
things in the quarter, we completed a significant reduction and
redeployment of the U.S. field force and began the elimination of
large numbers of positions in other parts of the company. We also
announced the intention to close five manufacturing and five research
and development sites. We are making solid progress on the five
priorities we announced in January 2007, while continuing an intense
focus on near-term results."
Initiatives are well under way across Pfizer to achieve the
immediate priorities outlined on January 22, 2007, as the first
critical steps along the path of the company's long-term
transformation. In addition to the efforts to streamline our
workforce, we have made important progress in several other priority
areas.
-- U.S. commercial operations have been restructured into five
individually focused and accountable areas, each led by a
general manager. This new commercial structure is intended to
ensure that managers closest to our customers are empowered to
make key strategic decisions swiftly and with agility to take
advantage of competitive opportunities.
-- The R&D organization is being simplified. We are reducing the
number of R&D sites, consolidating our therapeutic areas, and
removing layers of management. We have embarked on a concerted
talent-retention and recruitment strategy for key R&D talent.
-- The Pfizer Incubator, established to fund early-stage
technology or product-development projects, opened last month
on the Pfizer campus in La Jolla, California. The Incubator
demonstrates Pfizer's new emphasis on actively engaging with
academic innovators to advance science and the value of our
medicines, while benefiting patients and medical researchers.
-- Pfizer has completed more than 30 business-development
transactions over the past 15 months and is on track to
surpass this number over the next 15 months.
"I am very pleased with our progress to date on our five immediate
priorities," Mr. Kindler continued. "And with regard to our near-term
performance, apart from the impact of losing U.S. exclusivity for
Norvasc six months earlier than expected and the uncertainty created
by a recent adverse lower court decision regarding Lipitor patent
protection in Canada, Pfizer's projected overall performance for 2007
and 2008 remains on track.
"In the U.S., an appellate court decision that was counter to
three previous trial court rulings in Pfizer's favor led to the loss
of exclusivity for Norvasc in the first quarter of 2007. As a result
of this decision, we now expect that 2007 revenues will be reduced by
$1.2 billion, an impact that we expect to be partially offset by
greater favorability in foreign exchange (at current rates) than our
previous forecast in January 2007. On balance, the rest of our
business remains on track, with a normal range of variability in the
performances of key inline and new products. At current exchange
rates, we now forecast 2007 revenues of $47 billion to $48 billion,
2007 reported diluted EPS of $1.30 to $1.41, and 2007 adjusted diluted
EPS(1) of $2.08 to $2.15.
"For 2008, our projected overall performance also remains on
track, subject to the residual effect of the U.S. Norvasc patent
decision and uncertainty regarding Lipitor's patent protection in
Canada as a result of a recent unfavorable decision by a lower court.
We have appealed the Canadian decision, which we believe was wrongly
decided. The impact of these patent-litigation-related events,
partially offset by greater favorability in foreign exchange, combined
with the normal range of variability in the performance of our
products result in a forecast of full-year 2008 revenues of $46.5
billion to $48.5 billion, at current exchange rates. Our financial
guidance for full-year 2008 reported diluted EPS and adjusted diluted
EPS(1) remains unchanged.
"We're realistic about our challenges, and not every aspect of our
performance met our expectations. For example, while we remain
convinced that Exubera offers substantial benefit for diabetic
patients worldwide, we are disappointed with the product's performance
to date. Our priorities to improve Pfizer's performance remain clear:
execute better, control costs, instill accountability across the
company, and make sure we deliver the value our customers and
shareholders expect," Mr. Kindler concluded. "We are optimistic that
the changes we have initiated are beginning to take hold and that they
will position the company to enhance returns to our shareholders going
forward."
In-Line and New Products Deliver Solid Revenue Growth
Revenue growth of 6 percent to $12.5 billion reflects a solid
performance from both new and in-line products and was achieved in
spite of U.S. revenue reductions for products that recently lost U.S.
exclusivity: Norvasc (down $115 million), Zoloft (down $615 million),
and Zithromax (down $112 million). Growth was favorably impacted by
$269 million, or two percentage points, by foreign exchange. Revenues
also benefited from about $145 million in lower rebates in both our
government and non-government contracted businesses in the U.S.,
reflecting the continued impact of the Medicare Modernization Act,
changes in product mix, and the impact of our contracting strategies.
Worldwide pharmaceutical revenues grew 5 percent in the first
quarter of 2007 and reached $11.6 billion. The revenue performance in
the first quarter of 2007 was driven by solid growth from several of
our core products, including Lipitor (up 8 percent), Celebrex (up 22
percent), Lyrica (up 106 percent), Geodon (up 18 percent), Caduet (up
89 percent), Detrol (up 17 percent), Zyvox (up 39 percent), Vfend (up
26 percent), Viagra (up 11 percent), Zyrtec (up 10 percent), and
Aromasin (up 33 percent), as well as strong revenues for two key new
products-- Chantix/Champix and Sutent. In the U.S., pharmaceutical
revenues of $6.5 billion represented 2-percent growth.
Worldwide sales of Lipitor totaled $3.4 billion for the first
quarter of 2007 and represented growth of 8 percent. Lipitor sales in
the first quarter benefited primarily from price increases, lower
rebates, strong U.S. statin market growth, and the favorable impact of
foreign exchange--all of which more than offset a decline in U.S.
Lipitor prescriptions.
In the U.S., the volume of patients who switched from Lipitor to
generic simvastatin following the entry of multiple generics was
slightly greater than we had predicted, particularly in the
managed-care environment. Toward the end of the quarter, there was
some evidence that new prescriptions in the U.S. for Lipitor may be
stabilizing. Over the next quarter, our focus will be on bringing
Lipitor's switch rate volume back to 2006 levels. We have implemented
comprehensive plans that we believe will strengthen Lipitor's market
position, including physician and patient initiatives aimed at
reducing the rate of switches to generics. In light of the interplay
of prescription trends, market-growth assumptions, branded and generic
competitive dynamics, and payer pressures, we now project full-year
2007 worldwide revenue performance for Lipitor within a range of
modest growth to a modest decline.
On March 5, 2007, Lipitor was approved by the FDA for five new
indications in patients with clinically evident heart disease, thereby
expanding the U.S. label from primary prevention in moderate-risk
patients to include secondary prevention in high-risk patients.
Lipitor is now the only cholesterol-lowering medicine approved for the
reduction in risk of hospitalization due to heart failure. These new
indications have been incorporated into promotional materials,
including a new direct-to-consumer (DTC) advertising campaign, and
support the incremental benefit and overall safety of using higher
doses of Lipitor.
Emerging real-world data also support the value of Lipitor. In an
analysis of a large U.S. managed-care database that was presented at
the American Heart Association's 47th Annual Conference on
Cardiovascular Disease Epidemiology and Prevention in March 2007,
Lipitor patients achieved a significant 14-percent reduction in the
risk of cardiovascular events compared with patients taking
simvastatin, even after adjustments for expected differences of
Lipitor and simvastatin LDL lowering based on dose. These findings
provide physicians with additional support as they make treatment
decisions to achieve improved and cost-effective cardiovascular
outcomes for their patients.
Worldwide sales of Celebrex totaled $598 million for the first
quarter of 2007, reflecting 22-percent growth over the first quarter
of 2006. In April 2007, Pfizer launched an innovative Celebrex
television advertising campaign to re-initiate a productive
patient-physician dialogue about treatment options for arthritis. The
unprecedented 2 1/2-minute television advertisement opens by
addressing cardiovascular safety first and clarifies misperceptions
among arthritis sufferers about the risks and benefits of Celebrex and
other prescription non-steroidal anti-inflammatory drugs. Future
growth in demand for Celebrex will depend in part on the impact of DTC
advertising as well as continued successful execution of the "CV
first" strategy by the new and refocused Powers U.S. field force.
Worldwide sales of Lyrica totaled $395 million for the first
quarter of 2007 and represented growth of 106 percent, compared to the
same period in 2006. Growth continues to be fueled by strong efficacy
as well as high physician and patient satisfaction in the marketplace.
Pfizer expects continued growth for Lyrica to be driven by market
expansion in diabetic peripheral neuropathy and post-herpetic
neuralgia as we continue to roll out new screening tools to aid
physicians in diagnosis, and by the anticipated launch of a
fibromyalgia indication in the U.S. in the second half of this year,
which will increase the potential patient base in the U.S.
Chantix is performing better than expected and continues to
demonstrate strong uptake, with more than 100,000 new prescriptions
per week in March. An unbranded advertising campaign introduced
earlier this year is working to effectively develop the market, and
branded advertising is planned for the third quarter of 2007. As
outlined earlier this year, our strategy for this innovative medicine
is to build a sustainable, medically supported market over time and to
seek to secure reimbursement--initiatives that we believe will drive
future growth. The product also was recently launched in Canada.
Sutent continues to exceed our revenue expectations, with $102
million of revenues in the first quarter of 2007. During the quarter,
the FDA granted full approval for Sutent in advanced renal cell
carcinoma (RCC), and the label was revised to include new first-line
RCC data. In the EU, Sutent was granted full marketing authorization
and extension of the indication to first-line treatment of advanced
RCC. We believe that future growth of Sutent will be fueled by
emerging new data in a range of potential new indications. More than
25 Sutent abstracts have been accepted for presentation at the
American Society of Clinical Oncology (ASCO) annual meeting in June
2007.
With the disappointing revenue performance of Exubera to date,
Pfizer's updated forecast reflects a slower rate of market acceptance
in 2007 and 2008 for this product, given the more extensive
market-development activities we now believe are necessary. However,
Pfizer is applying market experience from the past six months to seek
to accelerate uptake of Exubera in 2007 and beyond with new
field-force efforts--including the first-quarter 2007 full-scale
launch in primary care--educational outreach to physicians and a
consumer advertising campaign. Beginning on April 2, 2007, Exubera has
been supported by the Pratt and Vista cardiovascular field forces.
Diabetes educators are also in the field engaging in clinical
discussions to deliver the practical clinical guidance needed by
physicians to help them understand the benefits of this innovative
insulin-delivery system. These resources are in direct response to our
customers' need for increased support in using a novel delivery
device. Pfizer plans to initiate branded DTC advertising mid-summer
for Exubera. We will continue to monitor the performance of Exubera,
while we seek to effectively establish this important product and
serve the millions of diabetics whose blood sugar is still
uncontrolled on current therapy.
Regulatory review of fesoterodine is progressing in the U.S. and
the EU. This product candidate received a positive opinion from the
EU's Committee for Medicinal Products for Human Use during the first
quarter of 2007. In the U.S., an approvable action was granted by the
FDA in January 2007. Pfizer is working with Schwarz Pharma, our
partner, to scale up manufacturing and define sourcing alternatives.
Launch is now planned for the latter half of 2008 in Europe and early
2009 in the U.S.
Pfizer Pipeline Highlighted at Medical Meetings
Pfizer has the largest new-product pipeline in its history, with
249 programs currently underway. The most advanced compound in the
pipeline is maraviroc, our CCR5 inhibitor to treat HIV, which is
currently under accelerated review by regulators in both the U.S. and
Europe. An FDA advisory committee meeting to discuss maraviroc is
scheduled for April 24, 2007. Pfizer recently presented pivotal data
on maraviroc at the 14th Conference on Retroviruses and Opportunistic
Infections, one of the world's largest HIV/AIDS research meetings. If
approved, maraviroc would be the first of a new oral class of HIV
medicines and could broaden the arsenal of treatments to combat
resistant forms of the human immunodeficiency virus (HIV) that causes
AIDS.
Pfizer also has several promising programs in our oncology
pipeline. Our progress is reflected by 49 abstracts generated from 10
Pfizer oncology programs accepted for presentation at the 43rd Annual
Meeting of the American Society of Clinical Oncology (ASCO) in Chicago
in June 2007, including 31 abstracts across four different compounds
in our angiogenesis portfolio and 21 oral presentations covering eight
different Pfizer medicines.
Data from the RELIEF trial, evaluating the efficacy of Lyrica for
the treatment of pain and other symptoms of fibromyalgia, will be
presented at the annual meeting of the American Academy of Neurology
in May 2007. There are currently no medications approved by the FDA
for fibromyalgia, which is the most common chronic pain condition in
the U.S. We have submitted a supplemental NDA for use of Lyrica in
fibromyalgia.
Pfizer Achieves Solid Financial Performance in the Quarter,
Updates Financial Guidance for 2007 and 2008
In the first quarter of 2007, revenue growth of 6 percent was
driven by strong growth of key in-line and new medicines and the
favorable impact of foreign exchange and lower rebates. Cost of sales
as a percentage of revenues in the first quarter of 2007 reflects
unfavorable product mix and the impact of lower volume and foreign
exchange, partially offset by the continued implementation of our
Adapting to Scale (AtS) productivity initiatives. The pre-tax
operating expense component of adjusted income(1) decreased 1 percent
compared to the prior year, reflecting the continued implementation of
our productivity initiatives and a lower level of investment in
promotional and R&D programs during the first quarter of 2007 than
that expected over the remaining three quarters of the year. Reported
expenses include restructuring costs of $812 million in the first
quarter of 2007, versus $299 million in the first quarter of 2006.
This differential primarily reflects costs associated with the
company's recent decisions to rationalize our manufacturing base and
R&D site network.
The company updated certain aspects of its financial guidance for
2007:
-- Revenues of $47 billion to $48 billion
-- Cost of sales pre-tax component of adjusted income(1), as a
percentage of revenues, largely unchanged from 2006 at
approximately 15 percent (guidance unchanged)
-- SI&A pre-tax component of adjusted income(1) down about $500
million versus 2006 to about $14.9 billion (guidance
unchanged)
-- R&D pre-tax component of adjusted income(1) of approximately
$7.5 billion (guidance unchanged)
-- Effective tax rate on adjusted income(1) of 22 percent
-- Reported diluted EPS of $1.30 to $1.41
-- Adjusted diluted EPS(1) of $2.08 to $2.15
-- Cash flow from operations of $12 billion to $13 billion
In March 2007, the Company received an adverse court decision that
resulted in the loss of exclusivity for Norvasc in the U.S., six
months earlier than anticipated. We estimate that this decision will
result in approximately $1.2 billion in foregone revenues in 2007.
This impact is expected to be partially offset by approximately $450
million in higher-than-anticipated favorability in foreign exchange
this year, reflecting primarily a strengthening of the euro relative
to the dollar since our previous forecast in January 2007. In
addition, our forecasts for Lipitor, Exubera, and Chantix, among other
products, reflect a range of variability attendant to the underlying
dynamics of these product lines. As a result, at current exchange
rates, we now anticipate revenues of $47 billion to $48 billion this
year.
Our guidance with respect to the 2007 cost of sales pre-tax
component of adjusted income(1), as a percentage of revenues, and the
2007 operating expense pre-tax component of adjusted income(1) is
unchanged from our guidance provided on January 22, 2007. We are
reducing our 2007 effective tax rate on adjusted income(1) from 22.5
percent to 22 percent, reflecting changes in geographic mix as well as
the impact of ongoing tax-planning strategies. As a result of these
revenue and expense adjustments, at current exchange rates, we now
forecast reported diluted EPS of $1.30 to $1.41 for 2007, reflecting
the impact of the operational changes cited above, implementation
costs associated with our productivity initiatives, and
purchase-accounting charges (including $283 million in first-quarter
2007 charges for in-process R&D primarily associated with our
acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc.). We
now forecast 2007 adjusted diluted EPS(1) of $2.08 to $2.15 and expect
to generate cash flow from operations of $12 billion to $13 billion
this year.
The company also updated certain aspects of its financial guidance
for 2008:
-- Revenues of $46.5 billion to $48.5 billion are forecasted for
2008
-- Total cost pre-tax component of adjusted income(1) at least
$1.5 billion to $2 billion lower than 2006
-- Effective tax rate on adjusted income(1) of 22 percent to 22.5
percent
-- Reported diluted EPS of $1.75 to $1.93 (guidance unchanged)
-- Adjusted diluted EPS(1) of $2.31 to $2.45 (guidance unchanged)
We expect to see a residual adverse impact of about $300 million
in revenues in 2008 resulting from the accelerated loss of exclusivity
this year for Norvasc in the U.S. This impact is expected to be offset
by approximately $450 million in higher-than-anticipated favorability
in foreign exchange in 2008, reflecting primarily the strengthening of
the euro relative to the dollar since our previous forecast in January
2007. In addition, patents protecting Lipitor in Canada have been
challenged by various generic companies. One of those companies has
been successful at the lower court level, and we have appealed that
decision, which we believe was wrongly decided. There is a risk that
sales of Lipitor in Canada would be adversely affected by generic
competition, should the Canadian courts or regulatory authorities
allow generic competition in Canada before the expiration of our
Lipitor patents. We remain optimistic about the approval of a
fibromyalgia indication for Lyrica in the U.S. this year, although the
timing is subject to the normal uncertainties associated with the
regulatory review process. Finally, our forecasts for Lipitor in
markets other than Canada, and for Exubera and Chantix, among other
products, exhibit a range of variability, reflecting the underlying
dynamics of these product lines and our experience in the marketplace
this year. As a result, at current exchange rates, we now expect
revenues of $46.5 billion to $48.5 billion in 2008.
We expect a reduction in the total cost pre-tax component of
adjusted income(1) of at least $1.5 billion to $2 billion, compared to
2006, by the end of 2008. We forecast an effective tax rate on
adjusted income(1) of 22 percent to 22.5 percent. At current exchange
rates, our reported diluted EPS and adjusted diluted EPS(1) forecasts
remain unchanged: We continue to forecast 2008 reported diluted EPS of
$1.75 to $1.93 and 2008 adjusted diluted EPS(1) of $2.31 to $2.45.
Committed to Total Shareholder Return
"Pfizer is intensely committed to maximizing total shareholder
return through revenue growth as well as cost management and capital
allocation. We are delivering on all these fronts," said David
Shedlarz, vice chairman.
"Business development has been a major focus in recent months in
order to aggressively pursue new sources of revenue. Pfizer has
completed more than 30 transactions that gained access to new product
candidates or technologies over the past 15 months, and we are on
track to surpass this number over the next 15 months. In cost
management, Pfizer is actively implementing productivity improvement
initiatives that are expected to deliver net cost reductions of at
least $1.5 billion to $2.0 billion in 2008, notwithstanding cost
pressures from inflation and new investments.
"Pfizer also allocates its capital effectively to maximize
shareholder return, not only through strong reinvestment in the
business but also through strong dividends and substantial share
purchases. The company's first-quarter 2007 dividend to shareholders
represents the 40th consecutive year of dividend increases, a
21-percent increase over the fourth quarter of 2006, and a 53-percent
increase over the fourth quarter of 2005. The dividend yield is now
over 4 percent. We are committed to a substantial dividend for our
shareholders. During the first quarter of 2007, we purchased $2.5
billion of our stock, and we continue to expect to purchase up to $10
billion of our stock this year."
For additional details, please see the attached financial
schedules, product revenue table, supplemental financial information,
and Disclosure Notice.
(1) "Adjusted income" and "adjusted diluted earnings per share
(EPS)" are defined as reported net income and reported diluted EPS
excluding purchase-accounting adjustments, acquisition-related costs,
discontinued operations, and certain significant items. As described
under Adjusted Income in the Financial Review section of Pfizer's Form
10-K for the fiscal year ended December 31, 2006, management uses
adjusted income, among other factors, to set performance goals and to
measure the performance of the overall company. We believe that
investors' understanding of our performance is enhanced by disclosing
this measure. Reconciliations of first-quarter 2007 and 2006, and
forecasted full-year 2007 (revised) and 2008, adjusted income and
adjusted diluted EPS to reported net income and reported diluted EPS
are provided in the materials accompanying this report. The adjusted
income and adjusted diluted EPS measures are not, and should not be
viewed as, substitutes for U.S. GAAP net income and diluted EPS.
PFIZER INC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(millions of dollars, except per common share data)
First Quarter % Incr.
----------------- /
2007 2006 (Decr.)
-------- -------- --------
Revenues $12,474 $11,747 6
Costs and expenses:
Cost of sales (a) 1,887 1,671 13
Selling, informational and administrative
expenses (a) 3,361 3,395 (1)
Research and development expenses (a) 1,665 1,543 8
Amortization of intangible assets 815 825 (1)
Acquisition-related in-process research
and development charges 283 - *
Restructuring charges and acquisition-
related costs 812 299 172
Other (income)/deductions--net (402) (256) 56
-------- --------
Income from continuing operations before
provision for taxes on income and minority
interests 4,053 4,270 (5)
Provision for taxes on income 689 262 163
Minority interests 3 2 28
-------- --------
Income from continuing operations 3,361 4,006 (16)
-------- --------
Discontinued operations:
Income from discontinued operations--net
of tax - 102 (100)
Gains/(loss) on sales of discontinued
operations--net of tax 31 3 933
-------- --------
Discontinued operations--net of tax 31 105 (70)
-------- --------
Net income $ 3,392 $ 4,111 (18)
======== ========
Earnings per common share - Basic:
Income from continuing operations $ 0.48 $ 0.55 (13)
Discontinued operations--net of tax - 0.01 *
-------- --------
Net income $ 0.48 $ 0.56 (14)
======== ========
Earnings per common share - Diluted:
Income from continuing operations $ 0.48 $ 0.55 (13)
Discontinued operations--net of tax - 0.01 *
-------- --------
Net income $ 0.48 $ 0.56 (14)
======== ========
Weighted-average shares used to calculate
earnings per common share:
Basic 7,051 7,314
======== ========
Diluted 7,075 7,348
======== ========
(a) Exclusive of amortization of intangible assets, except as
discussed in footnote 4 below.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
1. The above financial statements present the three-month periods
ended April 1, 2007 and April 2, 2006. Subsidiaries operating
outside the United States are included for the three-month
periods ended February 25, 2007, and February 26, 2006.
2. The financial results for the three-month period ended April 1,
2007 are not necessarily indicative of the results which
ultimately might be achieved for the current year.
3. As required, the estimated value of Acquisition-related in-process
research and development charges (IPR&D) is expensed at
acquisition date. In the first quarter of 2007, we expensed $283
million of IPR&D, primarily related to our acquisitions of
BioRexis Pharmaceutical Corp. and Embrex, Inc.
4. Amortization expense related to acquired intangible assets that
contribute to our ability to sell, manufacture, research, market
and distribute our products are included in Amortization of
intangible assets as they benefit multiple business functions.
Amortization expense related to acquired intangible assets that
are associated with a single function are included in Cost of
sales, Selling, informational and administrative expenses or
Research and development expenses, as appropriate.
5. Discontinued operations--net of tax is primarily related to our
former Consumer Healthcare business, sold in December 2006 for
approximately $16.6 billion.
6. Provision for taxes on income in the first quarter of 2006
includes one time tax benefits associated with favorable tax
legislation and the resolution of certain tax positions.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION FROM REPORTED NET INCOME AND REPORTED DILUTED EARNINGS
PER SHARE
TO ADJUSTED INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
(UNAUDITED)
(millions of dollars, except per common share data)
First Quarter % Incr.
----------------- /
2007 2006 (Decr.)
-------- -------- -------
Reported net income $ 3,392 $ 4,111 (18)
Purchase accounting adjustments--net of tax 847 581 46
Acquisition-related costs--net of tax 13 3 333
Discontinued operations--net of tax (31) (105) (70)
Certain significant items--net of tax 583 (240) *
-------- --------
Adjusted income $ 4,804 $ 4,350 10
======== ========
Reported diluted earnings per common share $ 0.48 $ 0.56 (14)
Purchase accounting adjustments--net of tax 0.12 0.07 71
Acquisition-related costs--net of tax - - -
Discontinued operations--net of tax - (0.01) *
Certain significant items--net of tax 0.08 (0.03) *
-------- --------
Adjusted diluted earnings per common share $ 0.68 $ 0.59 15
======== ========
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
1. The above reconciliation presents the three-month periods ended
April 1, 2007, and April 2, 2006. Subsidiaries operating outside
the United States are included for the three-month periods ended
February 25, 2007, and February 26, 2006.
2. Adjusted income and Adjusted diluted earnings per common share as
shown above reflect the following items:
(millions of dollars) First Quarter
-----------------
2007 2006
-------- --------
Purchase accounting adjustments:
Intangible amortization and other (a) $ 825 $ 810
In-process research and development
charges (b) 283 -
-------- --------
Total purchase accounting adjustments,
pre-tax 1,108 810
Income taxes (261) (229)
-------- --------
Total purchase accounting
adjustments--net of tax 847 581
-------- --------
Acquisition-related costs:
Integration costs (c) 23 2
Restructuring charges (c) (6) 3
-------- --------
Total acquisition-related costs, pre-
tax 17 5
Income taxes (4) (2)
-------- --------
Total acquisition-related costs--net
of tax 13 3
-------- --------
Discontinued operations:
(Income) loss from discontinued
operations (d) - (155)
(Gains)/loss on sales of discontinued
operations (d) (40) (5)
-------- --------
Total discontinued operations, pre-tax (40) (160)
Income taxes 9 55
-------- --------
Total discontinued operations--net
of tax (31) (105)
-------- --------
Certain significant items:
Restructuring charges - Adapting to
Scale (c) 795 294
Implementation costs - Adapting to
Scale (e) 174 185
Consumer Healthcare business transition
activity (f) (9) -
Sanofi-aventis research and development
milestone (g) - (118)
Gain on disposals of investments and
other (h) - (51)
-------- --------
Total certain significant items, pre-
tax 960 310
Income taxes (377) (109)
Resolution of certain tax positions (i) - (441)
-------- --------
Total certain significant items--net
of tax 583 (240)
-------- --------
Total purchase accounting adjustments,
acquisition-related costs, discontinued
operations and certain significant
items--net of tax $ 1,412 $ 239
======== ========
(a) Included primarily in Amortization of intangible assets.
(b) Included in Acquisition-related in-process research and
development charges, primarily related to our acquisitions of
BioRexis Pharmaceutical Corp. and Embrex, Inc.
(c) Included in Restructuring charges and acquisition-related costs.
(d) Discontinued operations--net of tax is primarily related to our
former Consumer Healthcare business.
(e) Included in Cost of sales ($94 million), Selling, informational
and administrative expenses ($49 million) and Research and
development expenses ($31 million) for the three months ended
April 1, 2007. Included in Cost of sales ($124 million), Selling,
informational and administrative expenses ($39 million) and
Research and development expenses ($22 million) for the three
months ended April 2, 2006.
(f) Included in Revenue ($44 million), Cost of sales ($35 million),
Selling, informational and administrative expenses ($2 million)
and Other (income)/deduction-net ($2 million income) for the
three months ended April 1, 2007.
(g) Included in Research and development expenses.
(h) Included in Other (income)/deductions - net.
(i) Included in Provision for taxes on income.
PFIZER INC
SEGMENT/PRODUCT REVENUES
FIRST QUARTER 2007
(UNAUDITED)
(millions of dollars)
-----------------------------------------------------------
WORLDWIDE U.S. INTERNATIONAL
-----------------------------------------------------------
% % %
2007 2006 Chg 2007 2006 Chg 2007 2006 Chg
======================================================================
TOTAL
REVENUES 12,474 11,747 6 6,850 6,617 4 5,624 5,130 10
======================================================================
- ----------------------------------------------------------------------
PHARMA-
CEUTICAL 11,581 11,017 5 6,468 6,312 2 5,113 4,705 9
- ----------------------------------------------------------------------
- - CARDIO-
VASCULAR
AND
METABOLIC
DISEASES 5,155 4,748 9 3,024 2,751 10 2,131 1,997 7
LIPITOR 3,358 3,107 8 2,137 1,974 8 1,221 1,133 8
NORVASC 1,069 1,183 (10) 511 626 (18) 558 557 -
CHANTIX /
CHAMPIX 162 - * 145 - * 17 - *
CADUET 146 77 89 135 73 85 11 4 140
CARDURA 134 126 6 2 2 (10) 132 124 6
- - CENTRAL
NERVOUS
SYSTEM
DISORDERS 1,245 1,644 (24) 637 1,087 (41) 608 557 9
LYRICA 395 192 106 241 114 112 154 78 96
GEODON /
ZELDOX 216 182 18 182 150 21 34 32 6
ZOLOFT 146 779 (81) 68 683 (90) 78 96 (19)
NEURONTIN 110 127 (14) 23 26 (13) 87 101 (14)
ARICEPT** 85 82 4 - - * 85 82 4
RELPAX 83 66 26 57 44 30 26 22 17
XANAX / XR 75 82 (8) 15 23 (33) 60 59 1
- - ARTHRITIS
AND PAIN 749 641 17 523 436 20 226 205 10
CELEBREX 598 491 22 476 391 22 122 100 23
- - INFECTIOUS
AND
RESPIRATORY
DISEASES 913 937 (3) 335 410 (18) 578 527 10
ZYVOX 258 186 39 183 137 34 75 49 54
VFEND 148 117 26 59 46 27 89 71 26
ZITHROMAX /
ZMAX 131 259 (49) 13 134 (90) 118 125 (6)
DIFLUCAN 111 107 4 3 3 - 108 104 4
- - UROLOGY 751 663 13 453 387 17 298 276 8
VIAGRA 434 390 11 224 197 14 210 193 8
DETROL /
DETROL LA 303 260 17 223 185 20 80 75 8
- - ONCOLOGY 595 470 27 244 179 36 351 291 21
CAMPTOSAR 229 212 8 130 112 16 99 100 (1)
SUTENT 102 16 529 53 16 232 49 - *
AROMASIN 93 70 33 35 28 26 58 42 38
- - OPHTHAL-
MOLOGY 366 337 9 126 123 3 240 214 12
XALATAN /
XALACOM 360 337 7 126 123 3 234 214 9
- - ENDOCRINE
DISORDERS 245 246 (0) 64 77 (18) 181 169 7
GENOTROPIN 201 197 2 60 64 (6) 141 133 6
- ALL
OTHER 1,164 1,007 16 819 654 26 345 353 (3)
ZYRTEC /
ZYRTEC D 461 421 10 461 421 10 - - *
- ALLIANCE
REVENUE
(Aricept,
Macugen,
Mirapex,
Olmetec,
Rebif and
Spiriva) 398 324 23 243 208 17 155 116 33
- ----------------------------------------------------------------------
ANIMAL
HEALTH 586 511 15 264 229 15 322 282 14
- ----------------------------------------------------------------------
OTHER *** 307 219 40 118 76 55 189 143 32
- ----------------------------------------------------------------------
* - Calculation not meaningful.
** - Represents direct sales under license agreement with Eisai Co.,
Ltd.
*** - Includes Consumer Healthcare business transition activity,
Capsugel and Pfizer Centersource.
Certain amounts and percentages may reflect rounding adjustments.
Certain prior year data have been reclassified to conform to the
current year presentation.
PFIZER INC
SUPPLEMENTAL FINANCIAL INFORMATION
1) Change in Cost of Sales
Cost of sales increased 13% in the first quarter of 2007 compared
to the same period in 2006. The increase reflects unfavorable product
mix and volume, in part reflecting the loss of U.S. exclusivity on low
manufacturing cost products (Zoloft and Norvasc) and foreign exchange,
partially offset by the favorable impact of our ongoing Adapting to
Scale (AtS) productivity initiatives. Cost of sales as a percentage of
revenues increased 0.9%, reflecting the factors mentioned above.
Cost of sales includes charges of $94 million and $124 million
related to our AtS productivity initiative for the first quarters of
2007 and 2006.
In the first quarter 2007, Cost of sales also includes $35 million
related to business transition activities associated with the sale of
our Consumer Healthcare business, completed in December 2006. These
expenses are transitional in nature and generally result from
agreements that seek to facilitate the orderly transfer of operations
of our former Consumer Healthcare business to the new owner.
2) Change in Selling, Informational & Administrative (SI&A)
Expenses and Research & Development (R&D) Expenses
Reported R&D expenses, excluding acquisition-related in-process
research and development charges (IPR&D), grew 8% in the first quarter
of 2007 compared to the same period in 2006. The increase primarily
results from a one-time R&D milestone of $118 million due to us from
sanofi-aventis recorded in the first quarter of 2006 in connection
with Exubera. IPR&D charges of $283 million, primarily related to the
acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc., were
recorded in the first quarter of 2007.
Reported SI&A expense decreased 1% in the first quarter of 2007
compared to the same period in 2006, reflecting the savings impact of
our AtS productivity initiatives, the unfavorable impact of foreign
exchange on expenses, and a lower level of investment in promotional
programs during the first quarter of 2007 than that expected over the
remaining three quarters of the year.
Reported SI&A and R&D expenses include charges of $49 million and
$31 million related to the AtS implementation costs in the first
quarter of 2007. Reported SI&A and R&D expenses included charges of
$39 million and $22 million related to AtS implementation costs in the
first quarter of 2006.
3) Savings and Costs Relating to Productivity Initiatives
Our Adapting to Scale (AtS) productivity initiative, launched in
the first quarter of 2005 and broadened in October 2006, involved a
comprehensive review of our processes, organizations, systems, and
decision-making procedures in a company-wide effort to improve
performance and efficiency. Through these initiatives we are
generating cost savings through site rationalization in research and
manufacturing, reductions in our global sales force, streamlined
organizational structures, staff-function reductions, and increased
outsourcing and procurement savings. Some of these cost savings will
be reallocated to more value-added activities. After making those
investments, Pfizer expects to achieve an absolute reduction in the
pre-tax total expense component of adjusted income(1) of at least $1.5
billion to $2 billion by the end of 2008, compared to 2006. Costs
relating to the AtS productivity initiative were $969 million in the
first quarter 2007 compared to $479 million in the first quarter 2006,
reflecting the costs associated with our most recent decisions to
rationalize our manufacturing base and R&D site network.
4) Other Income and Other Deductions
($ millions) First Quarter
------------------------
2007 2006*
----------- -----------
Net Interest (Income)/Expense(a) $(248) $(52)
Royalty Income (93) (82)
Net Gains on Disposals of Investments,
Products, and Product Lines (10) (77)
Other, Net (51) (45)
----------- -----------
Other (Income)/Deductions-Net $(402) $(256)
=========== ===========
*Certain 2006 amounts were reclassified to conform to the 2007
presentation.
(a) Increase in Net interest income in the first quarter 2007
compared to the same period in 2006 was due primarily to higher
interest rates and an increase in our net financial assets, reflecting
proceeds of $16.6 billion from the sale of our Consumer Healthcare
business in late December 2006.
5) Effective Tax Rate
The effective tax rate for the first quarter of 2007 is 17.0%. The
comparable rate for 2006 was 6.1%, primarily reflecting certain one
time tax benefits associated with favorable tax legislation and the
resolution of certain tax positions. The effective tax rate on
adjusted income(1) is 21.7% in the first quarter of 2007 compared to
19.3% in the first quarter of 2006. We now forecast a full-year 2007
tax rate of 22% on adjusted income(1), a 0.5% reduction from our prior
guidance, reflecting changes in geographic mix and ongoing tax
planning strategies.
6) Reconciliation of Forecasted 2007 (Revised) and 2008 Adjusted
Income(1) and Adjusted Diluted EPS(1) to Forecasted 2007 (Revised) and
2008 Reported Net Income and Reported Diluted EPS
Full-Year 2007 Revised Forecast
($ billions, except per-share
amounts) Net Income(a) Diluted EPS(a)
----------------- -----------------
Income/(Expense)
- -----------------------------------
Forecasted Adjusted Income/Diluted ~$14.5 - $15.0 ~$2.08 - $2.15
EPS(1)
Purchase Accounting Impacts, Net of
Tax (2.7) (0.39)
Adapting to Scale Costs, Net of Tax (2.5 - 2.7) (0.35 - 0.39)
----------------- -----------------
Forecasted Reported Net
Income/Diluted EPS ~$9.1 - $9.8 ~$1.30 - $1.41
================= =================
Full-Year 2008 Forecast
($ billions, except per-share
amounts) Net Income(a) Diluted EPS(a)
----------------- -----------------
Income/(Expense)
- -----------------------------------
Forecasted Adjusted Income/Diluted ~$15.6 - $16.6 ~$2.31 - $2.45
EPS(1)
Purchase Accounting Impacts, Net of
Tax (2.0) (0.30)
Adapting to Scale Costs, Net of Tax (1.5 - 1.8) (0.22 - 0.26)
----------------- -----------------
Forecasted Reported Net
Income/Diluted EPS ~$11.8 - $13.1 ~$1.75 - $1.93
================= =================
(a) Forecasts in the table exclude the effects of
business-development transactions not completed as of April 1, 2007.
7) Share-Purchase Program
During the first quarter of 2007, the Company purchased
approximately 96 million shares at a total cost of about $2.5 billion.
We continue to expect to purchase up to $10 billion of our stock
during 2007.
(1) "Adjusted income" and "adjusted diluted earnings per share
(EPS)" are defined as reported net income and reported diluted EPS
excluding purchase-accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items. As described
under Adjusted Income in the Financial Review section of Pfizer's Form
10-K for the fiscal year ended December 31, 2006, management uses
adjusted income, among other factors, to set performance goals and to
measure the performance of the overall company. We believe that
investors' understanding of our performance is enhanced by disclosing
this measure. Reconciliations of first-quarter 2007 and 2006, and
forecasted full-year 2007 (revised) and 2008 adjusted income and
adjusted diluted EPS to reported net income and reported diluted EPS
are provided in the materials accompanying this report. The adjusted
income and adjusted diluted EPS measures are not, and should not be
viewed as, substitutes for U.S. GAAP net income and diluted EPS.
DISCLOSURE NOTICE: The information contained in this earnings
release and the attachments is as of April 20, 2007. The Company
assumes no obligation to update any forward-looking statements
contained in this earnings release or the attachments as a result of
new information or future events or developments.
This earnings release and the attachments contain forward-looking
information about the Company's financial results and estimates,
business plans and prospects, in-line products and product candidates
that involve substantial risks and uncertainties. You can identify
these statements by the fact that they use words such as "will,"
"anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," "target," "forecast" and other words and terms of similar
meaning in connection with any discussion of future operating or
financial performance or business plans and prospects. Among the
factors that could cause actual results to differ materially are the
following: the success of research and development activities;
decisions by regulatory authorities regarding whether and when to
approve our drug applications as well as their decisions regarding
labeling and other matters that could affect the availability or
commercial potential of our products; the speed with which regulatory
authorizations, pricing approvals and product launches may be
achieved; the success of external business development activities;
competitive developments, including with respect to competitor drugs
and drug candidates that treat diseases and conditions similar to
those treated by our in-line drugs and drug candidates; the ability to
successfully market both new and existing products domestically and
internationally; difficulties or delays in manufacturing; trade buying
patterns; the ability to meet generic and branded competition after
the loss of patent protection for our products and competitor
products; the impact of existing and future regulatory provisions on
product exclusivity; trends toward managed care and healthcare cost
containment; U.S. legislation or regulatory action affecting, among
other things, pharmaceutical product pricing, reimbursement or access,
including under Medicaid and Medicare, the importation of prescription
drugs that are marketed from outside the U.S. at prices that are
regulated by governments of various foreign countries, and the
involuntary approval of prescription medicines for over-the-counter
use; the impact of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003; legislation or regulatory action in markets
outside the U.S. affecting pharmaceutical product pricing,
reimbursement or access; contingencies related to actual or alleged
environmental contamination; claims and concerns that may arise
regarding the safety or efficacy of in-line products and product
candidates; legal defense costs, insurance expenses, settlement costs
and the risk of an adverse decision or settlement related to product
liability, patent protection, governmental investigations, ongoing
efforts to explore various means for resolving asbestos litigation,
and other legal proceedings; the Company's ability to protect its
patents and other intellectual property both domestically and
internationally; interest rate and foreign currency exchange rate
fluctuations; governmental laws and regulations affecting domestic and
foreign operations, including tax obligations; changes in generally
accepted accounting principles; any changes in business, political and
economic conditions due to the threat of terrorist activity in the
U.S. and other parts of the world, and related U.S. military action
overseas; growth in costs and expenses; changes in our product,
segment and geographic mix; and the impact of acquisitions,
divestitures, restructurings, product withdrawals and other unusual
items, including our ability to realize the projected benefits of our
Adapting to Scale multi-year productivity initiative, including the
projected benefits of the broadening of this initiative over the next
few years. A further list and description of these risks,
uncertainties, and other matters can be found in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, and
in its reports on Forms 10-Q and 8-K.
This earnings release includes discussion of certain clinical
studies relating to various in-line products and/or product
candidates. These studies typically are part of a larger body of
clinical data relating to such products or product candidates, and the
discussion herein should be considered in the context of the larger
body of data.
CONTACT: Pfizer
Media
Andy McCormick, 212-733-5469
Shreya Prudlo, 212-733-4889
or
Investors
Ron Aldridge, 212-573-3685