Exhibit 99.1
- -- WITH LOGO -- TO BUSINESS EDITOR:
Pfizer Inc Second-Quarter 2005 Performance Report
Pfizer Delivers Solid Operating Performance
While Making Progress Toward Long-Term Strategic Goals
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Key In-Line and New Products Achieve Strong Revenue Growth
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Second Quarter Reported Net Income of $3.463 Billion,
Reported Diluted EPS of $.47; Second Quarter Adjusted Income* of
$3.424 Billion, Adjusted Diluted EPS* of $.46
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New-Product Pipeline Continues to Advance
with U.S. Regulatory Approvals of Revatio, Zmax, and Lyrica;
Important Clinical Data for Sutent, Exubera, and Lipitor;
Agreement to Acquire Vicuron Pharmaceuticals
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Pfizer Remains On Track to Submit an Industry-Record
20 Major U.S. Regulatory Filings in 2001-2006
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Company Begins Implementing New Productivity Initiative, Leverages Financial
Strength with Expanded Earnings
Repatriation Program and New Share-Purchase Program
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Pfizer Leads by Example in Employer-Sponsored Healthcare
by Launching Healthy Directions Program
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Despite Stronger U.S. Dollar, Pfizer's Solid Operational Performance Leads
Company to Continue to Target
Adjusted Diluted EPS* of About $1.98 in 2005 and
Double-Digit Adjusted Diluted EPS* Growth in 2006 and 2007
NEW YORK, July 20 /PRNewswire-FirstCall/ -- Pfizer today reported financial
results for the second quarter of 2005.
"Pfizer achieved solid operating results in the second quarter," said Hank
McKinnell, chairman and chief executive officer. "While Pfizer continues to
achieve solid current performance, the company is successfully reinventing
itself for the long term to meet patients' healthcare needs and to enhance
shareholder value. Pfizer's strategy for long-term growth has four key
components -- maximizing the value of current products; developing, licensing,
or acquiring new products; leveraging our scale and financial strength; and
developing innovative approaches to improving human health. Pfizer made
significant progress toward achieving each of these strategic goals in the
second quarter."
Pfizer revenues for the second quarter of 2005 grew 1 percent to $12.425
billion, compared to the second quarter of 2004. The Company's Human Health
business generated revenues of $10.638 billion, down 1 percent, in the second
quarter. Quarterly revenues of Pfizer's Consumer Healthcare business were $969
million, up 12 percent. Pfizer's Animal Health revenues increased 19 percent in
the quarter to $578 million.
Reported second-quarter net income of $3.463 billion and reported diluted
earnings per share of $.47 included $816 million ($.11 per share) of purchase
accounting adjustments for acquisitions (primarily non-cash intangible
amortization charges); merger-related costs of $178 million ($.02 per share);
and certain significant items representing income of $1.042 billion ($.14 per
share), which included $490 million of income ($.07 per share) related to a
revised estimate of taxes for the repatriation of foreign earnings in 2005 and
$586 million of income ($.08 per share) related to the resolution of certain tax
positions, and $39 million in expenses ($.01 per share) related to the new
Adapting to Scale productivity initiative, all on an after-tax basis. Excluding
these items and the impact of discontinued operations of $9 million, adjusted
income* in the second quarter of 2005 decreased 5 percent relative to the same
period in 2004 to $3.424 billion, and adjusted diluted EPS* in the quarter
decreased 2 percent to $.46, compared to the same period in 2004.
During Transition Year, Human Health
Medicines Again Lead Industry
Second-quarter Human Health revenues reflect growth in the in-line
portfolio, offset by sales declines associated with Celebrex and Bextra and
generic competition to Neurontin, Diflucan, and Accupril.
"The solid performance of our in-line portfolio affirms Pfizer's
long-planned strategy to offset the effects of patent expirations with revenue
built on a broad base," said Karen Katen, vice chairman and president of Pfizer
Human Health. "Pfizer leads in eleven therapeutic areas (based on IMS Audited
Sales 1Q2005). Our year-to-date performance demonstrates the strength and depth
of our in-line portfolio. Excluding the COX-2-selective inhibitors and major
products that have lost exclusivity in the U.S. within the last year, Human
Health revenues in the first half of 2005 increased 18 percent, compared to the
first half of 2004, driven by the industry's broadest portfolio of innovative
products."
Fast-Growing Medicines. Nine of Pfizer's top ten products showed
second-quarter growth as measured year to year. These include Lipitor (up 21
percent), Norvasc (up 12 percent), Zoloft (up 1 percent), Zithromax (up 14
percent), Viagra (up 1 percent), Zyrtec (up 16 percent), Xalatan/Xalacom (up 17
percent), Camptosar (up 58 percent, benefiting from the recent acquisition of
rights in Europe), and Detrol/Detrol LA (up 22 percent). Additional strong
performers include Aromasin (up 86 percent), Zyvox (up 39 percent), Relpax (up
34 percent), Geodon (up 32 percent), and Vfend (up 28 percent).
With $2.9 billion of worldwide revenue in the second quarter, Lipitor grew
at 21 percent and remains the world's best-selling medicine. Lipitor is the most
prescribed cholesterol-lowering therapy in the world, with nearly 100 million
patient years of experience. Despite the entry of new competitors in the statin
market, Lipitor maintains strong sales growth and preferred formulary status.
Since the introduction of Lipitor more than eight years ago, its safety and
efficacy have been supported through an extensive clinical trial program with
more than 400 ongoing and completed trials involving more than 80,000 patients.
The landmark Treating to New Targets (TNT) study investigated the
cardiovascular benefit of lowering LDL cholesterol well below current guidelines
in patients with coronary heart disease. This five-year trial builds on the
well-established safety profile of Lipitor 80 mg, demonstrating musculoskeletal
safety comparable to the 10 mg dose. Emerging results from a sub-group analysis
of the TNT trial were reported at the American Diabetes Association meeting on
June 12. These results demonstrated that patients with diabetes taking high
doses of Lipitor experienced significant additional cardiovascular benefit.
In addition, the Australian Government Pharmaceutical Benefits Advisory
Committee recently reviewed comprehensive data on the clinical and
cost-effective benefits of Lipitor compared to simvastatin and concluded that
Lipitor is more effective at lowering cholesterol. We believe this to be a very
positive endorsement of the benefits of Lipitor for millions of patients around
the world by an independent official government advisory committee. This review
of our data may have significant implications for other governments when
considering the efficacy and cost effectiveness of Lipitor.
Despite loss of exclusivity in much of Europe, Norvasc continues to be
driven by strong growth in the U.S. and has delivered another billion-dollar
quarter worldwide (up 12 percent, compared to the second quarter of 2004).
Norvasc year-to-date U.S. total-prescription growth continues to outpace the
market (7 percent versus 5 percent).
After the decline in its sales performance beginning in late 2004, Celebrex
sales have improved, with year-to-date revenues of over $800 million. U.S.
weekly arthritis new-prescription market share of Celebrex has improved from 7.4
percent in mid-February to 10.6 percent in early July. This improvement is
coming both from switches of about one-third of Bextra prescriptions to Celebrex
and from organic product growth.
Adding to our understanding of the cardiovascular safety profile of Celebrex
are two new epidemiological studies published in the June 9 issue of the British
Medical Journal (BMJ). The study in BMJ by Cox and Coupland, et al., suggests an
increased risk of heart attack associated with current use of some non-steroidal
anti-inflammatory drugs (NSAIDs) such as diclofenac and ibuprofen. The authors
found no significant increase in cardiovascular risk associated with the use of
Celebrex, although the measures of relative risk were of similar magnitude to
those observed with the other drugs. The other study in BMJ by Hudson et al.
reported that the risk of death and recurrent congestive heart failure combined
was higher in elderly patients prescribed non-selective NSAIDs or rofecoxib than
in those prescribed Celebrex.
Last month, an expert panel of the European Medicines Agency (EMEA)
reaffirmed use of both Celebrex and Dynastat (with new warnings and
contraindications) as important treatment options for patients. The Canadian
government has also concluded that Celebrex should remain on the market and that
all NSAIDs carry a similar cardiovascular risk profile. In the U.S., Pfizer has
received the FDA's proposal for revised labeling for Celebrex and all other
medicines in the NSAID category, reflecting the agency's conclusion that the
cardiovascular risk profiles of these products are similar based on the clinical
evidence available to date.
Caduet continues its steady growth, up 143 percent year-to-date to $73
million. Caduet is a clinical enhancement to manage hypertensive patients with
other cardiovascular risk factors. Caduet has recently received approval in
France. As with any novel approach, we anticipate that revenue growth will
accelerate over time.
Recent & Upcoming Launches. Pfizer is in the process of launching at least
four new medicines in important disease categories in the U.S. during 2005 --
Macugen, Lyrica, Revatio, and Zmax.
Within three months of launching in the U.S., Macugen attained the number
one rank in Verispan monthly physician claims share for neovascular age-related
macular degeneration (AMD). Claims share is the projected share of physician
claims for all neovascular AMD patients treated in the U.S. In the U.S., Pfizer
markets Macugen with Eyetech Pharmaceuticals, Inc., the medicine's discoverer.
A recent tracking survey shows that more than 74 percent of all retina
specialists in the U.S. have administered Macugen to their patients. Medicare
covers Macugen in all 50 states, and it is increasingly being used as a primary
therapy regardless of lesion subtype or size. Macugen has recently been approved
in Canada and Brazil and has been filed for approval in the E.U., Australia, and
Switzerland. Macugen joins a strong ophthalmology portfolio that includes
Xalatan, the world's number-one agent for treatment of glaucoma. In June,
Xalatan in the U.S. reached a new 52-week prescription share all-time high of
29.3 percent.
In June, the FDA approved Lyrica as adjunctive therapy for adults with
partial onset seizures. This latest indication builds on the earlier FDA
approval of Lyrica for two of the most common forms of neuropathic pain --
diabetic peripheral neuropathy, a chronic neurologic condition affecting nearly
three million Americans, and postherpetic neuralgia. Lyrica is now approved in
47 countries outside the U.S. In the U.K., Germany, and Mexico, Lyrica is one of
the most successful epilepsy or neuropathic-pain launches ever. A supplemental
filing has been submitted in the E.U. for use of Lyrica in treatment of
generalized anxiety disorder. Pfizer expects to launch Lyrica in the U.S. as
soon as final DEA scheduling is received.
The Lyrica clinical program -- the largest ever for a neuroscience compound,
with more than 9,000 patients in clinical trials -- has produced compelling
results. At the American Diabetes Association meeting in June, pooled data from
six randomized, placebo-controlled studies involving more than 1,300 patients
with painful diabetic peripheral neuropathy demonstrated that Lyrica
significantly reduces pain as early as day 1, improves pain-related sleep
interference, and improves overall patient-reported outcomes such as vitality,
mental health, and social functioning.
Pfizer expects to launch Revatio (sildenafil citrate) for U.S. patients this
summer. In June, the FDA concluded its priority review and approved Revatio to
treat adult pulmonary arterial hypertension (PAH), a rare, aggressive, and
life-shortening vascular disease. "Pfizer will promote Revatio to treat patients
with PAH, a deadly disease that currently has no sufficient treatment options,"
Karen Katen said. "We are committed to using Pfizer's vast scientific capability
to address unmet medical need, regardless of commercial potential."
Also in June, the FDA approved Zmax (azithromycin extended release), a
patented microsphere Zithromax formulation that provides a single-dose treatment
for mild-to-moderate acute bacterial sinusitis and community-acquired pneumonia
in adults. This innovative technology allows for release of the medicine in the
small intestine rather than in the stomach, which results in a favorable
side-effect profile. A single-dose antibiotic will be a significant advancement
toward improving compliance.
New-Product Pipeline Continues to Advance
Pfizer achieved several key milestones in development of new products during
the second quarter of 2005:
- The filing for Indiplon Immediate Release capsules was accepted in June by
the FDA. FDA decision on the acceptance of the Modified Release tablet
filing is expected shortly. Indiplon is a novel GABA-A receptor
potentiator for the treatment of multiple aspects of insomnia. Pfizer is
developing Indiplon jointly with Neurocrine Biosciences. Insomnia is
estimated to affect at least 70 million Americans; an estimated 75 million
experience minor sleep disturbances.
- The U.S. regulatory review of Oporia, a selective estrogen receptor
modifier for osteoporosis prevention and vaginal atrophy, is progressing.
- At the American Diabetes Association meeting in June, Pfizer presented
clinical results from three studies showing that Exubera (inhalable human
insulin) provided effective, sustained glycemic control and was well
tolerated for over two years in adults with type 2 diabetes. A fourth
study showed that three months of Exubera therapy was well tolerated and
as effective as injectable short-acting insulin in achieving tight
glycemic control in adults with type 1 diabetes. Inhalable insulin
represents a significant advance in diabetes treatment, as up to 45
percent of patients with type 2 diabetes delay insulin treatment, citing
fear of injections. The FDA and EMEA are reviewing applications to market
Exubera for adult patients with type 1 and type 2 diabetes. Exubera is
under joint development by the Sanofi- Aventis Group and Pfizer. Pfizer is
also partnering with Nektar Therapeutics, which developed the inhalation
device and the technique for spray-drying insulin into powdered form.
- In data presented at a meeting of the American Society of Clinical
Oncology, Sutent, a potential breakthrough multi-targeted tyrosine kinase
inhibitor in Phase 3 development, was shown to prolong the time to tumor
progression in patients with gastrointestinal stromal tumors who were
resistant to or intolerant of the standard treatment Gleevec (6.3 months
on Sutent versus 1.5 months for controls) and reduced their risk of death
by approximately 50 percent versus placebo. In addition, a 63-patient
Phase 2 trial showed 40 percent of metastatic renal cell carcinoma
patients responded to Sutent treatment as measured by standard response
criteria, and the median overall survival was 16.4 months. Encouraging
Phase 2 results also were observed in other tumor types, such as
metastatic breast cancer and neuroendocrine tumors. Sutent is an integral
component of Pfizer's long-term vision for oncology. For the first time,
quarterly revenues for our current oncology portfolio surpassed $500
million, with second-quarter growth of 39 percent (compared to the second
quarter of 2004).
- A supplemental U.S. filing was submitted in June for the use of
Genotropin, the world's leading human recombinant growth hormone, in the
treatment of short stature and growth problems resulting from Turner's
syndrome.
- In June, a supplemental filing was submitted in the U.S. for a new
powder for oral suspension formulation of Vfend.
- A supplemental filing was approved in the E.U. in April for use of Fragmin
in treating deep vein thrombosis. Fragmin is a clot-preventing agent in a
class of drugs known as low-molecular-weight heparins. Fragmin is already
indicated for prophylaxis of deep vein thrombosis.
- Maraviroc (UK-427,857) is in Phase 3 development for treatment of HIV.
Maraviroc is a revolutionary new CCR-5 co-receptor antagonist, which
prevents the HIV virus from infecting white blood cells.
- Pfizer began production of torcetrapib/atorvastatin, a new medicine
candidate under development to lower LDL cholesterol and raise HDL
cholesterol, at a $90 million plant expansion at our facility in Loughbeg,
Ireland.
Pfizer Promotes Prevention and Wellness,
Availability of Medicines
"Pfizer continues to look for new ways to improve health and reduce
long-term costs," said Sylvia Montero, senior vice president, human resources.
"One such strategy began internally with Pfizer employees in June. Pfizer
launched Healthy Directions, a new incentive-based health-management program
that focuses on prevention and wellness. Employees participate in health
screenings and surveys that help identify specific areas for holistic health
improvement. Healthy Directions is a proactive commitment on Pfizer's part to
Pfizer colleagues and their families to help them understand their underlying
health conditions and, with their physicians, be an active participant in
managing their health."
Pfizer's external public-health program, Know Your Health, provides
educational materials to promote prevention and wellness. Know Your Health
encourages patients to learn about their medical conditions and gives them tools
to track doctor visits, prescriptions, and diet and exercise regimens.
Pfizer and Humana have created Green Ribbon Health, a Florida-based project
to provide better care to high-risk patients at lower cost by promoting
prevention and wellness. Starting in October, Green Ribbon will enroll 20,000
Medicare beneficiaries with diabetes and/or congestive heart failure to receive
personalized care to help them manage their health. Enrollees will participate
in classes and receive access to a personal support team and a 24-hour nurse
hotline. Green Ribbon is targeting nine Florida counties with high health costs,
poor health, traditionally low Medicare quality, and diverse populations. The
Centers for Medicare and Medicaid Services (CMS) chose Green Ribbon as one of
nine projects nationwide to find new ways to improve health while cutting costs
at least 5 percent. After three years, CMS will make this prevention-based care
a permanent service and will award larger national contracts to the most
successful project.
Since availability of medicine helps promote wellness and prevent disease,
Pfizer continues looking for new ways to help the 45 million Americans without
insurance find and pay for prescription medicines. Pfizer is proud to be an
important part of the Partnership for Prescription Assistance, launched on April
5 by a national coalition of pharmaceutical companies and other healthcare
providers. This partnership provides a single point of entry to connect patients
with low-cost or free medications directly from pharmaceutical companies and
other sources. Pfizer has joined nine other pharmaceutical companies to create
Together Rx Access to help patients obtain medicines through retail pharmacies.
The Together Rx Access card will enable approximately 80 percent of uninsured
Americans to gain access to more than 275 brand-name and generic prescription
medicines and other products, at savings of up to 40 percent. Both programs
build on the successful model of Pfizer Helpful Answers, the company's own
program to expand availability of Pfizer medicines.
"These education and access programs demonstrate Pfizer's commitment to
helping people become better informed about their medical conditions and to get
the medicines they need," said Karen Katen. "A critically important next step is
the rollout of the Medicare prescription drug benefit, where productive steps
are being taken to inform seniors of the benefits of enrolling. At the same
time, providers are playing an important role in developing plans that offer
seniors both choice and access to medicines."
Streamlining Our Business to Improve Performance and Efficiency
During the second quarter, Pfizer made significant progress in our
multi-year productivity initiative, called Adapting to Scale, to increase
efficiency and streamline decision making across the company. The initiative is
expected to yield $4 billion in cost savings on an annual basis by 2008, based
on a top-to-bottom business review completed during the first half of 2005.
"We are fully committed to realizing these cost savings, which will better
enable us to grow our products and pipeline so our company can return to
double-digit adjusted diluted EPS* growth next year," said David Shedlarz and
Karen Katen, vice chairmen, who are co-leading this effort for the company.
This initiative, first announced in April, follows the integration of
Warner-Lambert and Pharmacia, which resulted in the tripling of Pfizer's
revenues over the past five years. The integration of those two companies is
expected to result in a combined expense reduction of $6 billion in 2005,
inclusive of $4.2 billion in Pharmacia-related synergies that are expected to be
achieved this year.
During 2005, we anticipate that cost savings from our new initiative will
approximate $400 million. These will accelerate over the following three years,
with about $2 billion in savings targeted for 2006, about $3.5 billion in 2007,
and about $4 billion upon completion in 2008. These total savings of $4 billion
are expected to be realized in procurement ($1.3 billion), operating expenses
($1.3 billion), and facilities ($.3 billion), among other sources. The company
expects that the cost of implementing this initiative through 2008 will be
approximately $4 billion to $5 billion, reflecting the results of our detailed
implementation planning in the second quarter.
Pfizer is aggressively reducing costs in support services while continuing
to invest in growth opportunities. For example, savings from operating expenses
will be derived in part from reductions in travel, entertainment, consulting,
and other external service expenses. Facilities savings are being found in site
rationalization, energy conservation, and renegotiated service contracts.
Purchasing initiatives will focus on rationalizing suppliers, leveraging the
approximately $16 billion of goods and services that Pfizer purchases annually,
improving demand management to optimize levels of outside services needed, and
strategic sourcing from lower-cost sources.
While some projects are already underway, during the second half Pfizer will
accelerate the implementation of changes, including:
- A reorganization of Pfizer Global Research & Development (PGRD) to reduce
costs, speed decision making, and concentrate resources on projects that
have demonstrated the highest likelihood of success. Through this
initiative, PGRD is moving toward an operating model focused on
therapeutic areas from the earliest stages of research into development
and throughout product life cycles.
- Further progress in optimizing Pfizer Global Manufacturing's plant network
to ensure that the company's manufacturing facilities are aligned with
current and future product supply needs. Since December 2004, Pfizer has
announced the divestiture of facilities in Augusta, GA; Holland, MI;
Angers and Val-de-Reuil, France; Morpeth, U.K.; and Stockholm, Sweden, as
well as several smaller facilities. In addition, plants in Arecibo,
Caguas, and Cruce Davila, Puerto Rico; and Sandwich, U.K., are being
restructured. Since 2003, Pfizer has announced plans to reduce the number
of plants in its global network by more than 25 percent. These
initiatives, which will continue over the next three years, will further
enhance the organization's industry-leading efficiency.
- Increasing productivity by redesigning the U.S. field force to reflect the
new Medicare regions and to respond to changing market dynamics, including
respecting the time demands of physicians.
- Reorganizing commercial support across the European region to increase
focus on the needs of emerging customers and eliminate redundancy and
duplicative activities.
- Savings in information technology (IT) resulting from significant
reductions in applications (already reduced from about 8,000 at the time
of the Pharmacia acquisition in 2003 to about 4,000 today, with
considerable further reduction planned) and data centers (to be reduced
from 17 to 4), as well as rationalization of service providers, while
enhancing our ability to invest in innovative IT opportunities to further
propel our growth.
"By adapting to scale, Pfizer is tearing down silos and streamlining
processes -- unburdening our organization to focus on activities that matter
most to our business and to the patients who rely on us," said Karen Katen.
"This effort will help Pfizer operate more efficiently and cost-effectively, so
we can create greater value for patients, customers, and shareholders. We
understand that these changes will be challenging for all colleagues.
Unfortunately, some of these organizational changes will result in job
reductions. Consistent with our values, we will do everything we can to help
affected colleagues during the transition."
Leveraging Financial Strength
"Pfizer is actively employing its strong positive cash flow for the
long-term interests of shareholders," said David Shedlarz, vice chairman. "The
company is both investing aggressively in promising new business opportunities
and returning cash to shareholders through growing dividends and a new $5
billion share purchase program."
Pfizer has a strong track record of augmenting our internal product
portfolio with external opportunities. The recent announcement of the agreement
to acquire Vicuron Pharmaceuticals is one more demonstration of this approach.
In the recent past, Pfizer has acquired companies with innovative technologies
and exciting product candidates, such as Esperion, Idun, Angiosyn, and Meridica,
as well as entered into collaborations with Medarex, Rigel, and Coley. The
company will continue to identify external opportunities that enhance our
targeted therapeutic areas. This acquisition strategy is aided by Pfizer's
repatriation of about $37 billion in foreign earnings during 2005.
"Pfizer has performed well and will continue to perform well in spite of the
recent adverse impact of foreign exchange," said Alan Levin, chief financial
officer. "Since the beginning of April, the U.S. dollar has strengthened about 7
percent against the euro, about 8 percent against the pound sterling, and about
4 percent against the yen. As a result, we now project a modest decline in
revenues for the full year, compared to 2004. Cost of sales as a percentage of
revenues will continue to remain under pressure throughout the year. And the
company will continue to make the necessary investments to propel its future
growth, including R&D expenditures of about $8 billion this year. Nevertheless,
at current exchange rates, we continue to target 2005 adjusted diluted EPS* of
about $1.98, reflecting our confidence in the underlying operational performance
of the company. Reported diluted EPS in 2005 of about $1.24 is now anticipated,
compared to a previous estimate of about $1.04, in large part due to the
resolution of certain tax positions, a revised estimate of the tax cost of
repatriating foreign earnings reflecting recent U.S. Treasury guidance and the
recently announced expansion of our repatriation strategy, and a revised
estimate of restructuring and implementation costs associated with our
productivity initiative. Forecasted 2005 reported diluted EPS does not include
the impact of any pending acquisitions, such as Vicuron Pharmaceuticals. The
strengthened U.S. dollar, at current rates, will also have an adverse impact in
2006 and 2007. Nonetheless, at current exchange rates, we continue to target
double-digit adjusted diluted EPS* growth in 2006 and accelerating double-digit
adjusted diluted EPS* growth in 2007."
Vigorously Defending Pfizer's Intellectual Property
The company said that later this year it expects a decision in the lawsuit
the company brought against Ranbaxy in federal court in Delaware for
infringement of our two principal U.S. patents on Lipitor. "We believe that our
patents are valid and are being infringed by Ranbaxy and that we presented a
compelling case at trial," said Jeffrey Kindler, vice chairman and general
counsel. "In many other countries, including Canada and a number of markets in
the E.U., we have various patent rights that provide market exclusivity for
Lipitor for varying periods. In certain of these countries, our patent rights
are being challenged, and we are aggressively defending our position. With
respect to challenges in major European markets, a trial was held in Spain in
April, and a trial in the U.K. began on July 18. Decisions in both cases are
expected later this year."
Pfizer Helps Eliminate Blindness,
Train Healthcare Workers in Developing World
Sometimes, a medicine holds the power not just to treat a disease, but to
wipe it out entirely. Pfizer's International Trachoma Initiative (ITI) has
provided Zithromax to 16 million patients in 11 African and Asian countries with
one goal: to eliminate trachoma, the world's leading cause of preventable
blindness. ITI helps prevent trachoma by teaching patients about hygiene and by
promoting clean water and sanitation. The ITI has trained thousands of
healthcare professionals, who have completed 75,000 surgeries to treat advanced
cases of trachoma. In Morocco, where ITI has worked the longest, preliminary
data suggest that blinding trachoma has already been eliminated in children and
will be eliminated in adults later this year.
To fight HIV/AIDS, Pfizer's Diflucan Partnership donates this anti-infective
medication in developing countries to treat infections associated with the
disease. The Partnership has treated more than 150,000 patients at more than
1,100 sites in 33 countries in Africa, Asia, the Caribbean, and Latin America.
The Partnership also has trained 20,000 healthcare providers to distribute the
medicine.
Around the world, the first step toward healthy living is often learning
about wellness and prevention from a healthcare professional. That's especially
important in developing countries ravaged by HIV/AIDS. To increase the number of
trained healthcare providers in Africa, Pfizer led the creation of the
Infectious Disease Institute in Uganda, to help begin addressing barriers to
healthcare, access, and treatment in African countries. This treatment and
training institute provides the latest standards of care and is strengthening
local capacity to provide HIV/AIDS treatment by training 200 healthcare
professionals each year from all over Africa.
Since 2002, more than 50 Pfizer employees have worked as Global Health
Fellows to support non-governmental organizations in fighting HIV/AIDS in
developing countries. These physicians, epidemiologists, nurses, educators, and
business consultants are helping build the infrastructure necessary to provide
healthcare in developing countries. Most recently, the company began a
partnership with the President's Emergency Plan for AIDS Relief to assist
Kenya's health ministry in building organizational capacity needed to receive
and effectively use U.S. funding to fight AIDS.
Pfizer Investing in a Promising Future
"I am proud of the efforts -- and progress -- Pfizer colleagues are making
around the world in all areas of our business," concluded Hank McKinnell.
"Pfizer's continued strong investment during this transition year reflects our
optimism about our company's future and the many opportunities available for
improving human health."
For additional details, please see the attached financial schedules, product
revenue tables, and supplemental financial information.
DISCLOSURE NOTICE: The information contained in this document and the
attachments is as of July 20, 2005. The Company assumes no obligation to update
any forward-looking statements contained in this document or the attachments as
a result of new information or future events or developments.
This document and the attachments contain forward-looking information about
the Company's financial results and estimates, business prospects and products
in research 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," and
other words and terms of similar meaning in connection with any discussion of
future operating or financial performance. 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 commercial potential
of our products; the impact of the FDA's decision to require a boxed warning
including expanded risk information and the European Medicines Evaluation
Agency's decision to require expanded risk information in the Celebrex label;
the speed with which regulatory authorizations, pricing approvals and product
launches may be achieved; competitive developments affecting our current growth
products; 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; the impact of existing and future
regulatory provisions on product exclusivity; trends toward managed care and
health care cost containment; possible U.S. legislation or regulatory action
affecting, among other things, pharmaceutical pricing and reimbursement,
including under Medicaid and Medicare, the importation of prescription drugs
that are marketed outside the U.S. and sold at prices that are regulated by
governments of various foreign countries, and the involuntary approval of
prescription medicines for over-the-counter use; the potential impact of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003;
legislation or regulations in markets outside the U.S. affecting 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 future
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
mix; and the impact of acquisitions, divestitures, restructurings, product
withdrawals, and other unusual items, including our ability to integrate and to
obtain the anticipated results and synergies from our acquisition of Pharmacia,
and our ability to realize the projected benefits of our Adapting to Scale
multi-year productivity initiative. 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, 2004, and in its
reports on Forms 10-Q and 8-K.
This document 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.
* "Adjusted income" and "adjusted diluted earnings per share (EPS)" are
defined as reported net income and reported diluted EPS, excluding
discontinued operations, purchase accounting adjustments, merger-related
costs, and certain significant items. As described under Adjusted Income
in the Management's Discussion and Analysis of Financial Condition and
Results of Operations section of Pfizer's Form 10-Q for the quarterly
period ended April 3, 2005, 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. A reconciliation to
reported net income and reported diluted EPS is provided within this
document. 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
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(millions of dollars, except per common share data)
Second Quarter Six Months
-------------------- % Incr./ -------------------- % Incr./
2005 2004 (Decr.) 2005 2004 (Decr.)
-------- -------- -------- -------- -------- --------
Revenues $ 12,425 $ 12,274 1 $ 25,516 $ 24,762 3
Costs and expenses:
Cost of sales 2,081 1,752 19 4,272 3,546 20
Selling,
informational and
administrative
expenses 4,226 4,258 (1) 8,311 8,191 1
Research and
development
expenses 1,875 1,819 3 3,639 3,469 5
Amortization of
intangible assets 859 830 3 1,741 1,653 5
Merger-related
in-process research
and development
charges 260 - * 262 955 (73)
Restructuring charges
and merger-related
costs 270 289 (6) 489 536 (9)
Other (income)/
deductions--net (207) (102) 105 831 (145) *
Income from continuing
operations before
(benefit)/provision
for taxes on income
and minority
interests 3,061 3,428 (11) 5,971 6,557 (9)
(Benefit)/provision
for taxes on income (413) 582 * 2,222 1,390 60
Minority interests 2 2 8 5 4 20
Income from
continuing
operations 3,472 2,844 22 3,744 5,163 (27)
Discontinued operations:
(Loss)/income from
discontinued
operations--net
of tax (9) 17 * (22) 30 *
Gains on sales of
discontinued
operations--net
of tax - 2 (100) 41 2 M+
Discontinued
operations--net
of tax (9) 19 * 19 32 (38)
Net income $ 3,463 $ 2,863 21 $ 3,763 $ 5,195 (28)
Earnings per common share - Basic:
Income from
continuing
operations $ .47 $ .38 24 $ .51 $ .69 (26)
Discontinued
operations--net
of tax - - - - - -
Net income $ .47 $ .38 24 $ .51 $ .69 (26)
Earnings per common share - Diluted:
Income from
continuing
operations $ .47 $ .38 24 $ .51 $ .68 (25)
Discontinued
operations--net
of tax - - - - - -
Net income $ .47 $ .38 24 $ .51 $ .68 (25)
Weighted-average shares used to
calculate earnings per
common share:
Basic 7,366 7,574 7,391 7,580
Diluted 7,418 7,664 7,445 7,672
* Calculation not meaningful.
M+ Change greater than one-thousand percent.
Certain amounts and percentages may reflect rounding adjustments.
1. The above financial statement presents the three-month and six-month
periods ended July 3, 2005 and June 27, 2004. Subsidiaries operating
outside the United States are included for the three-month and six- month
periods ended May 29, 2005 and May 23, 2004.
2. The financial results for the three-month and six-month periods ended July
3, 2005 are not necessarily indicative of the results which ultimately
might be achieved for the current year.
3. As required, the estimated value of Merger-related in-process research and
development charges (IPR&D) is expensed at acquisition date. In 2005, we
expensed $262 million of IPR&D, primarily related to our acquisition of
Idun Pharmaceuticals, Inc. on April 12, 2005. In 2004, we expensed $955
million of IPR&D, primarily related to our acquisition of Esperion
Therapeutics, Inc. on February 10, 2004.
4. Other (income)/deductions--net in the first quarter of 2005 includes an
impairment charge of $1.2 billion related to the developed technology
rights and the write-off of machinery and equipment for Bextra, a
COX-2-selective inhibitor.
5. (Benefit)/provision for taxes on income in the second quarter of 2005
includes tax benefits associated with the resolution of certain tax
positions and a revised estimate of taxes on the repatriation of foreign
earnings.
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)
Second Quarter Six Months
-------------------- % Incr./ -------------------- % Incr./
2005 2004 (Decr.) 2005 2004 (Decr.)
-------- -------- -------- -------- -------- --------
Reported net
income $ 3,463 $ 2,863 21 $ 3,763 $ 5,195 (28)
Discontinued
operations
--net of tax 9 (19) * (19) (32) (38)
Purchase
accounting
adjustments
--net of tax 816 523 56 1,438 2,036 (29)
Merger-related
costs--net of
tax 178 224 (20) 330 351 (6)
Certain
significant
items --net
of tax (1,042) 20 * 1,913 40 M+
Adjusted
income $ 3,424 $ 3,611 (5) $ 7,425 $ 7,590 (2)
Reported
diluted
earnings per
common
share $ .47 $ .38 24 $ .51 $ .68 (25)
Discontinued
operations
--net of tax - - - - - -
Purchase
accounting
adjustments
--net of tax .11 .05 120 .19 .25 (24)
Merger-related
costs--net
of tax .02 .03 (33) .04 .05 (20)
Certain
significant
items --net
of tax (.14) .01 * .26 .01 M+
Adjusted diluted
earnings per
common share $ .46 $ .47 (2) $ 1.00 $ .99 1
* Calculation not meaningful.
M+ Change greater than one-thousand percent.
Certain amounts and percentages may reflect rounding adjustments.
1. The above reconciliation presents the three-month and six-month periods
ended July 3, 2005 and June 27, 2004. Subsidiaries operating outside the
United States are included for the three-month and six-month periods ended
May 29, 2005 and May 23, 2004.
2. Adjusted income and adjusted diluted earnings per common share as shown
above reflect the following items:
Second Quarter Six Months
-------------------- --------------------
(millions of dollars) 2005 2004 2005 2004
- ---------------------------------------- -------- -------- -------- --------
Discontinued operations, pre-tax:
Loss/(income) from discontinued
operations (a) $ 14 $ (25) $ 33 $ (45)
Gains on sales of discontinued
businesses and product lines (a) - (3) (65) (3)
Total discontinued operations,
pre-tax 14 (28) (32) (48)
Income taxes (5) 9 13 16
Total discontinued
operations--net of tax 9 (19) (19) (32)
Purchase accounting adjustments,
pre-tax:
In-process research and development
charges (b) 260 - 262 955
Intangible amortization and other (c) 828 820 1,683 1,623
Total purchase accounting
adjustments, pre-tax 1,088 820 1,945 2,578
Income taxes (272) (297) (507) (542)
Total purchase accounting
adjustments--net of tax 816 523 1,438 2,036
Merger-related costs, pre-tax:
Integration costs (d) 191 150 297 254
Restructuring costs (d) 58 139 171 282
Total merger-related costs, pre-tax 249 289 468 536
Income taxes (71) (65) (138) (185)
Total merger-related
costs--net of tax 178 224 330 351
Certain significant items, pre-tax
Asset impairment charges and other
costs associated with the
suspension of selling Bextra (e) - - 1,213 -
Operating results of divested
legacy Pharmacia research
facility (f) - 32 - 64
Restructuring charges - Adapting to
Scale (d) 21 - 21 -
Implementation costs - Adapting to
Scale (g) 33 - 33 -
Total certain significant items,
pre-tax 54 32 1,267 64
Income taxes (20) (12) (467) (24)
Resolution of certain tax
positions (h) (586) - (586) -
Tax impact for the repatriation of
foreign earnings (h) (490) - 1,699 -
Total certain significant
items--net of tax (1,042) 20 1,913 40
Total discontinued operations,
purchase accounting adjustments,
merger-related costs and certain
significant items--net of tax $ (39) $ 748 $ 3,662 $ 2,395
(a) Included in Discontinued operations--net of tax.
(b) Included in Merger-related in-process research and development charges.
(c) Included primarily in Amortization of intangible assets.
(d) Included in Restructuring charges and merger-related costs.
(e) Included in Cost of sales ($56 million), Selling, informational and
administrative expenses ($5 million) and Other (income)/deductions-net
($1,152 million).
(f) Included in Research and development expenses.
(g) Included in Cost of sales ($1 million), Selling, informational and
administrative expenses ($21 million), and Research and development
expenses ($11 million).
(h) Included in (Benefit)/provision for taxes on income.
PFIZER INC
SEGMENT/PRODUCT REVENUES
SECOND QUARTER 2005
(UNAUDITED)
(millions of dollars)
WORLDWIDE U.S. INTERNATIONAL
---------------------------- ---------------------------- ----------------------------
2005 2004 % Chg 2005 2004 % Chg 2005 2004 % Chg
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL
REVENUES 12,425 12,274 1 6,186 6,595 (6) 6,239 5,679 10
HUMAN HEALTH 10,638 10,704 (1) 5,387 5,886 (8) 5,251 4,818 9
- - CARDIOVASCULAR
AND
METABOLIC
DISEASES 4,471 3,899 15 2,288 1,858 23 2,183 2,041 7
LIPITOR 2,858 2,363 21 1,680 1,313 28 1,178 1,050 12
NORVASC 1,156 1,032 12 523 412 27 633 620 2
CARDURA 155 161 (4) 1 1 (6) 154 160 (4)
ACCUPRIL/
ACCURETIC 73 153 (53) 3 81 (96) 70 72 (4)
CADUET 41 2 M+ 40 2 M+ 1 0 *
- - CENTRAL
NERVOUS
SYSTEM
DISORDERS 1,537 2,036 (24) 873 1,434 (39) 664 602 10
ZOLOFT 796 789 1 613 608 1 183 181 1
NEURONTIN 161 782 (79) 35 644 (95) 126 138 (9)
GEODON 145 110 32 119 91 30 26 19 39
XANAX / XR 104 86 21 35 23 57 69 63 8
ARICEPT ** 86 74 16 0 0 - 86 74 16
RELPAX 50 38 34 28 21 36 22 17 31
LYRICA 38 0 * 0 0 - 38 0 *
- - ARTHRITIS
AND PAIN 547 1,146 (52) 324 773 (58) 223 373 (40)
CELEBREX 401 728 (45) 306 504 (39) 95 224 (58)
BEXTRA (42) 275 * (34) 242 * (8) 33 *
- - INFECTIOUS
AND
RESPIRATORY
DISEASES 1,101 1,125 (2) 520 620 (16) 581 505 15
ZITHROMAX 424 370 14 294 260 13 130 110 18
ZYVOX 153 110 39 106 81 31 47 29 63
DIFLUCAN 129 285 (55) (2) 152 * 131 133 (1)
VFEND 91 71 28 31 30 3 60 41 46
- - UROLOGY 626 583 7 320 320 - 306 263 16
VIAGRA 391 389 1 174 201 (13) 217 188 16
DETROL/
DETROL LA 222 182 22 142 115 23 80 67 20
- - ONCOLOGY 513 369 39 178 164 8 335 205 64
CAMPTOSAR 233 147 58 123 133 (8) 110 14 696
ELLENCE 96 88 10 20 17 13 76 71 9
AROMASIN 58 31 86 18 8 118 40 23 74
- - OPHTHALMOLOGY 341 291 17 102 91 11 239 200 20
XALATAN /
XALACOM 341 291 17 102 91 11 239 200 20
- - ENDOCRINE
DISORDERS 263 223 18 82 66 24 181 157 15
GENOTROPIN 201 180 12 56 47 17 145 133 10
- - ALL OTHER 991 894 11 566 498 14 425 396 7
ZYRTEC /
ZYRTEC D 355 306 16 355 306 16 0 0 -
- - ALLIANCE
REVENUE
(Aricept,
Macugen,
Mirapex,
Rebif and
Spiriva) 248 138 79 134 62 118 114 76 48
CONSUMER
HEALTHCARE 969 869 12 463 421 10 506 448 13
ANIMAL HEALTH 578 484 19 263 217 21 315 267 18
OTHER *** 240 217 11 73 71 3 167 146 14
* - Calculation not meaningful.
** - Represents direct sales under license agreement with Eisai Co., Ltd.
*** - Includes Capsugel and Pfizer CenterSource.
M+ - Change greater than one-thousand percent.
Certain amounts and percentages may reflect rounding adjustments.
Certain prior year data have been reclassified to conform to the current year
presentation.
PFIZER INC
SEGMENT/PRODUCT REVENUES
SIX MONTHS 2005
(UNAUDITED)
(millions of dollars)
WORLDWIDE U.S. INTERNATIONAL
---------------------------- ---------------------------- ----------------------------
2005 2004 % Chg 2005 2004 % Chg 2005 2004 % Chg
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL
REVENUES 25,516 24,762 3 13,163 13,744 (4) 12,353 11,018 12
HUMAN HEALTH 22,078 21,745 2 11,593 12,348 (6) 10,485 9,397 12
- - CARDIOVASCULAR
AND METABOLIC
DISEASES 9,197 8,085 14 4,854 4,123 18 4,343 3,962 10
LIPITOR 5,932 4,860 22 3,593 2,886 24 2,339 1,974 19
NORVASC 2,331 2,173 7 1,063 901 18 1,268 1,272 -
CARDURA 309 309 - 3 4 (30) 306 305 -
ACCUPRIL/
ACCURETIC 173 344 (50) 32 205 (84) 141 139 2
CADUET 73 30 143 69 30 132 4 0 *
- - CENTRAL
NERVOUS
SYSTEM
DISORDERS 3,129 3,983 (21) 1,827 2,814 (35) 1,302 1,169 11
ZOLOFT 1,641 1,599 3 1,274 1,252 2 367 347 6
NEURONTIN 343 1,478 (77) 91 1,214 (92) 252 264 (5)
GEODON 282 198 42 231 163 42 51 35 46
XANAX / XR 206 171 20 69 48 44 137 123 11
ARICEPT ** 170 145 18 0 0 - 170 145 18
RELPAX 103 67 53 60 37 62 43 30 41
LYRICA 58 0 * 0 0 - 58 0 *
- - ARTHRITIS
AND PAIN 1,184 2,322 (49) 652 1,601 (59) 532 721 (26)
CELEBREX 813 1,497 (46) 571 1,062 (46) 242 435 (45)
BEXTRA 14 545 (97) (16) 486 * 30 59 (49)
- - INFECTIOUS
AND
RESPIRATORY
DISEASES 2,583 2,360 9 1,403 1,343 4 1,180 1,017 16
ZITHROMAX 1,221 837 46 926 595 56 295 242 22
ZYVOX 296 207 43 210 154 36 86 53 62
DIFLUCAN 267 588 (55) 4 329 (99) 263 259 1
VFEND 179 135 33 65 56 15 114 79 45
- - UROLOGY 1,328 1,218 9 735 690 6 593 528 12
VIAGRA 829 805 3 403 420 (4) 426 385 11
DETROL/
DETROL LA 474 389 22 321 260 24 153 129 19
- - ONCOLOGY 992 680 46 341 290 18 651 390 66
CAMPTOSAR 445 239 87 227 214 6 218 25 782
ELLENCE 186 167 11 38 34 11 148 133 11
AROMASIN 113 55 107 38 12 221 75 43 75
- - OPHTHALMOLOGY 674 570 18 206 191 8 468 379 23
XALATAN /
XALACOM 673 570 18 206 191 8 467 379 23
- - ENDOCRINE
DISORDERS 521 443 18 170 146 17 351 297 18
GENOTROPIN 404 360 12 119 106 13 285 254 12
- - ALL OTHER 1,980 1,801 10 1,129 1,004 12 851 797 7
ZYRTEC /
ZYRTEC D 697 605 15 697 605 15 0 0 -
- - ALLIANCE
REVENUE
(Aricept,
Macugen,
Mirapex,
Rebif and
Spiriva) 490 283 73 276 146 89 214 137 56
CONSUMER
HEALTHCARE 1,914 1,673 14 946 838 13 968 835 16
ANIMAL HEALTH 1,073 912 18 482 416 16 591 496 19
OTHER *** 451 432 5 142 142 (1) 309 290 7
* - Calculation not meaningful.
** - Represents direct sales under license agreement with Eisai Co., Ltd.
*** - Includes 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 AND SUBSIDIARY COMPANIES
RECONCILIATION FROM REPORTED TO ADJUSTED
HUMAN HEALTH REVENUES
(UNAUDITED)
(millions of dollars)
Second Quarter Six Months
-------------------- % Incr./ -------------------- % Incr./
2005 2004 (Decr.) 2005 2004 (Decr.)
-------- -------- -------- -------- -------- --------
Total Human
Health revenues $ 10,638 $ 10,704 (1) $ 22,078 $ 21,745 2
Excluding:
Celebrex 401 728 (45) 813 1,497 (46)
Bextra (42) 275 * 14 545 (97)
Dynastat 9 11 (21) 20 18 9
Neurontin 161 782 (79) 343 1,478 (77)
Diflucan 129 285 (55) 267 588 (55)
Accupril/Accuretic 73 153 (53) 173 344 (50)
Adjusted Human
Health revenues $ 9,907 $ 8,470 17 $ 20,448 $ 17,275 18
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
Adjusted Human Health revenues, which excludes the worldwide revenues of
COX-2-selective inhibitors and major products which have lost exclusivity in
the U.S. within the last year, is an alternative view of our Human Health
revenue performance and we believe that investors' understanding of Human
Health revenue growth is enhanced by disclosing this performance measure.
Neurontin, Diflucan and Accupril/Accuretic recently lost their U.S.
exclusivity and, as is typical in the pharmaceutical industry, this has
resulted in a dramatic decline in revenues due to generic competition.
Celebrex and Bextra, as a result of recent regulatory evaluation of the
risks and benefits of all COX-2 medicines, have also experienced a
significant decline in sales. Specifically, the regulatory review of and
conclusions regarding Celebrex have resulted in declining sales as
physicians evaluate the evolving information on the risks and benefits of
all NSAIDs, and on April 7, 2005, the FDA requested the suspension of Bextra
sales and marketing based on its assessment of an unfavorable risk/benefit
profile due to the additional increased risk of rare, serious skin reactions
compared to other NSAIDs. We believe that excluding the impact of these
products assists the reader in understanding the underlying strength of the
balance of our diverse Human Health product portfolio. Because of its
non-standardized definition, this adjusted Human Health revenues measure has
limitations as it may not be comparable with the calculation of similar
measures of other companies. This additional revenue measure is not, and
should not be, viewed as a substitute for the U.S. GAAP comparison of Human
Health revenue growth.
Pfizer Inc
Supplemental Financial Information
1) Impact of Foreign Exchange on Revenues
A weakening of the U.S. dollar relative to other currencies in the first
half of 2005 compared to the first half of 2004, principally the euro, Japanese
yen, British pound, and Canadian dollar, favorably impacted second-quarter 2005
revenue growth by $335 million, or 3%, and first-half 2005 revenue growth by
$734 million, or 3%.
Due to the recent strengthening of the dollar versus the major foreign
currencies, foreign exchange, at current rates, is not expected to have a
material impact on year-over-year growth comparisons in the second half of 2005.
In addition, given the recent strengthening of the dollar, Pfizer now expects
2005 revenues for the full year to evidence a modest decline relative to 2004.
Notwithstanding the unfavorable impact of foreign exchange, at current
foreign-exchange rates Pfizer continues to target 2005 adjusted diluted EPS* of
about $1.98. Pfizer now targets 2005 reported diluted EPS of about $1.24.
2) Cost of Sales Growth
The primary drivers of the 19% growth in cost of sales in the quarter and
the increase in cost of sales as a percentage of revenues, compared to the
second quarter of 2004, are unfavorable geographic, segment, and product mix;
adverse changes in production volume; and foreign exchange. Cost of sales as a
percentage of revenues will remain under pressure throughout 2005.
3) Costs Relating to Adapting to Scale Productivity Initiative
We expect the costs associated with this multi-year effort to continue
through 2008. Total Adapting-to-Scale-related expenditures expected to be
incurred through 2008 are now estimated at between $4 billion and $5 billion, on
a pre-tax basis. These costs will include such charges as asset impairments,
exit costs, accelerated depreciation charges (primarily associated with plant
network optimization efforts), implementation costs (incremental costs of
implementing the initiative primarily associated with systems integration
activities and the expansion of certain shared support services), and severance
costs (including the associated impacts to our benefit plans, including
settlements and curtailments).
4) Other Income and Other Deductions
Second Quarter First Half
-------------------- --------------------
($ millions) 2005 2004 2005 2004
---------------------------------------- -------- -------- -------- --------
Net Interest (Income)/
Expense $ (53) $ (2) $ (70) $ (2)
Impairment of Bextra
-Related Long-Lived
Assets (3) -- 1,152 --
Royalties (88) (96) (166) (151)
Gains on Disposals of
Investments/Product
Lines (58) (2) (62) (2)
Other, Net (5) (2) (23) 10
Other (Income)/Deductions
-Net $ (207) $ (102) $ 831 $ (145)
In connection with the decision to suspend sales of Bextra in the first
quarter of 2005, we recorded a charge of $1.145 billion relating to the
impairment of Bextra's intangible assets for developed technology rights and the
write-off of machinery and equipment of $7 million.
5) Effective Tax Rate on Adjusted Earnings
The effective tax rate in calculating adjusted income* from continuing
operations for 2005 is projected to be 23%. The effective tax rate in
calculating reported net income from continuing operations in the second quarter
reflects a benefit of 13.5% and is impacted primarily by adjustments relating to
taxes on repatriation of foreign earnings and the resolution of certain tax
positions. These two items do not impact adjusted income.
6) Tax Impact on Repatriation of Foreign Earnings
Pfizer's reported net income in the second quarter of 2005 was positively
impacted by a net amount of $490 million ($.07 per share) due to two factors
relating to taxes on the repatriation of foreign earnings:
- A reversal of $863 million ($.12 per share) of the $2.2 billion tax charge
recorded in the first quarter in connection with the initial repatriation
of about $28 billion in foreign earnings, as a result of recent guidance
issued by the U.S. Treasury, partially offset by
- A tax charge of about $373 million ($.05 per share) associated with the
repatriation of an additional $8.6 billion in foreign earnings.
7) Reconciliation of Targeted 2005 Adjusted Income* and Adjusted Diluted
EPS* to Targeted 2005 Reported Net Income and Reported Diluted EPS
($ billions, except per-share amounts) Net Income Diluted EPS
-------------------------------------------------- ---------- -----------
Targeted Adjusted Income*/Diluted EPS* $ 14.6 ~$ 1.98
Intangible Amortization and Other (2.3) (.31)
In-Process R&D Charges (Primarily Idun) (0.3) (.04)
Merger-Related Costs/Productivity Initiative Costs (1.0) (.14)
Asset Impairment Charges and Other Costs
Associated with Suspension of Selling Bextra (0.8) (.10)
Tax Impact on Repatriation of Foreign Earnings (1.7) (.23)
Resolution of Certain Tax Positions 0.6 .08
Targeted Reported Net Income/Diluted EPS $ 9.1 ~$ 1.24
Pfizer's estimates of 2005 reported net income of $9.1 billion and reported
diluted earnings per share of about $1.24, subject to the Disclosure Notice in
this report, have been revised from the prior guidance of $7.7 billion and about
$1.04. The revision is principally attributable to the resolution of certain tax
positions (increase to net income and diluted EPS of $0.6 billion and $0.08), a
revised estimate of the cost of repatriating foreign earnings (net reduction in
taxes from $2.2 billion and $0.30 EPS impact to $1.7 billion and $0.23) and a
revised estimate of merger-related costs/productivity initiative costs
(reduction from an after-tax cost of $1.4 billion and $0.18 EPS impact to $1.0
billion and $0.14). These estimates do not reflect the impact of any pending
acquisitions, such as Vicuron Pharmaceuticals.
8) Share-Purchase Program
We believe that purchase of our stock is an excellent investment
opportunity. Since January 1999, Pfizer has purchased more than $30 billion of
its common stock. In the second quarter of 2005, the company completed the $5
billion share-purchase program authorized in October 2004 by purchasing
approximately 86 million shares at a total cost of about $2.4 billion. On June
23, 2005, Pfizer announced the authorization of a new $5 billion share-purchase
program.
SOURCE Pfizer Inc
-0- 07/20/2005
/CONTACT: Andy McCormick, +1-212-733-5469, or Paul Fitzhenry,
+1-212-733-4637, both of Pfizer Inc/
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