Exhibit 99.1
PFIZER FIRST-QUARTER 2006 FINANCIAL RESULTS
REFLECT OPERATING AND FINANCIAL STRENGTH
First Quarter
-----------------------
($ billions, except per-share amounts) 2006 2005
- --------------------------------------------- ---------- ----------
Revenue $ 12.660 $ 13.091
Reported Net Income $ 4.111 $ 0.301
Reported Diluted EPS $ 0.56 $ 0.04
Adjusted Income(1) $ 4.461 $ 4.000
Adjusted Diluted EPS(1) $ 0.61 $ 0.54
[see end of text prior to tables]
Rapid Uptake of Lyrica Continues;
Geodon Among Fastest-Growing Antipsychotic Drugs
- - -
Foreign Exchange, Timing of New-Product Launches and Expenses,
Loss of Exclusivity, Effective Tax Rate, Other Factors Impact Quarterly 2006
EPS; Company Reaffirms 2006-08 Financial Guidance for Adjusted
Diluted EPS(1), Raises Guidance for 2006 Reported Diluted EPS
- - -
Pfizer Continues to Build Shareholder Value with $1 Billion Share Purchase in
First Quarter, Plans for $1 Billion Purchase in Second Quarter, Target of Up
to $4 Billion Purchase for Full-Year 2006; Additional Share-Purchase
Opportunities Possible
- - -
Company Remains Committed to Aggressive Full-Year Sales Targets
for Lipitor, Celebrex, Lyrica, and Geodon
- - -
U.S. Approvals in Quarter Include Sutent,
Exubera, and Eraxis (Anidulafungin), With Action Pending
on Varenicline, Zeven (Dalbavancin), and Indiplon; Industry's Broadest Pipeline
Continues to Advance, With U.S. Filings Made or Expected for Five New Medicines
in 2006 Through 2007
- - -
Company to Acquire Rinat Neuroscience Corp.
and to License Fesoterodine for Overactive Bladder
- - -
Pfizer Continues to Explore Strategic Options for Consumer Healthcare Business,
Sees High Degree of Initial Interest
- - -
Broad-Based Productivity Initiative on Track to Achieve At Least $2 Billion
in Annual Savings in 2006, $4 Billion by 2008
NEW YORK, April 19 /PRNewswire-FirstCall/ -- Pfizer reported
first-quarter 2006 financial results today.
"We are reporting solid operating performance for the first quarter of
2006, with an increasing contribution from our new products, significant cost
savings from our restructuring initiatives, and additional action to build
shareholder value," said Hank McKinnell, chairman and chief executive officer.
"We will continue to manage the loss of exclusivity on some of our major
products with an aggressive strategy that responds to our competitive challenges
and positions Pfizer for renewed growth. We are reconfirming our 2006 full-year
financial guidance for revenues and adjusted diluted EPS(1), as well as our
targets for 2007 and 2008.
"We are committed in our efforts to reach our full-year revenue goal for
Lipitor, although it is an aggressive target given a challenging environment and
a slower-than-hoped-for start to the year. New clinical data, educational
campaigns on Lipitor that highlight its unique benefit profile, and advantageous
formulary positioning are expected to contribute to growth. The same commitment
is true for Celebrex, which remains an important treatment option for millions
of arthritis patients. Geodon is delivering excellent results, Lyrica is
exceeding our high initial expectations, and the contribution of new products
will continue to accelerate as we launch new products throughout the year.
"At the same time, we continue to buy company shares aggressively.
Having purchased $1 billion of Pfizer stock in the first quarter of 2006, we
intend to buy another $1 billion in the second quarter. We hope to purchase up
to $4 billion in total this year. Our expected operating cash flow of more than
$16 billion enables us to build value today while investing in the future.
Already this year we have acquired the sanofi-aventis worldwide rights,
including patent rights and production technology, to manufacture and sell
Exubera; reached an agreement to acquire Rinat Neuroscience Corp.; and reached
an agreement with Schwarz Pharma AG to acquire exclusive worldwide rights to
fesoterodine for overactive bladder."
Portfolio, Pipeline Position Human Health for Future Success
"Pfizer's first-quarter 2006 results mark the beginning of a year that
will be characterized by the transition to the next-generation Pfizer," said
Karen Katen, vice chairman of Pfizer and president of Pfizer Human Health. "Our
in-line medicines are continuing to drive performance; recent and upcoming
launches of new medicines will replenish and expand the portfolio as older
medicines lose exclusivity."
($ billions, except % growth)
Impact on
Total
Human Health Human Health
1Q06 1Q06/1Q05
Revenues % Growth
------------- -------------
In-Line Products(2)
and New Products(2) $ 10.870 5%
Loss-of-Exclusivity Products
and Bextra(2) 0.581 (6)%
(Withdrawn)
Impact of Foreign Exchange (0.338) (3)%
Total Human Health Revenues $ 11.113 (4)%
Human Health revenues of $11.113 billion for the first quarter of 2006
represent a decline of 4 percent compared to the first quarter of 2005. In the
U.S., Human Health revenues increased 2 percent for the first quarter of 2006,
compared to the same period in 2005. Excluding the major medicines that lost
exclusivity in the U.S. since the beginning of 2004 and Bextra, which we
voluntarily withdrew in 2005, Human Health adjusted revenues(3) grew 3 percent
worldwide and 13 percent in the U.S. for the quarter in 2006 compared to 2005.
In addition, the unfavorable impact of foreign exchange on Human Health revenues
was $338 million, or 3 percent. Excluding the impact of foreign exchange,
adjusted Human Health revenues(3) would have increased 6 percent worldwide.
Many of Pfizer's medicines achieved double-digit growth in the quarter,
compared to the first quarter of 2005, across many therapeutic areas, including
cardiovascular/metabolic diseases (Caduet up 147 percent);
central-nervous-system disorders (Geodon up 32 percent, Relpax up 24 percent);
arthritis and pain (Celebrex up 19 percent); infectious and respiratory diseases
(Zyvox up 30 percent, Vfend up 33 percent); and oncology (Aromasin up 26
percent).
First-Quarter Portfolio Highlights
Pfizer expects that the performance of key products -- including
Lipitor, Celebrex, Lyrica, and Geodon -- will continue to drive overall
performance for Pfizer Human Health.
Worldwide sales of Lipitor totaled $3.107 billion in the first quarter
of 2006, reflecting growth of 3 percent on a constant-dollar basis. The
unfavorable impact of foreign exchange reduces the growth rate to 1 percent on a
reported basis. In the U.S., sales of $1.974 billion represent growth of 3
percent over the previous year's first quarter.
While sales growth in the first quarter of 2006 was slower than
anticipated, we continue to pursue a target of more than $13 billion in 2006
revenue for Lipitor. Lipitor leads prescriptions for U.S. patients receiving
statin therapy for the first time in the last 12 months, with nearly a
37-percent share of new-to-market patients in January 2006, more than twice the
share of the closest competitor.(4) Internationally, Lipitor sales in the
quarter grew by 4 percent on a constant-dollar basis, although the impact of
foreign exchange resulted in a 3-percent reported decline in international
Lipitor sales for the quarter.
Scientific data continue to reinforce the trend toward the use of higher
dosages of statins for greater cholesterol reduction. Lipitor is generating
ongoing outcomes data that support its unique benefit profile on a wide range of
endpoints.
For example, data from a sub-analysis of the Treating to New Targets
(TNT) study, presented at the American College of Cardiology meeting in March
2006, showed that patients with kidney dysfunction taking 80 mg of Lipitor had
significantly greater improvements in kidney function than patients taking 10
mg. Half of these patients on 80 mg had normal kidney function at the end of the
study. This further builds on the wealth of evidence that Lipitor is a powerful
lipid-lowering agent, which leads to improved health outcomes for a broad range
of patients -- even those with impaired kidney function.
These data are being communicated through significantly improved
physician encounters versus the competition, a result of last year's U.S.
field-force realignment. Pfizer also launched a compelling new educational
campaign last month. The new print and television ads feature Dr. Robert Jarvik,
inventor of the artificial heart, discussing the advantages of better
cardiovascular health and the benefits of Lipitor.
The proven benefits of Lipitor are enabling successful contracting with
key customers throughout the U.S., driven in part by the unsurpassed body of
clinical evidence supporting it. Contracts covering 60 percent of commercial
lives for Lipitor, approximately 106 million lives, have been signed through
2007, allowing broad access to Lipitor through 2007 and beyond.
Worldwide sales of Celebrex totaled $491 million for the first quarter
of 2006, reflecting 19-percent growth over the first quarter of 2005. We
continue to pursue an aggressive full-year sales target of more than $2 billion
for Celebrex for the year. In the U.S., Celebrex new-prescription volume in the
first quarter grew 23 percent over the same period in the prior year, despite a
2-percent decline in new-prescription volume for the overall arthritis market.
Celebrex is the only actively promoted prescription medicine in the arthritis
market. A new branded print advertising campaign began this week.
Internationally, first-quarter 2006 sales of $100 million declined by 32
percent, due to strong sales in the beginning of the first quarter of 2005
related to the Vioxx withdrawal as well as the adverse effects of foreign
exchange.
Strong clinical data continue to support Celebrex as an important
medicine for patients with arthritis. The SUCCESS-1 study (Successive Celecoxib
Efficacy and Safety Study), recently published in the American Journal of
Medicine, showed that people with osteoarthritis who take Celebrex experience
significantly fewer gastrointestinal problems than patients who take
non-specific non-steroidal anti-inflammatory drugs.
It was this gastrointestinal profile that led researchers to choose
high-dose Celebrex for investigational trials in the area of chemoprevention.
The first efficacy data from two of these long-term clinical studies -- Adenoma
Prevention with Celecoxib (APC) and Prevention of Sporadic Adenomatous Polyps
(PreSAP) -- were presented earlier this month at the American Association for
Cancer Research meeting. These studies showed that Celebrex helps stop the
regrowth of pre-cancerous polyps (adenomas) that can lead to colon cancer. The
final cardiovascular safety results from these long-term polyp studies are
consistent with the current Celebrex label.
Worldwide first-quarter 2006 Geodon sales of $182 million represent a
32-percent increase over the prior year. Geodon growth is due to the improved
perception among clinicians of its efficacy, increased benefits from optimal
dosing, and its favorable metabolic profile, as confirmed by the Clinical
Antipsychotic Trials of Intervention Effectiveness (CATIE) trial. As the only
antipsychotic that demonstrates efficacy and reduced weight, lipid,
triglyceride, and insulin levels, Geodon is uniquely positioned to allow
psychiatrists to treat mental health "with the body in mind." The U.S. Patent
and Trademark Office granted a five-year extension to the Geodon U.S. patent,
extending its exclusivity to 2012. We continue to expect full-year 2006 Geodon
revenues of about $800 million.
In only its second year on the market, Lyrica continues to be one of the
most successful pharmaceutical market entries, with first-quarter 2006 worldwide
revenues of $192 million. We now expect Lyrica to achieve full-year revenues of
at least $900 million. In the first quarter of 2006, Lyrica achieved a
significant milestone -- more than 1 million patients have now been prescribed
Lyrica since its introduction.
In the U.S., Lyrica has been number one in new prescriptions for pain
associated with diabetic peripheral neuropathy and post-herpetic neuralgia among
primary-care physicians and neurologists for the last five months. Lyrica has
now reached a 9.1-percent new-prescription market share for the total
anti-epileptic drug market as of the week ending March 31, 2006. Lyrica
continues to perform strongly in Europe, with February 2006 sales shares of the
anti-epileptic drug market of 24 percent in Italy, 18 percent in Germany, 17
percent in Spain, and 14 percent in the U.K., according to IMS data.
On March 27, 2006, the European Commission approved Lyrica to treat
generalized anxiety disorder (GAD) in adults, thereby providing a new treatment
option for the approximately 12 million Europeans living with GAD. Pfizer
continues to pursue indications for GAD, fibromyalgia, and other conditions in
the U.S. and other markets worldwide.
Rich Pipeline of Medicines Continues to Advance
"The first quarter of 2006 marked a strong start to an important year
for the Pfizer pipeline," said Dr. John LaMattina, President of Pfizer Global
Research and Development.
Along with approving Exubera and Sutent, the FDA approved Eraxis
(anidulafungin) during the first quarter of 2006 to treat candidemia and
invasive and esophageal candidiasis. Eraxis builds upon Pfizer's strength in
medicines for the treatment of infectious diseases, particularly antifungal
treatments. In addition to these three exceptional medicines, we anticipate
three more approvals by the end of the year: varenicline, Zeven (dalbavancin),
and indiplon. By year-end, we expect to have launched these new products,
including Sutent, which was the most recently introduced breakthrough treatment
for patients with rare and difficult-to-treat forms of cancer.
Pfizer remains on track to deliver on the industry's broadest pipeline,
with five new medicines filed or expected to be filed in 2006-07: fesoterodine,
a product for overactive bladder that Pfizer has reached an agreement to acquire
from Schwarz Pharma AG; maraviroc for HIV/AIDS; asenapine for schizophrenia;
ticilimumab for cancer; and torcetrapib/atorvastatin for cholesterol management.
New data for torcetrapib/atorvastatin were highlighted at the American
College of Cardiology meeting last month. A sub-analysis of the TNT study found
that patients treated to LDL-cholesterol levels below current guidelines showed
a direct relationship between raising HDL levels and reducing the frequency of
cardiovascular events. This suggests that HDL cholesterol may also provide
important therapeutic benefits that may result in further reductions in
cardiovascular risk. The torcetrapib/atorvastatin development program is
Pfizer's largest and most-comprehensive clinical program ever and is studying
25,000 patients at hundreds of medical centers worldwide at a cost of about $800
million.
In addition, we continue to complement our internal portfolio by
entering into collaborations with other important companies, including in the
first quarter of 2006:
-- NicOx S.A., to identify novel drugs to treat ophthalmic disorders,
and
-- NOXXON Pharma, AG, to apply their Spiegelmer(R) Technology Platform
to identify molecules to treat obesity.
In the first quarter of 2006, we acquired the sanofi-aventis worldwide
rights, including patent rights and production technology, to manufacture and
sell Exubera. Earlier this month, we entered into an agreement to acquire Rinat
Neurosciences Corp., which is developing therapeutic proteins for the treatment
of central-nervous-system disorders, including an approach to alter the
progression of Alzheimer's disease. Also earlier this month, we reached an
agreement with Schwarz Pharma AG to acquire exclusive worldwide rights to
fesoterodine, a new drug candidate for treatment of overactive bladder.
Leveraging Operational/Financial Strength
"Pfizer remains on target to achieve its projected financial performance
for 2006 and beyond," said David Shedlarz, vice chairman. "We continue to expect
2006 revenues to be comparable to those in 2005, with growth of in-line and new
products substantially replacing revenue declines from loss of exclusivity (most
recently, Zithromax in the U.S. in the fourth quarter of 2005 and Zoloft in the
U.S. at the end of the second quarter of 2006). We are on track to achieve 2006
adjusted diluted EPS(1) of about $2.00. We now expect 2006 reported diluted EPS
of $1.56 to $1.60, an increase driven by reduced Adapting-to-Scale-related
restructuring and implementation costs this year.
"Beyond 2006, Pfizer's performance and new opportunities will be driven
by our ability to leverage our scale and capabilities; grow our in-line
products; deliver our new medicine pipeline; and pursue advances in healthcare
access, delivery, and policy. We reconfirm our expectations for financial
performance in 2007 and 2008, when we target resumed growth in revenue, as
performances of in-line and new products will more than offset the impact of
loss of exclusivity. We now expect 2006 cost synergies from the
Adapting-to-Scale initiative of at least $2 billion, rising to about $4 billion
by 2008. Average annual growth in adjusted diluted EPS(1) over 2007 and 2008 is
targeted to be in the high single digits.
"We are making progress in our focused efforts to increase shareholder
value. We paid a dividend of 24 cents per share in the first quarter of 2006, a
26-percent increase over the comparable quarter of 2005 and the 39th consecutive
year of dividend increases. Pfizer's dividend yield now approaches 4 percent.
"We purchased approximately $1 billion of our common stock in the first
quarter of 2006, achieving in just three months the minimum level of share
purchases for the full year that we projected at the February 2006 analyst
meeting. We expect to purchase an additional $1 billion of Pfizer stock in the
second quarter of 2006, and we hope to purchase up to $4 billion of stock in
total during 2006. In addition, the outcome of our exploration of strategic
options for our Consumer Healthcare business may afford still further
share-purchase opportunities.
"We advanced our effort to explore strategic options for our Consumer
Healthcare business and continue to consider a range of potential outcomes for
this business, including sale or spin-off. The initial level of interest has
been high. We continue to anticipate that we will make a decision in the third
quarter of 2006."
"While our outlook for full-year 2006 revenues and adjusted diluted
EPS(1) is substantially unchanged, various factors will play a part in the
results of particular quarters, including foreign exchange, timing
considerations related to the launch of new products and loss of exclusivity of
mature products, the timing of investments in support of our pipeline and
product portfolio, and quarterly variations in our tax rate," said Alan Levin,
chief financial officer.
"The adverse impact of foreign exchange on revenues in the first quarter
of 2006 is expected to dissipate in the second half of 2006. On the expense
side, Pfizer's adjusted diluted EPS(1) in the first quarter of 2006 reflected
the timing of various research and development programs relative to last year,
the impact of foreign exchange, and about $500 million in overall cost savings
derived from our Adapting-to-Scale (AtS) restructuring program. Initiatives
pursuant to this restructuring program began to be implemented in the second
half of 2005, thereby impacting expense comparisons in the first quarter of
2006. Our gross-margin ratio improved this quarter over the comparable period in
2005, reflecting in part the favorable effects of operating efficiencies and
foreign exchange.
"For the full year, we continue to expect that expenditures representing
the R&D and SI&A pre-tax components of adjusted income(1) will approximate $7.8
billion and $17.4 billion, respectively, reflecting investments in support of
our pipeline and multiple new-product launches later this year. Using the
components of adjusted income(1) related to gross margin, we continue to expect
a modest improvement in our gross-margin ratio for 2006 relative to full-year
2005.
"Pfizer's effective tax rate on adjusted income(1) of 19.7 percent in
the first quarter of 2006 benefited from a change in tax law that favorably
affects certain restructuring activity that we undertook in prior years. We
continue to expect a full-year 2006 effective tax rate on adjusted income(1) of
about 22.5 percent.
"First-quarter 2006 reported diluted EPS of $.56 reflects, among other
items, purchase-accounting charges related primarily to our acquisition of
Pharmacia Corporation, restructuring and implementation costs associated with
our AtS productivity initiative, and a tax benefit related to the resolution of
certain tax positions."
Pfizer's Successful Navigation in New Environment
Commenting on first-quarter performance and company-wide initiatives to
transform the organization in the face of challenges in the healthcare
environment and loss of sales due to patent expirations, Dr. McKinnell said:
"Pfizer is successfully navigating a period of major challenges for the company.
Aggressive cost-cutting efforts, coupled with investments in business
development and significantly improved R&D productivity, are preparing us to
transition to the next-generation Pfizer, with resumed growth and an
unparalleled pipeline of new medicines to bring to the market," he said.
For additional details, please see the attached financial schedules,
product revenue tables, 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 discontinued operations, purchase-accounting adjustments,
merger-related costs, 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, 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. Reconciliations of first-quarter and
forecasted full- year 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.
(2) New Products is defined as first-quarter 2006 worldwide revenues
(excluding the impact of foreign exchange) of products launched in
2004-06 -- Caduet, Inspra, Lyrica, Macugen, Nicotrol Rx, Olmetec,
Onsenal, Revatio, Sutent, and Zmax. Loss-of-Exclusivity Products and
Bextra is defined as first-quarter 2006 worldwide revenues
(excluding the impact of foreign exchange) of products that have
lost U.S. exclusivity in 2004-06 -- Accupril/Accuretic, Diflucan,
Neurontin, and Zithromax -- and of Bextra, sales of which were
suspended in 2005. In-Line Products is defined as first-quarter 2006
worldwide revenues (excluding the impact of foreign exchange) of all
other Human Health Products.
(3) Human Health adjusted revenues are defined as total Human Health
revenues excluding the revenues of major products that have lost
exclusivity in the U.S. since the beginning of 2004 and the revenues
of Bextra, which Pfizer voluntarily withdrew in 2005. See the table
accompanying this report.
(4) Verispan longitudinal patient database.
PFIZER INC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(millions of dollars, except per common share data)
First Quarter
--------------------------- % Incr./
2006 2005 (Decr.)
------------ ------------ ------------
Revenues $ 12,660 $ 13,091 (3)
Costs and expenses:
Cost of sales 1,973 2,191 (10)
Selling, informational and
administrative expenses 3,810 4,085 (7)
Research and development expenses 1,588 1,764 (10)
Amortization of intangible assets 828 882 (6)
Merger-related in-process
research and development charges - 2 *
Restructuring charges and merger-
related costs 306 219 40
Other (income)/deductions -- net (272) 1,038 (126)
Income from continuing operations
before provision for taxes
on income and minority interests 4,427 2,910 52
Provision for taxes on income 315 2,635 (88)
Minority interests 4 3 16
Income from continuing operations 4,108 272 M+
Discontinued operations:
Loss from discontinued
operations -- net of tax - (12) *
Gains on sales of discontinued
operations -- net of tax 3 41 (93)
Discontinued operations -- net of tax 3 29 (90)
Net income $ 4,111 $ 301 M+
Earnings per common share - Basic:
Income from continuing operations $ 0.56 $ 0.04 M+
Discontinued operations -- net of
tax - - *
Net income $ 0.56 $ 0.04 M+
Earnings per common share - Diluted:
Income from continuing operations $ 0.56 $ 0.04 M+
Discontinued operations -- net of
tax - - *
Net income $ 0.56 $ 0.04 M+
Weighted-average shares used to calculate earnings per
common share:
Basic 7,314 7,416
Diluted 7,324 7,474
* 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 periods ended April
2, 2006 and April 3, 2005. Subsidiaries operating outside the United States
are included for the three-month periods ended February 26, 2006 and
February 27, 2005.
2. The financial results for the three-month period ended April 2, 2006 are
not necessarily indicative of the results which ultimately might be
achieved for the current year.
3. 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 selective
COX-2 inhibitor.
4. Provision for taxes on income in the first quarter of 2006 includes tax
benefits associated with the resolution of certain tax positions ($441
million) and in the first quarter of 2005 includes taxes on the
repatriation of foreign earnings ($2.2 billion).
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./
2006 2005 (Decr.)
------------ ------------ ------------
Reported net income $ 4,111 $ 301 M+
Purchase accounting adjustments --
net of tax 582 622 (6)
Merger-related costs -- net of tax 3 151 (98)
Discontinued operations -- net of tax (3) (29) (90)
Certain significant items -- net of tax (232) 2,955 *
Adjusted income $ 4,461 $ 4,000 12
Reported diluted earnings per
common share $ 0.56 $ 0.04 M+
Purchase accounting adjustments --
net of tax 0.08 0.08 -
Merger-related costs -- net of tax - 0.02 *
Discontinued operations -- net of tax - - *
Certain significant items -- net of tax (0.03) 0.40 *
Adjusted diluted earnings per common
share $ 0.61 $ 0.54 13
* 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 periods ended April 2,
2006 and April 3, 2005. Subsidiaries operating outside the United States
are included for the three-month periods ended February 26, 2006 and
February 27, 2005.
2. Adjusted Income and Adjusted diluted earnings per common share as shown
above reflect the following items:
(millions of dollars)
First Quarter
---------------------------
2006 2005
------------ ------------
Purchase accounting adjustments, pre-tax:
In-process research and
development charges (a) $ - $ 2
Intangible amortization and other (b) 812 851
Sale of acquired inventory
written up to fair value (c) - 4
Total purchase accounting adjustments,
pre-tax 812 857
Income taxes (230) (235)
Total purchase accounting
adjustments -- net of tax 582 622
Merger-related costs, pre-tax:
Integration costs (d) 2 106
Restructuring charges (d) 3 113
Total merger-related costs, pre-tax 5 219
Income taxes (2) (68)
Total merger-related costs
-- net of tax 3 151
Discontinued operations, pre-
tax:
Loss from discontinued operations (e) - 18
Gains on sales of discontinued
operations (e) (5) (65)
Total discontinued operations,
pre-tax (5) (47)
Income taxes 2 18
Total discontinued operations
-- net of tax (3) (29)
Certain significant items, pre-tax
Asset impairment charges and other
costs associated with the suspension
of selling Bextra (f) - 1,213
Sanofi-aventis research and
development milestone (g) (118) -
Restructuring charges - Adapting
to Scale (d) 301 -
Implementation costs - Adapting
to Scale (h) 186 -
Gain on disposals of
investments (i) (51) -
Total certain significant items,
pre-tax 318 1,213
Income taxes (109) (447)
Resolution of certain tax positions (j) (441) -
Tax impact for the
repatriation of foreign earnings (j) - 2,189
Total certain
significant items -- net
of tax (232) 2,955
Total purchase accounting adjustments,
merger-related costs, discontinued
operations, and certain significant
items -- net of tax $ 350 $ 3,699
(a) Included in Merger-related in-process research and development charges.
(b) Included primarily in Amortization of intangible assets.
(c) Included in Cost of sales.
(d) Included in Restructuring charges and merger-related costs.
(e) Included in Discontinued operations--net of tax.
(f) Included in Cost of sales ($56 million), Selling, informational and
administrative expenses ($2 million) and Other (income)/deductions-net
($1.2 billion) for the first quarter of 2005.
(g) Included in Research and development expenses.
(h) Included in Cost of sales ($124 million), Selling, informational and
administrative expenses ($40 million), and Research and development
expenses ($22 million) for the first quarter of 2006.
(i) Included in Other (income)/deductions-net.
(j) Included in Provision for taxes on income.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION FROM HUMAN HEALTH REPORTED REVENUES
TO HUMAN HEALTH ADJUSTED REVENUES
(UNAUDITED)
(millions of dollars)
Worldwide
------------------------------------------
First Quarter
--------------------------- % Incr./
2006 2005 (Decr.)
------------ ------------ ------------
Total Human Health revenues $ 11,113 $ 11,517 (4)
Zithromax 250 797 (69)
Neurontin 127 182 (30)
Diflucan 107 138 (23)
Accupril/Accuretic 68 100 (32)
Bextra - 56 *
Human Health adjusted revenues $ 10,561 $ 10,244 3
U.S.
------------------------------------------
First Quarter
--------------------------- % Incr./
2006 2005 (Decr.)
------------ ------------ ------------
Total Human Health revenues $ 6,340 $ 6,229 2
Zithromax 126 632 (80)
Neurontin 26 56 (53)
Diflucan 3 6 (44)
Accupril/Accuretic 10 29 (65)
Bextra - 18 *
Human Health adjusted revenues $ 6,175 $ 5,488 13
International
------------------------------------------
First Quarter
--------------------------- % Incr./
2006 2005 (Decr.)
------------ ------------ ------------
Total Human Health revenues $ 4,773 $ 5,288 (10)
Zithromax 124 165 (24)
Neurontin 101 126 (20)
Diflucan 104 132 (22)
Accupril/Accuretic 58 71 (19)
Bextra - 38 *
Human Health adjusted revenues $ 4,386 $ 4,756 (8)
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
(1) Human Health adjusted revenues, which excludes the revenues of Bextra and
major products which have lost exclusivity in the U.S. since the beginning
of 2004, 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. Zithromax lost its U.S.
exclusivity in November 2005 and as is typical in the pharmaceutical
industry, this has resulted in a dramatic decline in revenues due to
generic competition. Neurontin, Diflucan and Accupril/Accuretic lost their
U.S. exclusivity in 2004 and revenues continue to decline due to the impact
of generic competition. On April 7, 2005, the FDA, as a result of a
regulatory evaluation of the risks and benefits of all COX-2 medicines,
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 in 2006. 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.
(2) Human Health International adjusted revenues are also impacted negatively
by the loss of exclusivity of certain additional major products including
Norvasc and Zoloft, which have lost exclusivity in many key international
markets. In addition, international adjusted revenues reflect an adverse
impact in the first quarter of 2006 due to changes in foreign exchange
rates.
PFIZER INC
SEGMENT/PRODUCT REVENUES
FIRST QUARTER 2006
(UNAUDITED)
(millions of dollars)
QUARTER-TO-DATE
------------------------------------------------------------------------------------------------
WORLDWIDE U.S. INTERNATIONAL
------------------------------ ------------------------------ ------------------------------
% % %
2006 2005 Chg 2006 2005 Chg 2006 2005 Chg
-------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL
REVENUES 12,660 13,091 (3) 7,067 6,974 1 5,593 6,117 (9)
HUMAN
HEALTH 11,113 11,517 (4) 6,340 6,229 2 4,773 5,288 (10)
- - CARDIOVASCULAR
AND
METABOLIC
DISEASES 4,748 4,726 - 2,751 2,566 7 1,997 2,160 (8)
LIPITOR 3,107 3,075 1 1,974 1,913 3 1,133 1,162 (3)
NORVASC 1,183 1,175 1 626 540 16 557 635 (12)
CARDURA 126 153 (18) 2 1 43 124 152 (18)
CADUET 77 31 147 73 30 144 4 1 214
ACCUPRIL/
ACCURETIC 68 100 (32) 10 29 (65) 58 71 (19)
- - CENTRAL
NERVOUS
SYSTEM
DISORDERS 1,644 1,591 3 1,087 954 14 557 637 (13)
ZOLOFT 779 845 (8) 683 661 3 96 184 (48)
LYRICA 192 20 860 114 - * 78 20 291
GEODON/
ZELDOX 182 138 32 150 112 34 32 26 26
NEURONTIN 127 182 (30) 26 56 (53) 101 126 (20)
ARICEPT** 82 85 (3) - - - 82 85 (3)
XANAX/XR 82 102 (20) 23 34 (32) 59 68 (14)
RELPAX 66 53 24 44 32 38 22 21 3
- - ARTHRITIS
AND PAIN 640 637 - 436 328 33 204 309 (34)
CELEBREX 491 411 19 391 265 48 100 146 (32)
BEXTRA - 56 * - 18 * - 38 *
- - INFECTIOUS
AND
RESPIRATORY
DISEASES 937 1,482 (37) 410 883 (54) 527 599 (12)
ZITHROMAX/
ZMAX 259 797 (67) 134 632 (79) 125 165 (25)
ZYVOX 186 143 30 137 104 31 49 39 26
VFEND 117 88 33 46 34 36 71 54 32
DIFLUCAN 107 138 (23) 3 6 (44) 104 132 (22)
- - UROLOGY 663 702 (6) 387 415 (7) 276 287 (4)
VIAGRA 390 438 (11) 197 230 (14) 193 208 (7)
DETROL/
DETROL LA 260 252 3 185 180 3 75 72 4
- - ONCOLOGY 470 479 (2) 179 164 10 291 315 (8)
CAMPTOSAR 212 212 - 112 104 8 100 108 (8)
ELLENCE 73 90 (19) 13 18 (27) 60 72 (17)
AROMASIN 70 55 26 28 20 42 42 35 17
SUTENT 16 - * 16 - * - - -
- - OPHTHALMOLOGY 337 333 1 123 105 17 214 228 (6)
XALATAN/
XALACOM 337 333 1 123 105 17 214 228 (6)
- - ENDOCRINE
DISORDERS 246 257 (4) 77 88 (12) 169 169 -
GENOTROPIN 197 203 (3) 64 63 1 133 140 (4)
- - ALL
OTHER *** 1,104 1,068 3 682 584 17 422 484 (13)
ZYRTEC/
ZYRTEC D 421 342 23 421 342 23 - - -
- - ALLIANCE
REVENUE
(Aricept,
Macugen,
Mirapex,
Olmetec,
Rebif
and
Spiriva) 324 242 34 208 142 46 116 100 16
CONSUMER
HEALTHCARE 900 945 (5) 451 483 (6) 449 462 (3)
ANIMAL
HEALTH 511 496 3 229 219 4 282 277 2
OTHER**** 136 133 1 47 43 10 89 90 (3)
* - Calculation not meaningful.
** - Represents direct sales under license agreement with Eisai Co., Ltd.
*** - Includes Pfizer CenterSource
**** - Capsugel
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) Impact of Accounting Calendar on Revenues
The number of days in Pfizer's accounting calendar versus prior year had
no impact on revenues in the first quarter and will have no impact on revenues
in each of the remaining quarters.
2) Impact of Foreign Exchange on Revenues
The strength of the U.S. dollar relative to other currencies, primarily
the euro, Japanese yen, and British pound, in the first quarter of 2006 relative
to the same period in the prior year unfavorably impacted revenues of Pfizer Inc
by $377 million, or 3%. At current exchange rates, we anticipate the negative
impact on revenues to lessen over the course of the year, with most of the
adverse impact occurring in the first half of the year.
3) Change in Gross Margin
Gross margin of 84.4% in the first quarter of 2006 increased from 83.3%
in the first quarter of 2005. The improvement in gross margin in the first
quarter of 2006, relative to the comparable period in 2005, reflects operational
efficiencies and favorable effects from foreign exchange. In addition,
first-quarter 2006 gross margin reflects charges of $124 million related to
Adapting-to-Scale (AtS) implementation costs in 2006, and first-quarter 2005
gross margin reflects charges of $56 million for write-offs of inventory related
to the suspension of Bextra sales.
4) Savings and Costs Relating to Adapting-to-Scale (AtS)
Productivity Initiative
This initiative, launched in the first quarter of 2005, involves a
comprehensive, multi-year review of our processes, organizations, systems, and
decision making to identify and capitalize on opportunities to make the company
more effective and efficient. Savings realized during the first quarter of 2006
total approximately $500 million. We now expect annual savings of at least $2
billion in 2006, growing to about $4 billion in 2008.
Costs relating to the AtS productivity initiative were $487 million for
the first quarter of 2006, with full-year costs now projected to be between $1.8
billion and $2.2 billion ($1.1 billion to $1.4 billion, after tax). We continue
to expect the costs associated with this multi-year effort to continue through
2008 and to total $4 billion to $5 billion, pre-tax.
5) Change in Selling, Informational & Administrative (SI&A)
Expenses and Research & Development (R&D) Expenses
SI&A and R&D expenses in the first quarter of 2006 declined 7% and 10%
versus the prior-year period, respectively. Reflected in these declines are
savings related to the AtS productivity initiative of about $300 million in SI&A
and about $100 million in R&D and a sanofi-aventis research and development
milestone ($118 million, pre-tax). In addition, just as foreign exchange reduced
revenues, it also reduced reported expenses in the first quarter of 2006.
Savings from our AtS productivity initiatives first began to be realized in the
third quarter of 2005, thereby affecting expense comparisons in the first
quarter of 2006.
6) Other Income and Other Deductions
First Quarter
------------------------------
($ millions) 2006 2005*
- -------------------------------------------- ------------- -------------
Net Interest (Income)/Expense $ (52) $ (17)
Impairment of Bextra-Related Long-Lived
Assets -- 1,155
Royalties (95) (78)
Gains on Disposals of Investments/ Product
Lines (76) (4)
Other, Net (49) (18)
Other (Income)/Deductions-Net $ (272) $ 1,038
* Certain 2005 amounts were reclassified to conform to the 2006
presentation.
In connection with the decision to suspend sales of Bextra, we recorded
a charge of $1.1 billion relating to the impairment of Bextra's intangible
assets for developed technology rights and the write-off of machinery and
equipment of $10 million in the first quarter of 2005.
7) Effective Tax Rate
The effective tax rate used in calculating reported income for the first
quarter of 2006 is 7.1%. The effective tax rate used in calculating adjusted
income(1) for the first quarter of 2006 is 19.7%. The effective tax rates used
in calculating both adjusted income(1) and reported income for the first quarter
of 2006 were impacted by a tax-law change that favorably affects certain
restructuring activity undertaken in prior years. Under generally accepted
accounting principles, the full-year impact of this change in tax law has been
recognized in the first quarter. We continue to expect an effective tax rate on
adjusted income(1) of 22.5% for the full year, reflecting higher quarterly rates
over the remainder of the year.
During the quarter, we reached a favorable resolution of certain open
tax positions with the IRS. As a result, we recognized a tax benefit of $441
million in our reported net income for the first quarter.
8) Seasonality Considerations in 2006 P&L Quarterly Results
Following is a summary of seasonality considerations affecting
anticipated quarterly results in 2006:
Revenues: A number of factors affect Pfizer's quarterly revenue patterns
in 2006. As previously noted, the adverse effect of foreign currencies reduced
reported revenue growth by $377 million, or 3%, in the first quarter of 2006. At
current exchange rates, we anticipate that this adverse impact will dissipate
over the remainder of the year, particularly in the second half of 2006.
Revenues will be adversely impacted by the U.S. patent expiration of Zoloft at
the end of the second quarter of 2006. On a positive note, revenues will
increasingly benefit from recent and upcoming new-product launches.
Gross Margin: See item 3.
Operating Expenses: SI&A and R&D first-quarter 2006 expenses reflect
declines versus prior year of 7% and 10%, respectively, due in part to
AtS-related savings (versus no savings in the first quarter of the prior year)
and the favorable impact of foreign exchange on expenses. Savings from our AtS
initiatives first began to be realized in the third quarter of 2005. We expect
that the favorable effect of foreign exchange will diminish in the second half
of the year. Investments in our promotional and research programs are expected
to accelerate over the remainder of the year, consistent with our numerous
new-product introductions.
Effective Tax Rate: See item 7.
9) Reconciliation of Forecasted 2006 Adjusted Income(1) and
Adjusted Diluted EPS(1) to Forecasted 2006 Reported Net Income
and Reported Diluted EPS
Full-Year 2006 Forecast
-------------------------------
($ billions, except per-share amounts) Net Income(a) Diluted EPS(a)
- -------------------------------------------- ------------- --------------
Income/(Expense)
Forecasted Adjusted Income/Diluted EPS ~$15.0 ~$2.00
Intangible Amortization, Net of Tax (2.3) (0.32)
Adapting-to-Scale Costs, Net of Tax (1.1-1.4) (0.15-0.19)
Equity Sales / Other 0.1 0.01
Resolution of Certain Tax Positions 0.4 0.06
Forecasted Reported Net Income/Diluted
EPS(b) ~ $11.8-$12.1 ~ $1.56-$1.60
(a) Forecasts in the table above do not include the impacts of
business- development transactions not completed as of the end
of the first quarter of 2006. Forecasts in the table also do not
include any potential impacts in connection with exploring
strategic options for the Consumer Healthcare business.
(b) Pfizer's estimates of 2006 reported net income of approximately
$11.8 billion to $12.1 billion and 2006 reported diluted
earnings per share of approximately $1.56 to $1.60 have been
revised to reflect lower restructuring and implementation costs
associated with our Adapting- to-Scale productivity initiative
in 2006.
10) Share-Purchase Program
During the first quarter of 2006, the company purchased approximately 38
million shares at a total cost of about $1 billion. In light of Pfizer's
financial strength and strong cash-flow generation, we expect to maintain this
pace of share-purchase activity in the second quarter of 2006. We hope to buy
back up to $4 billion of shares in total during 2006. In addition, the outcome
of our exploration of strategic options for our Consumer Healthcare business may
afford still further share-purchase opportunities.
DISCLOSURE NOTICE: The information contained in this document and the
attachments is as of April 19, 2006. 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, 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.
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; 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 and competitor products; the impact
of existing and future regulatory provisions on product exclusivity; trends
toward managed care and healthcare 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,
segment, and geographic mix; and the impact of acquisitions, divestitures,
restructurings, product withdrawals, and other unusual items, including the
impact of the possible sale or spin-off of our Consumer Healthcare business 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, 2005, 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.
SOURCE Pfizer Inc
-0- 04/19/2006
/CONTACT: Andy McCormick, +1-212-733-5469, or Paul Fitzhenry,
+1-212-733-4637, both of Pfizer Inc /
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