News: Pfizer Reports First-Quarter 2008 Results; Reaffirms Full …
Pfizer Inc (NYSE: PFE):
($ in millions, except per share amounts)
First Quarter
————————–
2008 2007 Change
——– ——– ——
Reported Revenues $ 11,848 $ 12,474 (5%)
Reported Net Income 2,784 3,392 (18%)
Reported Diluted EPS 0.41 0.48 (15%)
Adjusted Income(1) 4,099 4,804 (15%)
Adjusted Diluted EPS(1) 0.61 0.68 (10%)
See end of text prior to tables for notes.
Pfizer Inc (NYSE: PFE) today reported results for the
first-quarter 2008. The Company recorded revenues of $11.8 billion, a
decrease of 5% compared with $12.5 billion in the year-ago quarter,
primarily due to the March 2007 loss of U.S. exclusivity of Norvasc as
well as the January 2008 loss of U.S. exclusivity of Zyrtec, which
Pfizer ceased selling in late January 2008. In the first-quarter 2008,
Norvasc and Zyrtec revenues decreased by $556 million and $344
million, respectively, compared with the prior-year quarter.
First-quarter 2008 revenues were positively impacted by foreign
exchange, which increased revenues by approximately $570 million or
5%, and the solid performance of many new and in-line products.
For the first-quarter 2008, Pfizer posted reported net income of
$2.8 billion, a decrease of 18% compared with $3.4 billion in the
prior-year quarter, and reported diluted EPS of $0.41, a decrease of
15% compared with $0.48 in the prior-year quarter. These declines were
primarily attributable to lower revenues due to the U.S. losses of
exclusivity discussed above and, to a lesser extent, increased
in-process research and development expenses associated with
acquisitions, primarily CovX and Coley Pharmaceutical Group, Inc.,
which were partially offset by lower expenses related to our
cost-reduction initiatives and foreign exchange.
For the first-quarter 2008, Pfizer posted adjusted income(1) of
$4.1 billion, a decrease of 15% compared with $4.8 billion in the
year-ago quarter, and adjusted diluted EPS(1) of $0.61, a decrease of
10% compared with $0.68 in the year-ago quarter. Both adjusted
income(1) and adjusted diluted EPS(1) reflected lower revenues due to
the U.S. losses of exclusivity discussed above, which were partially
offset by savings from the Company’s cost-reduction initiatives and
foreign exchange. Reported and adjusted diluted EPS(1) were also
positively impacted by the full benefit of Pfizer’s purchase of $10.0
billion of the Company’s common stock in 2007.
Executive Commentary
“Today we are reaffirming our full-year 2008 financial guidance,”
stated Chairman and Chief Executive Officer Jeff Kindler. “As we
discussed in our fourth-quarter 2007 earnings call and materials, the
first-quarter 2008 is not comparable to the year-ago quarter due to
the loss of U.S. exclusivity of Norvasc in late March 2007 and Zyrtec
in late January 2008. These results, however, are in-line with our
expectations. Since the Norvasc loss of U.S. exclusivity occurred in
the first-quarter 2007, the comparisons of our 2008 to 2007 quarterly
results going forward will not be significantly impacted.”
“This quarter, many of our new products continued to perform well,
including Sutent and Chantix. We also saw steady growth from many
in-line medicines, including Lyrica, Geodon, Viagra and Xalatan. In
addition, our alliance revenues demonstrated double-digit growth.
Further, Lipitor remains a powerful global brand supported by
extensive outcomes data and it continues to grow on an operational
basis in many international markets,” continued Kindler.
“We’re continuing to make progress on our cost-reduction
initiatives and are well on our way to achieving at least a $1.5 to
$2.0 billion reduction in adjusted total costs(2) at the end of 2008
versus 2006, on a constant currency basis(3),” said Frank D’Amelio,
Chief Financial Officer. “We’re on track to generate $17 to $18
billion in operating cash flow in 2008, and we expect to continue to
generate strong operating cash flow beyond 2008.”
Product Performance
($ in millions, except percentages)
First Quarter
————————–
2008 2007 Change
——– ——– ——
In-Line Products(4) $ 9,602 $ 9,554 1%
New Products(5) 480 268 79%
——– ——–
Total In-Line and New
Products(6) 10,082 9,822 3%
Loss of Exclusivity
Products(7) 822 1,759 (53%)
——– ——–
Total Pharmaceutical 10,904 11,581 (6%)
Animal Health 619 586 6%
Other(8) 325 307 6%
——– ——–
Total Revenues $ 11,848 $ 12,474 (5%)
======== ========
See end of text prior to tables for notes.
Pharmaceutical
Pharmaceutical revenues for the first-quarter 2008 were $10.9
billion, a decrease of 6% compared with the prior-year quarter,
including the favorable impact of foreign exchange, which increased
revenues by approximately $520 million or 4%. First-quarter 2008
revenues from in-line and new products(6) increased 3% compared with
the year-ago quarter. Revenues for Norvasc and Camptosar, which lost
U.S. marketing exclusivity in 2007 and 2008, respectively, and Zyrtec,
which we ceased selling in late January 2008 shortly after the
expiration of the U.S. patent, declined $937 million or 53% compared
with the year-ago quarter.
Lipitor revenues in the first-quarter 2008 were $3.1 billion, a
decrease of 7% compared with the prior-year quarter; this includes the
favorable impact of foreign exchange, which increased revenues by
approximately $135 million or 4%. In the U.S., Lipitor revenues
declined 18% during the quarter, while revenues from international
markets rose 13%. The U.S. statin market continues to be highly
competitive, with both branded and generic competition in an
increasingly cost-sensitive environment. Pfizer continues to respond
to these market dynamics, which include the data presented at the
recent American College of Cardiology meeting, with an integrated,
multi-channel effort emphasizing Lipitor’s strong clinical profile.
Lipitor is the only medicine that provides potent mean LDL-C
reductions of greater than 50%, a broad range of proven cardiovascular
outcomes and an established safety profile.
Celebrex revenues in the first-quarter 2008 were $611 million, an
increase of 2% compared with the year-ago quarter. International
revenues grew to $147 million, an increase of 20% driven by a
double-digit increase in demand, as well as the favorable impact of
foreign exchange.
In the first-quarter 2008, Lyrica revenues were $582 million, an
increase of 47% compared with the prior-year quarter driven by strong
efficacy and high patient and physician satisfaction in the
marketplace, particularly in managing fibromyalgia. Lyrica is the only
FDA-approved medicine indicated for this chronic, widespread pain
condition.
Revenues from new products, including Sutent and Chantix (known as
Champix outside the U.S.), grew significantly in the first-quarter
2008 compared with the corresponding period in 2007. In the
first-quarter 2008, Sutent, Pfizer’s breakthrough cancer treatment,
continued to demonstrate strong performance and market leadership in
its approved indications - advanced renal cell carcinoma (RCC) and
gastrointestinal stromal tumor (GIST) - with revenues of $190 million,
an increase of 86% compared with the year-ago quarter.
In the first-quarter 2008, Chantix delivered revenues of $277
million, an increase of 71% compared with the first-quarter 2007. In
January 2008, Pfizer updated the Chantix U.S. label to include
additional safety information, which has unfavorably impacted recent
U.S. prescription trends. Given the significant health benefits of
quitting smoking, Pfizer will continue its aggressive educational and
promotional efforts with a focus on the Chantix benefit-risk
proposition, the significant health consequences of smoking and the
importance of the physician-patient dialogue.
Animal Health
Animal Health revenues for the first-quarter 2008 were $619
million, an increase of 6% compared with $586 million in the year-ago
quarter, driven by the favorable impact of foreign exchange, which
increased revenues by approximately $35 million or 6%.
Expenses
In the first-quarter 2008, adjusted cost of sales(1) as a
percentage of revenues was 15.3% compared with 14.0% in the
first-quarter 2007. The year-over-year increase reflects the greater
impact of foreign exchange on cost of sales relative to revenues in
addition to unfavorable changes in geographic and business mix. These
were partially offset by the favorable effect of our ongoing
cost-reduction initiatives.
Adjusted selling, informational and administrative (SI&A)
expenses(1) were $3.4 billion in the first-quarter 2008, an increase
of 3% compared with the prior-year quarter. The favorable impact of
our ongoing cost-reduction initiatives was more than offset by the
unfavorable impact of foreign exchange on expenses compared with the
year-ago period.
Adjusted research and development (R&D) expenses(1) were $1.6
billion in the first-quarter 2008, an increase of 1% compared with the
year-ago quarter, due primarily to the unfavorable impact of foreign
exchange on expenses, which was mostly offset by the realization of
savings associated with our cost-reduction initiatives.
Overall, foreign exchange negatively impacted adjusted total
costs(2) by approximately $330 million or 5% in the first-quarter 2008
compared with the year-ago period. Absent foreign exchange, our
adjusted total costs(2) decreased operationally by approximately $170
million year-over-year.
Financial Guidance
For the full-year 2008, Pfizer’s financial guidance, at current
exchange rates(9) except as otherwise noted, is summarized below. As
noted last quarter, the reported diluted EPS guidance previously
provided did not reflect the charges associated with business
development transactions that had not yet closed as of December 31,
2007; therefore, the Company updated the reported diluted EPS guidance
to reflect charges associated with the acquisitions of CovX, Coley
Pharmaceutical Group, Inc. and two smaller acquisitions related to
Animal Health, all of which closed in the first-quarter 2008.
2007 Actual 2008 Guidance
———————————————————————-
$47.0 to $49.0
Revenues $48.2 billion billion
———————————————————————-
Adjusted Cost of Sales(1) as
a Percentage of Revenues 16.0% 14.5% to 15.5%
———————————————————————-
$14.4 to $14.9
Adjusted SI&A Expenses(1) $15.2 billion billion
———————————————————————-
Adjusted R&D Expenses(1) $7.5 billion $7.3 to $7.6 billion
———————————————————————-
Effective Tax Rate on
Adjusted Income(1) 21.0% 22.0% to 22.5%
———————————————————————-
Reported Diluted EPS(10) $1.17 $1.73 to $1.88
———————————————————————-
Adjusted Diluted EPS(1) $2.18 $2.35 to $2.45
———————————————————————-
$17.0 to $18.0
Cash Flows from Operations $13.4 billion billion
———————————————————————-
Lastly, adjusted total costs(2) are expected to be at least $1.5
to $2.0 billion lower than 2006 on a constant currency basis(3).
For additional details, please see the attached financial
schedules, product revenue table, supplemental financial information
and Disclosure Notice.
(1) “Adjusted income” and its components and “adjusted diluted
earnings per share (EPS)” are defined as reported net income and its
components and reported diluted EPS excluding purchase-accounting
adjustments, acquisition-related costs, discontinued operations and
certain significant items. Adjusted Cost of Sales, Adjusted SI&A
expenses and Adjusted R&D expenses are income statement line items
prepared on the same basis, and therefore, components of the overall
Adjusted Income measure. 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-K for the fiscal
year ended December 31, 2007, 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 2008 and 2007, and full-year 2007,
adjusted income and its components and adjusted diluted EPS to
reported net income and its components and reported diluted EPS, as
well as reconciliations of full-year 2008 adjusted income and adjusted
diluted EPS guidance to full-year 2008 reported net income and
reported diluted EPS guidance, are provided in the materials
accompanying this report. The adjusted income and its components and
adjusted diluted EPS measures are not, and should not be viewed as,
substitutes for U.S. GAAP net income and diluted EPS.
(2) Represents primarily the total of Adjusted Cost of Sales(1),
Adjusted SI&A expenses(1) and Adjusted R&D expenses(1).
(3) Constant currency basis means that the applicable projected
financial measure is based upon the actual foreign exchange rates in
effect during 2006.
(4) Represents worldwide revenues for all pharmaceutical products,
excluding revenues included in notes (5) and (7).
(5) Represents worldwide revenues for pharmaceutical products
launched in the U.S. since 2006: Chantix/Champix, Eraxis,
Selzentry/Celsentri and Sutent.
(6) Total worldwide pharmaceutical revenues excluding the revenues
of major products that have lost exclusivity in the U.S. in 2007 and
2008 as described in note (7). See the table accompanying this report.
(7) Represents worldwide revenues for pharmaceutical products that
lost exclusivity in the U.S. in 2007 and 2008: Camptosar, Norvasc and
Zyrtec.
(8) Includes Consumer Healthcare business transition activity,
Capsugel and Pfizer Centersource.
(9) Current exchange rates approximate rates at the time of our
first quarter earnings press release (April 2008).
(10) Excludes the charges associated with business development
transactions not completed as of March 30, 2008.
PFIZER INC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(millions of dollars, except per common share data)
First Quarter % Incr.
—————– /
2008 2007 (Decr.)
——– ——– ——–
Revenues $11,848 $12,474 (5)
Costs and expenses:
Cost of sales (a) 1,986 1,887 5
Selling, informational and
administrative expenses (a) 3,492 3,361 4
Research and development expenses (a) 1,791 1,665 8
Amortization of intangible assets 779 815 (4)
Acquisition-related in-process
research and development charges 398 283 40
Restructuring charges and acquisition-
related costs 178 812 (78)
Other (income)/deductions–net (333) (402) (17)
——– ——–
Income from continuing operations
before provision for taxes on income
and minority interests 3,557 4,053 (12)
Provision for taxes on income 763 689 11
Minority interests 6 3 89
——– ——–
Income from continuing operations 2,788 3,361 (17)
——– ——–
Discontinued operations:
Income/(loss) from discontinued
operations–net of tax (4) - *
Gains/(losses) on sales of
discontinued operations–net of tax - 31 *
——– ——–
Discontinued operations–net of tax (4) 31 *
——– ——–
Net income $ 2,784 $ 3,392 (18)
======== ========
Earnings per common share - basic:
Income from continuing operations $ 0.41 $ 0.48 (15)
Discontinued operations–net of tax - - *
——– ——–
Net income $ 0.41 $ 0.48 (15)
======== ========
Earnings per common share - diluted:
Income from continuing operations $ 0.41 $ 0.48 (15)
Discontinued operations–net of tax - - *
——– ——–
Net income $ 0.41 $ 0.48 (15)
======== ========
Weighted-average shares used to
calculate earnings per common share:
Basic 6,739 7,051
======== ========
Diluted 6,762 7,075
======== ========
(a) Exclusive of amortization of intangible assets, except as
discussed in footnote 4 below.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
1. The above financial statements present the three-month periods
ended March 30, 2008 and April 1, 2007. Subsidiaries operating
outside the United States are included for the three-month periods
ended February 24, 2008 and February 25, 2007.
2. The financial results for the three-month period ended March 30,
2008, are not necessarily indicative of the results which
ultimately might be achieved for the current year.
3. As required, the estimated value of Acquisition-related in-process
research and development charges (IPR&D) is expensed at
acquisition date. In the first quarter of 2008, we expensed $398
million of IPR&D, primarily related to our acquisitions of CovX
and Coley Pharmaceutical Group, Inc. In the first quarter of 2007,
we expensed $283 million of IPR&D, primarily related to our
acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc.
4. Amortization expense related to acquired intangible assets that
contribute to our ability to sell, manufacture, research, market
and distribute our products are included in Amortization of
intangible assets as they benefit multiple business functions.
Amortization expense related to acquired intangible assets that
are associated with a single function are included in Cost of
sales, Selling, informational and administrative expenses or
Research and development expenses, as appropriate.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND REPORTED
DILUTED EPS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
(millions of dollars, except per common share data)
Three Months Ended March 30, 2008
——————————————————
Purchase Acqui- Discon- Certain
Accounting sition- tinued Signi-
Adjust- Related Oper- ficant
Reported ments Costs ations Items(2) Adjusted
——– ———- ——– ——- ——– ——–
Revenues $11,848 $ - $ - $ - $ (52) $11,796
Costs and
expenses:
Cost of sales
(a) 1,986 - - - (186) 1,800
Selling,
informational
and
administrative
expenses (a) 3,492 3 - - (86) 3,409
Research and
development
expenses (a) 1,791 (7) - - (146) 1,638
Amortization of
intangible
assets 779 (752) - - - 27
Acquisition-
related in-
process R&D
charges 398 (398) - - - -
Restructuring
charges and
acquisition-
related costs 178 - (1) - (177) -
Other (income)/
deductions–
net (333) (2) - - 2 (333)
——- ——— ——- —— ——- ——-
Income from
continuing
operations
before
provision for
taxes on income
and minority
interests 3,557 1,156 1 - 541 5,255
Provision for
taxes on income 763 222 - - 165 1,150
Minority
interests 6 - - - - 6
——- ——— ——- —— ——- ——-
Income from
continuing
operations 2,788 934 1 - 376 4,099
——- ——— ——- —— ——- ——-
Discontinued
operations:
Income/(loss)
from
discontinued
operations–
net of tax (4) - - 4 - -
Gains/(losses)
on sales of
discontinued
operations–
net of tax - - - - - -
——- ——— ——- —— ——- ——-
Discontinued
operations–net
of tax (4) - - 4 - -
——- ——— ——- —— ——- ——-
Net income $ 2,784 $ 934 $ 1 $ 4 $ 376 $ 4,099
======= ========= ======= ====== ======= =======
Earnings per
common share -
diluted:
Income from
continuing
operations $ 0.41 $ 0.14 $ - $ - $ 0.06 $ 0.61
Discontinued
operations–
net of tax - - - - - -
——- ——— ——- —— ——- ——-
Net income $ 0.41 $ 0.14 $ - $ - $ 0.06 $ 0.61
======= ========= ======= ====== ======= =======
(a) Exclusive of amortization of intangible assets, except as
discussed in note 1.
See end of tables for notes.
Certain amounts may reflect rounding adjustments.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND REPORTED
DILUTED EPS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
(millions of dollars, except per common share data)
Three Months Ended April 1, 2007
—————————————————–
Purchase Acqui- Discon- Certain
Accounting sition- tinued Signi-
Adjust- Related Oper- ficant
Reported ments Costs ations Items(2) Adjusted
——– ———- ——- ——- ——– ——–
Revenues $12,474 $ - $ - $ - $ (43) $12,431
Costs and
expenses:
Cost of sales
(a) 1,887 (14) - - (129) 1,744
Selling,
informational
and
administrative
expenses (a) 3,361 3 - - (51) 3,313
Research and
development
expenses (a) 1,665 (6) - - (31) 1,628
Amortization of
intangible
assets 815 (791) - - - 24
Acquisition-
related in-
process R&D
charges 283 (283) - - - -
Restructuring
charges and
acquisition-
related costs 812 - 2 - (814) -
Other (income)/
deductions–net (402) (17) - - 3 (416)
——- ——— —— —— ——- ——-
Income from
continuing
operations
before provision
for taxes on
income and
minority
interests 4,053 1,108 (2) - 979 6,138
Provision for
taxes on income 689 261 (1) - 382 1,331
Minority
interests 3 - - - - 3
——- ——— —— —— ——- ——-
Income from
continuing
operations 3,361 847 (1) - 597 4,804
——- ——— —— —— ——- ——-
Discontinued
operations:
Income from
discontinued
operations–net
of tax - - - - - -
Gains/(losses)
on sales of
discontinued
operations–net
of tax 31 - - (31) - -
——- ——— —— —— ——- ——-
Discontinued
operations–net
of tax 31 - - (31) - -
——- ——— —— —— ——- ——-
Net income $ 3,392 $ 847 $ (1) $ (31) $ 597 $ 4,804
======= ========= ====== ====== ======= =======
Earnings per
common share -
diluted:
Income from
continuing
operations $ 0.48 $ 0.12 $ - $ - $ 0.08 $ 0.68
Discontinued
operations–net
of tax - - - - - -
——- ——— —— —— ——- ——-
Net income $ 0.48 $ 0.12 $ - $ - $ 0.08 $ 0.68
======= ========= ====== ====== ======= =======
(a) Exclusive of amortization of intangible assets, except as
discussed in note 1.
See end of tables for notes.
Certain amounts may reflect rounding adjustments.
Certain prior period amounts were reclassified to conform to the
current period presentation.
PFIZER INC AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND
REPORTED DILUTED EPS TO ADJUSTED INCOME AND ITS COMPONENTS AND
ADJUSTED DILUTED EPS
(UNAUDITED)
1) Amortization expense related to acquired intangible assets that
contribute to our ability to sell, manufacture, research, market
and distribute our products are included in Amortization of
intangible assets as they benefit multiple business functions.
Amortization expense related to acquired intangible assets that
are associated with a single function are included in Cost of
sales, Selling, informational and administrative expenses or
Research and development expenses, as appropriate.
2) Certain significant items includes the following:
First Quarter
—————
(millions of dollars) 2008 2007
——- ——-
Restructuring charges - Cost-reduction
initiatives(a) $ 177 $ 795
Implementation costs - Cost-reduction
initiatives(b) 357 174
Consumer Healthcare business transition
activity(c) (3) (9)
Other 10 19
——- ——-
Total certain significant items, pre-tax 541 979
Income taxes(d) (165) (382)
——- ——-
Total certain significant items–net of tax $ 376 $ 597
======= =======
(a) Included in Restructuring charges and
acquisition-related costs.
(b) Included in Cost of sales ($138 million), Selling,
informational and administrative expenses ($75 million),
Research and development expenses ($146 million), and Other
(income)/deductions - net ($2 million income) for the three
months ended March 30, 2008. Included in Cost of sales ($94
million), Selling, informational and administrative expenses
($49 million), and Research and development expenses ($31
million) for the three months ended April 1, 2007.
(c) Included in Revenues ($52 million), Cost of sales ($48
million), and Selling, informational and administrative
expenses ($1 million) for the three months ended March 30,
2008. Included in Revenues ($43 million), Cost of sales ($35
million), Selling, informational and administrative expenses
($2 million), and Other (income)/deductions - net ($3 million
income) for the three months ended April 1, 2007.
(d) Included in Provision for taxes on income.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND REPORTED
DILUTED EPS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
(millions of dollars, except per common share data)
Twelve Months Ended December 31, 2007
—————————————————–
Purchase Acqui- Discon- Certain
Accounting sition- tinued Signi-
Adjust- Related Oper- ficant
Reported ments Costs ations Items Adjusted
——– ———- ——- ——- ——– ——–
Revenues $48,418 $ - $ - $ - $ (209) $48,209
Costs and
expenses:
Cost of sales
(a) 11,239 (49) - - (3,497) 7,693
Selling,
informational
and
administrative
expenses (a) 15,626 12 - - (418) 15,220
Research and
development
expenses (a) 8,089 (29) - - (516) 7,544
Amortization of
intangible
assets 3,128 (3,013) - - - 115
Acquisition-
related in-
process R&D
charges 283 (283) - - - -
Restructuring
charges and
acquisition-
related costs 2,534 - (11) - (2,523) -
Other (income)/
deductions–net (1,759) (22) - - 235 (1,546)
——- ——— —— —— ——- ——-
Income from
continuing
operations
before provision
for taxes on
income and
minority
interests 9,278 3,384 11 - 6,510 19,183
Provision for
taxes on income 1,023 873 1 - 2,131 4,028
Minority
interests 42 - - - - 42
——- ——— —— —— ——- ——-
Income from
continuing
operations 8,213 2,511 10 - 4,379 15,113
——- ——— —— —— ——- ——-
Discontinued
operations:
Income/(loss)
from
discontinued
operations–net
of tax (3) - - 3 - -
Gains/(losses)
on sales of
discontinued
operations–net
of tax (66) - - 66 - -
——- ——— —— —— ——- ——-
Discontinued
operations–net
of tax (69) - - 69 - -
——- ——— —— —— ——- ——-
Net income $ 8,144 $ 2,511 $ 10 $ 69 $ 4,379 $15,113
======= ========= ====== ====== ======= =======
Earnings per
common share -
diluted:
Income from
continuing
operations $ 1.18 $ 0.37 $ - $ - $ 0.63 $ 2.18
Discontinued
operations–net
of tax (0.01) - - 0.01 - -
——- ——— —— —— ——- ——-
Net income $ 1.17 $ 0.37 $ - $ 0.01 $ 0.63 $ 2.18
======= ========= ====== ====== ======= =======
(a) Exclusive of amortization of intangible assets, except
amortization expense related to acquired intangible assets that
contribute to our ability to sell, manufacture, research, market
and distribute our products are included in Amortization of
intangible assets as they benefit multiple business functions.
Amortization expense related to acquired intangible assets that
are associated with a single function are included in Cost of
sales, Selling, informational and administrative expenses or
Research and development expenses, as appropriate.
Certain amounts may reflect rounding adjustments.
Certain prior period amounts were reclassified to conform to the
current period presentation.
PFIZER INC
SEGMENT/PRODUCT REVENUES
FIRST QUARTER 2008
(UNAUDITED)
(millions of dollars)
———————————————————-
WORLDWIDE U.S. INTERNATIONAL
——————– —————— ——————
% % %
2008 2007 Change 2008 2007 Change 2008 2007 Change
======================================================================
TOTAL
REVENUES 11,848 12,474 (5) 5,511 6,850 (20) 6,337 5,624 13
======================================================================
———————————————————————-
PHARMA-
CEUTICAL 10,904 11,581 (6) 5,141 6,468 (21) 5,763 5,113 13
———————————————————————-
- CARDIO-
VASCULAR
AND
METABOLIC
DISEASES 4,494 5,155 (13) 2,140 3,024 (29) 2,354 2,131 10
LIPITOR 3,137 3,358 (7) 1,751 2,137 (18) 1,386 1,221 13
NORVASC 513 1,069 (52) (5) 511 * 518 558 (7)
CHANTIX /
CHAMPIX 277 162 71 193 145 33 84 17 392
CADUET 147 146 1 120 135 (11) 27 11 158
CARDURA 121 134 (10) 2 2 12 119 132 (10)
- CENTRAL
NERVOUS
SYSTEM
DISORDERS 1,386 1,245 11 684 637 7 702 608 16
LYRICA 582 395 47 351 241 45 231 154 51
GEODON /
ZELDOX 241 216 12 200 182 10 41 34 21
ZOLOFT 122 146 (17) 26 68 (61) 96 78 22
ARICEPT** 104 85 22 - - 77 104 85 22
NEURONTIN 89 110 (19) 13 23 (42) 76 87 (13)
XANAX /
XANAX XR 86 75 14 17 15 7 69 60 16
RELPAX 77 83 (7) 49 57 (14) 28 26 9
- ARTHRITIS
AND PAIN 755 749 1 504 523 (4) 251 226 11
CELEBREX 611 598 2 464 476 (2) 147 122 20
- INFECTIOUS
AND
RESPIRATORY
DISEASES 931 913 2 299 335 (11) 632 578 9
ZYVOX 259 258 1 164 183 (10) 95 75 27
VFEND 171 148 15 53 59 (11) 118 89 32
ZITHROMAX /
ZMAX 120 131 (8) 6 13 (58) 114 118 (3)
DIFLUCAN 89 111 (19) 3 3 (13) 86 108 (20)
- UROLOGY 784 751 4 447 453 (1) 337 298 13
VIAGRA 460 434 6 223 224 (1) 237 210 13
DETROL /
DETROL LA 313 303 3 222 223 - 91 80 13
- ONCOLOGY 637 595 7 197 244 (19) 440 351 25
CAMPTOSAR 192 229 (16) 83 130 (36) 109 99 10
SUTENT 190 102 86 66 53 25 124 49 150
AROMASIN 104 93 13 37 35 4 67 58 18
- OPHTHAL-
MOLOGY 413 366 13 135 126 7 278 240 16
XALATAN /
XALACOM 405 360 13 135 126 7 270 234 16
- ENDOCRINE
DISORDERS 258 245 6 62 64 (3) 196 181 9
GENOTROPIN 206 201 3 55 60 (9) 151 141 8
- ALL OTHER 758 1,164 (35) 381 819 (53) 377 345 9
ZYRTEC /
ZYRTEC D 117 461 (75) 117 461 (75) - - -
- ALLIANCE
REVENUE
(Aricept,
Exforge,
Macugen,
Mirapex,
Olmetec,
Rebif and
Spiriva) 488 398 23 292 243 20 196 155 27
———————————————————————-
ANIMAL
HEALTH 619 586 6 240 264 (9) 379 322 18
———————————————————————-
OTHER *** 325 307 6 130 118 10 195 189 3
———————————————————————- * - Calculation not meaningful.
** - Represents direct sales under license agreement with Eisai Co.,
Ltd.
*** - Includes Consumer Healthcare business transition activity,
Capsugel and Pfizer Centersource.
Certain amounts and percentages may reflect rounding adjustments.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION FROM REPORTED PHARMACEUTICAL REVENUES TO TOTAL
IN-LINE AND NEW PRODUCTS(1) PHARMACEUTICAL REVENUES
(UNAUDITED)
(millions of dollars)
Worldwide
————————–
First Quarter % Incr.
—————– /
2008 2007 (Decr.)
——– ——- ——–
Total reported Pharmaceutical revenues $10,904 $11,581 (6)
Norvasc 513 1,069 (52)
Camptosar 192 229 (16)
Zyrtec/Zyrtec D 117 461 (75)
——- ——
Total in-line products and new products(1)
Pharmaceutical revenues $10,082 $ 9,822 3
======= ======
U.S.
————————–
First Quarter % Incr.
—————– /
2008 2007 (Decr.)
——– ——- ——–
Total reported Pharmaceutical revenues $ 5,141 $ 6,468 (21)
Norvasc (5) 511 *
Camptosar 83 130 (36)
Zyrtec/Zyrtec D 117 461 (75)
——- ——
Total in-line products and new products(1)
Pharmaceutical revenues $ 4,946 $ 5,366 (8)
======= ======
International
————————–
First Quarter % Incr.
—————– /
2008 2007 (Decr.)
——– ——- ——–
Total reported Pharmaceutical revenues $ 5,763 $ 5,113 13
Norvasc 518 558 (7)
Camptosar 109 99 10
Zyrtec/Zyrtec D - - -
——- ——
Total in-line products and new products(1)
Pharmaceutical revenues $ 5,136 $ 4,456 15
======= ======
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments. (1) Total in-line and new products Pharmaceutical revenues, which
exclude the revenues of major products that have lost exclusivity in
the U.S. since the beginning of 2007, is an alternative view of our
Pharmaceutical revenues and we believe that investors’ understanding
of Pharmaceutical revenues is enhanced by disclosing this
performance measure. Norvasc lost its U.S. exclusivity in March 2007
and Camptosar lost its U.S. exclusivity in February 2008, and as is
typical in the pharmaceutical industry, this has resulted in a
dramatic decline in revenues due to generic competition.
Zyrtec/Zyrtec D lost its U.S. exclusivity in January 2008 and we
ceased marketing the product in late January 2008. We believe that
excluding the impact of these products assists the reader in
understanding the underlying strength of the balance of our diverse
Pharmaceutical product portfolio in 2008. Because of its non-
standardized definition, this total in-line and new products
Pharmaceutical 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
Pharmaceutical revenues.
(2) Total in-line and new products Pharmaceutical international
revenues reflect a favorable impact in the first quarter of 2008 due
primarily to changes in foreign exchange rates.
PFIZER INC
SUPPLEMENTAL INFORMATION
1) Impact of Foreign Exchange on Revenues
The weakening of the U.S. dollar relative to other currencies,
primarily the euro, Canadian dollar and Japanese yen, favorably
impacted our revenues by approximately $570 million, or 5%, in
first-quarter 2008, compared to the same period in 2007.
2) Change in Cost of Sales
Reported cost of sales increased 5% in first-quarter 2008,
compared to the same period in 2007. The increase primarily reflects
the unfavorable impact of foreign exchange, higher implementation
costs associated with our cost-reduction initiatives and costs related
to business-transition activities associated with the sale of our
Consumer Healthcare business, partially offset by the savings impact
of our cost-reduction initiatives.
Implementation charges in reported cost of sales related to our
cost-reduction initiatives were $138 million for the first quarter of
2008 and $94 million for the first quarter of 2007.
Reported cost of sales also included $48 million for first-quarter
2008 and $35 million for first-quarter 2007, related to
business-transition activities associated with the sale of our
Consumer Healthcare business, completed in December 2006. This
continuing activity is transitional in nature and generally results
from agreements that seek to facilitate the orderly transfer of
operations of our former Consumer Healthcare business to the new
owner.
Reported cost of sales as a percentage of revenues increased 1.7
percentage points to 16.8% in first-quarter 2008, reflecting a less
favorable geographic and product mix (including the impact of the
products that lost exclusivity), the unfavorable impact of foreign
exchange and the impact of higher first-quarter 2008 implementation
costs associated with our cost-reduction initiatives, compared to
first-quarter 2007, partially offset by the savings impact of our
cost-reduction initiatives.
3) Change in Selling, Informational & Administrative (SI&A)
Expenses and Research & Development (R&D) Expenses
Reported SI&A expenses in first-quarter 2008 increased 4% compared
to the same period in 2007, reflecting the unfavorable impact of
foreign exchange, as well as the impact of higher 2008 implementation
costs associated with our cost-reduction initiatives, partially offset
by savings associated with our cost-reduction initiatives.
Implementation charges in reported SI&A expenses related to our
cost-reduction initiatives were $75 million for first quarter 2008 and
$49 million for first-quarter 2007.
Reported R&D expenses, excluding acquisition-related in-process
research and development charges (IPR&D), increased 8% in
first-quarter 2008, compared to the same period in 2007. The increase
is primarily due to higher first-quarter 2008 implementation costs
associated with our cost-reduction initiatives and the unfavorable
impact of foreign exchange on expenses, partially offset by the
non-recurrence of first-quarter 2007 milestone payments.
Implementation charges in reported R&D expenses related to our
cost-reduction initiatives were $146 million for first-quarter 2008
and $31 million for first-quarter 2007.
IPR&D charges in first-quarter 2008 of $398 million primarily
related to the acquisitions of CovX and Coley Pharmaceutical Group,
Inc. IPR&D charges in 2007 of $283 million primarily related to the
acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc.
4) Other Income and Other Deductions
($ millions) First Quarter
—————-
2008 2007*
—————-
Net Interest (Income)/Expense(a) $ (203) $ (248)
Royalty Income (63) (93)
Net Gains on Asset Disposals (23) (7)
Other, Net (44) (54)
—————-
Other (Income)/Deductions-Net $ (333) $ (402)
================
*Certain prior period amounts were reclassified to conform to the
current period presentation.
(a) The decrease in net interest income in first-quarter 2008
compared to the same periods in 2007 was due primarily to lower cash
balances and lower interest rates.
5) Effective Tax Rate
The effective tax rate on reported Income from continuing
operations before provision for taxes on income and minority interests
for first-quarter 2008 was 21.5% compared to 17.0% in first-quarter
2007, reflecting a decrease in and change in geographic mix of
expenses incurred to execute our cost-reduction initiatives, as well
as an increase in IPR&D expenditures, which generally are not
deductible for tax purposes.
The effective tax rate on adjusted income(1) was 21.9% in
first-quarter 2008 compared to 21.7% in first-quarter 2007.
6) Reconciliation of 2008 Adjusted Income(1) and Adjusted Diluted
EPS(1) Guidance to 2008 Reported Net Income and Reported Diluted EPS
Guidance
Full-Year 2008 Guidance
($ billions, except per-share amounts) Net Income(a) Diluted EPS(a)
————— —————
Income/(Expense)
—————————————
Adjusted Income/Diluted EPS(1)
Guidance $15.8 - $16.6 $2.35 - $2.45
Purchase Accounting Impacts, Net of
Tax:
Business Development Transactions
Completed as of 12/31/07 (2.1) (0.31)
Business Development Transactions
Completed from 1/1/08 through
3/30/08 (0.3) (0.05)
Costs Related to Cost-Reduction
Initiatives, Net of Tax (1.4 - 1.7) (0.21 - 0.26)
————— —————
Reported Net Income/Diluted EPS
Guidance $11.7 - $12.8 $1.73 - $1.88
=============== ===============
(a) Guidance in the table above excludes the effects of business
development transactions not completed as of March 30, 2008.
(1) “Adjusted income” and “adjusted diluted earnings per share
(EPS)” are defined as reported net income and reported diluted EPS
excluding purchase-accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items. As described
under Adjusted Income in the Management’s Discussion and Analysis of
Financial Condition and Results of Operations section of Pfizer’s Form
10-K for the fiscal year ended December 31, 2007, 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. The adjusted income and adjusted diluted EPS measures
are not, and should not be viewed as, substitutes for U.S. GAAP net
income and diluted EPS.
DISCLOSURE NOTICE: The information contained in this earnings
release and the attachments is as of April 17, 2008. The Company
assumes no obligation to update any forward-looking statements
contained in this earnings release or the attachments as a result of
new information or future events or developments.
This earnings release and the attachments contain forward-looking
information about the Company’s financial results and estimates,
business plans and prospects, in-line products and product candidates
that involve substantial risks and uncertainties. You can identify
these statements by the fact that they use words such as “will,”
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” “target,” “forecast” and other words and terms of similar
meaning in connection with any discussion of future operating or
financial performance or business plans and prospects. Among the
factors that could cause actual results to differ materially are the
following: the success of research and development activities;
decisions by regulatory authorities regarding whether and when to
approve our drug applications as well as their decisions regarding
labeling and other matters that could affect the availability or
commercial potential of our products; the speed with which regulatory
authorizations, pricing approvals and product launches may be
achieved; the success of external business development activities;
competitive developments, including with respect to competitor drugs
and drug candidates that treat diseases and conditions similar to
those treated by our in-line drugs and drug candidates; the ability to
successfully market both new and existing products domestically and
internationally; difficulties or delays in manufacturing; trade buying
patterns; the ability to meet generic and branded competition after
the loss of patent protection for our products and competitor
products; the impact of existing and future legislation and regulatory
provisions on product exclusivity; trends toward managed care and
healthcare cost containment; U.S. legislation or regulatory action
affecting, among other things, pharmaceutical product pricing,
reimbursement or access, including under Medicaid and Medicare, the
importation of prescription drugs from outside the U.S. at prices that
are regulated by governments of various foreign countries, and the
involuntary approval of prescription medicines for over-the-counter
use; the impact of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003; legislation or regulatory action in markets
outside the U.S. affecting pharmaceutical product pricing,
reimbursement or access; contingencies related to actual or alleged
environmental contamination; claims and concerns that may arise
regarding the safety or efficacy of in-line products and product
candidates; significant breakdown, infiltration or interruption of our
information technology systems and infrastructure; legal defense
costs, insurance expenses, settlement costs and the risk of an adverse
decision or settlement related to product liability, patent
protection, governmental investigations, ongoing efforts to explore
various means for resolving asbestos litigation, and other legal
proceedings; the Company’s ability to protect its patents and other
intellectual property both domestically and internationally; interest
rate and foreign currency exchange rate fluctuations; governmental
laws and regulations affecting domestic and foreign operations,
including tax obligations; changes in generally accepted accounting
principles; any changes in business, political and economic conditions
due to the threat of terrorist activity in the U.S. and other parts of
the world, and related U.S. military action overseas; growth in costs
and expenses; changes in our product, segment and geographic mix; and
the impact of acquisitions, divestitures, restructurings, product
withdrawals and other unusual items, including our ability to realize
the projected benefits of our cost-reduction initiatives. A further
list and description of 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, 2007, and in its reports on Forms 10-Q and 8-K.
This earnings release may include 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.