Company's Plan Focuses On:
Maximizing Revenues from Current Product Portfolio
Investing in Medium- and Long-Term Growth Opportunities through Internal
Pipeline and Externally Sourced Products
Establishing Lower, More Flexible Cost Base
Creating Smaller, More Focused and Accountable Operating Units
NEW YORK, Jan. 22 /PRNewswire-FirstCall/ -- Pfizer Chairman and Chief
Executive Officer Jeffrey B. Kindler today announced the company's
immediate priorities to drive improved performance, position Pfizer for
future success and enhance total shareholder return. Executing on those
priorities will mark the beginning of an ongoing process to change the way
Pfizer does business.
"Pfizer is a great company with a great future," Kindler said. "We are
facing significant challenges, however, in a profoundly changing business
environment. I believe we must fundamentally change the way we run our
company to meet these challenges and to take advantage of the diverse and
attractive opportunities that we see in the marketplace.
"We need to maximize near- and long-term revenues from our current
product portfolio, from our pipeline and from external opportunities," he
added. "We must reduce our absolute costs and put in place a more flexible
cost structure. We are establishing smaller operating units that can
enhance innovation and accountability while still drawing on the advantages
that our scale and resources provide. We also are taking steps to enhance
our collaborations with patients, customers, scientists and business
partners, as well as to make Pfizer an even better place to work for our
people. We believe executing against these key priorities will help Pfizer
continue as a market and industry leader in the 21st century, and in the
process, deliver superior shareholder returns over the short, medium and
long term."
PFIZER'S IMMEDIATE PRIORITIES
In a meeting with financial analysts today, Kindler and several other
members of Pfizer's leadership team -- including David Shedlarz, Vice
Chairman; Ian Read, the head of Worldwide Pharmaceutical Operations; and
Dr. John LaMattina, the head of Pfizer Global Research and Development --
discussed the challenges and opportunities facing the company and
summarized Pfizer's most immediate priorities.
Priority One: Maximize revenues in both the short and the long term.
* Pfizer plans to maximize revenues from its current in-line portfolio
and new products. In 2007, the company will further highlight
Lipitor's unique package of benefits, build on an outstanding 2006 for
Celebrex, continue Lyrica's momentum, and introduce campaigns in
support of newer medicines. In pursuing these efforts, Pfizer plans to
work differently with its customers - listening better, testing new
approaches, scaling up what's working and, in the process, making the
company's medicines even more valuable.
* To expand future revenues, Pfizer is taking a number of actions to
deliver more products of greater value more quickly. The company will
step up its Research and Development investment in areas that are
especially promising. In biotherapeutics, Pfizer will strengthen its
capabilities in vaccines and antibodies. It is also dramatically
simplifying the organizational structure of R&D to increase
accountability, flexibility, innovation and entrepreneurship. In
addition, the company will complement its accelerated internal efforts
with business development activities that will secure new medicines as
well as related products and services designed to enhance the value of
its medicines.
David Shedlarz said, "We recognize that business development is
critical to our ability to drive revenue growth in the medium to long term,
along with growing our core products, successfully launching new products,
and developing and accelerating our internal R&D pipeline. We are making
the changes needed to our strategy, approach and capital allocation to best
ensure our success in this area." Pfizer plans to launch two new externally
sourced products each year beginning in 2010.
Priority Two: Establish a smaller and more flexible cost base.
* Pfizer will generate cost savings through site rationalization in
research and manufacturing, streamlined organizational structures,
staff function reductions, increased outsourcing and procurement
savings. The company will reallocate many of these cost savings to
more value-added activities. After making those investments, Pfizer
plans to achieve an absolute net reduction in the pre-tax total expense
component of adjusted income(1) of between $1.5 billion and $2 billion
by the end of 2008, while continuing to invest in R&D, business
development, emerging markets and new marketing approaches.
* The company's cost reduction initiatives will result in the elimination
of about 10,000 positions or about 10 percent of Pfizer's total
worldwide workforce by the end of next year. This includes the U.S.
sales organization reductions announced previously. In Europe, Pfizer
will take steps to streamline its operations, with a proposed reduction
to its European field force by more than 20 percent -- subject to
consultation with works councils and local labor law -- while
maintaining a competitive share of voice for its medicines and a strong
organization going forward.
* Pfizer will continue to consolidate its worldwide manufacturing
operations with the closure of two additional manufacturing sites --
Brooklyn, NY and Omaha, NE. In addition, the company will pursue the
sale of a third site in Feucht, Germany, subject to consultation with
works councils and local labor law. From 2003 to 2008, Pfizer will
have reduced its network of manufacturing plants around the world from
93 to 48, including sites announced today. Pfizer manufacturing has
achieved and will continue to achieve substantial cost savings while
maintaining its high-quality manufacturing standards.
* In Research and Development, the company is planning to close three
research sites in the United States -- Ann Arbor, MI, Esperion (also in
Ann Arbor) and Kalamazoo, MI (where the company will continue to
maintain a large manufacturing and Animal Health presence) -- and is
proposing to close research sites in Nagoya, Japan and Amboise, France,
subject to consultation with works councils and local labor law.
"These and other actions will allow us to reduce costs in support
services and 'bricks and mortar' and to redeploy hundreds of millions of
dollars into the discovery and development work of our scientists," said
Dr. LaMattina.
Pfizer said it will do everything it can to offer support and benefits
to all colleagues affected by these difficult actions, and said it was
committed to working with community leaders to mitigate the impact of these
closures in whatever way it can.
"These are, of course, complex issues where we must balance many
different considerations, and they are, without doubt, among the most
difficult decisions we have to make," said Kindler. "We have thought long
and hard about these steps, because we are acutely aware of their impact on
colleagues and the communities where we are located."
Priority Three: Create smaller, more focused and entrepreneurial
business units that will enhance innovation and draw on the advantages of
our scale and resources.
* Pfizer is restructuring U.S. Pharmaceutical Operations into four
distinct business units, each led by a general manager with profit-and-
loss accountability, and a fifth business unit responsible for customer
support and specifically focused on managed care and access. No change
in the field force organization will be required as these units mirror
the existing structure. Each unit will have the dedicated resources
needed to drive the business, including medical, marketing and sales.
* Pfizer said it will simplify its R&D organization and improve
productivity by consolidating each of the research teams focused on any
given therapeutic area (TA) -- currently distributed in multiple
locations around the globe, in many cases -- to one of four major sites.
Each TA will be run by a single leader with more responsibility,
authority and accountability, as well as more control over resource
decisions. Pfizer plans to exit discovery research in gastroenterology
and dermatology, but will continue to develop compounds already in the
pipeline and to seek external opportunities in these areas.
"Our simplified structure will help drive the growth of our expanding
pipeline -- including our goal to deliver four new internally generated
products per year by 2011 -- while maintaining current R&D investment
levels," said Dr. LaMattina. "This will give us the 'best of both worlds'
-- the entrepreneurial spirit of a small company, aligned with the
world-class technologies, platforms and capabilities that only a company of
Pfizer's size can provide."
Priority Four: Actively and more meaningfully engage with customers,
patients, physicians and other collaborators to provide them with greater
value.
* Pfizer said it will experiment with new approaches to bringing its
products to market, seeking new and more effective ways of
communicating with physicians and patients, inviting payers earlier
into the development process, and enhancing its collaboration with
academic and other research institutions.
* Pfizer is also committed to playing a more significant role in the
national dialogue on improving the delivery of care and patient access.
"We must be a constructive voice with our stakeholders on healthcare
policy and regulation of our products," said Kindler. "We must be seen
as a responsible and active company that is focused on solutions that
work for everyone - not just for Pfizer."
Priority Five: Make Pfizer a great place to work.
* Pfizer said that, as part of an ongoing effort to cut down on
bureaucracy and reduce management layers, it has eliminated many
unnecessary committees and cross-functional teams and is in the process
of cutting at least three to four layers of management in its
pharmaceutical, R&D and manufacturing divisions, as well as
company-wide support functions.
"By reducing middle management and increasing spans of control, we're
getting leaders closer to colleagues and customers and giving colleagues a
clearer line of sight to those aspects of the business for which they are
accountable. As a result, our managers will delegate, empower and focus on
developing colleagues more than ever, and our colleagues will grow and take
on more responsibility than ever," said Kindler.
Kindler concluded, "I am convinced that products and services that
contribute meaningfully to the public's health -- and that address areas of
major unmet medical need -- will always be highly valued. But I believe
Pfizer must transform the way we've done business in the past in order to
be successful in the future."
"Obviously, this change won't happen overnight. It will take time, it
will take discipline, and it will take determination to turn these
aspirations into reality," Kindler said. "But at Pfizer today, our goals
are clear. Our leadership understands both our challenges and our
opportunities. And we are committed to providing the value our customers
need, the working environment our employees want and the results our owners
deserve."
Financial Guidance for 2007 and 2008
Pfizer provided the following financial guidance, at current foreign
exchange rates.
For 2007:
* Revenues Comparable to 2006
* SI&A Pre-tax Component of Adjusted Income(1) Decreases by about $500
Million
* R&D Pre-tax Component of Adjusted Income(1) Essentially Flat from 2006
Expenditures
* Effective Tax Rate of 22.5% on Adjusted Income(1) before Taxes
* Reported Diluted EPS of $1.45 to $1.55
* Adjusted Diluted EPS(1) of $2.18 to $2.25, Representing Growth of 6%
to 9%
* Up to $10 Billion in Common Stock Purchases
* Cash Flow from Operations of $12.5 Billion to $13.5 Billion
For 2008:
* Revenues Comparable to 2006
* Total Cost as a Pre-tax Component of Adjusted Income(1) About $1.5
Billion to $2.0 Billion Lower than 2006
* Reported Diluted EPS of $1.75 to $1.93
* Adjusted Diluted EPS(1) of $2.31 to $2.45, Representing Growth of 6%
to 9%
Long Term Outlook -- 2009-10
* Resumption of Revenue Growth Given Contribution of New and In-Line
Products and Dissipation of Loss of Exclusivity Impact
For additional details, please see the attached supplemental financial
information and Disclosure Notice.
(1) "Adjusted income" and "adjusted diluted earnings per share (EPS)"
are defined as reported net income and reported diluted EPS excluding
purchase- accounting adjustments, acquisition-related costs, discontinued
operations, cumulative effect of a change in accounting principles, and
certain significant items. As described under Adjusted Income in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations section of Pfizer's Form 10-Q for the quarterly period ended
October 1, 2006, management uses adjusted income, among other factors, to
set performance goals and to measure the performance of the overall
company. We believe that investors' understanding of our performance is
enhanced by disclosing this measure. Reconciliations of forecasted
full-year 2007 and 2008 adjusted income and adjusted diluted EPS to
forecasted reported net income and reported diluted EPS are provided in the
materials accompanying this report. The adjusted income and adjusted
diluted EPS measures are not, and should not be viewed as, substitutes for
U.S. GAAP net income and diluted EPS.
For more information on Pfizer Inc, or to request broadcast-standard
video related to this announcement, please visit http://www.pfizer.com.
PFIZER INC
SUPPLEMENTAL FINANCIAL INFORMATION
1) Reconciliation of Forecasted 2007 and 2008 Adjusted Income(1) and
Adjusted
Diluted EPS(1) to Forecasted 2007 and 2008 Reported Net Income and
Reported
Diluted EPS
Full-Year 2007 Forecast
($ billions, except per-share amounts) Net Income(a) Diluted EPS(a)
Income/(Expense)
Forecasted Adjusted Income/
Diluted EPS(1) ~$15.1 - $15.6 ~$2.18 - $2.25
Purchase Accounting Impacts, Net of Tax (2.4) (0.35)
Adapting to Scale Costs, Net of Tax (2.4 - 2.7) (0.35 - 0.38)
Forecasted Reported Net Income/
Diluted EPS ~$10.0 - $10.8 ~$1.45 - $1.55
Full-Year 2008 Forecast
($ billions, except per-share amounts) Net Income(a) Diluted EPS(a)
Income/(Expense)
Forecasted Adjusted Income/
Diluted EPS(1) ~$15.6 - $16.6 ~$2.31 - $2.45
Purchase Accounting Impacts, Net of Tax (2.0) (0.30)
Adapting to Scale Costs, Net of Tax (1.5 - 1.8) (0.22 - 0.26)
Forecasted Reported Net Income/
Diluted EPS ~$11.8 - $13.1 ~$1.75 - $1.93
(a) Forecasts in the table exclude the effects of business-development
transactions not completed as of December 31, 2006.
(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, cumulative effect of a change in accounting principles 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
October 1, 2006, management uses adjusted income, among other factors, to
set performance goals and to measure the performance of the overall
company. We believe that investors' understanding of our performance is
enhanced by disclosing this measure. Reconciliations of forecasted
full-year 2007 and 2008 adjusted income and adjusted diluted EPS to
forecasted reported net income and reported diluted EPS are provided in the
materials accompanying this report. The adjusted income and adjusted
diluted EPS measures are not, and should not be viewed as, substitutes for
U.S. GAAP net income and diluted EPS.
DISCLOSURE NOTICE: The information contained in this document and the
attachments is as of January 22, 2007. 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 plans and
prospects, in-line products, and product candidates that involve
substantial risks and uncertainties. You can identify these statements by
the fact that they use words such as "will," "anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe," "target," "forecast", and
other words and terms of similar meaning in connection with any discussion
of future operating or financial performance or business plans and
prospects. Among the factors that could cause actual results to differ
materially are the following: the success of research and development
activities; decisions by regulatory authorities regarding whether and when
to approve our drug applications as well as their decisions regarding
labeling and other matters that could affect the availability or commercial
potential of our products; the speed with which regulatory authorizations,
pricing approvals, and product launches may be achieved; the success of
external business development activities; competitive developments,
including with respect to competitor drugs and drug candidates that treat
diseases and conditions similar to those treated by our in-line drugs and
drug candidates; the ability to successfully market both new and existing
products domestically and internationally; difficulties or delays in
manufacturing; trade buying patterns; the ability to meet generic and
branded competition after the loss of patent protection for our products
and competitor products; the impact of existing and future regulatory
provisions on product exclusivity; trends toward managed care and 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 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 our ability to realize the projected benefits of
our Adapting to Scale multi-year productivity initiative, including the
projected benefits of the broadening of this initiative over the next few
years. A further list and description of these risks, uncertainties, and
other matters can be found in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2005, and in its reports on Forms 10-Q
and 8-K.
This document 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.
SOURCE Pfizer Inc
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