($ billions, except per-share amounts) First Quarter 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 ($118 million, pre-tax). In addition, just as foreign
exchange reduced revenues, it also reduced reported expenses in the first
quarter of 2006. Savings from our AtS productivity initiatives first began
to be realized in the third quarter of 2005, thereby affecting expense
comparisons in the first quarter of 2006.
6) Other Income and Other Deductions
($ millions) First Quarter
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
 back to top
Related links:
http://www.pfizer.com/
Photo Notes:A free corporate logo to accompany this
story is availableimmediately via Wieck Photo Database to any
media with telephoto receiveror electronic darkroom, PC or
Macintosh, that can accept overheadtransmissions. To retrieve a
logo, please call 972-392-0888./ /Company News On-Call:
http://www.prnewswire.com/comp/688250.html
Pfizer's press releases are available through PR Newswire's
Company News On-Call service on PRN's Web Site. Visit
http://www.prnewswire.com/comp/688250.html /
CONTACT:
Andy McCormick, +1-212-733-5469, or Paul
Fitzhenry, +1-212-733-4637, both of Pfizer Inc
|
