- 2008 First Quarter Worldwide Net Revenue Increased 6% to $5.7 Billion and
Reported Diluted Earnings per Share Decreased 3% to $0.89. Diluted Earnings
per Share, Before Certain Significant Items, was $0.94, equivalent to the
$0.94 in the 2007 First Quarter
- Reaffirms Full Year Pro Forma Diluted Earnings per Share Guidance of
$3.35 to $3.49
- Gains FDA Approval for Pristiq for Depression and Xyntha for Hemophilia
A; Relistor for Opioid-Induced Constipation Approved in Canada
- Worldwide Growth of Nutritional Business Leads to a New Manufacturing
Site in China and Expansion of Other Facilities
MADISON, N.J., April 22 /PRNewswire-FirstCall/ -- Wyeth (NYSE: WYE)
today reported results for the 2008 first quarter ended March 31, 2008.
Worldwide net revenue increased 6% to $5.7 billion for the 2008 first
quarter. Excluding the favorable impact of foreign exchange, worldwide net
revenue increased 1% for the 2008 first quarter.
"We are pleased with a solid start to 2008 and, despite the significant
negative impact from launches of infringing generic versions of Protonix,
are on track to meet our full year pro forma diluted earnings per share
guidance of $3.35 to $3.49. We are encouraged by the performance of our
biotech business, our diverse product portfolio and the international sales
growth of our three divisions," said Bernard Poussot, Wyeth's President and
Chief Executive Officer. "We also had three new product approvals during
the quarter: Pristiq for depression, Xyntha for Hemophilia A and Relistor,
in Canada, for opioid-induced constipation. At the same time, we are taking
the necessary steps to transform our business going forward."
2008 First Quarter Product Highlights
Net revenue from Wyeth's principal products for the 2008 first quarter
together with the percentage changes from the comparable period in the
prior year are presented in the following table:
(UNAUDITED)
Three Months Ended 3/31/2008
Principal Products ($ in Millions) Increase/(Decrease)
Effexor $1,021 15%
Prevnar 706 14%
Enbrel (outside the U.S. and Canada) 606 36%
Nutrition 411 19%
Alliance Revenue (1) 369 21%
Zosyn/Tazocin 342 22%
Premarin family 276 15%
Protonix family (2) 159 (66)%
Centrum 188 18%
Advil 172 8%
(1) Alliance revenue reflects revenue to Wyeth derived from sales of
Enbrel (in the United States and Canada), Altace and the CYPHER stent.
(2) Protonix family reflects revenue from both the branded product and
Wyeth's own generic version.
Product Highlights
ENBREL(R) continued to post strong revenue growth during the 2008 first
quarter. Enbrel sales in the United States and Canada are scheduled to be
reported by Wyeth's marketing partner, Amgen Inc., on April 24, 2008. Wyeth
has exclusive rights to Enbrel outside the United States and Canada.
Enbrel is a breakthrough product approved for the treatment of chronic
inflammatory diseases, including rheumatoid arthritis, juvenile rheumatoid
arthritis, ankylosing spondylitis, psoriatic arthritis and psoriasis.
Enbrel is the leading biotechnology product in the world today and ranks
fifth among the top pharmaceutical products worldwide by sales.
PREVNAR(R), Wyeth's vaccine to prevent invasive pneumococcal disease
(IPD) in both infants and young children, is the world's best selling
vaccine. Prevnar is available in 87 countries worldwide and now is included
in 23 national immunization programs (NIPs), with several additional
countries announcing intentions to initiate NIPs. A study published in the
February 15, 2008 issue of the Centers for Disease Control and Prevention's
Morbidity and Mortality Weekly Report found that Prevnar has had broad
public health impact since its introduction in the United States in 2000,
including a 98 percent decline of vaccine-type IPD and 77 percent decline
in overall IPD in infants and young children through 2005 compared with a
pre-vaccine baseline.
EFFEXOR(R) (Effexor and Effexor XR) continues to be the number one
global antidepressant in sales and an important therapy in treating adult
patients with major depressive disorder, generalized anxiety disorder,
social anxiety disorder and panic disorder.
Wyeth Nutrition continued its strong performance during the 2008 first
quarter driven by outstanding results from key emerging markets,
particularly China. Also during the quarter, the Company announced plans to
continue with its $500 million capital investment in the Asia/Pacific
region with a new manufacturing site in China and ongoing expansion of its
facilities in Singapore and the Philippines.
Sales in the 2008 first quarter of PROTONIX(R) (pantoprazole sodium),
Wyeth's branded proton pump inhibitor indicated for gastroesophageal reflux
disease, were adversely affected by the "at risk" launch of generic
pantoprazole tablets in the United States by Teva Pharmaceuticals USA, Inc.
(Teva) on December 21, 2007, and the subsequent "at risk" launch of Sun
Pharmaceutical Industries, Ltd.'s (Sun) generic pantoprazole tablets. On
January 29, 2008, Wyeth and its business partner, Nycomed GmbH, announced
the U.S. launch of Wyeth's own generic version of Protonix tablets.
However, sales of Wyeth's own generic have not, and cannot, offset the
substantial harm caused by the launch of infringing generics. The Company
believes the Protonix compound patent is strong and will continue to
vigorously pursue its litigation against Teva, Sun and other infringing
generics. Wyeth will seek to recover its lost profits and other damages
resulting from the infringing sales by Teva and Sun, and will continue to
seek court orders against infringement of this patent.
Additional information regarding Wyeth's product sales may be accessed
on the Company's Internet Web site at http://www.wyeth.com by clicking on the
"Investor Relations" hyperlink.
New Product Update
Wyeth gained three key new product approvals during the 2008 first
quarter. In February, the U.S. Food and Drug Administration (FDA) approved
XYNTHA(TM) (Antihemophilic Factor [Recombinant], Plasma/Albumin-Free), a
recombinant factor VIII product, for patients with hemophilia A for both
the control and prevention of bleeding episodes and surgical prophylaxis.
Xyntha is manufactured and formulated using an albumin-free process and
state-of-the- art nanofiltration technology. It is also the only
recombinant factor VIII product to utilize an entirely non-human and
non-animal based purification process.
In addition, in February, the FDA approved PRISTIQ(TM)
(desvenlafaxine), a structurally novel, once-daily serotonin-norepinephrine
reuptake inhibitor, to treat adult patients with major depressive disorder.
Wyeth began to ship Pristiq into commercial channels in April 2008.
Additionally, in March, RELISTOR(TM) (methylnaltrexone) for
subcutaneous use was approved in Canada for the treatment of opioid-induced
constipation in patients with advanced illness receiving palliative care.
Health Canada's decision regarding Relistor marks the first regulatory
approval of this novel medication anywhere in the world.
2008 First Quarter Results
Net revenue increased 6% in the 2008 first quarter primarily driven by
our core products, Enbrel, Prevnar and Nutritionals, and the favorable
impact of foreign exchange. Sales of Effexor and the PREMARIN(R) family of
products also increased in this quarter, benefiting from price increases
since the first quarter of 2007, as well as supply constraints in the first
quarter of 2007. Protonix family sales substantially declined due to
generic competition.
Selling, general and administrative expenses for the 2008 first
quarter, excluding certain significant items, increased 8%, and 3%
excluding the impact of foreign exchange, versus the first quarter of 2007.
This increase is primarily due to a significantly lower spending rate in
the 2007 first quarter versus the other 2007 quarters. Excluding the
effects of certain significant items and foreign exchange, selling, general
and administrative expenses for the full year are projected to decrease by
2% versus 2007.
Research and development expenses for the 2008 first quarter, excluding
certain significant items, increased 9% due to higher late stage clinical
trial spending, as well as a lower spend rate in the 2007 first quarter
versus the other 2007 quarters. For the full year, we project research and
development costs, excluding certain significant items, to be up slightly
versus 2007 levels.
The 2008 first quarter tax rate, excluding certain significant items,
increased to 31.1% from 28.2% in the 2007 first quarter. The tax rate for
the 2008 first quarter was greater than the expected tax rate for the full
year due primarily to Congress not yet renewing legislation for the U.S.
Research and Development Tax Credit, which expired in December 2007.
Net income and diluted earnings per share for the 2008 first quarter
were $1,196.9 million and $0.89, respectively, compared with $1,254.1
million and $0.92 for the 2007 first quarter. The 2008 first quarter
results included net charges of $81.0 million ($69.7 million after-tax or
$0.05 per share-diluted) related to the Company's productivity initiatives.
The 2007 first quarter results included productivity initiatives charges of
$42.6 million ($29.5 million after-tax or $0.02 per share-diluted). Net
income and diluted earnings per share, before these certain significant
items, for the 2008 first quarter were $1,266.6 million and $0.94,
respectively, compared with $1,283.6 million and $0.94 for the 2007 first
quarter.
Productivity Initiatives
In 2008, the Company continued its productivity initiatives by
launching Project Impact, a company-wide program designed to address
short-term fiscal challenges, particularly the significant loss of sales
and profits resulting from the launch of generic versions of Protonix.
Longer-term, Project Impact will include strategic actions transforming our
business to fundamentally change how we conduct business across the entire
Company and to adapt to the continuously changing environment. The 2008
first quarter net charges included expenses of $185.6 million, primarily
for severance and other employee-related costs associated with a reduction
in workforce of approximately 6% by year end, many of which were selling
and marketing personnel who supported Protonix. These expenses were offset,
in part, by a $104.6 million gain on the sale of a Japanese manufacturing
facility. The 2007 first quarter included expenses of $42.6 million,
primarily related to manufacturing site network consolidation initiatives.
To assist in performing first quarter comparisons, a pro forma
presentation, which excludes our productivity initiatives, is provided
under "Results of Operations - As Adjusted".
Segment Information
The following table sets forth worldwide net revenue by reportable segment
together with the percentage changes from the comparable period in the prior
year:
(UNAUDITED)
Three Months Ended 3/31/2008
Net Revenue by
Reportable Segment ($ in Millions) Increase
Pharmaceuticals $4,759 6%
Consumer Healthcare 675 10%
Animal Health 277 --
Consolidated Total $5,711 6%
Pharmaceuticals
Worldwide Pharmaceuticals net revenue increased 6% for the 2008 first
quarter due primarily to higher sales of Effexor, Enbrel, Prevnar,
Nutrition products, the Premarin family of products and ZOSYN(R). The
increase in Pharmaceuticals net revenue was offset, in part, by lower sales
of the Protonix family of products due to generic competition. Alliance
revenue increased 21% to $369.0 million for the 2008 first quarter due to
an increase in Enbrel alliance revenue, which was offset, in part, by lower
alliance revenue associated with sales of the CYPHER stent and Altace.
Excluding the favorable impact of foreign exchange, worldwide
Pharmaceuticals net revenue increased 1% for the 2008 first quarter.
Consumer Healthcare
Worldwide Consumer Healthcare net revenue increased 10% for the 2008
first quarter due primarily to an increase in sales of Centrum(R), Advil(R)
and Caltrate(R), partially offset by lower sales of Robitussin(R), due, in
part, to the voluntary recall and replacement program initiated during the
2007 third quarter in connection with the redesign of dosing cups, as well
as lower sales of Alavert(R) and Dimetapp(R). Excluding the favorable
impact of foreign exchange, worldwide Consumer Healthcare net revenue
increased 4% for the 2008 first quarter.
Animal Health
Worldwide Animal Health net revenue for the 2008 first quarter was
consistent with the 2007 first quarter. Higher sales of poultry and
livestock products were offset by lower sales of equine and companion
animal products. Excluding the favorable impact of foreign exchange,
worldwide Animal Health net revenue decreased 6% for the 2008 first
quarter.
Results of Operations
The comparative results of operations are as follows:
(In thousands except per share amounts)
(UNAUDITED)
Three Months Ended
3/31/2008 3/31/2007
Net Revenue $5,710,649 $5,368,686
Cost of Goods Sold 1,562,013 1,474,511
Selling, General and
Administrative Expenses 1,722,213 1,512,539
Research and Development Expenses 839,377 750,732
Interest Income, Net (27,456) (14,800)
Other Income, Net (143,485) (99,636)
Income before Income Taxes 1,757,987 1,745,340
Provision for Income Taxes 561,040 491,236
Net Income $1,196,947 $1,254,104
Basic Earnings per Share $0.90 $0.93
Average Number of Common Shares
Outstanding During Each Period -
Basic 1,335,207 1,342,884
Diluted Earnings per Share $0.89 $0.92
Average Number of Common Shares
Outstanding during Each Period -
Diluted 1,360,311 1,375,275
See Notes to Results of Operations and Results of Operations - As
Adjusted.
Results of Operations - As Adjusted
Wyeth has prepared the following presentation of its results of
operations for the three months ended March 31, 2008 and 2007, adjusted,
where noted below, to exclude charges, which are considered certain
significant items during the 2008 and 2007 first quarter.
The comparative results of operations - as adjusted are as follows:
(In thousands except per share amounts)
(UNAUDITED) - AS ADJUSTED
Three Months Ended
3/31/2008 3/31/2007
Net Revenue $5,710,649 $5,368,686
Cost of Goods Sold 1,496,085 1,445,455
Selling, General and
Administrative Expenses 1,621,639 1,499,061
Research and Development Expenses 820,264 750,666
Interest Income, Net (27,456) (14,800)
Other Income, Net (38,830) (99,636)
Income before Income Taxes 1,838,947 1,787,940
Provision for Income Taxes 572,390 504,336
Net Income $1,266,557 $1,283,604
Basic Earnings per Share $0.95 $0.96
Average Number of Common Shares
Outstanding During Each Period -
Basic 1,335,207 1,342,884
Diluted Earnings per Share $0.94 $0.94
Average Number of Common Shares
Outstanding during Each Period -
Diluted 1,360,311 1,375,275
See Notes to Results of Operations and Results of Operations - As
Adjusted.
Notes to Results of Operations and Results of Operations - As Adjusted
(1) The average number of common shares outstanding for diluted earnings
per share is higher than for basic earnings per share due to the
assumed conversion of the Company's outstanding convertible senior
debentures, outstanding stock options, deferred contingent common
stock awards, performance share awards, restricted stock awards and
convertible preferred stock into common stock equivalents using the
treasury stock method. For purposes of calculating diluted earnings
per share, interest expense, net of capitalized interest and taxes
related to the Company's outstanding convertible senior debentures is
added back to reported net income, and the additional shares of common
stock (assuming conversion) are included in total shares outstanding.
Interest expense, net of capitalized interest and taxes related to
these debentures was $7,071 for the 2008 first quarter compared with
$7,872 for the 2007 first quarter.
(2) Other income, net included royalty income for the 2008 and 2007 first
quarter of $55,758 and $76,964, respectively.
(3) Certain significant items, which have been described under
"Productivity Initiatives," have been excluded from the results of
operations - as adjusted for the 2008 and 2007 first quarter as
follows:
(UNAUDITED)
(In thousands, except Three Months Ended
per share amounts) 3/31/2008 3/31/2007
Cost of Goods Sold $65,900 $29,100
Selling, General and
Administrative Expenses 100,600 13,500
Research and Development Expenses 19,100 --
Total Productivity Initiatives
Charges(a) 185,600 42,600
Other Income, Net(b) (104,600) --
Net Productivity
Initiatives Charges $81,000 $42,600
Net Productivity
Initiatives Charges,
After-Tax $69,700 $29,500
Decrease in Diluted
Earnings per Share $0.05 $0.02
(a) 2008 first quarter total charges are primarily severance and other
employee-related costs associated with an approximately 6%
reduction in workforce. 2007 first quarter charges were primarily
related to manufacturing site network consolidation initiatives.
(b) Other income, net represents the net gain on the sale of a Japanese
manufacturing facility.
Wyeth calculates net income before certain significant items by
excluding the after-tax effect of items considered by management to be
unusual from the net income reported under generally accepted accounting
principles (GAAP). Wyeth's management uses this measure to manage and
evaluate the Company's performance and believes it is appropriate to
disclose this non-GAAP measure to assist investors with analyzing business
performance and trends. Wyeth's management believes that excluding these
items from the Company's results provides a more appropriate view of the
Company's operations for the accounting periods presented. These measures
should not be considered in isolation or as a substitute for the results of
operations and diluted earnings per share prepared in accordance with GAAP.
Wyeth is one of the world's largest research-driven pharmaceutical and
health care products companies. It is a leader in the discovery,
development, manufacturing and marketing of pharmaceuticals, vaccines,
biotechnology products and non-prescription medicines that improve the
quality of life for people worldwide. The Company's major divisions include
Wyeth Pharmaceuticals, Wyeth Consumer Healthcare and Fort Dodge Animal
Health.
The statements in this press release and on the related conference call
that are not historical facts, including the reaffirmation of our 2008
financial guidance, are forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements. In
particular, the reaffirmation of our 2008 financial guidance is based in
part on key assumptions regarding, among other things, the impact of
generic pantoprazole tablets on sales of Protonix, achievement of cost
reductions relating to Project Impact, the timing and impact of potential
generic competition for Zosyn and Effexor XR, and continued growth in sales
of certain of our principal products, including Prevnar, Enbrel and our
Nutrition business. If the assumptions underlying our 2008 financial
guidance prove incorrect, our actual results could differ materially from
our guidance. In addition, the statements in this press release and on the
related conference call regarding development and regulatory timelines for
our pipeline products are subject to risks and uncertainties related to
both the timing and success of regulatory submissions and review and
decisions by regulatory authorities, including the possibility that
regulatory authorities will not agree with our assessments of clinical data
or the sufficiency of regulatory submissions, will require additional
clinical trials or other data, will take longer to review our submissions
than we expect, or will determine not to approve our applications. Other
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by forward-looking statements
include, without limitation, the inherent uncertainty of the timing and
success of, and expense associated with, research, development, regulatory
approval and commercialization of our products and pipeline products;
government cost-containment initiatives; restrictions on third-party
payments for our products; substantial competition in our industry,
including from branded and generic products; emerging data on our products
and pipeline products; the importance of strong performance from our
principal products and our anticipated new product introductions; the
highly regulated nature of our business; product liability, intellectual
property and other litigation risks and environmental liabilities;
uncertainty regarding our intellectual property rights and those of others;
difficulties associated with, and regulatory compliance with respect to,
manufacturing of our products; risks associated with our strategic
relationships; economic conditions including interest and currency exchange
rate fluctuations; changes in generally accepted accounting principles;
trade buying patterns; the impact of legislation and regulatory compliance;
risks and uncertainties associated with global operations and sales; and
other risks and uncertainties, including those detailed from time to time
in our periodic reports filed with the Securities and Exchange Commission,
including our current reports on Form 8-K, quarterly reports on Form 10-Q
and annual report on Form 10-K, particularly the discussion under the
caption "Item 1A, RISK FACTORS" in our annual report on Form 10-K for the
year ended December 31, 2007, which was filed with the Securities and
Exchange Commission on February 29, 2008. The forward-looking statements in
this press release and on the related conference call are qualified by
these risk factors. We assume no obligation to publicly update any
forward-looking statements, whether as a result of new information, future
developments or otherwise.
The Company will hold a conference call with research analysts at 8
a.m. Eastern Daylight Time today. The purpose of the call is to review the
financial results of the Company for the 2008 first quarter. Interested
investors and others may listen to the call live or on a delayed basis
through the Internet webcast, which may be accessed by visiting the
Company's Internet Web site at http://www.wyeth.com and clicking on the "Investor
Relations" hyperlink.
Also, for recent announcements and additional information including
product sales information, please refer to the Company's Internet Web site.
SOURCE Wyeth
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Related links:
http://www.wyeth.com
CONTACT:
Media: Douglas Petkus, +1-973-660-5218,
Investor: Justin Victoria, +1-973-660-5340
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