- Worldwide Net Revenue Increased 4% for the 2008 Third Quarter and
5% for the 2008 First Nine Months
- Third Quarter Revenue Growth in Pharmaceuticals Division Led by
Solid Growth of Enbrel +32%, Nutritionals +18% and Prevnar +13%
- Guidance for 2008 Full Year Diluted EPS, before Certain Significant
Items, Revised to a Range of $3.49 to $3.55
- Dividend to Stockholders Increased by 7.1%
MADISON, N.J., Oct. 22 /PRNewswire-FirstCall/ -- Wyeth (NYSE: WYE)
today reported results for the 2008 third quarter and first nine months
ending September 30, 2008. Worldwide net revenue increased 4%, to $5.8
billion, for the 2008 third quarter and 5%, to $17.5 billion, for the first
nine months of 2008. Excluding the favorable impact of foreign exchange,
worldwide net revenue increased 2% for the 2008 third quarter and increased
1% for the 2008 first nine months.
"Wyeth's results so far this year reflect the continued solid
performance of our major growth engines - Enbrel, Prevnar and our
Nutritionals franchise," said Bernard Poussot, Chairman, President and
Chief Executive Officer. "For the first nine months of 2008, our revenues
grew five percent despite the launch of Protonix generics last December.
Wyeth has become a well diversified global biopharmaceutical company with
43 percent of its revenues represented by vaccines, biotechnology and
nutritional products."
Product Highlights for the Third Quarter and First Nine Months of 2008
The following table presents worldwide net revenue from Wyeth's
principal products for the 2008 third quarter and first nine months,
together with the percentage changes from the comparable periods in the
prior year:
(UNAUDITED)
Three Months Ended Nine Months Ended
9/30/2008 9/30/2008
Increase/ Increase/
Principal Products $in millions (Decrease) $in millions (Decrease)
Effexor $982 3% $3,026 7%
Prevnar 717 13% 2,113 12%
Enbrel
Outside U.S. and Canada 697 32% 1,995 35%
Alliance Revenue -
U.S. and Canada 294 23% 904 23%
Nutritionals 408 18% 1,249 19%
Zosyn/Tazocin 305 7% 966 14%
Premarin family 262 (8)% 809 2%
Protonix Family(1) 234 (45)% 621 (57)%
Centrum 186 7% 558 11%
Advil 165 (7)% 502 1%
(1) Protonix family net revenue for the 2008 third quarter and first
nine months reflects revenue from both the branded product, $92 and $279,
respectively, and Wyeth's own generic version, $142 and $342, respectively.
2008 Third Quarter Results
Overall net revenue increased 4% for the 2008 third quarter, primarily
driven by Wyeth's key pharmaceutical franchises, such as ENBREL(R),
PREVNAR(R) and Nutritional products, as well as the favorable impact of
foreign exchange. Partially offsetting the increases were lower sales of
the PROTONIX(R) family.
Selling, general and administrative expenses, excluding certain
significant items, decreased 6% for the 2008 third quarter (7% excluding
the impact of foreign exchange) versus the 2007 third quarter, primarily
due to the realization of cost savings as a result of Project Impact.
Research and development expenses, excluding certain significant items,
decreased 1% for the 2008 third quarter versus the 2007 third quarter.
Other (income) expense, net for the 2008 third quarter primarily
included costs associated with our foreign exchange hedging program and
investment activity, which were partially offset by royalty income and
product divestitures. The investment activity included write-downs of
Lehman Brothers and Washington Mutual bonds totaling $68.7 million.
The Company's tax rate for the 2008 third quarter, excluding certain
significant items, increased to 33.2% from 29.6% in the 2007 third quarter.
The increase in the tax rate for the 2008 third quarter versus the 2007
third quarter resulted primarily from certain charges in countries with
lower tax rates and the fact that there was no benefit in the 2008 third
quarter from the U.S. Research and Development Tax Credit, which had
expired in December 2007 but was subsequently renewed on October 3, 2008.
The effect of the U.S. Research and Development Tax Credit renewal will be
reflected in our 2008 fourth quarter tax rate. Our full year effective tax
rate range is still expected to be 29% - 31%.
Net income and diluted earnings per share for the 2008 third quarter
were $1,138.4 million and $0.84, respectively, compared with $1,145.9
million and $0.84 for the 2007 third quarter. The 2008 third quarter
results included charges of $115.2 million ($79.8 million after-tax or
$0.06 per share-diluted) related to the Company's productivity initiative.
The 2007 third quarter results included productivity initiative charges of
$117.1 million ($86.0 million after-tax or $0.06 per share-diluted). Net
income and diluted earnings per share, before these certain significant
items, for the 2008 third quarter were $1,218.2 million and $0.90,
respectively, compared with $1,231.9 million and $0.90 for the 2007 third
quarter.
2008 First Nine Months Results
Net revenue increased 5% for the 2008 first nine months, primarily
driven by Wyeth's key pharmaceutical franchises, such as Enbrel, Prevnar
and Nutritional products, and the favorable impact of foreign exchange. Net
revenue from EFFEXOR(R) and ZOSYN(R) also increased for the 2008 first nine
months due primarily to price increases in the case of Effexor and
increased volume in the case of Zosyn. Partially offsetting the increases
were lower sales of the Protonix family.
Selling, general and administrative expenses, excluding certain
significant items, for the first nine months of 2008 increased 2% (and
decreased 2% excluding the impact of foreign exchange) versus the first
nine months of 2007.
Research and development expenses, excluding certain significant items,
for the 2008 first nine months increased 3% (2% excluding the impact of
foreign exchange) versus the 2007 first nine months due to higher
late-stage clinical trial spending.
Other (income) expense, net, excluding certain significant items, for
the first nine months of 2008 primarily included costs associated with our
foreign exchange hedging program and investment activity, which were
partially offset by royalty income and product divestitures. The investment
activity included write-downs of Lehman Brothers and Washington Mutual
bonds totaling $68.7 million. Royalty income included a one-time royalty
milestone payment of $60.0 million related to the previously divested
SYNVISC(R) product line.
The Company's tax rate for the first nine months of 2008, excluding
certain significant items, increased to 31.6% from 29.3% in the first nine
months of 2007. As noted earlier, the tax rate for the first nine months of
2008 does not include any benefit from the U.S. Research and Development
Tax Credit.
Net income and diluted earnings per share for the first nine months of
2008 were $3,457.4 million and $2.56, respectively, compared with $3,598.5
million and $2.63 for the 2007 first nine months. Results for the first
nine months of 2008 included net charges of $351.4 million ($259.9 million
after-tax or $0.19 per share-diluted) related to the Company's productivity
initiative. Results for the first nine months of 2007 included productivity
initiative charges of $209.5 million ($152.5 million after-tax or $0.11 per
share-diluted). Net income and diluted earnings per share, before these
certain significant items, for the first nine months of 2008 were $3,717.4
million and $2.75, respectively, compared with $3,751.0 million and $2.74
for the first nine months of 2007.
"In a tough economy, Wyeth delivered a solid quarter," said Mr.
Poussot. "Based on this performance, we have revised our 2008 full year
diluted earnings per share guidance to a range of $3.49 to $3.55, exclusive
of certain significant items."
To assist in performing third quarter and first nine months
comparisons, a presentation, which excludes our productivity initiative, is
provided under "Results of Operations - As Adjusted."
Segment Information
The following table presents worldwide net revenue by reportable
segment, together with the percentage changes from the comparable periods
in the prior year:
(UNAUDITED)
Three Months Ended Nine Months Ended
9/30/2008 9/30/2008
Net Revenue by
Reportable Segment Increase/
($ in millions) (Decrease)($ in millions) Increase
Pharmaceuticals $4,890 5% $14,616 5%
Consumer Healthcare 679 (5)% 2,019 4%
Animal Health 261 11% 851 8%
Consolidated Total $5,830 4% $17,486 5%
Pharmaceuticals
Worldwide Pharmaceuticals net revenue increased 5% for the 2008 third
quarter and first nine months due primarily to higher sales of Enbrel,
Prevnar and Nutritional products, as well as the favorable impact of
foreign exchange. Net revenue from Effexor and Zosyn also increased for the
first nine months of 2008. Also contributing to net revenue growth were new
products such as TYGACIL(R), TORISEL and PRISTIQ. The increase in
Pharmaceuticals net revenue was offset, in part, by lower sales of the
Protonix family. Excluding the favorable impact of foreign exchange,
worldwide Pharmaceuticals net revenue increased 3% for the 2008 third
quarter and increased 1% for the 2008 first nine months.
Consumer Healthcare
Worldwide Consumer Healthcare net revenue decreased 5% for the third
quarter of 2008 due primarily to a decrease in sales of ROBITUSSIN(R) and
ADVIL(R), partially offset by an increase in sales of CENTRUM(R) and the
favorable impact of foreign exchange. Worldwide Consumer Healthcare net
revenue increased 4% for the first nine months of 2008 due primarily to an
increase in sales of Centrum and CALTRATE(R) and the favorable impact of
foreign exchange, partially offset by lower sales of Robitussin. Excluding
the favorable impact of foreign exchange, worldwide Consumer Healthcare net
revenue decreased 6% for the 2008 third quarter and for the 2008 first nine
months was comparable to the 2007 first nine months.
In September 2008, Consumer Healthcare completed the purchase of the
THERMACARE(R) product line, a leading over-the-counter heat wrap, from
Procter & Gamble. The transaction is expected to enhance Wyeth's global
position in pain management.
Animal Health
Worldwide Animal Health net revenue increased 11% for the third quarter
of 2008 due primarily to higher sales of livestock products, driven by
ZULVAC(R) bluetongue vaccine, equine products and the favorable impact of
foreign exchange. For the 2008 first nine months, net revenue increased 8%
due primarily to higher sales of livestock, poultry and companion animal
products and the favorable impact of foreign exchange, which were offset,
in part, by lower sales of equine products. Excluding the favorable impact
of foreign exchange, worldwide Animal Health net revenue increased 9% for
the third quarter of 2008 and 3% for the first nine months of 2008.
R&D Update
Later this month, Wyeth will present Phase 3 pediatric data for its
investigational 13-valent pneumococcal conjugate vaccine PREVNAR 13 at the
meeting of the Interscience Conference on Antimicrobial Agents and
Chemotherapy/Infectious Diseases Society of America in Washington, D.C. The
Company expects to complete its U.S. filing for pediatric use of the
vaccine in the first quarter of 2009, with other pediatric global filings
expected at the same time, or possibly earlier. Prevnar 13 is also being
studied in Phase 3 global clinical trials in adults.
Productivity Initiative
In the 2008 third quarter, the Company continued to realize the
benefits of Project Impact, a company-wide program designed to initially
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 that
will fundamentally change how the Company conducts business as it adapts to
the continuously changing business climate.
When fully implemented, we expect this initiative to generate annual
cost savings in a range of $1.0 to $1.5 billion.
The charges for the third quarter and first nine months of 2008
included expenses of $115.2 million and $456.1 million, respectively,
primarily for severance and other employee-related costs associated with a
reduction in workforce of approximately 6%. The expenses in connection with
the productivity initiative for the first nine months of 2008 were offset,
in part, by a $104.7 million gain on the sale of a manufacturing facility
in Japan in the 2008 first quarter. The third quarter and first nine months
of 2007 included productivity initiative charges of $117.1 million and
$209.5 million, respectively, primarily related to manufacturing site
network consolidation initiatives.
Increase in Common Stock Dividend
As previously announced on September 25, 2008, the Company declared a
dividend of thirty cents ($0.30) per share on the outstanding shares of its
common stock, payable on December 1, 2008 to stockholders of record at the
close of business on November 13, 2008. This quarterly rate represents a
7.1% increase per share from the previous quarter ($0.28).
Results of Operations
The comparative results of operations are as follows:
(In thousands except per share amounts)
(UNAUDITED)
Three Months Ended Nine Months Ended
9/30/2008 9/30/2007 9/30/2008 9/30/2007
Net Revenue $5,829,582 $5,619,536 $17,485,589 $16,636,272
Cost of Goods Sold 1,571,467 1,617,581 4,817,417 4,622,269
Selling, General and
Administrative Expenses 1,635,719 1,670,671 5,190,432 4,871,222
Research and Development
Expenses 799,757 798,464 2,475,201 2,374,319
Interest (Income)
Expense, Net 12,953 (39,622) 4,182 (73,440)
Other (Income)
Expense, Net 101,878 (61,416) (86,284) (251,748)
Income before Income
Taxes 1,707,808 1,633,858 5,084,641 5,093,650
Provision for Income
Taxes 569,401 487,953 1,627,193 1,495,120
Net Income $1,138,407 $1,145,905 $3,457,448 $3,598,530
Basic Earnings per Share $0.85 $0.85 $2.59 $2.68
Average Number of Common
Shares Outstanding during
Each Period - Basic 1,332,744 1,343,036 1,333,542 1,343,897
Diluted Earnings per
Share $0.84 $0.84 $2.56 $2.63
Average Number of Common
Shares Outstanding during
Each Period - Diluted 1,356,909 1,372,145 1,358,902 1,376,505
See Notes to Results of Operations.
Results of Operations - As Adjusted
Wyeth has prepared the following presentation of its results of
operations for the three and nine months ended September 30, 2008 and 2007,
adjusted to exclude charges, which are considered certain significant items
during the 2008 and 2007 third quarter and first nine months.
The comparative results of operations - as adjusted are as follows:
(In thousands except per share amounts)
(UNAUDITED) - AS ADJUSTED
Three Months Ended Nine Months Ended
9/30/2008 9/30/2007 9/30/2008 9/30/2007
Net Revenue $5,829,582 $5,619,536 $17,485,589 $16,636,272
Cost of Goods Sold 1,528,702 1,506,381 4,661,083 4,439,890
Selling, General and
Administrative Expenses 1,569,629 1,664,801 4,922,217 4,844,341
Research and Development
Expenses 793,362 798,434 2,443,685 2,374,079
Interest (Income)
Expense, Net 12,953 (39,622) 4,182 (73,440)
Other (Income)
Expense, Net 101,878 (61,416) 18,371 (251,748)
Income before Income Taxes 1,823,058 1,750,958 5,436,051 5,303,150
Provision for Income Taxes 604,811 519,053 1,718,673 1,552,120
Net Income $1,218,247 $1,231,905 $3,717,378 $3,751,030
Basic Earnings per Share $0.91 $0.92 $2.79 $2.79
Average Number of Common
Shares Outstanding during
Each Period - Basic 1,332,744 1,343,036 1,333,542 1,343,897
Diluted Earnings per Share $0.90 $0.90 $2.75 $2.74
Average Number of Common
Shares Outstanding during
Each Period - Diluted 1,356,909 1,372,145 1,358,902 1,376,505
See Notes to Results of Operations.
Notes to Results of Operations
(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 $5,687 and $19,523 for
the 2008 third quarter and first nine months, respectively, compared with
$7,838 and $23,617 for the 2007 third quarter and first nine months,
respectively.
(2) Other (income) expense, net included royalty income for the 2008
third quarter and first nine months of $34,190 and $202,179, respectively,
compared with $63,265 and $202,048 for the prior year. The 2008 first nine
months included a one-time royalty milestone payment of $60,000 related to
the previously divested Synvisc product line. Other (income) expense, net
also included pre-tax gains from product divestitures of $15,567 for the
2008 third quarter and $48,768 for the 2008 first nine months compared with
$2,725 for the 2007 third quarter and $60,309 for the 2007 first nine
months. Also included in Other (income) expense, net in the third quarter
of 2008 are write-downs of Lehman Brothers and Washington Mutual bonds
totaling $68,657.
(3) Certain significant items, which have been described under
"Productivity Initiative," have been excluded from the results of
operations - as adjusted for the 2008 and 2007 third quarter and first nine
months as follows:
(UNAUDITED)
Three Months Ended Nine Months Ended
(In thousands except per
share amounts) 9/30/2008 9/30/2007 9/30/2008 9/30/2007
Cost of Goods Sold $42,765 $111,200 $156,334 $182,380
Selling, General and
Administrative Expenses 66,090 5,870 268,215 26,881
Research and Development
Expenses 6,395 30 31,516 239
Total Productivity
Initiative Charges(a) 115,250 117,100 456,065 209,500
Other Income, Net(b) - - (104,655) -
Net Productivity
Initiative Charges $115,250 $117,100 $351,410 $209,500
Net Productivity
Initiative Charges,
After-Tax $79,840 $86,000 $259,930 $152,500
Decrease in Diluted
Earnings per Share $0.06 $0.06 $0.19 $0.11
(a) 2008 charges are primarily severance and other employee-related
costs associated with an approximate 6% reduction in workforce. 2007
charges were primarily related to manufacturing site network consolidation
initiatives.
(b) Other income, net represents the net gain on the sale of a
manufacturing facility in Japan.
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, nutritionals 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.
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.
The statements in this press release and on the related conference call
that are not historical facts, including our revised 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, if the
assumptions underlying our revised 2008 financial guidance (including 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 products) 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 third quarter and first nine
months. 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,
Investors, Justin Victoria, +1-973-660-5340, both of Wyeth
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