---
Pfizer Expects $4 Billion in Annualized Cost Savings by 2008 Through
Productivity Initiatives Across Company
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Company to Continue Investments in Products and R&D Pipeline; Unrivaled
Product Portfolio Includes 33 Major Medicines in Ten Therapeutic Areas;
13 Major New Drug Applications Completed Toward Goal of 20 Filings in
Five Years Ending in 2006
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During 2005 "Transition Year" Company Expects Full-Year
Adjusted Diluted EPS* of About $2.00
(Full-Year 2005 GAAP Diluted EPS of About $1.16)
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Pfizer Expects Double-Digit Adjusted Earnings Growth in 2006 Driven by
Productivity Enhancements; For 2007, Revenue Growth from Major In-Line
Products and New Products Expected to Drive Accelerated Double-Digit Adjusted
Earnings Growth
---
Pfizer Plans Range of New Healthcare Solutions to Add Value for Patients and
Payers; CEO McKinnell: 'Our Vision is Integrated Healthcare Delivery Focused
on Patient Health and Wellness'
NEW YORK, April 5 /PRNewswire-FirstCall/ -- Pfizer Inc said today it will
sustain long-term growth through investments in innovative current and new
medicines from its strong R&D pipeline, while enhancing effectiveness and
reducing operating costs.
In a presentation to financial analysts, company leaders say they will
leverage the company's competitive advantages -- including its global scale,
proven ability to develop innovative medicines, operating flexibility, and
financial strength -- to meet the challenges posed by patent expirations in
the 2004-2007 period and other issues in Pfizer's operating environment.
"Pfizer has been preparing for this period for more than a decade," said
Hank McKinnell, Pfizer's chairman and chief executive officer. "During this
time, we have transformed the company through key product launches, major
acquisitions and other strategic actions. We now have competitive advantages
that clearly distinguish Pfizer from others in the worldwide pharmaceutical
industry.
"But 2005 will be a transition year. In addition to the loss of
exclusivity on several important products, we are facing a number of
uncertainties. These include the outlook for our Cox-2 franchise, continued
pricing pressures, and market acceptance of new products. We expect our
performance to rebound quickly in 2006 and accelerate in 2007 as we
increasingly realize the benefits of the continued growth of major in-line
products, new product launches and productivity initiatives."
2005-2007 Financial Forecast and Productivity Initiatives
Vice Chairman David Shedlarz told the meeting that Pfizer expects revenues
in 2005 to be substantially unchanged from 2004 when the company recorded
revenues of $52.5 billion. Cost of goods sold will be substantially
negatively impacted by changes in geographic and product mix, loss of
exclusivity of major products in the U.S., and lower year-over-year sales of
the Cox-2 franchise.
Reflecting the company's confidence in the growth potential of its
research and development pipeline, Pfizer plans to invest approximately
$8 billion in R&D in 2005, compared with $7.7 billion in 2004.
Financial results for 2005 will be impacted by the adoption of new
accounting regulations relating to the expensing of stock options. These
regulations are expected to result in an after-tax expense of $200 million or
$0.03 per share.
Pfizer's effective tax rate for adjusted income from continuing operations
is expected to rise from 21.75 percent in 2004 to 23 percent in 2005 due to a
changing income mix by country and product.
Shedlarz told analysts that Pfizer's financial strengths will be enhanced
by the repatriation of more than $28 billion in foreign cash in 2005. This
will strengthen Pfizer's ability to pursue strategic opportunities while
enhancing the company's flexibility to invest in our R&D pipeline and new
product potential in the U.S. The company will record a tax charge of
$2.2 billion in the first-quarter in connection with the repatriation. This
charge may be reduced by approximately $850 million pending anticipated
technical corrections under the repatriation legislation.
Based on these and other factors, Pfizer said it expects to achieve 2005
GAAP net income of about $8.6 billion and GAAP diluted earnings per share of
about $1.16. This includes non-cash charges of $2.4 billion ($0.32 per share)
relating to purchase accounting attributable to the acquisition of Pharmacia;
merger-related and restructuring costs of $1.4 billion ($0.18 per share) which
includes both Pharmacia-related chargers and recent productivity initiative-
related charges; and, an in-process research and development charge of
$0.3 billion ($0.04 per share) relating to the pending acquisition of Idun
Pharmaceutical, Inc., all on an after-tax basis. In addition, GAAP net income
will include a tax charge of $2.2 billion ($0.30 per share) relating to the
repatriation of foreign cash in 2005. Excluding these items, adjusted income
is expected to be about $14.9 billion, and adjusted diluted EPS of about
$2.00, subject to the variables cited in the Disclosure Notice found in this
report.
For the first quarter of 2005, Pfizer expects adjusted diluted earnings
per share of about $0.53 per share (GAAP diluted EPS of $0.13 per share),
subject to the Disclosure Notice found in this report.
Earlier this year, Pfizer launched a company-wide initiative to streamline
the organization, fund key investments, and realize significant cost savings.
Pfizer is targeting $4 billion in total annualized cost savings by 2008, which
represents approximately 12 percent of Pfizer's current cost base.
Shedlarz said the financial impact of these efforts will be modest in 2005
but is expected to yield significant benefits in 2006 and 2007. In 2006, the
company expects the operational and financial benefits of this productivity
initiative to drive a return to double-digit growth in adjusted earnings. For
2007, the company expects revenue growth from both new products and major in-
line products will drive accelerating double-digit adjusted earnings growth.
Productivity initiatives will also contribute to growth in 2007.
The company estimates the cost of implementing this initiative will be
$5 billion to $6 billion through 2008.
"Pfizer has the financial strength to meet the challenges of the 2005-2007
period. Pfizer's strong cash flow will provide us with flexibility in
leveraging the company's financial strength. For example, we will intensify
our efforts to acquire new products and technologies to further strengthen our
new product pipeline," Shedlarz said.
Shedlarz also said the company expects to accelerate the completion of a
$5 billion share repurchase program initiated in October 2004. Pfizer now
expects to complete the repurchase by mid-year, following the planned purchase
of approximately $2.3 billion of Pfizer stock in the second quarter of 2005
alone. Early in the second half of the year, Pfizer will consider additional
opportunities to purchase the company's stock.
Human Health Overview:
"Beyond Pharmaceutical to Healthcare Innovation"
"Changes at Pfizer and in our environment over the past few years mean
it's time to reinvent how we approach discovering, developing and delivering
new medicines," said Karen Katen, Pfizer vice chairman and Human Health
president.
Katen said Pfizer is number-one in sales in almost every major market
worldwide and operates in 89 countries. The company now markets five of the
world's 25 largest-selling medicines, more than any other company. Pfizer's
product portfolio is unrivaled, with 33 major medicines in 10 distinct
therapeutic areas.
Pfizer anticipates continued growth of many of its major in-line
medicines, driven by strong new clinical data. "This is a key competitive
advantage, as we continue to lead in clinical investigation and pursue
programs with a scale and reach others simply can't match," Katen said.
Recently launched products are already increasing their revenue
contributions, and Pfizer anticipates strong growth for them as well, driven
by clinical data and increasing market acceptance. Finally, new and upcoming
launches will drive revenues.
"We need to help people live healthier, especially late in life, when they
suffer from chronic diseases like diabetes, heart disease, cancer, depression
or macular degeneration. So both ends of the health spectrum -- reducing
morbidity and mortality on one hand, and improving quality of life on the
other -- are clearly major growth opportunities for our company. We need to
focus not only on life span, but health span," Katen said.
Katen highlighted recent developments for Pfizer's key products:
-- Lipitor is far and away the lipid-lowering market leader, and, in fact,
the most successful medicine in history, with nearly $11 billion in
2004 revenue. Lipitor continues to post double-digit growth around the
world. This is due in large part to the "wall of science" built from
clinical-trials data, including ASCOT, REVERSAL, CARDS and PROVE-IT and
the latest study, TNT. In the eight years Lipitor has been on the
market, Pfizer has invested $700 million in clinical trials and
enrolled more than 80,000 patients.
-- Katen noted that all of Pfizer's cardiovascular (CV) products are
linked, since the diseases that each product treats often co-exist in
the same patient and contribute to heightened CV risk. More and more
studies show that CV risk factors must be managed simultaneously.
Pfizer's new and unique medicine, Caduet, treats hypertension and high
cholesterol with the gold standard in their respective classes, Norvasc
and Lipitor, which makes it an ideal tool for optimizing care.
-- For the Cox-2 portfolio, Pfizer looks forward to finalizing changes to
its U.S. labeling with the U.S. Food and Drug Administration (FDA) as
well as moving ahead with plans for clinical studies to further explore
the benefits as well as the risks of the Cox-2 specific medicines
compared to older, non-selective medicines. In the interim, Pfizer
remains focused on the importance of these products for millions of
patients around the world. "We believe that, with continued clinical
work and appropriate labeling, these medicines will remain important
treatment options for patients and doctors for many years to come,"
Katen said.
-- Viagra has maintained market leadership in the face of fierce
competition, and Pfizer continues to see strong growth opportunities
for this product. New clinical data, effective sales and marketing
efforts, and novel approaches to encourage more men to see a physician
are key elements in the growth plan.
-- The drug candidate Revatio, a brand name for sildenafil for the
treatment of pulmonary arterial hypertension, demonstrates our
commitment to developing medicines for rare diseases with unmet needs.
-- Zithromax is off to a strong start in 2005, based on its clear benefits
over competitors. Pfizer plans to extend this successful brand with
the single-dose Zithromax microsphere formulation, which has been filed
for approval with the FDA. This technology allows the delivery of a
front-loaded antibiotic treatment that enhances compliance through
directly-observed therapy in the presence of a physician.
-- Geodon has grown in market share as well as in new and total
prescriptions. The market is clearly receptive to its distinctive
benefits, including efficacy, dosing flexibility and a favorable
metabolic and weight-gain profile compared to older anti-psychotic
agents. Pfizer continues to expand the pool of patients who can
benefit from Geodon with new indications, specifically the recently
launched bipolar mania indication.
-- There is now substantial evidence that using Camptosar as standard
first-line treatment for advanced colorectal cancer results in improved
survival rates for patients. In 2004, Pfizer acquired the rights to
Camptosar in Europe and Asia (except Japan).
-- Another newly launched medicine, Lyrica, has been well-received in
Germany, the U.K. and Mexico. Lyrica's early success signifies its
clear benefits. It is effective -- with rapid, robust and sustained
pain reduction across its entire dose range -- well-tolerated and easy-
to-use.
-- Macugen, which was approved last December for neovascular (wet) age-
related degeneration, adds to a best-in-class ophthalmology franchise.
Macugen is the only current therapy approved for all forms of lesion
subtypes, sizes and locations, and Medicare carriers in all 50 states
have confirmed coverage.
Other medicines highlighted by Katen included Xalatan, the most-prescribed
branded glaucoma medicine worldwide; Aromasin, which continues to be the
fastest-growing aromatase inhibitor for the treatment of breast cancer in the
U.S.; Rebif, for the treatment of multiple sclerosis; Vfend, with a new
indication that makes it the only intravenous and oral antifungal with first-
line efficacy in systemic yeast and mold infections; and indiplon, a drug
candidate that is potentially the first medicine to be indicated for multiple
features of insomnia.
Katen said that Pfizer is increasing the alignment of resources within the
Human Health organization across therapeutic areas. "This creates an enhanced
focus on all of our efforts from discovery through commercialization."
Pfizer is also realigning individual business lines for productivity and
organizational efficiency in R&D, Manufacturing, Licensing and in the
commercial group. As one example, Katen noted that the U.S. Field Force,
which has been recognized by physicians as the industry's best for ten years
in a row, is being redesigned to respond to changing market dynamics that
include our physician customers' time demands.
"We're reorganizing our sales regions around states to better align with
our increasingly important Medicare and Medicaid customers. We intend that
the field force will remain at a scale that is consistent with meeting current
customer needs, and with the capacity required to support the launches of the
20 products that we have filed and expect to file in the 2001-2006 period,"
said Katen.
Pfizer also is developing and implementing a series of initiatives to
address inefficiencies in healthcare. In these patient-centered models, care
is focused on prevention and early intervention through means like diet and
exercise and the appropriate use of medicines.
Pfizer's ground-breaking program Florida: A Healthy State enrolled more
than 150,000 patients, three times the original target. More than half of
these high-risk patients exhibited improved physical health scores, and total
medical costs decreased significantly relative to baseline.
Based on the Florida program, Pfizer and its partner Humana have been
selected as one of nine programs that will provide care management services to
high-risk Medicare beneficiaries, under the new Medicare Modernization Act.
The three-year project called "Green Ribbon Health" will cover approximately
20,000 Medicare patients in Florida with congestive heart failure, diabetes or
both.
"We are working toward a vision of healthcare that's patient-centered and
integrated," Katen said. "When we serve the patient, we serve the public and
our communities and carry on our tradition of innovation."
Advanced Development Opportunities for Pfizer R&D
Dr. John LaMattina, president of Pfizer's global R&D operations, outlined
the company's recent achievements across the broad range of R&D activities,
pointing out the high level of productivity in just the last 125 days since
the company's November, 2004 analyst meeting at its Groton, Connecticut R&D
site. "Pfizer's pipeline continues to grow," he said. "Since December, our
pipeline has grown to 149 new molecular entities. We have 102 candidates in
early development, 33 in mid-stage development, eight in advanced development,
and another six in registration. In addition, we have 78 active product
enhancement projects in development. We are optimistic that this presages a
gathering influx of new advanced development opportunities over the next
several years."
Pfizer has filed an NDA with the FDA for marketing approval of Exubera, or
inhaled insulin. Exubera's European filing is proceeding. Pfizer also
submitted a revised label to the FDA for the add-on epilepsy indication for
Lyrica, which was approved in 2004 for the treatment of diabetic peripheral
neuropathy and post-herpetic neuralgia.
Pfizer also has submitted several important supplemental NDAs for new
indications for existing products including the cancer agent Aromasin, the
novel antibiotic Zyvox, and the antifungal Vfend. Pfizer's medicine depo-subQ
provera has received FDA approval for contraception and endometriosis.
Pfizer said it has discontinued studies of edotecarin and is returning the
compound to Banyu Pharmaceuticals.
The drug candidate torcetrapib, a novel compound designed to raise HDL, or
"good" cholesterol, is being paired with Lipitor to create Pfizer's "next
generation product for atherosclerosis prevention and treatment," LaMattina
said. "The hypothesis that HDL elevation combined with LDL reduction will
advance cardiovascular medicine to a new standard of care will be thoroughly
investigated by a major development program that will cost approximately $800
million dollars to complete. Phase II results were presented in March at the
American College of Cardiology meeting, and Phase III lipid trials are
enrolling patients on schedule.
"Oncology is emerging as one of the most promising therapeutic areas in
our pipeline and is in fact our second-largest area of research investment,"
LaMattina said. "We are most excited by the clinical results being seen with
Sutent, which inhibits both tumor cell growth and tumor vascularization."
Sutent is being studied in difficult-to-treat cancers such as renal cell
carcinoma and gastrointestinal stromal tumors, with very encouraging results.
Pfizer also continues to maintain its status as partner of choice.
LaMattina noted that Pfizer has forged agreements with a number of specialized
companies including Rigel Pharmaceuticals and Coley Pharmaceuticals. Pfizer
also has agreed to acquire Idun Pharmaceuticals and the research assets of
QuoreX, and agreed to merge with Angiosyn. These agreements provide Pfizer
with potential new capabilities and technologies in cancer, anti-infectives,
and diagnostics, among other opportunities. "The execution of these alliance
agreements, licensing deals and acquisitions is at a pace of one every two
weeks," he said.
In concluding the meeting, McKinnell said, "Today marks the beginning of
another important chapter in the company's 156-year history. We have
reinvented ourselves many times and it's clearly time to do it again. While
change is always difficult, I have great confidence in the talent and
dedication of my Pfizer colleagues.
"We are fully prepared to lead both a changing industry and a changing
world view of health."
DISCLOSURE NOTICE: The information contained in this document and the
attachment is as of April 5, 2005. The Company assumes no obligation to update
any forward-looking statements contained in this document as a result of new
information or future events or developments.
This document and the attachment contain forward-looking information about
the Company's financial results and estimates, business prospects and products
in research 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," 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 commercial
potential of our products; final actions relating to Celebrex and/or Bextra
that may be taken by the FDA and/or the European Medicines Evaluation Agency
in connection with their respective reviews of the benefits and risks of COX-2
specific inhibitor medicines and related agents; 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; trends toward managed care and health
care cost containment; possible U.S. legislation or regulatory action
affecting, among other things, pharmaceutical pricing and reimbursement,
including under Medicaid and Medicare, the importation of prescription drugs
that are marketed outside the U.S. and sold at prices that are regulated by
governments of various foreign countries, and the involuntary approval of
prescription medicines for over-the-counter use; the 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 mix; and the impact of
acquisitions, divestitures, restructurings, product withdrawals and other
unusual items, including our ability to integrate and to obtain the
anticipated results and synergies from our acquisition of Pharmacia and our
ability to realize the benefits of the multi-year productivity initiative
announced today. 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, 2004, and in its periodic
reports on Forms 10-Q and 8-K.
APPENDIX 1
Reconciliation of Adjusted Income and Adjusted Diluted EPS to GAAP Net
Income and GAAP Diluted EPS
($ Billions, Except EPS)
Full-Year 2005 Forecast First Quarter 2005 Forecast
Net Diluted Net Diluted
Income/(Expense) Income EPS Income EPS
Adjusted Income
and Adjusted
Diluted EPS ~$14.9 ~$2.00 ~$4.0 ~$ .53
Purchase-
Accounting-
Related Intangible
Amortization and
Other, net of tax (2.4) (.32) (0.6) (.09)
In-Process R&D
(Idun Acquisition),
net of tax (0.3) (.04) -- --
Merger-Related and
Restructuring
Costs, net of tax (1.4) (.18) (0.2) (.02)
Taxes on Repatriation (2.2) (.30) (2.2) (.29)
GAAP Net Income/
Diluted EPS ~$8.6 ~$1.16 ~$1.0 ~$ .13
* "Adjusted Income" and "Adjusted diluted earnings per share (EPS)" are
defined as GAAP net income and GAAP diluted earnings per share excluding
discontinued operations, significant impacts of purchase accounting for
acquisitions, merger-related and restructuring costs, and certain
significant items. Reconciliations to GAAP net income and GAAP diluted
EPS are provided within this document.
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SOURCE Pfizer Inc
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