Pfizer Inc First-Quarter 2005 Performance Report
Pfizer Delivers Steady Performance
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First-Quarter Reported Net Income of $301 Million,
Reported Diluted EPS of $.04, Reflect Tax Provision
for Cash Repatriation of Overseas Earnings and
Charges Attributable to the Suspension of Sales of Bextra
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First-Quarter Adjusted Income* of $4.000 Billion;
First-Quarter Adjusted Diluted EPS* of $.54
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Quarter Marked by Revenue Growth of Key In-Line
and New Products, New Clinical Data for Lipitor,
U.S. Launch of Macugen, FDA Acceptance of Exubera Filing
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Due to Suspension of Bextra Sales and Other Factors, Pfizer Now Projects 2005
Adjusted Diluted EPS* of Approximately $1.98,
Reported Diluted EPS of Approximately $1.04
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Pfizer Expects 2005 to Be 'a Transition Year,'
Double-Digit Adjusted Diluted EPS* Growth in 2006, and
Accelerating Double-Digit Adjusted Diluted EPS* Growth in 2007
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Pfizer Remains On Track to Submit an Industry-Record
20 Major U.S. Regulatory Filings in 2001-2006
NEW YORK, April 19 -- Pfizer today reported financial results for the first
quarter of 2005.
'Pfizer continues to deliver steady performance,' said Hank McKinnell,
chairman and chief executive officer.
'Pfizer's revenue growth of 5 percent in the first quarter was the product
of two underlying forces. One Pfizer markets the broadest array of in-line
and new products in the industry. Excluding the U.S. revenues of Neurontin,
Diflucan, and Accupril -- products that faced generic competition beginning in
2004 -- and total revenues of Celebrex and Bextra, Pfizer revenues for the
first quarter of 2005 achieved strong double-digit growth. The other Pfizer
is a business going through the natural process of reinventing itself. We are
addressing the loss of exclusivity of a number of products, a situation that
we have long planned for, by advancing a number of internally developed, in-
licensed, and co-promoted product candidates.
'As the leader of the worldwide pharmaceutical industry, Pfizer has
important competitive advantages that will serve us well and distinguish us
from others in our industry. The unparalleled breadth and depth of our
product portfolio and pipeline clearly demonstrate the unique benefits of
Pfizer's scale and our skill at leveraging the opportunities it provides us.
Scale also enhances our status as 'partner of choice' with other companies who
have promising product candidates and technologies, as well as giving us
influence as a global purchaser of goods and services.
'Our strategic and operating flexibility allows us to marshal and focus
resources when and where they are needed, to change with a changing
environment, and to recognize and seize emerging opportunities. And our will
to succeed in the important work of improving human health remains as strong
as ever,' Dr. McKinnell continued.
Pfizer revenues for the first quarter of 2005 grew 5 percent to $13.091
billion, compared to the first quarter of 2004, reflecting strong performances
by Lipitor, Zithromax, and other product lines. Revenue growth was also due
to three additional days in our fiscal calendar in the quarter as well as the
weakening of the U.S. dollar relative to a number of foreign currencies,
offset in part by sales declines for Celebrex and Bextra and recent generic
competition in the U.S. against Neurontin, Diflucan, and Accupril.
The Company's Human Health business generated revenues of $11.440 billion,
up 4 percent, in the first quarter compared to the same period in 2004.
Quarterly revenues of Pfizer's Consumer Healthcare business were $945 million,
up 17 percent. Pfizer's Animal Health revenues increased 16 percent in the
quarter to $496 million.
Reported first-quarter net income of $301 million and reported diluted
earnings per share of $.04 included $622 million ($.08 per share) of
significant impacts of purchase accounting for acquisitions (primarily non-
cash charges attributable to the acquisition of Pharmacia); merger-related
costs of $151 million ($.02 per share); certain significant items of $2.955
billion ($.40 per share), which included $2.189 billion of tax expense related
to the planned repatriation of $28.3 billion in overseas cash later in 2005
and $766 million of charges attributable to the suspension of sales of Bextra;
and income from discontinued operations of $29 million, all on an after-tax
basis. Excluding these items, adjusted income* in the first quarter of 2005
grew 1 percent relative to the prior year to $4.000 billion, and adjusted
diluted EPS* in the quarter increased 4 percent to $.54, compared to the same
period in 2004.
Human Health Continues Industry-Leading Revenue Performance
'While 2005 will be a transitional year for Pfizer, the underlying
strengths that will sustain us through this period and extend our growth into
the future were clearly evident in the solid first-quarter performance of the
Human Health business,' said Karen Katen, vice chairman and president, Pfizer
Human Health. 'These strengths are founded in the continued growth of many of
our major in-line medicines, along with the growing contributions of our newer
introductions -- growth that is driven by clinical data, continued investment
in new science and clinical trials, and operational execution.'
First-quarter Human Health revenue growth of 4 percent, compared to the
same period in 2004, was led by Lipitor (+23 percent), Aromasin (+134
percent), Camptosar (+132 percent), Detrol/Detrol LA (+22 percent),
Xalatan/Xalacom (+19 percent), Zithromax (+71 percent), Zoloft (+4 percent),
Zyrtec (+14 percent), and Zyvox (+47 percent), as well as newer introductions
including Geodon (+56 percent), Relpax (+77 percent), Vfend (+38 percent), and
Caduet (+10 percent). This solid performance across the in-line portfolio
more than offset sales declines, particularly in the U.S., for Celebrex and
Bextra, as well as declines for Neurontin, Diflucan, and Accupril due to
generic competition.
Ms. Katen continued, 'Beyond the performance of our current portfolio, we
continue to make significant progress in our longstanding efforts to address
important health needs. Some notable achievements during the first quarter
include the successful introduction in the U.S. of Macugen, a major new
medicine to treat a leading cause of blindness, with the product's discoverer
Eyetech Pharmaceuticals, Inc.; the approval of Vfend in Japan; the acceptance
by the FDA of the filing for Exubera, potentially an important new treatment
option for diabetes under co-development with sanofi-aventis and Nektar
Therapeutics; significant progress in building a flow of new products to
replenish and grow our portfolio, with a pipeline that now spans 149 new
molecular entities and 78 product enhancement projects; the evolution of our
Human Health organization to better respond to market needs and become more
efficient and productive, which will also help achieve Pfizer's targeted
$4 billion in annualized cost savings by 2008; and piloting new business
approaches that represent solutions to some of the most urgent problems
affecting current healthcare systems in the U.S. and around the world.'
Response to COX-2 Developments. Following the FDA decision to require
boxed warnings of potential cardiovascular and gastrointestinal risk for all
COX-2-specific pain relievers and all non-steroidal anti-inflammatory drugs
(NSAIDs), including older non-specific drugs such as ibuprofen and naproxen,
Pfizer will work with the FDA to add expanded risk information in the Celebrex
label. Pfizer has accumulated extensive Celebrex clinical data over the past
10 years involving more than 40,000 patients, and we remain committed to
conducting additional long-term clinical studies evaluating the benefits and
risks of Celebrex. Pfizer will also work closely with the FDA to develop a
guide to assist patients and their healthcare professionals in making the best
decisions for treating their arthritis pain.
Regarding Bextra, Pfizer has suspended its sales in the U.S. in accordance
with the FDA's request. The FDA view is that Bextra's cardiovascular risk
could not be differentiated from other NSAIDs. However, the agency has
concluded that the additional, increased risk of rare but serious skin
reactions associated with Bextra, already described in its label, warrants its
withdrawal from the market. Pfizer respectfully disagrees with the FDA
position regarding the overall risk/benefit profile of Bextra. However, in
deference to the regulatory agency's views, the company has suspended sales of
the medicine pending further discussions with the FDA. For now, patients
should stop taking Bextra and contact their physicians about appropriate
treatment options. In addition, at the request of European and other
regulators, Pfizer has also suspended sales of Bextra in the European Union,
Canada, Hong Kong, Singapore, Malaysia, South Africa, the Philippines, and
Mexico. We will explore options with the regulatory agencies under which the
company might be permitted to resume making Bextra available to physicians and
patients. The company is in contact with other regulatory agencies around the
world and will take appropriate measures based on those discussions.
Strong Core Business. 'While a reduced outlook for the COX-2-specific
medicines and the loss of exclusivity for a number of important products will
make 2005 a transition year for Pfizer, the strong performance across our
broad portfolio of patent-protected medicines during the first quarter
indicates that our core Human Health business remains fundamentally sound.
Our portfolio of medicines is strong, with five of the world's 25 best-selling
medicines, and with 11 medicines that lead their therapeutic areas,' Ms. Katen
continued. 'We anticipate continued growth for many of our major in-line and
recently launched medicines based on four major drivers: favorable demographic
trends as people live longer; the outstanding need to improve quality of life
as people live longer; epidemiological trends showing enormous unmet medical
needs in major disease areas; and a continual stream of new clinical data
demonstrating the efficacy and therapeutic value of our medicines.'
The ongoing strength of our major in-line medicines, many of which are
fully patent-protected through 2005 and beyond, is most apparent in the
performance of Lipitor. After eight years on the market, it continues double-
digit growth off the largest base of any pharmaceutical medicine ever.
Lipitor had first-quarter revenue of $3.075 billion, ahead 23 percent compared
to the same period in 2004, and showed strong growth in market share and
prescription volume worldwide. Its ongoing success is based on ever-expanding
clinical evidence reinforcing unmatched efficacy and safety. This includes
the most recent results from the Treating to New Targets (TNT) study. TNT
found that intensive therapy with Lipitor 80 mg can reduce cholesterol and
cardiovascular events to among the lowest levels ever achieved in the history
of statin trials, with a safety profile comparable to that of lower-dose
Lipitor therapy. These results take the treatment of cholesterol to new
frontiers, while also reinforcing data from the ASCOT, CARDS, and PROVE-IT
studies -- which have all demonstrated early and significant improvement in
cardiovascular outcomes.
Norvasc first-quarter revenue reached $1.175 billion and is ahead 3
percent compared to the same period in 2004 -- a reduced rate of growth that
is attributable in part to loss of exclusivity in several E.U. countries. Its
performance in the U.S. continues to be strong, with 11 percent growth in the
first quarter, and its new-prescription growth in the U.S. continues to exceed
that of the cardiovascular market. The longstanding leadership of Norvasc in
the antihypertensive market, based on its excellent safety and efficacy, has
been reinforced by recent clinical trials, such as ASCOT, that demonstrate and
extend evidence regarding the outstanding effectiveness of Norvasc.
Zithromax performance was strong in the first quarter of 2005, based on
its clear benefits as well as an active flu season. It achieved $797 million
in first-quarter revenue, ahead 71 percent compared to the same period in
2004. Pfizer has filed with the FDA a single-dose Zmax formulation, which
would represent a valuable extension of this important medicine. It offers a
one-time antibiotic course of therapy that will improve compliance by allowing
directly observed therapy in the presence of a healthcare provider.
With $438 million in first-quarter revenue, ahead 5 percent compared to
the same period in 2004, Viagra is maintaining its market leadership in the
face of competition due to its unique functional and emotional benefits.
Additional growth opportunities for this medicine are expected to result from
new clinical data and sales and marketing efforts that encourage more men to
see their healthcare provider. In December, Pfizer submitted a regulatory
filing for Revatio, which has the same active ingredient (sildenafil) as
Viagra, for treatment for pulmonary arterial hypertension in the U.S., E.U.,
and other markets. The FDA accepted the Revatio application for priority
review.
The strong performance of Camptosar during the first quarter, with revenue
of $212 million, ahead 132 percent compared to the same period in 2004, is due
to clear clinical evidence that using Camptosar as standard first-line
treatment in advanced colorectal cancer results in improved survival for
patients, as well as Pfizer's acquisition of rights to this gold-standard
medicine in Europe and Asia (except Japan) in 2004. In the U.S., which
represents approximately half of total Camptosar worldwide sales, revenue was
ahead 30 percent in the first quarter. Camptosar continues to show strong
growth as second- and third-line advanced colorectal cancer therapy, and we
anticipate that new clinical data establishing its efficacy in the first-line
setting will accelerate its growth there as well.
Among other major in-line medicines, Xalatan/Xalacom achieved first-
quarter revenue of $333 million, ahead 19 percent compared to the same period
in 2004, as well as strong market performance in both new and total
prescriptions. Xalatan is the most-prescribed branded glaucoma medicine in
the world. Clinical data showing its advantages in treating intra-ocular
pressure compared with beta blockers should support the continued growth of
this important medicine.
Zyrtec revenue reached $342 million, ahead 14 percent compared to the same
period in 2004, and it continues to be the most-prescribed antihistamine agent
in the U.S. in a challenging market. Zyrtec has the broadest range of
formulations and treats patients as young as six months old. Zyrtec received
a warning letter from the FDA on April 13, 2005, addressing three print
consumer advertisements. Pfizer will respond to the FDA in the requested
timeframe.
Worldwide Zoloft sales reached $845 million, ahead 4 percent compared to
the same period in 2004. It has been the number-one prescribed antidepressant
in the U.S. since 2000. A large body of clinical data supports the safety and
effectiveness of Zoloft.
In addition, recently launched medicines are increasing their revenue
contributions, with additional growth anticipated based on new clinical data
and increasing market acceptance. Lyrica, one of Pfizer's newly launched
medicines in the U.K., Germany, and Mexico, is showing strong performance in
its first year on the market. It is experiencing rapid uptake, with more than
an 8 percent revenue share of the total anti-epileptic market in Germany, and
more than a 5 percent share in the U.K, after just five months on the market.
This early success indicates the clear benefits offered by Lyrica, including
its efficacy, with rapid, robust, and sustained pain reduction across the
entire dosing range; its tolerability; and its ease of use. New clinical data
from studies presented at the American Pain Society meeting last month further
support the efficacy of Lyrica in easing neuropathic pain in difficult-to-
treat patients, such as those with spinal-cord injury, and those who have not
received adequate relief from other therapeutic agents. In the U.S., Lyrica
is approved for the two most common forms of neuropathic pain -- diabetic
peripheral neuropathy and post-herpetic neuralgia -- and it is expected to be
launched later in 2005.
Among other recently introduced products with strong first-quarter
performance, Vfend revenue reached $88 million, ahead 38 percent compared to
the same period in 2004. Approval of the new candidemia indication in
December 2004 will further strengthen its position in the high-risk market of
patients at risk for both mold and yeast infections, as Vfend is the only
intravenous/oral antifungal with first-line indications for both these
infections. Vfend also received approval in April 2005 in Japan, which is the
world's second largest antifungal market, for a broad first-line antifungal
indication.
Geodon continues to outperform the market, with revenue of $138 million in
the first quarter, ahead 56 percent compared to the same period in 2004. Its
recently launched bipolar mania indication has expanded the pool of patients
who can benefit from this important medicine. The market is accepting its
very distinct benefits, including its efficacy, dosing flexibility, and
favorable metabolic and weight-gain profile compared to older agents. Pfizer,
along with other manufacturers of atypical antipsychotics, recently received a
request from the FDA to add a black-box warning to the Geodon label regarding
an increased mortality risk in patients with dementia-related psychosis. The
proposed new labeling is based on data from 17 placebo-controlled clinical
trials of other atypical antipsychotic agents in patients with dementia-
related psychosis. Geodon is not approved for use in this patient population.
Revenue for Relpax of $53 million in the first quarter was ahead 77
percent compared to the same period in 2004, and it continues to gain market
share in the $2.3 billion global oral triptan market. It is outperforming the
overall triptan market in the U.S., with the fastest rates of growth in both
new and total prescriptions (65 percent and 87 percent, respectively).
Despite being the sixth medicine to the market, the clear benefits Relpax
offers have driven its growth to be the number-one triptan in switch
prescriptions and number-two in new-to-market prescriptions, behind only
Imitrex. The migraine market continues to represent a large untapped growth
opportunity for Relpax, with diagnosis rates below 50 percent and treatment
rates below 20 percent.
A Promising Pipeline. Beyond the in-line portfolio, Pfizer has also
assembled a range of late-stage pipeline candidates through our internal R&D
and external product sourcing activities that have significant promise for
replenishing and expanding our future portfolio of medicines. Many of these
candidates target disease areas with significant unmet medical needs. For
example, indiplon is for the treatment of patients with insomnia -- a
condition that the National Sleep Association estimates affects at least
70 million Americans, with potentially another 75 million coping with minor
sleeping disorders. Oporia (lasofoxifene) is for the treatment of
osteoporosis, which affects around 10 million Americans and results in an
annual economic cost of about $14 billion, not to mention the huge toll on
health from 300,000 hip fractures a year caused by untreated osteoporosis.
Exubera is for the treatment of patients with diabetes, the sixth-leading
cause of death in the U.S. with over 50,000 deaths annually.
Ms. Katen noted, 'These statistics are startling. They certainly
highlight the urgency of getting our new medicines to the market as important
new treatment options for patients and their caregivers. Our research and
development organization is well on its way to delivering these and many other
important new medicines from our labs to the market.'
'The first quarter of 2005 was again productive for Pfizer R&D,' said Dr.
John LaMattina, President, Pfizer Global Research and Development. 'Pfizer's
development pipeline continues to grow and now includes 149 new molecular
entities and 78 product enhancement projects. Our discovery research engine
is reliably generating new development substrate, advancing ten new candidates
into pre-clinical development during just the first quarter. Research and
early development output is augmented by an active licensing and technology
alliance effort that is completing deals at a pace of one every two weeks.
The advanced development pipeline, including key compounds such as Sutent,
varenicline, maraviroc (UK-427,857), asenapine, torcetrapib/ atorvastatin, and
Daxas, continues to progress. We expect to achieve our goal of filing 20 U.S.
regulatory filings in the five-year period ending in 2006, or about one new
filing per quarter.
'Our productivity initiative to better utilize our wide-ranging R&D
capabilities is proceeding on schedule,' Dr. LaMattina continued. 'We are
maintaining a clear focus on key objectives -- increasing R&D productivity
while operating at ever higher levels of efficiency.'
Specific R&D highlights during the first quarter include the following:
* The FDA accepted the New Drug Application (NDA) filing for Exubera, or
inhaled insulin. In Europe, review of the Marketing Authorization
Application for Exubera is actively proceeding.
* A revised NDA for Lyrica for the treatment of add-on epilepsy was
submitted to the FDA. Lyrica was approved by the FDA in 2004 for the
treatment of diabetic peripheral neuropathy and post-herpetic neuralgia
and will be launched in the U.S. for these indications, pending the
completion of a scheduling designation by the U.S. Department of Health
and Human Services and the U.S. Drug Enforcement Administration.
* A supplemental NDA was approved for Depo-subQ Provera for treatment of
endometriosis pain.
* The development program for Sutent, a multi-targeted tyrosine kinase
inhibitor for potential treatment of gastrointestinal stromal tumors,
renal cell carcinoma, and breast cancer, was accelerated when an
independent data safety monitoring board halted pivotal Phase 3 trials
seven months early because a statistically significant efficacy endpoint
was successfully achieved.
Important new-product sourcing deals that have been completed in the first
quarter include the acquisition of Idun Pharmaceuticals, a biopharmaceutical
company that we agreed to acquire during February of this year. Idun is
focused on the discovery and development of therapies to control caspase
activity. Their lead compound, IDN-6556, is a first-in-class pan-caspase
inhibitor, currently in clinical trials to treat liver disease and hepatitis C
infection. In addition, Pfizer reached a collaborative research and license
agreement with Rigel Pharmaceuticals for the development of inhaled products
for treating allergic asthma and other respiratory diseases; entered an
agreement with LifeSpan Biosciences to develop an automated pathology system
for rapid and accurate evaluation of tissue specimens in preclinical studies;
and gained an exclusive license from Coley Pharmaceuticals to develop,
manufacture, and commercialize Coley's ProMune (CPG 7909), a toll-like
receptor (TLR 9) agonist delivered by subcutaneous injection for the potential
treatment, control, and prevention of cancers in humans.
Streamlining Business to Improve Performance and Efficiency. Ms. Katen
continued, 'Beyond extensive efforts in the Human Health organization to
support our business performance through growing our current portfolio and
supporting the medicines that will create our future portfolio, we are also
focused on targeting our resources toward activities that are most vital to
ensuring the continued success of our pharmaceutical operations. Various
efforts are underway across our Human Health organization to accomplish this,
including the realignment of our U.S. field force, already long recognized as
the industry's best in quality and productivity, in response to a changing
promotional environment.'
Other organizational changes include the continued implementation of
Pfizer Global Manufacturing's (PGM's) Plant Network Strategy, initiated after
the Pharmacia acquisition in 2003 to assure that our global manufacturing
plant network is in close alignment with Pfizer's current and future product
supply requirements. Recent announcements include the divestment of
facilities in Augusta, Georgia; Holland, Michigan; Angers and Val-de-Reuil,
France; and Morpeth, U.K.; and the restructuring of facilities in Arecibo,
Caguas, and Cruce Davila, Puerto Rico, and Sandwich, U.K.
Pfizer is also working to better realize the strategic advantages and meet
the efficiency goals of our unmatched global research and development
organization, which, with an annual investment in 2005 of approximately $8
billion -- or more than $20 million a day -- make it one of the world's
largest research institutions. Some actions include concentrating certain
operational functions such as bio-imaging in selected 'centers of emphasis';
considering the potential benefits of sourcing certain tasks in lower-cost
environments; streamlining our wide-ranging sample and clinical supply
network; implementing more efficient clinical-study designs; and continuing to
fully leverage our scale advantage in procurement.
New Approaches to Healthcare Delivery. 'Beyond efforts to improve our
internal operational efficiencies, we are implementing a series of initiatives
that respond to the most urgent constraints on our continued vitality as a
pharmaceutical innovation business,' Ms. Katen said. 'These pressures are
grounded in concerns about the cost of, and access to, medicines; a deep-
seated mistrust of some industry practices; and strained healthcare systems
that are increasingly unable to finance quality care delivery.
'We recognize the urgent need to expand how we provide value to
stakeholders beyond medicines. We are moving toward that goal by extending
our tradition of innovation to the entire process of getting new medicines to
the people who need them, effectively and efficiently. By doing so, we
believe that we will ultimately both enhance our leadership in health and
protect our future in pharmaceutical innovation.'
To that end, our efforts include:
Expanding Easy Access to Affordable Medicines. Pfizer already has among
the industry's most comprehensive, generous, and easy-to-use access programs
for uninsured and low-income patients. We are now focused on expanding, and
enrolling more people in, these programs through community-based outreach
efforts and by participating in Partnership for Prescription Assistance, a new
industry-wide umbrella program created by the Pharmaceutical Research and
Manufacturers of America.
Piloting New Models of Care. We are developing and implementing a series
of initiatives to address inefficiencies in healthcare, both in the U.S. and
around the world. These are all based on the fundamental premise that better
health at lower costs is possible through patient-centered and integrated care
delivery that is focused on prevention, early intervention, and appropriate
use of medicines. These initiatives include our first model, the Florida: A
Healthy State program; its expansion to several European markets; the redesign
of Pfizer's own employee healthcare program in the U.S. to be focused more on
health and well-being; and our new Green Ribbon Health program in partnership
with Humana to provide care-management services to approximately 20,000
Medicare patients in Florida with congestive heart failure, diabetes, or both.
'While it will undoubtedly take time for these efforts to deliver results,
we are confident in their ultimate success because they all have one primary
purpose: serving patients. Meeting the needs of patients and establishing
the value of health will also serve the best interests of the public, of our
communities, of our business, and ultimately of all our stakeholders,' Ms.
Katen concluded.
Pfizer Provides Revised Financial Guidance for 2005-07
David Shedlarz, vice chairman, noted, 'In the first quarter, Pfizer
performed well, and the company's long-term prospects remain strong.
'We expect 2005 to be a transition year for Pfizer due to a number of
factors. Results in 2005 are being, and will continue to be, impacted by loss
of U.S. exclusivity of four major products -- Diflucan, Neurontin, and
Accupril during 2004 and Zithromax in 2005. Revenues also have been, and will
continue to be, impacted by publicity and regulatory actions regarding
COX-2-selective inhibitors. Full-year revenues are expected to be
substantially unchanged from 2004, as growth from other product lines
generally offsets these factors. The suspension of sales of Bextra in the
U.S., E.U., and other markets in early April is expected to reduce our
previously announced targeted full-year 2005 adjusted and reported diluted
EPS* by approximately $.05 per share. Bextra asset write-offs are expected to
reduce our previously announced targeted full-year 2005 reported diluted EPS
by an additional $.10 per share. However, 2005 results are no longer expected
to be impacted by the adoption of new accounting regulations relating to the
expensing of stock options, pursuant to a deferral in the implementation date
of the new regulations, as announced by the SEC last week. These regulations
had been expected to result in an after-tax expense reducing 2005 adjusted and
reported diluted EPS* by $.03 per share. Pfizer expects to implement SFAS
123R regarding expensing of stock options as of January 1, 2006. From an
efficiency perspective, in 2005 we continue to anticipate Pharmacia merger-
related synergies of $4.2 billion this year, an increase of $600 million over
2004 Pharmacia merger-related synergies. Pfizer will also achieve modest cost
savings during 2005 from its newly announced productivity initiative. Given
these and other factors, we expect 2005 adjusted income* of approximately
$14.7 billion, adjusted diluted EPS* of approximately $1.98 per share,
reported income of approximately $7.7 billion, and reported diluted EPS of
approximately $1.04 per share, subject to the Disclosure Notice in this
report.
'The differences between targeted 2005 adjusted income* and adjusted
diluted EPS* and 2005 reported income and reported diluted EPS are
attributable to anticipated non-cash charges of $2.6 billion ($.36 per share)
relating to purchase accounting for the acquisition of Pharmacia and an in-
process research and development charge relating to our recently completed
acquisition of Idun Pharmaceuticals, Inc.; merger-related and restructuring
costs of $1.4 billion ($.18 per share), which include both Pharmacia-related
charges and charges related to the recently announced planned productivity
initiative; and charges relating to the suspension of sales of Bextra of $.8
billion ($.10 per share), all on an after-tax basis. In addition, reported
net income for 2005 will include a tax charge of $2.2 billion ($.30 per share)
relating to the cash repatriation of foreign earnings in 2005, with a possible
subsequent reduction of this charge by about $850 million, due to anticipated
technical corrections legislation. All of these estimates are subject to the
variables cited in the Disclosure Notice found in this report.
'We will sustain both the capability and will to make those investments
necessary to support long-term growth. Pfizer's financial strength remains
unprecedented and will be enhanced by the cash repatriation of $28.3 billion
in foreign earnings during this year. With the current quarterly dividend of
$.19 per share, which is 12 percent higher than last year, we are continuing
the company's commitment to strong growth in dividends, both today and in the
future. We will accelerate and complete our current share-purchase program in
the second quarter by purchasing approximately $2.4 billion of the company's
stock in this quarter, and early in the second half we will consider
additional opportunities to purchase the company's stock.
'A number of factors are expected to drive a return to double-digit
adjusted earnings* growth in 2006. We are undertaking a new, broad-based,
multi-year productivity initiative to increase efficiency and effectiveness of
all operations company-wide. Annual savings are projected to total $4 billion
by 2008. Improved revenue performance is also anticipated, as many of our in-
line products continue to grow, we experience renewed growth of Celebrex, and
the contribution of new products increases.
'Revenue growth, enhanced by continuing productivity initiatives, is
expected to drive a strong 2007, when we anticipate accelerating double-digit
adjusted earnings* growth,' Mr. Shedlarz concluded.
'Several factors affected first-quarter results, including several unique
to the quarter,' said Alan Levin, chief financial officer. 'Revenue growth
benefited from strong performances of many major in-line medicines, as well as
three additional days in our fiscal calendar compared to the first quarter of
2004. Cost of sales as a percentage of revenues in the first quarter of 2005
was adversely impacted by changes in production volume, as well as geographic,
segment, and product mix, reflecting the loss of exclusivity of certain major
products in the U.S. and lower year-over-year sales of COX-2 products,
compared to the first quarter of 2004, and charges for write-offs of inventory
related to the suspension of Bextra sales. Cost of sales as a percentage of
revenues will remain under pressure in 2005. R&D spending increased 7 percent
in the quarter, reflecting the advancement of our pipeline products. Full-
year R&D spending is expected to be approximately $8 billion. Finally, the
effective tax rate on adjusted income* increased to 23 percent, reflecting
changes in geographic and product mix.
'In connection with the decision to suspend sales of Bextra, we recorded
certain charges totaling $1.213 billion ($766 million, net of tax) in the
first quarter of 2005. These pre-tax charges included $1.145 billion relating
to the impairment of Bextra's intangible assets for developed technology
rights, $10 million related to the write-off of machinery and equipment, $56
million in write-offs of inventory, and $2 million relating to the costs of
administering the suspension of sales. In addition, we recorded in the first
quarter of 2005 a net charge of $71 million, substantially against revenues,
for estimated customer returns of Bextra.'
Pfizer Expands Patient-Access
And Corporate-Citizenship Initiatives
During the first quarter of 2005, Pfizer continued its mission to expand
patient access to medicines and to demonstrate good corporate citizenship.
In the aftermath of the tsunami disaster, Pfizer has donated approximately
$60 million (at wholesale price) of antibiotics, antifungal medicines, and
other health products to local and international relief organizations
operating in the Asian region. We are partnering with the United Nations by
sending Pfizer experts in supply-chain management to the affected areas to
support the U.N.-led relief efforts. We have also sent more colleagues to
lend support in areas of critical need, such as water purification.
In February, Pfizer also convened a first-ever conference for healthcare
professionals from tsunami-affected countries in managing post-traumatic
stress disorder. The company also is working closely with medical
associations and the Ministry of Public Health in Thailand to build local
mental-health treatment capacity through programs to train local health
professionals, including nurses, social workers, and psychologists, and other
community leaders. In Indonesia, Pfizer has pledged more than $600,000 to
establish a Public Health Laboratory to monitor potential infectious-disease
outbreaks in the disaster-affected region. The laboratory will become a
permanent component of the provincial health infrastructure in Banda Aceh as
services are re-established following the emergency relief period.
In addition to these activities, Pfizer employees have committed personal
funds totaling more than $2 million to non-profit organizations assisting in
the relief effort, with Pfizer and the Pfizer Foundation providing matching
support.
Pfizer Has the Capabilities to Meet the Challenges Ahead
'Pfizer today faces a paradox,' Dr. McKinnell concluded. 'On the one
hand, the opportunities for bringing innovative, life-saving medicines to the
world's patients have never been greater. On the other hand, the challenges
for innovative companies like Pfizer have also never been greater. But Pfizer
has faced important challenges before and has always addressed them with
energy and resolve and emerged a stronger company. Pfizer has a dynamic
organization of dedicated colleagues to navigate the challenges that lie
ahead, and I appreciate all their efforts. I am confident that Pfizer's
people, equipped with our innovative products and unsurpassed capabilities,
will rise to the occasion once again and propel our company to long-term
success.'
For additional details, please see the attached financial schedules,
product revenue tables, and supplemental information.
DISCLOSURE NOTICE: The information contained in this document and the
attachments is as of April 19, 2005. The Company assumes no obligation to
update any forward-looking statements contained in this document and 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, 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,'
'target,' 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; the impact of the FDA's decision to
require a boxed warning including expanded risk information in the Celebrex
label; final actions relating to Celebrex that may be taken by the European
Medicines Evaluation Agency following its review of the benefits and risks of
COX-2-specific inhibitor medicines; 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
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 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 projected benefits of the multi-year productivity
initiative announced on April 5, 2005. 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.
* 'Adjusted income' and 'adjusted diluted earnings per share (EPS)' are
defined as reported net income and reported diluted earnings per share
excluding discontinued operations, significant impacts of purchase
accounting for acquisitions, merger-related costs, and certain
significant items. A reconciliation to reported net income and
reported diluted EPS is provided within this document.
PFIZER INC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(millions of dollars, except per common share data)
First Quarter % Incr./
2005 2004 (Decr.)*
Revenues $ 13,091 $ 12,487 5
Costs and expenses:
Cost of sales 2,191 1,794 22
Selling, informational and
administrative expenses 4,085 3,933 4
Research and development expenses 1,764 1,649 7
Amortization of intangible assets 882 823 7
Merger-related in-process research
and development charges 2 955 (100)
Merger-related costs 219 247 (11)
Other (income)/deductions--net 1,038 (43) **
Income from continuing operations
before provision for taxes on income
and minority interests 2,910 3,129 (7)
Provision for taxes on income 2,635 809 226
Minority interests 3 2 31
Income from continuing operations 272 2,318 (88)
Discontinued operations:
Income/(loss) from discontinued
operations--net of tax (12) 13 **
Gains on sales of discontinued
operations--net of tax 41 - -
Discontinued operations--net of tax 29 13 125
Net income $ 301 $ 2,331 (87)
Earnings per common share - Basic:
Income from continuing operations $.04 $.31 (87)
Discontinued operations--net of tax - - -
Net income $.04 $.31 (87)
Earnings per common share - Diluted:
Income from continuing operations $.04 $.30 (87)
Discontinued operations--net of tax - - -
Net income $.04 $.30 (87)
Weighted-average shares used to
calculate earnings per common share:
Basic 7,415.9 7,586.4
Diluted 7,473.8 7,678.5
* - Percentages may reflect rounding adjustments.
** - Calculation not meaningful.
1. The above financial statement presents the three-month periods ended
April 3, 2005 and March 28, 2004. Subsidiaries operating outside the
United States are included for the three-month periods ended February
27, 2005 and February 22, 2004.
2. The financial results for the three-month period ended April 3, 2005
are not necessarily indicative of the results which ultimately might be
achieved for the current year.
3. For selected variance explanations, see accompanying Pfizer Inc
Supplemental Information.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION FROM REPORTED INCOME AND EARNINGS PER SHARE TO ADJUSTED
INCOME AND ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
(millions of dollars, except per common share data)
First Quarter % Incr./
(Decr.)
2005 2004
Reported net income $ 301 $ 2,331 (87)
Discontinued operations--net of tax (29) (13) 125
Purchase accounting adjustments--net
of tax 622 1,513 (59)
Merger-related costs--net of tax 151 126 20
Certain significant items--net of
tax 2,955 19 M+
Adjusted Income $ 4,000 $ 3,976 1
Reported diluted earnings per common
share $.04 $.30 (87)
Discontinued operations--net of tax - - -
Purchase accounting adjustments--net
of tax .08 .20 (60)
Merger-related costs--net of tax .02 .02 -
Certain significant items--net of
tax .40 - -
Adjusted diluted earnings per common
share $.54 $.52 4
** - Calculation not meaningful.
M+ - Change greater than one thousand percent.
Certain amounts and percentages may reflect rounding adjustments.
1. The above financial information presents the three-month periods ended
April 3, 2005 and March 28, 2004. Subsidiaries operating outside the
United States are included for the three-month periods ended February
27, 2005 and February 22, 2004.
2. Adjusted Income and Adjusted diluted earnings per common share as shown
above reflect the following items:
(millions of dollars) First Quarter
2005 2004
Discontinued operations, pre-tax:
Loss/(income) from discontinued
operations (a) $ 18 $ (20)
Gains on sales of discontinued
businesses and product lines (a) (65) -
Total discontinued operations, pre-tax (47) (20)
Income taxes 18 7
Total discontinued operations--
net of tax (29) (13)
Purchase accounting adjustments,
pre-tax:
In-process research and
development charges (b) 2 955
Intangible amortization and other (c) 851 803
Sale of acquired inventory
written up to fair value (d) 4 -
Total purchase accounting
adjustments, pre-tax 857 1,758
Income taxes (235) (245)
Total purchase accounting adjustments--
net of tax 622 1,513
Merger-related costs, pre-tax:
Integration costs -- Pharmacia (e) 102 101
Integration costs -- Other (e) 4 3
Restructuring charges -- Pharmacia (e) 113 143
Total merger-related costs, pre-tax 219 247
Income taxes (68) (121)
Total merger-related costs--net of tax 151 126
Certain significant items, pre-tax
Costs associated with the suspension of
selling Bextra (f) 1,213 -
Operating results of divested
legacy Pharmacia research facility (g) - 32
Total certain significant items, pre-tax 1,213 32
Income taxes (447) (13)
Tax impact for the repatriation
of foreign earnings (h) 2,189 -
Total certain significant items--
net of tax 2,955 19
Total discontinued operations, purchase
accounting adjustments, merger-related costs
and certain significant items--net of tax $ 3,699 $ 1,645
(a) Included in Discontinued operations--net of tax.
(b) Included in Merger-related in-process research and development
charges.
(c) Included primarily in Amortization of intangible assets.
(d) Included in Cost of sales.
(e) Included in Merger-related costs.
(f) Included in Cost of sales ($56 million), Selling, informational and
administrative expenses ($2 million) and Other (income)/deductions-
net ($1,155 million).
(g) Included in Research and development expenses.
(h) Included in Income taxes.
PFIZER INC
SEGMENT/PRODUCT REVENUES
FIRST QUARTER 2005
(UNAUDITED)
(millions of dollars)
QUARTER-TO-DATE
WORLDWIDE U.S. INTERNATIONAL
% % %
2005 2004 Chg 2005 2004 Chg 2005 2004 Chg
TOTAL
REVENUES 13,091 12,487 5 6,976 7,149 (2) 6,115 5,338 15
HUMAN HEALTH 11,440 11,041 4 6,206 6,462 (4) 5,234 4,579 14
- CARDIOVASCULAR
AND METABOLIC
DISEASES 4,726 4,186 13 2,566 2,266 13 2,160 1,920 12
LIPITOR 3,075 2,497 23 1,913 1,573 22 1,162 924 26
NORVASC 1,175 1,141 3 540 489 11 635 652 (3)
CARDURA 153 148 4 1 3 (44) 152 145 4
ACCUPRIL/
ACCURETIC 100 191 (47) 29 125 (77) 71 66 7
CADUET 31 28 10 30 28 6 1 0 -
- CENTRAL NERVOUS
SYSTEM
DISORDERS 1,591 1,947 (18) 954 1,380 (31) 637 567 13
ZOLOFT 845 810 4 661 644 3 184 166 10
NEURONTIN 182 696 (74) 56 570 (90) 126 126 (1)
GEODON 138 88 56 112 72 56 26 16 53
XANAX/XR 102 86 19 34 25 33 68 61 13
ARICEPT* 85 71 19 0 0 - 85 71 19
RELPAX 53 30 77 32 16 97 21 14 54
LYRICA 20 0 - 0 0 - 20 0 -
- ARTHRITIS
AND PAIN 637 1,176 (46) 328 828 (60) 309 348 (11)
CELEBREX 411 769 (47) 265 558 (53) 146 211 (31)
BEXTRA 56 270 (79) 18 244 (93) 38 26 43
- INFECTIOUS AND
RESPIRATORY
DISEASES 1,482 1,234 20 883 723 22 599 511 17
ZITHROMAX 797 466 71 632 335 89 165 131 25
ZYVOX 143 97 47 104 73 42 39 24 62
DIFLUCAN 138 304 (55) 6 176 (97) 132 128 4
VFEND 88 64 38 34 27 28 54 37 45
- UROLOGY 702 636 11 415 371 12 287 265 9
VIAGRA 438 416 5 230 220 4 208 196 6
DETROL/
DETROL LA 252 206 22 180 145 24 72 61 18
- ONCOLOGY 479 312 54 164 125 31 315 187 69
CAMPTOSAR 212 91 132 104 81 30 108 10 891
ELLENCE 90 80 13 18 17 9 72 63 14
AROMASIN 55 24 134 20 4 463 35 20 77
- OPHTHALMOLOGY 333 279 19 105 99 5 228 180 27
XALATAN/
XALACOM 333 279 19 105 99 5 228 180 27
- ENDOCRINE
DISORDERS 257 219 17 88 79 11 169 140 20
GENOTROPIN 203 179 13 63 58 9 140 121 15
- ALL OTHER 991 908 9 561 507 11 430 401 7
ZYRTEC/
ZYRTEC-D 342 299 14 342 299 14 0 0 -
- ALLIANCE
REVENUE
(Aricept,
Macugen,
Mirapex,
Rebif and
Spiriva) 242 144 68 142 84 69 100 60 67
CONSUMER
HEALTHCARE 945 804 17 483 416 16 462 388 19
ANIMAL HEALTH 496 428 16 219 199 10 277 229 21
OTHER ** 210 214 (2) 68 72 (6) 142 142 1
* - Represents direct sales under license agreement with Eisai Co.,
Ltd.
** - Includes Capsugel and Pfizer CenterSource.
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 INFORMATION
SHARES OUTSTANDING AND EPS INFORMATION:
1Q05 1Q04
Shares Outstanding (millions) - Basic EPS 7,415.9 7,586.4
Basic EPS $.04 $.31
Adjusted Basic EPS* $.54 $.52
Shares Outstanding (millions) - Diluted EPS 7,473.8 7,678.5
Diluted EPS $.04 $.30
Adjusted Diluted EPS* $.54 $.52
QUESTIONS:
PRODUCT PERFORMANCE / NEW PRODUCT DEVELOPMENT
CARDIOVASCULAR / METABOLIC / ENDOCRINE
Q1) How is Lipitor performing?
A1) Worldwide sales of Lipitor totaled $3.075 billion in the first
quarter of 2005, reflecting growth of 23% compared to the same
period in 2004. Lipitor is the best-selling pharmaceutical product
of any kind in the world and the industry's first $10 billion
product. Lipitor's full-year 2004 growth outpaced the lipid-
lowering market in both sales and unit volume worldwide. Lipitor's
strong worldwide performance is supported by the continued strong
performance in the U.S. market. Year-to-date U.S. new prescriptions
for Lipitor grew 11%, setting the pace in a strong growth market.
This impressive performance can be attributed to the safety and
efficacy profiles of Lipitor, including demonstrated strong
cholesterol reduction, a proven cardiovascular (CV) outcomes
benefit, and safety for patients across the full dosing range in
more than 400 ongoing and completed clinical trials involving more
than 80,000 patients and in 100 million patient years of experience.
Also supporting this impressive performance are new groundbreaking
clinical data, more aggressive treatment guidelines, and increased
promotion within the category. Lipitor has a growing body of
evidence demonstrating benefit to patients by impacting disease
progression and by reducing heart attacks and strokes (the ASCOT,
CARDS, REVERSAL, PROVE-IT, and ALLIANCE clinical trials).
Emerging results from a new clinical study -- Treating to New
Targets (TNT) -- were reported at the American College of Cardiology
on March 8. These results take the treatment of high cholesterol to
new frontiers, while also reinforcing data from the ASCOT, CARDS,
and PROVE-IT studies, which all demonstrated early and significant
improvement in cardiovascular outcomes. TNT is an innovative and
important landmark outcomes study that investigated the CV benefit
of lowering LDL cholesterol well below current guidelines in
patients with coronary heart disease (CHD). It is the largest and
longest clinical trial of its kind. TNT found that intensive lipid-
lowering therapy with Lipitor 80 mg in patients with stable CHD
provides significant clinical benefit beyond that afforded by
treatment with Lipitor 10 mg. This five-year trial builds on the
well-established safety profile of Lipitor 80 mg, demonstrating
musculoskeletal safety comparable to the 10 mg dose. The TNT
results have been published online in the New England Journal of
Medicine and will appear in its April print issue.
There continues to be an opportunity for further growth of the
cholesterol-lowering market. Of the tens of millions of people
around the world who need medical therapy for high cholesterol, only
about one third are actually receiving treatment. Worldwide,
millions of people with high cholesterol are not diagnosed, are not
treated, or are treated with a dose inadequate to achieve their
cholesterol goals. Evolving treatment guidelines continue to
encourage the broad use of statin therapy.
Q2) How is Caduet performing?
A2) Worldwide sales of Caduet totaled $31 million in the first quarter
of 2005, reflecting growth of 10% compared to the same period in
2004. The market performance of Caduet in the U.S. continues to
improve. U.S. sales of Caduet doubled, and weekly new-prescription
volume increased 27%, in the first quarter of 2005 versus the fourth
quarter of 2004. Momentum continues to grow behind Caduet due to
increased product awareness and acceptance by physicians.
The FDA approved Caduet in January 2004, and Pfizer launched the
product in the U.S. in May. The first E.U. filing was submitted in
France, the reference member state for Caduet, in the fourth quarter
of 2003. We will be pursuing E.U. approvals through the mutual
recognition process. Caduet has been launched in Mexico and has
been approved in ten additional countries throughout Latin America
and Asia.
Caduet provides an opportunity to address simultaneously two of the
most common risk factors of cardiovascular disease with the world's
most prescribed branded blood-pressure medication -- Norvasc -- and
lipid-lowering medication -- Lipitor -- in one pill. In September
2004, the FDA approved changes to the prescribing information for
Lipitor and Caduet to include prevention of cardiovascular disease.
The results of the Anglo-Scandinavian Cardiac Outcomes Trial-Lipid
Lowering Arm (ASCOT-LLA) bring a critical new insight into the
management of hypertensive patients -- that hypertensive patients
benefit from Lipitor in addition to blood-pressure -- lowering
therapy.
In December 2004, Pfizer announced that the independent ASCOT
steering committee had decided to stop the study in its entirety due
to favorable benefits being seen in patients receiving the Norvasc-
based treatment regimen. Preliminary results were presented at the
American College of Cardiology (ACC) meeting on March 8, 2005. The
fully analyzed ASCOT results are anticipated later in 2005. The
clinical benefits of Caduet are reinforced by these positive results
from Norvasc as well as those for Lipitor, including the results of
the Treating to New Targets study that were also presented at the
ACC meeting. These robust scientific data continue to reinforce
Caduet's efficacy and safety in preventing cardiovascular events in
hypertensive patients, with or without coronary heart disease.
By current estimates, each year 9 million deaths around the world,
equaling more than 75 million lost years of healthy life, may be
attributed to suboptimal blood-pressure or cholesterol levels.
Treatment guidelines advocate early and aggressive management of
multiple risk factors for patients at increased cardiovascular risk.
Q3) How is Norvasc performing?
A3) Worldwide sales of Norvasc in the first quarter of 2005 totaled
$1.175 billion, reflecting growth of 3% compared to the same period
in 2004. The reduced rate of growth is attributable in part to
patent expirations throughout the E.U., except for Italy, France,
Sweden, and Switzerland. Norvasc maintains exclusivity in many
markets globally, including the U.S., Japan, Canada, and Australia.
Norvasc's performance in the U.S. continues to be strong, with 11%
growth in sales, and its new-prescription growth in the U.S.
continues to exceed that of the cardiovascular market.
Since its introduction in 1990, Norvasc has become the world's most-
prescribed branded antihypertensive therapy. Overall, Norvasc has
been studied in more than 400,000 patients and has been used in more
than 30 billion patient days of therapy worldwide. Its success has
been driven by its outstanding efficacy, once-daily dosing,
consistent 24-hour control of hypertension and angina, and excellent
safety and tolerability. In addition, the results from the ALLHAT,
VALUE, and CAMELOT/NORMALISE trials demonstrate the beneficial
effects of Norvasc on multiple cardiovascular outcomes. An FDA
advisory committee is anticipated later this year to review the
ALLHAT filing for Norvasc.
Hypertension affects about 50 million Americans and one billion
people worldwide. Currently 69% of American adults diagnosed with
hypertension are not at their blood-pressure goal. Recent
guidelines call for early, aggressive blood-pressure management and
make clear that the majority of patients may require two or more
medications to reach their blood-pressure targets.
In December 2004, Pfizer announced that early indications from the
landmark Anglo-Scandinavian Cardiac Outcomes Trial (ASCOT) showed
that patients receiving a treatment regimen based on Norvasc
experienced favorable cardiovascular benefits. As a result of these
findings, the independent ASCOT steering committee decided to stop
the trial early so that investigators and patients in the trial
could discuss their optimum hypertension treatment moving forward.
Preliminary results were presented at the American College of
Cardiology meeting on March 8, 2005. These data showed that
patients receiving the Norvasc-based regimen demonstrated a 25%
reduction in cardiovascular death and a 15% reduction in total
mortality. These patients experienced a 10% reduction in the
primary endpoint (fatal coronary heart disease and non-fatal heart
attack), which did not reach statistical significance. This is
thought to be due to the widespread use of statins throughout the
trial as well as its premature termination, which reduced the number
of primary endpoints. Among the Norvasc-based regimen's other
benefits were significant reductions in stroke, coronary events, and
new-onset diabetes. The final results of this study are expected to
be presented and published in a peer-review journal later in 2005.
Q4) What is the status of Exubera?
A4) Exubera(R) is a dry powder form of insulin that is inhaled into the
lungs prior to eating using a specially designed inhalation device.
The product candidate is under development through a collaboration
between Pfizer and sanofi-aventis. Pfizer is also collaborating
with Nektar Therapeutics, developer of the inhalation device and
formulation process for Exubera. The product has been studied in
more than 3,500 patients, some for more than seven years. As an
effective alternative to insulin injections, Exubera has also been
shown in clinical trials to be preferred by patients. This patient
preference may encourage patient acceptance of, and compliance with,
insulin therapy, thereby improving the health of diabetics and
reducing the healthcare costs associated with the disease.
On March 2, 2005, Pfizer and sanofi-aventis announced that the FDA
had accepted for filing a New Drug Application for Exubera. The
companies seek approval to market Exubera for adult patients with
type 1 and type 2 diabetes. A filing for Exubera is currently under
review by the European Medicines Evaluation Agency.
It is estimated that nearly 180 million people worldwide suffer from
diabetes, and the number is expected to rise to 300 million people
in the next 20 years. More than half of people with diabetes remain
uncontrolled or poorly controlled and are at risk for common
complications such as heart disease, stroke, kidney failure, nerve
damage, and blindness. Annual costs associated with the disease are
estimated at $186 billion worldwide.
Q5) What is the status of Revatio?
A5) Revatio(TM) (sildenafil citrate) was submitted to the FDA, the
European Medicines Evaluation Agency, and Health Canada in December
2004 as a treatment for pulmonary arterial hypertension (PAH). PAH
is a rare, progressive, and life-shortening vascular disease
affecting approximately 100,000 people in North America and Europe.
The FDA has accepted the Revatio application for priority review.
If approved, Revatio is expected to offer an unprecedented
combination of efficacy, safety, and cost effectiveness for a
disease in need of new oral treatment options. In a large,
multinational clinical trial (SUPER-1) presented at the 2004
American College of Chest Physicians annual meeting, Revatio 20mg
taken three times daily was found to be effective, safe, and well
tolerated over 12 weeks. One-year data from SUPER-1 showing the
effects of Revatio on exercise capacity, survival, and disease
severity (based on functional class) will be presented at the 2005
International Conference of the American Thoracic Society in May.
Health-related quality-of-life data from SUPER-1 will also be
presented at the conference. Sildenafil is the same active
ingredient in Viagra(R), the world's leading erectile-dysfunction
medication, used by more than 23 million men worldwide based on its
excellent efficacy and safety.
Q6) What is the status of the torcetrapib/atorvastatin program?
A6) A combination product of torcetrapib, a cholesteryl ester transfer
protein (CETP) inhibitor, and atorvastatin (Lipitor) is now in
global Phase 3 clinical trials. The objective of this comprehensive
12,000-patient subject program is to demonstrate improved efficacy
and comparable safety of this novel product versus atorvastatin
alone, other statins, and fibrates in a wide range of patients at
cardiovascular risk. The program includes comparative
atherosclerotic imaging trials involving coronary intravascular
ultrasound and carotid ultrasound technology, as well as a full
range of blood-lipid efficacy studies. The program is designed to
provide substantive evidence of the vascular benefits of raising HDL
cholesterol and further lowering LDL cholesterol over the
established clinical benefits of atorvastatin's powerful LDL-
cholesterol lowering. Although a high hurdle has been created,
demonstration of such benefits would provide support for use of
torcetrapib/atorvastatin in patients currently being treated with
atorvastatin and other statins. Additional scientific and
mechanistic studies are also underway to broaden our understanding
of the effects of CETP inhibition on lipid metabolism and
atherosclerosis. The development program is also enrolling 13,000
patients in a definitive mortality and morbidity trial. This
program represents the major commitment by Pfizer to significantly
advance our understanding of lipids and atherosclerosis to provide
an important new tool for patients and prescribers in preventing and
treating the global burden of cardiovascular disease.
Data from Phase 2 studies assessing torcetrapib's impact on lipid
levels in patients with low HDL cholesterol alone and on a
background of atorvastatin treatment were reported at the recent
American College of Cardiology meeting. Torcetrapib, both alone and
on a background of atorvastatin, was found to substantially raise
HDL cholesterol. However, consistent LDL-cholesterol lowering with
torcetrapib was only seen in the patients taking background
atorvastatin. Torcetrapib, both alone and in combination with
atorvastatin, was well tolerated in these early Phase 2 studies.
The rationale for initial development of a fixed-combination tablet
of torcetrapib and atorvastatin, rather than of torcetrapib alone as
a monotherapy or as add-on therapy to any statin, is to provide
optimal lipid treatment for the majority of dyslipidemic patients.
The basis for this decision includes the complementary pharmacologic
actions of HMG Co-A reductase inhibition -- the mechanism of action
of statins -- and CETP inhibition on modifying lipid metabolism,
with supporting Phase 2 clinical observations. The
torcetrapib/atorvastatin combination also provides the mandatory
LDL-cholesterol control that patients at risk for heart disease
need. Current guidelines recommend intensive LDL-cholesterol
reduction in patients with cardiovascular risk, using a dose of a
statin that would provide at least a 30% reduction in LDL
cholesterol. This is the case even for patients with 'isolated' low
HDL cholesterol, since current treatment guidelines recommend LDL-
cholesterol reduction in these patients. Torcetrapib as a
monotherapy did not adequately or consistently lower LDL cholesterol
in the Phase 2 studies described above and therefore would not be
appropriate as a monotherapy. The choice of atorvastatin as the
companion statin was based on its powerful LDL-cholesterol and
triglyceride lowering, which has been proven to be safe and
clinically effective across its full dose range. Atorvastatin is
the best statin on the market, with a robust clinical-trial
database. Therefore, we believe it was critically important to
combine torcetrapib with the best available agent -- atorvastatin.
The combination of torcetrapib with atorvastatin has the potential
as a novel therapy to extend the proven benefits of LDL-cholesterol
lowering by adding substantial HDL-cholesterol elevation to further
reduce atherosclerosis and cardiovascular events beyond what is
currently achievable.
Q7) What is the status of varenicline?
A7) Varenicline is an innovative agent, in Phase 3 development, that was
researched and developed specifically for smoking cessation. Data
presented at the recent American College of Cardiology and Society
for Research on Nicotine and Tobacco meetings showed that
varenicline may offer an advance over existing prescription smoking-
cessation treatments. In two Phase 2 trials evaluating the
efficacy, safety, and tolerability of different doses of varenicline
in healthy smokers, about half of smokers treated with varenicline
1mg twice daily stopped smoking. In 2000, it was estimated that
there were 1.25 billion smokers worldwide and that nearly 5 million
premature deaths per year globally were attributable to smoking.
Seven out of ten smokers are contemplating quitting or actively want
to quit; however, only 3-5% of patients can quit on their own.
More-effective treatments are needed for smoking cessation than are
provided by currently available products. In contrast to a nicotine
derivative or an antidepressant, varenicline was designed to
selectively target the alpha 4-beta 2 nicotine receptors in the
brain and therefore to have the unique benefits of reducing craving
and the related withdrawal symptoms of quitting and of blocking the
rewards from smoking that perpetuate dependence. Varenicline
illustrates Pfizer's leadership in providing innovative products to
treat cardiovascular risk factors and the complications often
associated with smoking.
RESPIRATORY
Q8) How is Spiriva performing?
A8) Spiriva is an anticholinergic medication and the first inhaled
chronic obstructive pulmonary disease (COPD) treatment to provide
significant and sustained improvements in lung function with once-
daily dosing. Pfizer co-promotes Spiriva with the product's
discoverer, Boehringer Ingelheim. With 136% year-over-year growth
in full-year 2004 worldwide audited sales, Spiriva's performance
continue to outpace the overall COPD market. The product is
currently available in more than 50 countries and is the best-
selling COPD product in seven countries, including Germany and
Australia. Recent launches in the U.S. (June 2004), Italy (July
2004), and, most recently, Japan (December 2004) continue to go
well.
Clinical trials have shown that patients with all stages of COPD,
from mild to severe, can benefit from taking Spiriva. Trials have
also demonstrated that Spiriva provided superior and sustained
improvements in lung function, breathlessness, health-related
quality of life, and exercise tolerance in COPD patients. Spiriva
also provides sustained and significant improvements in lung
function compared to ipratropium, the currently recommended first-
line therapy outlined in many treatment guidelines. Spiriva has
also been shown to significantly reduce COPD exacerbations and
related health-resource burden versus placebo on top of usual care,
including inhaled corticosteroids and long-acting beta agonists.
In a study recently published in Chest, Spiriva was shown to be the
first product to consistently enhance the well-known exercise-
training benefits of pulmonary rehabilitation in patients with COPD.
This study builds upon previous studies with Spiriva, which have
demonstrated significant improvement in exercise tolerance,
shortness of breath, and quality of life when compared with placebo.
In the study, Spiriva was associated with prolonged (24-hour)
improvements in lung function as well as improvements in exercise-
endurance time, further augmenting benefits of pulmonary
rehabilitation. Spiriva may be an important tool for physicians to
break the vicious downward spiral of dyspnea, inactivity, and
subsequent deconditioning.
Q9) How is Zyrtec performing?
A9) Worldwide sales of Zyrtec totaled $342 million in the first quarter
of 2005, reflecting an increase of 14% compared to the same period
in 2004. The product continues to be the most-prescribed
antihistamine agent in the U.S. in a challenging market. Zyrtec
continues to lead Allegra by a wide margin in prescriptions by key
specialists -- allergists and pediatricians. The decline experienced
in the prescription antihistamine market for the past two years has
leveled off, as much of the impact of cheaper over-the-counter and
private-label loratadine (Claritin) products has been realized and
the majority of managed-care plans have completed their formulary
tier changes in this category. Zyrtec is indicated for both
seasonal and perennial allergic rhinitis. It has the broadest range
of formulations and treats patients as young as six months old.
Q10) What is the status of Daxas (roflumilast)?
A10) Daxas is a phosphodiesterase-4 inhibitor, a class of compounds that
provides anti-inflammatory action for respiratory diseases. The
compound is currently being studied for both asthma and chronic
obstructive pulmonary disease (COPD), two respiratory diseases
associated with substantial morbidity and mortality. COPD affects
600 million people worldwide and kills more than 2.75 million people
each year, according to estimates by the World Health Organization.
The Global Burden of Disease Studies found that COPD was the sixth-
most-common cause of death worldwide in 1990 and predicted that it
would become the third-most-common cause of death by 2020. In the
U.S., COPD is currently the fourth-leading cause of death (behind
heart disease, cancer, and stroke), with death rates having
increased 22% in the last decade. Asthma affects more than 300
million people worldwide and kills 180,000 people each year. Pfizer
and our co-promotion partner Altana Pharma filed Daxas in the E.U.
for both asthma and COPD indications. For other markets, the
product is in late-stage development.
UROLOGY
Q11) How is Detrol/Detrol LA performing?
A11) Worldwide sales of Detrol/Detrol LA totaled $252 million in the
first quarter of 2005, reflecting growth of 22% compared to the same
period in 2004. The robust performance was due to Detrol LA's
strong competitive positioning in the U.S. and E.U. and successful
launches of the once-daily formulation in Asia and Latin America.
For the first time, in-market sales of Detrol/Detrol LA, as reported
by IMS, exceeded $1 billion on an annualized basis. Recent
competitive launches have stimulated overall growth of the
overactive bladder (OAB) category, with minimal impact on
Detrol/Detrol LA's leading position in the market. Detrol/Detrol LA
remains the most-prescribed brand globally, with more than 8.5
million patients worldwide since launch and a 51% market share.
OAB is a highly prevalent and bothersome condition, affecting 50-100
million people worldwide, with an approximate 16% prevalence in
adults in the U.S. and E.U. The market opportunity is significant,
since OAB remains underdiagnosed and undertreated. Detrol/Detrol LA
is the leading OAB therapy worldwide, delivering proven 24-hour
efficacy across OAB symptoms of urge incontinence, urgency, and
frequency, resulting in excellent patient-reported treatment
outcomes.
Further evidence of Detrol/Detrol LA's patient benefits was
presented in March at the annual Congress of the European
Association of Urology in Istanbul. Study results confirmed that
Detrol LA reduces OAB symptoms in as little as five days. A
systematic review of 56 clinical trials covering all antimuscarinics
in widespread clinical use demonstrated very low total withdrawals
from treatment for Detrol LA. In addition, new data were released
demonstrating Detrol LA significantly reduced nighttime OAB voids
with favorable tolerability, as well as long-term efficacy and
safety.
Q12) How is Viagra performing?
A12) Worldwide sales of Viagra totaled $438 million in the first quarter
of 2005, a 5% increase compared to the same period in 2004,
reflecting Viagra's stabilization after the introduction of
competition. Viagra maintains a strong leadership position, with a
68% worldwide market share of audited sales of phosphodiesterase-5
inhibitors for the twelve months ending January 2005.
More than 130 clinical trials worldwide and more than six years of
real-world experience have shown that Viagra provides hard, long-
lasting erections that instill confidence in men, while maximizing
both patient and partner satisfaction. Studies have shown that
Viagra improves erections in up to 82% of men with erectile
dysfunction (ED). Men taking Viagra also report a 77% improvement
in their confidence to get and maintain an erection, compared to
only 18% taking placebo. After four years of treatment, 96% of
Viagra users and 92% of their partners report being highly satisfied
with the product, with 95% of partners expressing a desire for their
men to continue with Viagra treatment. A recently published study
demonstrates that men taking Viagra with constant visual sexual
stimulation reported a hard erection lasting on average for 33
minutes, compared to seven minutes for men on placebo. No other ED
therapy has been proven to work better or faster than Viagra.
NEUROSCIENCE
Q13) How is Aricept performing?
A13) Aricept, approved for the treatment of symptoms of mild-to-moderate
Alzheimer's disease (AD), continues to lead the AD market with a 59%
worldwide market share and more than one billion cumulative patient
days of therapy. Aricept is co-promoted with Eisai, the company
that discovered the product. Entering its ninth year on the U.S.
market, Aricept is the most prescribed treatment for AD, with new
prescriptions maintained at around 28,000-30,000 per week. Total
prescriptions are up 14% versus 2004.
Aricept's strong market leadership has been built on a large body of
clinical evidence supporting its excellent efficacy and tolerability
and a keen customer focus. About 10% of people over 65 suffer from
AD, including 4.5 million Americans. Cognition -- including
thinking, memory, and judgment -- is typically the first area
affected by AD. The benefits of early intervention with Aricept
were confirmed in a study published in December 2004 in the Archives
of Neurology. In this 24-week study of patients with early-stage or
mild AD, Aricept significantly improved cognitive performance
compared with placebo.
In February 2005, the National Institute of Clinical Excellence
(NICE) in the U.K., issued a preliminary recommendation against the
use of cholinesterase inhibitors. Advocacy groups, professional
associations, patients, and caregivers have publicly criticized this
recommendation. Eisai and Pfizer strongly disagree with NICE's
recommendation and formally submitted a response on March 22, 2005.
NICE is expected to issue final guidance in October 2005.
Q14) How is Geodon performing?
A14) Worldwide sales for Geodon totaled $138 million in the first quarter
of 2005, reflecting growth of 56% compared to the same period in
2004. Available in both an oral capsule and rapid-acting
intramuscular formulation, Geodon is now launched in 49 countries,
where more than five million prescriptions have been written for
more than one million patients worldwide. In the U.S., weekly new-
and total-prescription shares for Geodon continue to grow, achieving
a new share high of 6.2% for new prescriptions in March 2005. The
current growth rates of both new- and total-prescriptions for Geodon
are more than five times the growth rate of the overall U.S.
antipsychotic market. In addition, Germany and Spain enjoyed strong
double-digit sales growth of 30% and 45%, respectively, in the first
quarter compared to the same period in 2004.
Schizophrenia affects approximately one in every 100 people and is
among the most disabling of chronic mental illnesses, presenting in
early adults and often persisting throughout adult life. In the
selection of antipsychotics for schizophrenia, there is an
increasing appreciation of metabolic effects. In the treatment of
schizophrenia, clinical trials have demonstrated Geodon to be as
effective as risperidone (Risperdal) and olanzapine (Zyprexa) in
controlling both positive and negative symptoms, with a lower
incidence of extra-pyramidal side effects than risperidone, and
significantly less weight gain and adverse changes in other
metabolic indices than olanzapine. In a head-to-head study versus
olanzapine published in the October 2004 issue of the American
Journal of Psychiatry, Geodon demonstrated efficacy equivalent to
olanzapine in treating schizophrenia, while being associated with a
lower incidence of weight gain and more favorable effects on lipids,
triglycerides, and low-density lipoproteins. A head-to-head study
comparing Geodon to risperidone in patients with schizophrenia or
schizoaffective disorder was published in the December 2004 issue of
the Journal of Clinical Psychiatry. This study found that Geodon
improved psychotic symptoms, was generally well tolerated, and
demonstrated less effect on prolactin and weight than risperidone.
A one-year extension study of stable completers of a six-week trial
of outpatients demonstrated that patients who were switched from
olanzapine to Geodon sustained their weight loss, recorded
significant improvement in lipid parameters and triglycerides, and
maintained long-term improvement in their clinical symptoms. These
data were presented at major psychiatry congresses in 2004 and are
soon to be submitted for publication.
On April 11, 2005, the FDA issued a request to manufacturers of all
atypical antipsychotics to add a black-box warning to product
labeling regarding increased mortality in patients with dementia-
related psychosis, an indication for which Geodon is not approved.
The request for this label change was based on meta-analyses of 17
placebo-controlled trials of aripiprazole (Abilify), olanzapine
(Zyprexa), risperidone (Risperdal), and quetiapine (Seroquel) in
patients with dementia-related psychosis. Data for Geodon
(ziprasidone) were not included. The results of these analyses
reveal the risk ratio for death in the drug-treated patients
compared to the placebo-treated patients of 1.6 to 1.7. The
majority of deaths appeared to be cardiovascular or infectious in
nature. Product labeling changes and a Dear Health Care
Practitioner letter are expected soon.
Risperidone, olanzapine, and aripiprazole already had bolded
warnings in their labels indicating the increased mortality risk in
elderly patients with dementia-related psychosis. It is anticipated
that the addition of the black-box warning for all atypical
antipsychotics may slow the rate of growth in elderly patients with
dementia-related psychosis, affecting all agents. Less than 4% of
Geodon's current use is in the elderly (over age 65) group of
patients, and less than .3% in dementia patients. Geodon does not
currently have extensive data or broad usage in the elderly
population. Geodon is growing quickly in the core adult population.
As part of Geodon's lifecycle management, Pfizer is focused on new
indications for the core adult population in schizophrenia and
bipolar disorder. Pfizer does not anticipate this warning will have
a significant impact on Geodon's performance, nor will it prevent
clinicians from using antipsychotic agents for primary indications.
Q15) How is Lyrica (pregabalin) performing?
A15) Worldwide sales of Lyrica totaled $20 million in the first quarter
of 2005. Lyrica is currently approved for various forms of
neuropathic pain and as adjunctive therapy for partial epilepsy in
36 countries, including the E.U., and has been launched in 11
countries. The launches in Germany, the U.K., and Mexico represent
the most successful introductions of any neuropathic-pain or
adjunctive-epilepsy product to date. Strong initial adoption is
attributable to the significant unmet medical need in both
conditions, the compelling clinical evidence compiled in the Lyrica
clinical program -- the largest ever for a neuroscience compound,
with more than 9,000 patients in clinical trials -- and the positive
initial results experienced by patients and physicians.
Lyrica offers outstanding efficacy -- demonstrated by rapid, robust,
and sustained pain reduction across its entire dose range of 150-600
mg -- and favorable tolerability. Two critical studies presented at
the American Pain Society meeting in March 2005 further support
Lyrica's neuropathic-pain profile. One of these studies is the
first ever demonstrating Lyrica's efficacy and tolerability in
patients suffering from central neuropathic pain caused by spinal-
cord injury. The other is an analysis of an ongoing open-label
trial demonstrating Lyrica's efficacy in highly refractory
neuropathic-pain patients who did not respond to at least three
different treatments, including Neurontin (gabapentin). Recent
publications also highlight Lyrica's efficacy in epilepsy,
generalized anxiety disorder, and fibromyalgia, as well as its
potential to improve sleep quality in healthy volunteers.
In the U.S., Lyrica was approved on December 30, 2004, and is the
first FDA-approved product for the treatment of neuropathic pain
associated with both diabetic peripheral neuropathy and post-
herpetic neuralgia. Pending the completion of a scheduling
designation by the U.S. Department of Health and Human Services and
the U.S. Drug Enforcement Administration, Lyrica is expected to be
launched in the U.S. for these indications later in 2005. In
September 2004, Lyrica received an approvable letter for adjunctive
treatment of partial seizures in adults. Pfizer recently submitted
a revised regulatory filing to the FDA for Lyrica's use in epilepsy,
and this filing is under review.
Q16) How is Neurontin performing?
A16) Worldwide sales for Neurontin (gabapentin) totaled $182 million in
the first quarter of 2005, reflecting a decline of 74% compared to
the same period in 2004. This decline in sales is due to the at-
risk launches last year of generic gabapentin products by Ivax,
Alpharma, and Teva in the U.S. Pfizer's Greenstone subsidiary
followed suit by launching its own generic version of gabapentin.
Pfizer has sued these and other companies for patent infringement,
and if the court determines that these companies have infringed
Pfizer's Neurontin patent, Pfizer will seek all appropriate remedies
and damages, including damages based on Pfizer's lost profits.
Neurontin continues to be available in more than 100 countries and
has been prescribed to more than 12 million patients since its
initial approval in 1994. It is approved for adjunctive therapy in
epilepsy in more than 100 countries and for treatment of a range of
neuropathic-pain conditions in more than 60 countries.
Q17) How is Relpax performing?
A17) Worldwide sales of Relpax totaled $53 million in the first quarter
of 2005, reflecting growth of 77% compared to the same period in
2004. Launched in more than 25 countries, the product continues to
gain market share in the $2.3 billion global oral triptan market.
In the U.S., Relpax achieved a 12% new-prescription share year-to-
date through March, representing share growth of 65%, compared to
the same period in 2004. Relpax was launched in Canada, the fifth-
largest triptan market, in November 2004.
Recent data presented at the European Federation of Neurological
Societies and the Migraine Trust International Symposium show that
treating a migraine attack early, when the pain is still mild, with
Relpax provides greater efficacy for migraine sufferers than waiting
until the pain becomes more severe. The highest two-hour pain-free
rates were seen among patients with mild pain taking Relpax 40 mg
within 30 minutes of pain onset. Sustained pain-free rates were
higher for patients treated with Relpax 40 mg when the pain was mild
versus moderate-to-severe. Published data also demonstrate that
Relpax 40 mg provides better and more sustained relief from the
symptoms of migraine than the market leader, sumatriptan (Imitrex),
even if patients wait to treat and the pain is more severe. Relpax
40 mg also provides significantly more sustained relief than
zolmitriptan (Zomig) or naratriptan (Amerge) based on two comparator
studies. In addition, Relpax 40 mg has demonstrated efficacy in
patients who have previously failed to obtain adequate relief with
other prescription products or with over-the-counter migraine
medications, such as Imitrex, Maxalt, Excedrin Migraine, non-
steroidal anti-inflammatory drugs, and Fiorinal/Fioricet.
The migraine market still represents a large untapped opportunity
and a significant opportunity for continued Relpax growth. The
prevalence of migraine is estimated to be 12% globally, with fewer
than 50% of these patients being diagnosed and fewer than 20%
receiving prescription medicine.
Q18) How is Zoloft performing?
A18) Worldwide sales of Zoloft totaled $845 million in the first quarter
of 2005, reflecting growth of 4% compared to the same period in
2004. It has been the most-prescribed antidepressant in the U.S.
since 2000. Physicians have written approximately 250 million
Zoloft prescriptions for a variety of psychiatric disorders,
accounting for more than 13 billion patient days of therapy. A
large body of clinical data supports the product's safety and
effectiveness in its indicated uses. Zoloft, in the U.S., is
approved for six mood and anxiety disorders -- major depression,
panic disorder, obsessive-compulsive disorder (OCD) in adults and
children, post-traumatic stress disorder, pre-menstrual dysphoric
disorder (PMDD), and social anxiety disorder. For each of these
indications except PMDD, Zoloft is approved for both acute and long-
term use.
In the E.U., the Committee for Human Medicinal Products (CHMP) is
conducting a review of 12 antidepressants, including Zoloft,
regarding their use in children and adolescents. In February 2005,
Pfizer provided a response to the review, and an assessment report
from the CHMP is expected in the second quarter of 2005.
In the U.S., in February 2005, Pfizer implemented FDA instructions
that require the makers of all currently marketed antidepressants,
including tricyclic agents, MAO inhibitors, selective serotonin
reuptake inhibitors such as Zoloft, selective norepinephrine
reuptake inhibitors, and atypical antidepressants, to include a
black-box warning that antidepressants increased the risk of
suicidal thinking and behavior in children and adolescents in
pooled, short-term studies. In the nine completed clinical trials
of Zoloft in pediatric and adolescent patients, which included
studies of Zoloft in children diagnosed with depression, OCD, or
both, no suicides occurred. The trials found no statistically
significant differences between Zoloft-treated patients and placebo
controls in their rates of suicide attempts or ideation.
Q19) What is the status of asenapine?
A19) Pfizer, through its collaboration with Organon, continues to advance
the clinical development of asenapine, a novel psychotropic agent
discovered by Organon and currently in Phase 3 studies. Asenapine
is being studied in more than 3,000 patients for the treatment of
the acute symptoms and maintenance therapy of schizophrenia, as well
as for treatment of the acute manic episodes associated with bipolar
disorder. Results of Phase 2 results are encouraging and indicate
that asenapine has demonstrated strong efficacy and good
tolerability, with no clinically significant side effects. If
approved, Pfizer and Organon plan to co-promote asenapine, which
would enter a global antipsychotic market currently valued at more
than $14 billion in annual sales and growing about 12% per year.
Q20) What is the status of indiplon?
A20) Indiplon is a novel GABA-A receptor potentiator being developed by
Pfizer and Neurocrine Biosciences for the treatment of multiple
aspects of insomnia. Neurocrine Biosciences has announced that it
will resubmit U.S. regulatory filings for indiplon capsules and
tablets during the second quarter of 2005. The clinical development
program has demonstrated a compelling profile for the product:
consolidation of sleep via sleep maintenance, fast onset of action,
increased sleep duration, improved sleep quality, and no next-day
sedation, tolerance, or rebound insomnia.
Insomnia is a prevalent condition. In the U.S. alone, approximately
40% of the adult population report having trouble sleeping a few
nights per week or more, according to the National Sleep
Foundation's Sleep in America Poll 2002. Approximately 35% of the
adult population reports that they have experienced insomnia every
night or almost every night within the past year. Insomnia remains
a disorder with high unmet medical needs, including problems of
frequent night-time awakenings and difficulty falling back to sleep,
sometimes referred to as sleep fragmentation. Fewer than 10% of
patients are treated in this market.
ANTI-INFECTIVES
Q21) How is Vfend performing?
A21) Sales of the antifungal Vfend increased 38% to $88 million in the
first quarter of 2005, compared to the same period in 2004. Strong
growth has resulted from sustained demand and continuing product
launches. Vfend has been launched in 51 countries, including the
U.S. and most major overseas markets. It is now the leading hospital
antifungal product in France and Germany.
Vfend is a new-generation azole antifungal with an extended spectrum
of activity against both yeasts and molds. The risk of serious
fungal infections in hospitalized patients grows as more patients
undergo bone marrow/stem cell and solid organ transplants, as well
as aggressive chemotherapy for cancer and treatment for AIDS.
Fungal infections in these immunocompromised patients are associated
with high morbidity and mortality and require prompt and effective
treatment. Vfend can be an important tool for physicians fighting
these infections. Approved indications in the U.S. include primary
treatment of acute invasive aspergillosis, salvage therapy for rare
but serious fungal infections caused by the pathogens Scedosporium
apiospermum and Fusarium spp., treatment of esophageal candidiasis,
and candidemia in non-neutropenic patients and the following Candida
infections: disseminated infections in skin and infections in
abdomen, kidney, bladder wall, and wounds (approved in December
2004). In Europe, Vfend is also approved for the treatment of
serious, invasive, fluconazole-resistant Candida infections
(including C. krusei) and first-line treatment of candidemia in non-
neutropenic patients (approved in January 2005). Vfend is available
as oral tablets, powder for oral suspension, and in an intravenous
form. The main competing medicines can only be administered
intravenously. In both tablet form and liquid suspension, Vfend
shows excellent bioavailability. As a result, some patients may be
discharged from the hospital sooner, with orally administered
therapy continuing at home.
Data from Pfizer Global Comparative Aspergillosis Study presented at
the American Society of Hematology meeting in December 2004
demonstrated that patients with invasive aspergillosis who were
treated with Vfend as primary therapy required fewer days of
intensive care compared to patients receiving standard treatment.
Data from the same study published in the Journal of Antimicrobial
Chemotherapy indicated that Vfend as primary therapy provided both
total treatment cost savings, resulting from reduced consumption of
hospital resources and fewer changes in antifungal therapy, and
better medical outcomes in terms of survival and safety compared
with amphotericin B.
Data on the efficacy and safety of long-term Vfend treatment for
invasive aspergillosis with bone involvement were published in
Clinical Infectious Diseases in April. This report represents the
largest study of cases (20 cases) of bone aspergillosis treated with
the same antifungal agent. Patients, most of whom were experiencing
treatment failure or did not tolerate other antifungals, had a
global response rate to Vfend of 55%.
Q22) How is Zithromax performing?
A22) Worldwide sales of Zithromax increased 71% to $797 million in the
first quarter of 2005, compared to the same period in 2004. The
global antibiotic sales declined 3% over this time frame. In the
U.S., Zithromax remains the number-one branded product in all key
respiratory-tract-infection (RTI) indications, with more than three
times as many prescriptions written as the second-leading branded
competitor. Through the first quarter of 2005, Zithromax's U.S.
new-prescription growth of 38% was more than twice the market
growth, leveraging strong positioning relative to the competition as
well as a strong RTI season.
Zithromax continues to be used as first-line therapy for a number of
key indications, including acute exacerbations of chronic bronchitis
(AECB), community-acquired pneumonia (CAP), and acute bacterial
sinusitis (ABS). Zithromax has a proven track record of clinical
efficacy across the spectrum for mild to moderate RTI, an
unsurpassed safety profile, and a short therapeutic course that may
improve patient compliance.
The regulatory filing for the new, single-dose azithromycin
microspheres product is currently under review at the FDA. The
filing includes indications for adult AECB, ABS, and CAP. To date,
this product has also been filed for regulatory approval in 10 other
countries around the world. This innovative technology makes it
possible to deliver a single 2-gram dose.
Q23) How is Zyvox performing?
A23) Worldwide sales of Zyvox totaled $143 million in the first quarter
of 2005, reflecting growth of 47% compared to the same period in
2004. While days of therapy for all anti-staphylococcal products
have increased 15% worldwide in the past year, days of Zyvox therapy
have increased more than 50%. The product is now marketed in 62
countries.
The clinical value of Zyvox is growing, due to the rising incidence
of infections caused by methicillin-resistant Staphylococcus aureus
(MRSA) and multi-drug-resistant enterococci and their associated
morbidity and mortality. Zyvox has proven efficacy in the treatment
of patients with pneumonia and skin and soft-tissue infections,
including diabetic foot infections, often caused by MRSA. The
product has a unique mechanism of action that stops the initial
stage of bacterial protein production, without which bacteria cannot
multiply. This results in no cross-resistance with other
antibiotics. Zyvox is available in intravenous and oral
formulations. This allows for earlier discharge for some patients,
who can switch from the intravenous Zyvox in the hospital to the
oral form at home and thereby reduce their hospital costs. Zyvox is
also approved for pediatric use.
Published literature showing advantages of Zyvox continue to emerge.
A post-hoc analysis of MRSA patients with surgical-site infections
was published in the American Journal of Surgery in December 2004.
Patients treated with Zyvox had microbiologic success rates of 87%
compared to 48% for patients on vancomycin. In January 2005, the
American Thoracic Society and Infectious Diseases Society of America
published new recommendations in their evidence-based guidelines for
the management of adults with hospital-acquired pneumonia,
ventilator-associated pneumonia (VAP), and healthcare-associated
pneumonia, positioning Zyvox as an alternative to the market volume
leader, vancomycin, based on preliminary data suggesting Zyvox may
have an advantage for proven VAP cases due to MRSA.
Q24) What is the status of maraviroc (UK-427,857)?
A24) Maraviroc is in Phase 3 clinical development for the treatment, in
combination with other antiretroviral agents, of patients with HIV
infection. A CCR-5 antagonist, maraviroc belongs to a new group of
HIV antiretrovirals known as entry inhibitors that work
extracellularly to block the HIV virus from gaining entry into the
cell. It has been shown in vitro to be effective against HIV
strains resistant to the current classes of HIV antiretroviral
agents, potentially addressing a significant unmet medical need in
HIV therapy. Phase 1 studies have shown maraviroc to be well
tolerated across a range of potential doses, and efficacy and safety
have been studied in Phase 2 monotherapy trials in HIV patients.
The global HIV/AIDS epidemic killed more than 3 million people in
2003. An estimated 5 million people acquired HIV during the year,
bringing to 38 million the number of people living with the virus
around the world (UNAIDS Report, July 2004). Worldwide sales of
antiretroviral products in 2004 totaled just under $7.3 billion and
are anticipated to grow to $10 billion by 2009.
OPHTHALMOLOGY
Q25) How is Xalatan/Xalacom performing?
A25) Sales of Xalatan/Xalacom totaled $333 million in the first quarter
of 2005, reflecting growth of 19% compared to the same period in
2004. Xalatan/Xalacom are the leading brands in sales in the
glaucoma market and are outperforming all competitors in market-
share gain.
Worldwide, an estimated 67 million people suffer from glaucoma, a
group of eye diseases characterized by damage to the optic nerve,
visual-field loss, and elevated intraocular pressure (IOP). Each
year, more than 100,000 people in the U.S. are diagnosed with
glaucoma. In the U.S., approximately one third of the diagnosed
glaucoma patients are untreated, and only 10-15% of the ocular
hypertensive patients receive treatment. Xalatan, a prostaglandin
analogue used to lower the intraocular pressure associated with
glaucoma and ocular hypertension, continues to lead the worldwide
anti-glaucoma market and has displaced beta blockers as the accepted
gold standard. It provides comprehensive IOP management by
combining the benefits of product efficacy, tolerability, patient
persistency, and five-year safety data. Effective IOP management
has been shown to prevent or delay optic-nerve damage from glaucoma
that can lead to blindness. Xalacom, a combination of Xalatan and
the beta blocker timolol, provides incremental efficacy for patients
who have an insufficient response to monotherapy while maintaining
the simplicity of a single daily dose.
An article published in the September 2004 issue of the American
Journal of Ophthalmology compared the nocturnal effects of the once-
daily beta blocker timolol and Xalatan on IOP in a small number of
patients with ocular hypertension or early glaucomatous changes.
Both treatments were effective in lowering IOP during the day.
Xalatan also reduced IOP at night. No statistically significant
difference was found in the nocturnal IOP between timolol treatment
and no medication. Raised IOP is a risk factor for glaucoma
progression, and thus control of IOP, both day and night, is
critical for the control of glaucoma.
Publication of the European Glaucoma Prevention Study in
Ophthalmology in March 2005 expands the evidence supporting the need
for effective medical therapy to treat ocular hypertension and to
delay progression to glaucoma. An article published in the
September 2004 issue of the American Journal of Ophthalmology
addresses physicians' decisions about when to treat an ocular-
hypertensive patient. The article establishes the concept of global
risk assessment and supports early initiation of treatment in
ocular-hypertensive patients. As in cardiovascular disease, the
concept of global risk assessment, when applied to glaucoma, may
enable ophthalmologists to identify and treat glaucoma patients
earlier.
Q26) What is the status of Macugen?
A26) In December 2004, the FDA approved Macugen for the treatment of
neovascular (wet) age-related macular degeneration. Pfizer and
Eyetech Pharmaceuticals, Inc., the discoverer of Macugen, launched
the product in the U.S. in January 2005. Macugen has also been
filed in the E.U., Canada, Australia, Switzerland, and Brazil.
Macugen is an aptamer that selectively binds to, and neutralizes,
vascular endothelial growth factor (VEGF) for the treatment of age-
related macular degeneration (AMD). AMD is the leading cause of
irreversible vision loss among Americans over 55 and occurs in both
wet and dry forms. In wet AMD, blood vessels grow abnormally into
the area beneath the retina.
Positive Phase 3 results from the VEGF Inhibition Study in the
Ocular Neovascularization (VISION) trial were published in the
December 30, 2004, issue of the New England Journal of Medicine.
This study demonstrated that Macugen is an effective and well-
tolerated treatment for a broad group of wet AMD patients
irrespective of lesion subtype or size, unlike existing therapies.
Macugen is now reimbursed by Medicare carriers covering all 50
states in the U.S., all according to the broad FDA label without
restrictions. Pfizer and Eyetech have also developed a Macugen
Access Program(TM) (MAP), which is now available to physicians and
patients for additional support in gaining access to, or
reimbursement for, Macugen. MAP offers pre-treatment and post-
treatment services such as insurance verification, authorization
assistance, claims and reviews tracking, denials and appeal
assistance, and patient assistance programs.
ARTHRITIS AND PAIN
Q27) What recent regulatory actions have been taken concerning the safety
of prescription and over-the-counter non-steroidal anti-inflammatory
drugs (NSAIDs), including COX-2-specific medicines?
A27) The FDA Arthritis and Drugs Safety Committee and the Risk Management
Advisory Committee met jointly on February 16-18 to review COX-2-
specific inhibitors and other non-steroidal anti-inflammatory drugs
(NSAIDs). After evaluating a substantial body of clinical data
regarding Celebrex and Bextra and weighing the benefits and risks of
these products, the advisory committees recommended to the FDA that
these medicines remain available to patients with revised labeling.
On April 7, 2005, the FDA announced its plans for changes to the
warnings sections of labels of NSAIDs, including COX-2 medicines,
sold either by prescription or over-the-counter. These labeling
changes will include boxed warnings for prescription NSAIDs
regarding potential cardiovascular, gastrointestinal, and skin-
reaction risks. Pfizer will continue to work closely with the FDA
to implement labeling revisions for Celebrex that ensure its
appropriate prescribing and use.
The FDA also 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, including Celebrex. While Pfizer
disagrees with this assessment of Bextra, it has respectfully
complied with the FDA's request and began the process of suspending
Bextra sales on April 7. Discussions between Pfizer and the EMEA,
Health Canada, and several other regulatory agencies in early April
have led to similar regulatory requests regarding Bextra. Pfizer,
while disagreeing with these agencies, has complied with their
requests for suspension of sales and marketing of Bextra.
Q28) What is Pfizer's position on Celebrex?
A28) In keeping with the FDA's position, Pfizer is advising physicians to
consider the evolving information in evaluating the risks and
benefits of all NSAIDs, including its COX-2-selective medicine
Celebrex. While awaiting final labeling from the FDA, physicians
should consider the available data on all these medicines when
assessing individual patients to be treated for osteoarthritis,
rheumatoid arthritis, or acute pain. Factors to be considered
include information concerning the existing body of data, the risks
of alternative treatments, and the individual patient's underlying
cardiovascular and gastrointestinal risk status. As with all
prescription NSAIDs, Celebrex should be used at the lowest effective
dose for the shortest duration, consistent with individual patient
treatment goals.
ONCOLOGY
Q29) How is Aromasin performing?
A29) Sales of Aromasin totaled $55 million in the first quarter of 2005,
reflecting growth of 134% compared to the same period in 2004. This
growth can be attributed primarily to data in the early breast-
cancer setting for Aromasin and the increasing awareness of the
utility of aromatase inhibitors, the class to which Aromasin
belongs. In addition, updated efficacy data on Aromasin were
presented in December 2004 at the San Antonio Breast Cancer
Symposium, showing an improving trend toward overall survival for
Aromasin-treated patients in the Intergroup Exemestane Study (IES).
The American Society for Clinical Oncology and the National
Comprehensive Cancer Network recently updated adjuvant treatment
guidelines, endorsing the use of aromatase inhibitors, including
Aromasin, in the treatment of early breast cancer.
Pfizer submitted a supplemental regulatory filing in December 2004
in both the U.S. and the E.U. for an adjuvant indication for
Aromasin. Based on the pivotal IES trial, this would allow Aromasin
to be used in the estimated 500,000 breast-cancer patients currently
on tamoxifen for two to three years. The study showed a 32% better
probability of disease-free survival and a 37% better probability
for breast-cancer-free survival for patients switched to Aromasin.
Statistically significant risk reductions were also shown for
distant-recurrence, contralateral breast cancer and serious events
such as the development of non-breast primary cancers and
thromboembolism.
Q30) How is Campto/Camptosar performing?
A30) Sales of Campto/Camptosar totaled $212 million in the first quarter
of 2005, reflecting growth of 132% compared to the same period in
2004. Sales growth was impacted in part by Pfizer's acquisition of
marketing rights to Campto/ Camptosar in Europe and Asia (except
Japan) in late 2004. In the U.S., total metastatic colorectal-
cancer (CRC) patient share totaled nearly 30% in January 2005,
narrowing the share gap with Eloxatin to about five percentage
points.
The worldwide presence of Campto/Camptosar has driven the growth of
this cytotoxic drug. Campto/Camptosar continues to be the backbone
of metastatic CRC treatment. When used in combination with the
newly introduced targeted agents like Avastin, Campto/Camptosar with
5-fluorouracil (5FU) and leucovorin (LV) is the only regimen that
has demonstrated a survival benefit for patients in first-line
metastatic CRC. Campto/Camptosar and 5FU/LV are the only drugs
approved to be used in combination with the other newly introduced
targeted therapy Erbitux in second-line treatment. Campto/Camptosar
has also demonstrated a survival benefit when compared with 5FU/LV
alone. The overall survival rate for patients with metastatic CRC
has almost doubled since the introduction of Campto/Camptosar in
1999.
Q31) What is the status of Sutent (SU-11248)?
A31) Sutent, or SU-11248, is a breakthrough oral anti-cancer product
candidate that targets tumors both by cutting off blood supply to
the tumor and by directly killing tumor cells. It has shown
unprecedented activity in clinical trials involving patients with
advanced gastrointestinal stromal tumors and renal cell carcinoma
who did not respond to, or could not tolerate, standard treatment
options. At the upcoming American Society of Clinical Oncology
meeting in May, Pfizer anticipates presentation of exploratory
clinical research involving Sutent in other major tumor types.
OSTEOPOROSIS
Q32) What is the status of Oporia (lasofoxifene)?
A32) Oporia (lasofoxifene) is a selective estrogen receptor modulator
(SERM) under development for the prevention and treatment of
osteoporosis and for the treatment of vaginal atrophy. The U.S.
regulatory filing for osteoporosis prevention was submitted in
August 2004, and a supplemental filing for the treatment of vaginal
atrophy was submitted in December 2004. Regulatory submissions in
other markets are expected in 2005. Osteoporosis affects some 8
million American women. An additional 22 million women are
estimated to have low bone mass, placing them at increased risk of
osteoporosis. In the U.S., osteoporosis is responsible for more
than 1.5 million fractures per year. Vaginal dryness becomes
increasingly more common throughout the menopausal transition.
SERMs may offer benefits beyond just the bone effects provided by
other treatment options, such as bisphosphonates.
ANIMAL HEALTH
Q33) How did Pfizer's Animal Health business perform?
A33) Sales of the Animal Health business totaled $496 million in the
first quarter of 2005, reflecting growth of 16% compared to the same
period in 2004. These results were driven by solid growth of
Draxxin, cattle biologicals, and other livestock products and by the
companion-animal products Rimadyl and Revolution and small-animal
biological products, as well as the favorable impact of a weaker
U.S. dollar relative to the prior year. Pfizer Animal Health is the
world leader in providing products to prevent and treat diseases in
animals.
CONSUMER HEALTHCARE
Q34) How did Pfizer's Consumer Healthcare business perform?
A34) Sales of the Consumer Healthcare business totaled to $945 million in
the first quarter of 2005, reflecting growth of 17% compared to the
same period in 2004. These results reflect sustained sales strength
for Listerine mouthwash, which benefited from the launch of
Listerine Advanced in September 2004; growth from Sudafed and other
upper-respiratory products, Zantac, and tobacco-dependence products;
and a weaker U.S. dollar relative to the prior year.
FINANCIAL MATTERS
Q35) How were first-quarter revenues impacted by Pfizer's accounting
calendar?
A35) Pfizer's U.S. fiscal year runs from January 1 through December 31,
and its international fiscal year runs from December 1 to November
30. The start dates of the second, third, and fourth quarters and
ending dates of the first, second, and third quarters can vary
slightly from year to year because Pfizer's quarterly accounting
calendar closes on the Sunday in closest proximity to the end of the
calendar quarter, not the calendar quarter-end. This practice
resulted in three additional business days in the first quarter
relative to 2004. Pfizer's second and third fiscal quarters of 2005
have the same number of business days as the prior year. The fiscal
fourth quarter of 2005, however, has four fewer business days than
the prior year.
Q36) What impact did foreign exchange have on revenues in the quarter?
A36) The weakening of the U.S. dollar relative to other currencies,
principally the euro, Japanese yen, British pound, and Canadian
dollar, favorably impacted revenues in the first quarter of 2005 by
$399 million and favorably impacted consolidated revenue growth by
about three percentage points.
Q37) What cost synergies from the Pharmacia acquisition were achieved in
the first quarter? What costs to achieve these synergies are
expected?
A37) Cost synergies resulting from the acquisition of Pharmacia exceeded
$1 billion in the first quarter of 2005. Our estimate for full-year
2005 synergies remains $4.2 billion. Synergies stem from a broad
range of sources, including a streamlined organization, reduced
operating expenses, and procurement savings. Merger-related
expenditures (income statement and balance sheet) incurred during
2003-2005 to achieve these synergies continue to be expected at
about $6 billion.
Q38) What caused cost of sales to increase by 22% in the first quarter of
2005, compared to the first quarter of 2004, given the revenue
increase of 5%?
A38) Cost of sales as a percentage of revenues in the first quarter of
2005 was adversely impacted by changes in production volume, as well
as geographic, segment, and product mix, reflecting the loss of
exclusivity of certain major products in the U.S. and lower year-
over-year sales of COX-2 products, compared to the first quarter of
2004 and charges for write-offs of inventory related to the
suspension of Bextra sales. Cost of sales as a percentage of
revenues will remain under pressure in 2005.
Q39) What factors affected the 7% increase in research and development
expenses in the first quarter of 2005?
A39) During the transitional year of 2005, Pfizer will sustain both the
capability and will to make those investments necessary to support
long-term growth. R&D spending increased 7% in the quarter,
reflecting this commitment to continued investment, the advancement
of the portfolio, and the unfavorable impact of foreign exchange.
Full-year 2005 R&D spending is expected to be approximately $8
billion.
Q40) What impact did the suspension of sales of Bextra, announced on
April 7, 2005, have on first-quarter results? What is the
anticipated impact on Celebrex sales from the product's additional
labeling information?
A40) The suspension of sales of Bextra in the U.S., E.U., and other
markets in early April is expected to reduce our previously
announced targeted full-year 2005 adjusted and reported diluted EPS*
by approximately $.05 per share. Also in connection with the
decision to suspend sales of Bextra, Pfizer recorded certain charges
totaling $1.213 billion ($766 million net of tax, or $.10 per share)
in the first quarter of 2005. These pre-tax charges included $1.145
billion related to the impairment of Bextra's intangible assets for
developed technology rights, $10 million related to the write-off of
machinery and equipment, $56 million in write-offs of inventory, and
$2 million related to the costs of administering the suspension of
sales. In addition, we recorded in the first quarter of 2005 a net
charge of $71 million, substantially against revenues, for estimated
customer returns of Bextra.
The market for pain relievers has shown considerable change since
the withdrawal of Vioxx in September 2004. Following the FDA and
EMEA regulatory reviews of these medicines in February 2005, the
market for prescription pain relievers, including Celebrex,
indicated lower, but stabilizing, sales levels compared to pre-Vioxx
withdrawal levels. We do not expect the additional labeling
information for Celebrex to further impact 2005 revenues due to
anticipated switching by patients among pain relievers, including
those previously using Bextra.
Q41) What were the principal factors affecting pre-tax other (income)/
deductions-net?
A41) ($ millions) First Quarter
(Income)/Deductions 2005 2004
Net Interest (Income)/Expense ($17) $0
Impairment of Bextra-Related Long-Lived
Assets 1,155 --
Royalties (78) (55)
Other, Net (22) 12
Other (Income)/Deductions--Net $1,038 ($43)
In connection with the decision to suspend sales of Bextra, we
recorded a charge of $1.145 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.
Q42) What is Pfizer's projected effective tax rate for 2005?
A42) Pfizer's effective tax rate in calculating adjusted income* from
continuing operations for 2005 is projected to be 23%. This is the
same rate recorded for the first quarter of 2004. The difference
between the 23% rate projected for 2005 and the 21.75% rate recorded
for full-year 2004 relates mainly to changes in geographic and
product mix.
Q43) What was the impact of Pfizer's decision to repatriate cash
from foreign earnings?
A43) In the first quarter of 2005, we decided to repatriate cash from
foreign earnings totaling $28.3 billion during 2005 in accordance
with the American Jobs Creation Act of 2004, and we recorded a
related tax charge of $2.2 billion. This tax charge may be reduced
by approximately $850 million in future periods due to technical
corrections legislation expected to be considered by Congress in
2005.
Q44) What is the status of planned divestitures?
A44) In the first quarter of 2004, Pfizer announced its intention to
divest the legacy Pharmacia in-vitro allergy and autoimmune
diagnostic testing business; the legacy Pharmacia surgical
ophthalmology business, certain legacy Pfizer and Pharmacia non-core
European over-the-counter and personal-care product lines; and three
legacy Pharmacia European generic businesses. First-quarter net
income from discontinued operations of $29 million reflects the gain
on the sale of one of the two remaining European generic businesses,
less a loss from operations of these businesses prior to their sale.
Q45) What is the status of Pfizer's share-purchase program?
A45) Pfizer's financial strength and flexibility have allowed the Company
to purchase its stock over the past several years. We believe that
purchase of our stock is an excellent investment opportunity.
During the past six years, Pfizer has purchased more than $30
billion of its common stock. In October 2004, Pfizer announced a
new authorization to purchase up to $5 billion of the company's
common stock. During the first quarter of 2005, the company
purchased approximately 36 million shares at a total cost of about
$919 million under this authorization. The company has purchased
approximately 99 million shares at a total cost of about $2.6
billion under this authorization. In light of Pfizer's financial
strength and cash flow, we will accelerate and complete our current
share-purchase program in the second quarter by purchasing
approximately $2.4 billion of the company's stock in this quarter
alone, and early in the second half we will consider additional
opportunities to purchase the company's stock.
Q46) Why does Pfizer disclose adjusted income* and adjusted diluted EPS*?
A46) General Description of Adjusted Income Measure
Adjusted Income is an alternative view of performance used by
management and we believe that investors' understanding of our
performance is enhanced by disclosing this performance measure. The
company reports Adjusted Income in order to portray the results of
our major operations -- the discovery, development, manufacture,
marketing, and sale of prescription medicines for humans and
animals, as well as our over-the-counter products, prior to
considering certain income-statement elements. We have defined
Adjusted Income as net income before discontinued operations,
significant impacts of purchase accounting for acquisitions, merger-
related costs, and certain significant items. The Adjusted Income
measure is not, and should not be, viewed as a substitute for U.S.
GAAP Net Income.
The Adjusted Income measure is an important internal measurement for
Pfizer. We measure performance of the overall company on this basis.
The following are examples of how the Adjusted Income measure is
utilized:
* Senior management receives a monthly analysis of the operating
results of our company that is prepared on an Adjusted Income basis;
* The annual budgets of our company are prepared on an Adjusted Income
basis; and
* Annual and long-term compensation, including annual cash bonuses,
merit-based salary adjustments, and stock options, for various
levels of management is based on financial measures that include
Adjusted Income. The Adjusted Income measure currently represents a
significant portion of target objectives that are utilized to
determine the annual compensation for various levels of management,
although the actual weighting of the objective may vary by level of
management and job responsibility, and may be considered in the
determination of certain long-term compensation plans. The portion
of senior management's bonus, merit-based salary increase, and
equity-compensation awards based on the Adjusted Income measure
ranges from 10% to 30%.
Despite the importance of this measure to management in goal setting
and performance measurement, we stress that Adjusted Income is a
non-GAAP financial measure that has no standardized meaning
prescribed by U.S. GAAP and, therefore, has limits in its usefulness
to investors. Because of its non-standardized definition, Adjusted
Income (unlike U.S. GAAP Net Income) may not be comparable with the
calculation of similar measures for other companies. Adjusted
Income is presented solely to permit investors to more fully
understand how management assesses the performance of our company.
We also recognize that, as an internal measure of performance, the
Adjusted Income measure has limitations and we do not restrict our
performance-management process solely to this metric. A limitation
of the Adjusted Income measure is that it provides a view of
operations without including all events during a period, such as the
effects of an acquisition, merger-related or other restructuring
charges, or amortization of purchased intangibles, and does not
provide a comparable view of our performance to other companies in
the pharmaceutical industry. We also use other specifically
tailored tools designed to ensure the highest levels of performance
in the company. For example, our Research and Development
organization has productivity targets, upon which its effectiveness
is measured. In addition, for senior levels of management, a portion
of their long-term compensation is based on U.S. GAAP net income.
Purchase-Accounting Adjustments
Adjusted Income is calculated prior to considering significant
purchase-accounting impacts, such as those related to our
acquisitions of Pharmacia and Esperion as well as net-asset
acquisitions. These impacts can include charges for purchased in-
process research and development, the incremental charge to cost of
sales from the sale of acquired inventory that was written up to
fair value, and the incremental charges related to the amortization
of finite-lived intangible assets for the increase to fair value.
Therefore, the Adjusted Income measure includes the revenues earned
upon the sale of the acquired products without considering the
aforementioned significant charges.
Certain of the purchase-accounting adjustments associated with a
business combination or a net-asset acquisition, such as the
amortization of intangibles acquired in connection with our
acquisition of Pharmacia, can occur for up to 40 years (these assets
have a weighted-average useful life of approximately 10 years), but
this presentation provides an alternative view of our performance
that is used by management to internally assess business
performance. We believe the elimination of amortization
attributable to acquired intangible assets provides management and
investors an alternative view of our business results by trying to
provide a degree of parity to internally developed intangible assets
for which research and development costs have been previously
expensed.
However, a completely accurate comparison of internally developed
intangible assets and acquired intangible assets cannot be achieved
through Adjusted Income. This component of Adjusted Income is
derived solely with the impacts of the items listed in the first
paragraph of this section. We have not factored in the impacts of
any other differences in experience that might have occurred if
Pfizer had discovered and developed those intangible assets on its
own, and this approach does not intend to be representative of the
results that would have occurred in those circumstances. For
example, our research and development costs in total, and in the
periods presented, may have been different; our speed to
commercialization and resulting sales, if any, may have been
different; or our costs to manufacture may have been different. In
addition, our marketing efforts may have been received differently
by our customers. As such, in total, there can be no assurance that
our Adjusted Income amounts would have been the same as presented
had Pfizer discovered and developed the acquired intangible assets.
Merger-Related Costs
Adjusted Income is calculated prior to considering integration and
restructuring costs associated with business combinations because
these costs are unique to each transaction and represent costs that
were incurred to restructure and integrate two businesses as a
result of the acquisition decision. For additional clarity, only
restructuring and integration activities that are associated with a
purchase business combination or a net-asset acquisition are
included in merger-related costs. We have not factored in the
impacts on synergies that would have resulted had these costs not
been incurred.
We believe that viewing income prior to considering these charges
provides investors with a useful additional perspective because the
significant costs incurred in a business combination or net-asset
acquisition result primarily from the need to eliminate duplicate
assets, activities, or employees-a natural result of acquiring a
fully integrated set of activities. For this reason, we believe
that the costs incurred to convert disparate systems, to close
duplicative facilities, or to eliminate duplicate positions (for
example, in the context of a business combination) can be viewed
differently from those costs incurred in other, more normal business
contexts.
The integration and restructuring costs associated with a business
combination may occur over several years with the most significant
impacts ending within three years of the transaction. Because of
the need for certain external approvals for some actions, the span
of time needed to achieve certain restructuring and integration
activities can be lengthy. For example, due to the highly regulated
nature of the pharmaceutical business, the closure of excess
facilities can take several years, as all manufacturing changes are
subject to extensive validation and testing and must be approved by
the FDA. In other situations, we may be required by local laws to
obtain approvals prior to terminating certain employees. This
approval process can delay the termination action.
Discontinued Operations
Adjusted Income is calculated prior to considering gains or losses
on the sale of businesses and product lines included in discontinued
operations as well as the related results of operations. We believe
that this presentation is meaningful to investors because, while we
review our businesses and product lines on an ongoing basis for
strategic fit with our operations, we do not build or run our
businesses with an intent to sell them.
Certain Significant Items
Adjusted Income is calculated prior to considering certain
significant items. Certain significant items represent substantive,
unusual items that are evaluated on an individual basis. Such
evaluation considers both the quantitative and the qualitative
aspect of their unusual nature. Unusual, in this context, may
represent items that are not part of our ongoing business; items
that, either as a result of their nature or size, we would not
expect to occur as part of our normal business on a regular basis;
items that would be non-recurring; or items that relate to products
we no longer sell. While not all-inclusive, examples of items that
could be included as certain significant items would be a major non-
acquisition-related restructuring charge, if non-recurring in
nature, such as those related to our recently announced productivity
initiative; costs associated with a significant recall of one of our
products, such as costs related to our suspension of sales of Bextra
(such costs would not reflect customer returns); charges related to
sales or disposals of products or facilities that do not qualify as
discontinued operations as defined by U.S. GAAP; certain intangible-
asset impairments; the impact of certain significant tax
legislation, such as charges attributable to the repatriation of
foreign earnings in accordance with the American Jobs Creation Act
of 2004; or possible charges related to legal matters, such as those
discussed in Legal Proceedings in our Form 10-K and in Part II:
Other Information; Legal Proceedings included in our Form 10-Q
filings. Normal, ongoing defense costs of the company or
settlements and accruals on legal matters made in the normal course
of our business would not be considered a certain significant item.
Q47) What are Pfizer's financial expectations for 2005-07?
A47) We expect 2005 to be a transition year for Pfizer due to a number of
factors. Results in 2005 are being, and will continue to be,
impacted by loss of U.S. exclusivity of four major products-
Diflucan, Neurontin, and Accupril during 2004 and Zithromax in 2005.
Revenues also have been, and will continue to be, impacted by
publicity and regulatory actions regarding COX-2-selective
inhibitors. Full-year revenues are expected to be substantially
unchanged from 2004, as growth from other product lines generally
offsets these factors. The suspension of sales of Bextra in the
U.S., E.U., and other markets in early April is expected to reduce
our previously announced targeted full-year 2005 adjusted and
reported diluted EPS* by approximately $.05 per share. Bextra asset
write-offs are expected to reduce our previously announced targeted
full-year 2005 reported diluted EPS by an additional $.10 per share.
However, 2005 results are no longer expected to be impacted by the
adoption of new accounting regulations relating to the expensing of
stock options, pursuant to a deferral in the implementation date of
the new regulations, as announced by the SEC last week. These
regulations had been expected to result in an after-tax expense
reducing 2005 adjusted and reported diluted EPS* by $.03 per share.
Pfizer expects to implement SFAS 123R regarding expensing of stock
options as of January 1, 2006. From an efficiency perspective, in
2005 we continue to anticipate Pharmacia merger-related synergies of
$4.2 billion this year, an increase of $600 million over 2004
Pharmacia merger-related synergies. Pfizer will also achieve modest
cost savings during 2005 from its newly announced productivity
initiative. Given these and other factors, we expect 2005 adjusted
income* of approximately $14.7 billion, adjusted diluted EPS* of
approximately $1.98 per share, reported income of $7.7 billion, and
reported diluted EPS of approximately $1.04 per share, subject to
the Disclosure Notice in this report.
The differences between targeted 2005 adjusted income* and adjusted
diluted EPS* and 2005 reported income and reported diluted EPS are
attributable to anticipated non-cash charges of $2.6 billion ($.36
per share) relating to purchase accounting for the acquisition of
Pharmacia and an in-process research and development charge relating
to our recently completed acquisition of Idun Pharmaceuticals, Inc.;
merger-related and restructuring costs of $1.4 billion ($.18 per
share), which include both Pharmacia-related charges and charges
related to the recently announced planned productivity initiative;
and charges relating to the suspension of sales of Bextra of $.8
billion ($.10 per share), all on an after-tax basis. In addition,
reported net income for 2005 will include a tax charge of $2.2
billion ($.30 per share) relating to the cash repatriation of
foreign earnings in 2005, with a possible subsequent reduction of
this charge by about $850 million, due to anticipated technical
corrections legislation. All of these estimates are subject to the
variables cited in the Disclosure Notice found in this report.
We will sustain both the capability and will to make those
investments necessary to support long-term growth. Pfizer's
financial strength remains unprecedented and will be enhanced by the
cash repatriation of $28.3 billion in foreign earnings during this
year. With the current quarterly dividend of $.19 per share, which
is 12% higher than last year, we are continuing the company's
commitment to strong growth in dividends, both today and in the
future. We will accelerate and complete our current share-purchase
program in the second quarter by purchasing approximately $2.4
billion of the company's stock in this quarter, and early in the
second half we will consider additional opportunities to purchase
the company's stock.
A number of factors are expected to drive a return to double-digit
adjusted earnings* growth in 2006. We are undertaking a new, broad-
based, multi-year productivity initiative to increase efficiency and
effectiveness of all operations company-wide. Annual savings are
projected to total $4 billion by 2008. Improved revenue performance
is also anticipated, as many of our in-line products continue to
grow, we experience renewed growth of Celebrex, and the contribution
of new products increases.
Revenue growth, enhanced by continuing productivity initiatives, is
expected to drive a strong 2007, when we anticipate accelerating
double-digit adjusted earnings* growth.
IMPROVING PATIENT ACCESS
Q48) How is Pfizer promoting access to innovative medicines-both in the
U.S. and worldwide?
A48) For more than 30 years, Pfizer has maintained a commitment to making
its medicines available to patients in need. Our efforts include:
U.S.
* Partnership for Prescription Assistance: A pharmaceutical-
industry-wide umbrella program created by the Pharmaceutical
Research and Manufacturers of America to lead patients and
doctors to a single point of navigation to more than 275 public
and private-patient assistance programs, including more than 150
programs offered by pharmaceutical companies.
* Medicare-Approved Discount Cards: Pfizer has offered Medicare-
approved discount cards its $15 flat fee for qualified Medicare
beneficiaries.
* Helpful Answers: A Pfizer initiative that includes substantial
savings on Pfizer medicines for America's uninsured through
Pfizer Pfriends; expanded eligibility for existing Pfizer access
programs (Connection to Care, Sharing the Care, Hospital
Partnership) that provide free medicines; and creation of a
consumer-friendly, single-entry-point navigation component for
all uninsured patients.
* Pfizer Pfriends: A Pfizer program that offer substantial savings
on Pfizer medicines to uninsured Americans, regardless of age or
income, with average savings of 37% for families making less than
$45,000, and average savings of 15% for families making more than
$45,000.
* Together Rx Access: A collaboration of more than ten
pharmaceutical companies, offering savings on more than 275
medicines to uninsured Americans under age 65.
* Connection to Care: A Pfizer program for eligible families
earning less than $31,000/year, or $19,000/year for individuals
(approximately 200% of the federal poverty level), who can
receive Pfizer medicines through their physicians' offices free
of charge.
* Sharing the Care: A Pfizer program that provides Pfizer medicines
free of charge to participating federally qualified community
health centers. Eligible families earning less than
$31,000/year, or $19,000 for individuals (approximately 200% of
the federal poverty level) can receive Pfizer medicines from
eligible community health centers.
* Hospital Partnership: A Pfizer program that provides Pfizer
medicines free of charge to participating hospitals that serve a
disproportionately large number of low-income patients who lack
health insurance. Eligible families earning less than
$31,000/year, or $19,000/year for individuals (approximately 200%
of the federal poverty level), can receive Pfizer medicines from
eligible hospitals.
* Medicine-Specific Programs: Pfizer's medicine-specific programs
work in partnership with physicians to help patients with complex
medical conditions.
-- Pfizer HIV/AIDS Patient Assistance Program: Viracept and
Rescriptor are donated to eligible low-income HIV/AIDS
patients.
-- Anti-Infective Patient Assistance Program: Diflucan,
Vfend, and Zithromax are provided at no cost to eligible
low-income patients with chronic medical conditions.
-- Aricept Patient Assistance Program: Aricept is donated
to eligible low-income uninsured patients with
Alzheimer's disease.
-- Geodon Patient Assistance Program: Geodon is donated at
no cost to eligible low-income uninsured patients with
schizophrenia.
-- FirstRESOURCE: Aromasin, Camptosar, Celebrex, Ellence,
Emcyt, Idamycin, Trelstar, and Zinecard are made
available to eligible low-income uninsured oncology
patients.
-- The Bridge Program: Genotropin and Somavert support
programs are designed to assist eligible patients in
obtaining these medications.
International
* Diflucan Partnership Program: We partner with governments to
donate Diflucan for opportunistic infections associated with
HIV/AIDS in developing countries. In all, Pfizer has committed
$110 million to the program, which has distributed more than 4
million free doses of Diflucan and trained more than 18,000
healthcare workers.
* International Trachoma Initiative: We partner with the public
sector to eliminate trachoma, the world's leading cause of
preventable blindness, through training and medicine donations in
10 countries in Africa and Asia. We helped train healthcare
professionals who treated 10 million patients and completed
85,000 surgeries. We intend to help the World Health
Organization achieve its goal of eliminating blinding trachoma by
the year 2020.
* Infectious Diseases Institute: We helped to build a regional
treatment and training institute in Uganda to strengthen local
capacity in HIV/AIDS care. We helped train 150 physicians in
Uganda and the region to provide care to 400 patients per week.
* Global Health Fellows: We support a volunteer medical corps to
fight HIV/AIDS in 14 developing countries that partners with
nongovernmental organization. Pfizer colleagues (physicians,
epidemiologists, nurses, educators, business consultants) spend
up to six months on site advancing knowledge and practice in
infectious diseases.
* International AIDS Grant Program: The Pfizer Foundation supports
more than 30 organizations in 12 countries in Africa, Asia, and
Latin America for HIV/AIDS training and capacity building.
EVENTS FOR INVESTORS
Q49) When is Pfizer's conference call?
A49) Pfizer will be holding a conference call for analysts and investors
to discuss first-quarter 2005 business performance at 1:00 PM today.
To ensure universal access, the conference call will be
simultaneously broadcast over Pfizer's corporate website
(http://www.pfizer.com) and will be archived for seven days
thereafter.
* 'Adjusted income,' 'adjusted basic earnings per share (EPS),' and
'adjusted diluted EPS' are defined as reported net income, reported
basic EPS, and reported diluted EPS excluding discontinued operations,
significant impacts of purchase accounting for acquisitions, merger-
related costs, and certain significant items. A reconciliation to
reported net income and reported diluted EPS is provided within this
document.
SOURCE Pfizer Inc
-0- 04/19/2005
/CONTACT: Andy McCormick, +1-212-573-1226, or Paul Fitzhenry,
+1-212-733-4637, both of Pfizer Inc /
/Company News On-Call: 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 /
/Photo: A free corporate logo to accompany this story is available
immediately via Wieck Photo Database to any media with telephoto receiver or
electronic darkroom, PC or Macintosh, that can accept overhead transmissions.
To retrieve a logo, please call 972-392-0888./
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/Web site: http://www.pfizer.com /
END
PFIZER INC: 1st Quarter Results
© 2005 PR Newswire
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