Pfizer Driving Performance Through Growth of Current and New Medicines,
Productivity Improvements and Strategies to Capitalize on New Market
Opportunities
Pfizer Anticipates Sustained Growth of Existing Medicines and Increasing
Contribution from Next Generation of Innovative Medicines
- Strong growth forecast for key in-line medicines in 2006: Lipitor sales
expected to exceed $13 billion, Celebrex sales expected to exceed $2
billion, Lyrica sales expected to exceed $900 million
- Pfizer to launch six new medicines in 2006; anticipates excellent
prospects for Sutent, Exubera, Champix
- Delivering on industry's broadest pipeline, Pfizer expects to file five
new medicines in 2006-07: maraviroc for HIV/AIDS,
torcetrapib/atorvastatin for cholesterol management, asenapine for
schizophrenia, ticilimumab for cancer and a licensed compound
Financial Forecast Highlights: Building Shareholder Value
- 2006 Reported Diluted EPS expected to be $1.52 to $1.56
- 2006 Revenues and Adjusted Diluted EPS* of about $2.00, expected to be
comparable to 2005 including negative impact of stock-option expensing
and foreign exchange
- Revenue growth expected to resume in 2007 as growth from new and in-line
medicines more than offsets impact of loss of exclusivity
- High single-digit average annual growth anticipated in 2007-08 Adjusted
diluted EPS*
- 2006 cash flow from operations expected to exceed $16 billion; continued
strong growth in cash flow from operations anticipated over the planning
period to more than $19 billion by 2008
- Company evaluating strategic options for Pfizer Consumer Healthcare
business
Broad-Based Strategy for Success in Evolving Global Marketplace
- R&D productivity gains driving pipeline expansion with 235 total
projects and planned adjusted R&D expense* of $7.8 billion in 2006
- Pfizer establishing leadership in new areas of biologics and oncology;
2006 biologics revenues of $1.5 billion expected; oncology pipeline has
22 mid- and early-stage candidates
- Pfizer demonstrating value of its medicines to payers through compelling
pharmacoeconomic data; excellent formulary access achieved in U.S.
Medicare market
- While reducing worldwide plant network from 93 to 66, Pfizer
manufacturing investing in new technology and capacity for next
generation of medicines
- Pfizer to continue aggressively defending its intellectual property
rights worldwide, with "zero tolerance" for patent infringement; company
mobilized against global threat of counterfeit medicines
NEW YORK, Feb. 10 -- Pfizer Inc is executing a wide-ranging strategy to
transform all areas of its business, grow current and new medicines, drive
productivity improvements and launch innovative patient-centered healthcare
initiatives.
Addressing financial analysts here today, Pfizer outlined its drivers of
value for 2006-2008, including growth of its key in-line medicines, an
increasingly substantial contribution from new medicines, enhanced R&D
productivity supporting a broad and promising pipeline of new medicines, and
streamlining to reduce costs and speed decision-making in all parts of the
company.
"This is a time of transformation for Pfizer and our industry," said Hank
McKinnell, Pfizer chairman and chief executive officer. "We are responding
directly to the realities of our operating environment as we build value today
while aggressively investing in the future. We have many significant
opportunities ahead of us.
"We are rapidly adapting our business to effectively balance the demands
of our customers, the needs of patients, and the interests of shareholders.
Over the next three years, a new generation Pfizer will emerge, and our
company will have the operating and financial strength to sustain value."
Key Elements of Financial Forecast and Strategy to Build Shareholder Value
"Pfizer is aggressively transforming itself in all aspects of its
business -- challenging the old ways and taking risks with new directions and
innovations -- in sales, marketing, R&D, and manufacturing," said Vice
Chairman David Shedlarz. "While near-term results will be tempered by loss of
exclusivity of older medicines, we see a bright, long-term future driven by
growth of current and new medicines, productivity enhancements and new
initiatives to enhance shareholder value."
Revenue Growth. Pfizer expects sustained growth from key medicines and an
increasingly large contribution from new medicines, which will offset the
impact of loss of exclusivity. The company is reallocating resources to
ensure the highest growth from its portfolio of important medicines.
Productivity Enhancements. The Adapting to Scale initiative will continue
to produce substantial cost savings while creating a more efficient company.
Adapting to Scale spans all functions, processes and geographies, with
specific programs focused on enhancing R&D productivity, optimizing the field
force, consolidating our network of manufacturing plants and optimizing the
procurement of goods and services.
Initiatives to Enhance Shareholder Value. Pfizer will continue to use its
strong cash flow from operations to enhance shareholder value. The company is
focused on three important initiatives to leverage cash flow: increasing our
dividend payout and yield, purchasing shares, and changing Pfizer's business
portfolio, including the recently announced decision to explore strategic
alternatives for Pfizer Consumer Healthcare (PCH).
Financial Guidance. Mr. Shedlarz said the financial impact of these and
other transformational efforts are expected to result in the following
guidance for 2006 performance:
-- 2006 Revenues comparable to 2005, as growth of current and new products
offsets revenue declines from loss of exclusivity and adverse foreign
exchange
-- 2006 Reported Diluted EPS of $1.52 to $1.56
-- 2006 Adjusted Diluted EPS* comparable to 2005 at about $2.00, including
the adverse impact of stock-option expensing and foreign exchange
-- Mid-single-digit Adjusted Diluted EPS* growth in 2006, without the
adverse impact of stock-option expensing and foreign exchange
-- Modest improvement in 2006 of Adjusted Gross Margins** versus 2005
-- Cost savings from the Adapting to Scale productivity initiative of
about $2 billion in 2006
-- 2006 operating cash flow of more than $16 billion
-- 26 percent growth in the first-quarter 2006 dividend
-- At least $1 billion in 2006 share purchases
Regarding performance in 2007 and 2008, Mr. Shedlarz provided the
following guidance:
-- Revenue growth is expected to resume in 2007, as contributions from new
medicines and sustained in-line medicine growth more than offset the
declining impact of loss of exclusivity
-- Cost savings from the Adapting to Scale initiative of about $3.5
billion by 2007 and of about $4 billion by 2008
-- High-single-digit average annual growth in Adjusted Diluted EPS* over
the two-year period of 2007-2008
-- Continued strong growth in cash flow from operations anticipated to
more than $19 billion by 2008
Earlier this week, Pfizer said it would explore strategic alternatives for
its consumer healthcare business. "This is the right time to undertake this
review, given the premium the marketplace is placing on similar large,
high-quality consumer businesses," Mr. Shedlarz said. "We expect to make this
decision in the third quarter of 2006."
Pfizer Consumer Healthcare has a well-balanced product portfolio anchored
by key brands including Listerine, Benadryl and Visine, and broad geographic
presence. The business has maintained a strong, consistent financial
performance, with high margins and stable cash flows. The business had 2005
segment revenues of $3.9 billion and pre-tax segment income of about $700
million. The median multiple of stock-price-to-2005 earnings for consumer
healthcare companies is 21. If this multiple were applied to PCH, it could be
valued as a stand-alone business at more than $10 billion.
Pfizer Expects Strong Growth of Current and Emerging Medicines;
New Growth to Offset Impact of Patent Expirations
Karen Katen, vice chairman and president of Pfizer Human Health, said, "We
are expecting strong growth for Lipitor, Celebrex and Lyrica in 2006, and we
see excellent prospects for a number of new medicines we plan to launch this
year. These include recently approved Sutent and Exubera, breakthrough
treatments for cancer and diabetes, respectively, as well as our smoking
cessation medicine Champix, which is currently under priority review by the
FDA."
Ms. Katen said the company expects sales of Lipitor, the world's
most-prescribed medicine, to exceed $13 billion in 2006. "We continue to
enhance the Lipitor label -- including a new indication for reducing
strokes -- and differentiate Lipitor with high-impact economic data
demonstrating its benefits. In addition, Lipitor is performing well against
generic simvastatin in many markets where the two medicines compete. This
shows our efforts to communicate Lipitor's tremendous value in reducing
cardiovascular events are effective. Given the large numbers of untreated
patients, Lipitor has excellent opportunities to grow even further," Ms. Katen
said.
"Going forward, we are going to highlight the benefits of Lipitor with new
economic data demonstrating that Lipitor prevents costly cardiovascular events
and associated healthcare costs while providing better overall cardiovascular
health to patients," Ms. Katen said.
The company anticipates that sales of Celebrex will increase to more than
$2 billion in 2006 and that sales of Lyrica will triple to more than $900
million. "Celebrex is showing strong signs of growth with new prescription
trends in the U.S. climbing steadily since October," Ms. Katen said. "In the
fourth quarter of 2005, we saw an increase of 8 percent in new Celebrex
prescriptions while those for branded NSAIDs fell nearly 3 percent."
Celebrex offers clear gastrointestinal (GI) advantages. "Epidemiological
data indicate that Celebrex has lower rates of GI bleeding requiring
hospitalization than other highly prescribed pain relievers like naproxen and
ibuprofen," Ms. Katen said. "This GI profile also was confirmed in recent
study results published in the British Medical Journal."
To further characterize Celebrex's cardiovascular profile, Pfizer is
funding the first large-scale safety study of Celebrex and traditional NSAIDs
in patients with heart disease or those at high risk for heart disease. The
Pfizer-funded study is being run independently by the Cleveland Clinic and
will involve 20,000 patients worldwide.
Lyrica sales are outpacing those of other medicines that treat epilepsy
and neuropathic pain. "Physicians are prescribing Lyrica because of the
positive experiences their patients are having," Ms. Katen said. "In one
survey, 70 percent of doctors cited rapid pain relief as an attribute they
associate with Lyrica." Pfizer is aggressively pursuing additional
indications including generalized anxiety disorder, fibromyalgia and other
neuropathic pain conditions.
Ms. Katen said Pfizer expects strong long-term performance for a number of
new medicines, in many cases exceeding the expectations of financial analysts.
Key product highlights include:
-- Exubera, one of the most important innovations in diabetes treatment
since the discovery of insulin in the 1920s. Pfizer anticipates
exceptional uptake for this fast-acting inhaled form of insulin due to
better control of blood sugar without injections.
-- Sutent, a novel treatment for two difficult-to-treat cancers. Sutent
offers new hope to patients who otherwise have no options. Because of
Sutent's unique mechanism of action, it has potential to treat other
more common malignancies, and Pfizer is aggressively pursuing
additional indications.
-- Champix, Pfizer's smoking cessation medicine currently under FDA
priority review, is expected to be a major advance in improving health
worldwide. Discovered and developed by Pfizer, Champix has
demonstrated radically improved quit rates compared to other leading
smoking cessation products. Champix is unique in that it diminishes
cravings while also decreasing the reward smokers get from cigarettes.
In addition, Pfizer expects to launch indiplon for insomnia, the
antifungal medicine Eraxis, and Zeven, an antibiotic.
Pfizer has realigned its U.S. business in response to the Medicare
Prescription Drug Benefit. In 2006, Pfizer estimates that Medicare Part D
sales will represent about 20 percent of total U.S. sales, expanding to double
that by 2008. Ms. Katen said Pfizer is well positioned in the Medicare
marketplace with the majority of the company's key medicines represented on
formularies.
"In addition, we restructured our U.S. field force to mirror the new
regional structure under Medicare," Ms. Katen said. "This has resulted in our
representatives spending more time in the field with less duplication,
enabling us to build even stronger relationships with physicians and Medicare
prescription drug plans."
Ms. Katen also said Pfizer is competing effectively in the generic market
in the U.S. through the company's Greenstone subsidiary, which offers
high-quality generic medicines to U.S. consumers.
"We are mindful that, with increasing life expectancy and a growing number
of new medical innovations, the demand for healthcare will only increase," Ms.
Katen said. "At the same time, budgets will be further constrained, putting
even greater pressure on the healthcare system. Through a series of
initiatives, Pfizer is investing in prevention and wellness and helping
patients proactively manage chronic diseases, which ultimately will better
control total healthcare costs."
Productivity Improvements Drive Pipeline Expansion
Dr. John LaMattina, president of Pfizer Global Research and Development,
highlighted the company's progress in three areas: enhancing R&D productivity,
advancing the company's pipeline of new medicines and expanding the scope of
Pfizer R&D.
Dr. LaMattina said Pfizer is achieving productivity improvements through a
focus on the quality and quantity of new medicine candidates. "Our dual focus
on improving both candidate output and candidate quality is setting the
foundation for sustained R&D productivity in the years to come," he said.
With these enhancements, Pfizer's objective is to ultimately deliver four
medicines per year from the company's internal research efforts.
Pfizer's pipeline continues to grow and now consists of 235 total projects,
including 152 novel compounds and 83 product enhancements. "We have
successfully streamlined and restructured our organization. Our pipeline is
now 8 percent larger than at the end of 2004," Dr. LaMattina said.
Pfizer has completed 17 filings for approval of new medicines since 2001,
11 of which are approved and on the market. Dr. LaMattina added that the
company expects two additional filings in 2006 -- one for maraviroc, a CCR-5
antagonist in Phase III studies for treatment of HIV/AIDS, and one through a
licensing opportunity the company expects to announce in the first half of the
year.
Dr. LaMattina said Pfizer is targeting three additional NDA filings in
2007, including torcetrapib/atorvastatin for cholesterol management, the
schizophrenia medicine asenapine and ticilimumab, a new therapy for serious
and life-threatening cancers.
In describing the expanding scope of Pfizer's R&D activities, Dr.
LaMattina said the company has established a firm foothold in biologics with
medicines including Genotropin and Macugen, among others. Sales of biologics
in 2006 are expected to total $1.5 billion; Pfizer expects to triple revenues
from biologics by 2010, placing the company among the top five producers of
biologics. "From a single program in 1996, our presence in biologics has
grown to encompass more than 36 programs today, and we have a truly enviable
pipeline of new medicines in this important area," Dr. LaMattina said.
Pfizer Committed to Vigorous Global Defense Against
Patent Infringement, Counterfeiting and Foreign Price Controls
Pfizer Vice Chairman and General Counsel Jeffrey Kindler reviewed the
progress the company is making on the policy, legal and legislative fronts to
effectively meet challenges in the company's operating environment, including
threats to its intellectual property.
Regarding intellectual property, Mr. Kindler said, "We will continue to
aggressively defend our medicines from patent challenges and discourage
unwarranted attacks on innovators. Many of these attacks are on our basic
patents, and we have a 'zero-tolerance' policy for out-and-out patent
infringement." Mr. Kindler cited Pfizer's recent high-profile victories, most
notably its defense of Lipitor in the U.S., U.K. and Spain. "We have
established an excellent track record in these cases that has validated our
strategy for defending the patents protecting this critical medicine," he
said.
Mr. Kindler also said Pfizer is combating the global threat of
counterfeiting on multiple fronts, including focusing more resources on anti-
counterfeiting investigations and working cooperatively with government and
law enforcement agencies around the world to address the problem.
In the policy area, Mr. Kindler noted that Pfizer is addressing foreign
price controls and access restrictions as a top priority. "We are enlisting a
broad array of allies, including the U.S. government, to advance policies
supporting healthcare innovation around the world. With so much of the
research-based pharmaceutical industry located in the U.S., we believe that
this will become an even greater priority for keeping America at the forefront
of health and economic prosperity.
"As the U.S. Department of Commerce has recognized, not only do foreign
price controls and access restrictions harm patients in those countries, they
also force American patients to bear a disproportionate share of the cost of
research and development for new treatments," he said.
Conclusion. In summary, Hank McKinnell said, "Pfizer is changing, our
industry is changing, and healthcare systems around the world are changing.
We believe that future healthcare will be rooted in prevention and wellness
and early diagnosis and treatment of chronic diseases. All of these
approaches play to Pfizer's strengths. With our highly talented workforce,
Pfizer can be a catalyst in this evolution toward integrated, affordable and
patient-centered healthcare."
* See Appendix 1 for a reconciliation of forecasted Adjusted income and
Adjusted Diluted EPS to forecasted reported income and reported Diluted
EPS
DISCLOSURE NOTICE: The information contained in this document is as of
February 10, 2006. The Company assumes no obligation to update any
forward-looking statements contained in this document as a result of new
information or future events or developments.
This document contains forward-looking information about the Company's
financial results and estimates, business prospects, in-line products 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," "forecast", and other words and terms of similar meaning in
connection with any discussion of future operating or financial performance.
Among the factors that could cause actual results to differ materially are the
following:
-- the success of research and development activities;
-- decisions by regulatory authorities regarding whether and when to
approve our drug applications as well as their decisions regarding
labeling and other matters that could affect the availability or
commercial potential of our products;
-- the speed with which regulatory authorizations, pricing approvals and
product launches may be achieved;
-- competitive developments affecting our current growth products;
-- the ability to successfully market both new and existing products
domestically and internationally;
-- difficulties or delays in manufacturing;
-- trade buying patterns;
-- the ability to meet generic and branded competition after the loss of
patent protection for our products and competitor products;
-- the impact of existing and future regulatory provisions on product
exclusivity;
-- trends toward managed care and health care cost containment;
-- possible U.S. legislation or regulatory action affecting, among other
things, pharmaceutical pricing and reimbursement, including under
Medicaid and Medicare, the importation of prescription drugs that are
marketed outside the U.S. and sold at prices that are regulated by
governments of various foreign countries, and the involuntary approval
of prescription medicines for over-the-counter use;
-- the potential impact of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003;
-- legislation or regulations in markets outside the U.S. affecting
product pricing, reimbursement or access;
-- contingencies related to actual or alleged environmental contamination;
-- claims and concerns that may arise regarding the safety or efficacy of
in-line products and product candidates;
-- legal defense costs, insurance expenses, settlement costs and the risk
of an adverse decision or settlement related to product liability,
patent protection, governmental investigations, ongoing efforts to
explore various means for resolving asbestos litigation and other legal
proceedings;
-- the Company's ability to protect its patents and other intellectual
property both domestically and internationally;
-- interest rate and foreign currency exchange rate fluctuations;
-- governmental laws and regulations affecting domestic and foreign
operations, including tax obligations;
-- changes in generally accepted accounting principles;
-- any changes in business, political and economic conditions due to the
threat of future terrorist activity in the U.S. and other parts of the
world, and related U.S. military action overseas;
-- growth in costs and expenses
-- changes in our product mix;
-- and the impact of acquisitions, divestitures, restructurings, product
withdrawals, and other unusual items, including the impact of the
possible sale or spin-off of our Consumer Healthcare business and our
ability to realize the projected benefits of our Adapting to Scale
multi-year productivity initiative.
A further list and description of these risks, uncertainties and other
matters can be found in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2004, and in its reports on Forms 10-Q and 8-K.
APPENDIX 1
Reconciliation of Forecasted 2006 Adjusted Income and Adjusted Diluted EPS
to Forecasted 2006 Reported Net Income and Reported Diluted EPS
Full Year 2006 Forecast
($ billions, except per-share amounts) Net Income Diluted EPS
Income/(Expense)
Forecasted Adjusted Income/Diluted EPS ~$15.0 ~$2.00
Intangible Amortization/Fixed-Asset
Depreciation, Net of Tax (2.3) (0.31)
Adapting-to-Scale Costs, Net of Tax (1.4-1.7)(a) (0.19-0.23)
Resolution of Certain Tax Positions 0.4 0.06
Forecasted Reported Net Income/Diluted EPS ~$11.4-$11.7 ~$1.52-$1.56
(a) Includes Costs of $0.3 billion in SI&A and $0.2 billion in R&D, all on
a pre-tax basis. Adjusted SI&A and R&D excludes these costs.
The forecasts in the table above are subject to the Disclosure Notice in
this report. These forecasts do not reflect the impact of any pending
business-development transactions and any potential gains and losses in
connection with a business for which we are exploring strategic options.
"Adjusted income" and "Adjusted diluted earnings per share (EPS)" are
defined as reported net income and reported diluted EPS, excluding
discontinued operations, cumulative effect of a change in accounting
principles, purchase accounting adjustments, merger-related costs, and certain
significant items. As described under Adjusted Income in the Management's
Discussion and Analysis of Financial Condition and Results of Operations
section of Pfizer's Form 10-Q for the quarterly period ended October 2, 2005,
management uses adjusted income, among other factors, to set performance goals
and to measure the performance of the overall company. We believe that
investors' understanding of our performance is enhanced by disclosing this
measure. A reconciliation to reported net income and reported diluted EPS is
provided in the table above. The adjusted income and adjusted diluted EPS
measures are not, and should not be viewed as, substitutes for U.S. GAAP net
income and diluted EPS.
"Adjusted Gross Margins" is calculated on a basis consistent with our
measure of Adjusted Income. In 2006, it excludes Adapting to Scale costs of
approximately $100 million. In 2005, it excluded Adapting to Scale costs of
$124 million as well as the cost associated with the suspension of selling
Bextra of $73 million.
SOURCE Pfizer Inc
-0- 02/10/2006
/CONTACT: Andy McCormick of Pfizer Inc, +1-212-733-5469/
/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./
/Company News On-Call: http://www.prnewswire.com/comp/688250.html/
/Web site: http://www.pfizer.com/
(PFE)
END
© 2006 PR Newswire
