- Third-Quarter 2008 Reported Diluted EPS of $0.34 Compared with $0.11 in the Year-Ago Quarter
- Third-Quarter 2008 Adjusted Diluted EPS(1) of $0.62 Compared with $0.58 in the Year-Ago Quarter
- Third-Quarter 2008 Adjusted Total Costs(2) Decreased by Approximately $460 Million Compared with the Year-Ago Quarter Excluding Foreign Exchange
Achieved 2008 Adjusted Total Cost(2) Reduction Target in Third-Quarter 2008, with $1.7 Billion Realized; Increasing Full-Year 2008 Target to at Least $2.0 Billion
- Reaffirms Full-Year 2008 Guidance for Adjusted Results(1) within Previously Announced Ranges; Increasing Lower End of Revenue Range; Tightening Adjusted Diluted EPS(1) Range

($ in millions, except per share amounts)

Third-Quarter Year-to-Date
2008 2007 Change 2008 2007 Change
Reported Revenues $ 11,973
$ 11,990
-- $ 35,950
$ 35,548
1 %
Reported Net Income 2,278 761 199 % 7,838 5,420 45 %
Reported Diluted EPS 0.34 0.11 209 % 1.16 0.78 49 %
Adjusted Revenues(1) 12,159 11,950 2 % 36,030 35,414 2 %
Adjusted Income(1) 4,180 3,963 5 % 11,977 11,711 2 %
Adjusted Diluted EPS(1) 0.62 0.58 7 % 1.77 1.68 5 %

See end of text prior to tables for notes.

Pfizer Inc (NYSE: PFE) today reported financial results for third-quarter 2008. The Company recorded reported revenues of $12.0 billion, consistent with the year-ago quarter, despite the negative impact of the loss of U.S. exclusivity for Zyrtec, which Pfizer ceased selling in late January 2008, and for Camptosar in February 2008. Zyrtec and Camptosar third-quarter 2008 revenues decreased by $549 million ($428 million and $121 million, respectively), compared with the year-ago quarter. Foreign exchange favorably impacted reported revenues by approximately $620 million or 5%, as did the solid performance of many key products. Reported revenues in third-quarter 2008 were negatively impacted by a $217 million adjustment to prior years’ liabilities for product returns. U.S. reported revenues accounted for 41% of the total compared with 48% in the year-ago quarter, while international reported revenues accounted for 59% of the total compared with 52% in the year-ago quarter. In the U.S., reported revenues were $4.9 billion, a decrease of 15%, while international reported revenues were $7.1 billion, an increase of 13%, compared to third-quarter 2007. The increase in international reported revenues reflects the favorable impact of foreign exchange of 10% and operational growth of 3%.

For third-quarter 2008, Pfizer posted reported net income of $2.3 billion, compared with $761 million in the prior-year quarter, and reported diluted EPS of $0.34, compared with $0.11 in the prior-year quarter. These increases were primarily attributable to the after-tax charges of $2.1 billion related to the decision to exit Exubera in the year-ago quarter, which was partially offset by the after-tax charge in third-quarter 2008 of approximately $640 million resulting from the previously announced agreements in principle to resolve certain litigation involving the Company’s non-steroidal anti-inflammatory (NSAID) pain medicines as well as the after-tax charge of approximately $150 million associated with the aforementioned adjustment to prior years’ product returns liabilities.

For the first nine months of 2008, Pfizer recorded reported revenues of $36.0 billion, an increase of 1% compared with $35.5 billion in the same period in 2007, despite the loss of U.S. exclusivity of Norvasc (March 2007), Zyrtec (January 2008) and Camptosar (February 2008), which collectively decreased revenues by $2.1 billion. Foreign exchange favorably impacted revenues by approximately $2.0 billion or 6%, as did the solid performance of many key products. U.S. reported revenues accounted for 42% of the total compared with 49% in the year-ago period, while international reported revenues accounted for 58% of the total compared with 51% in the year-ago period. In the U.S., reported revenues were $15.2 billion, a decrease of 13%, while international reported revenues were $20.8 billion, an increase of 15% compared to the year-ago period. The increase in international reported revenues reflects the favorable impact of foreign exchange of 11% and operational growth of 4%.

For the first nine months of 2008, the Company posted reported net income of $7.8 billion, compared with $5.4 billion in the prior-year period, and reported diluted EPS of $1.16, compared with $0.78 in the prior-year period. These increases were primarily attributable to the previously mentioned after-tax charges of $2.1 billion related to Exubera in the year-ago quarter, lower restructuring charges associated with cost-reduction initiatives, as well as savings generated by those initiatives, which were partially offset by the previously mentioned after-tax charge of approximately $640 million associated with the resolution of certain NSAID litigation in third-quarter 2008.

Adjusted Revenue(1), Adjusted Income(1) and Adjusted Diluted EPS(1) Results

For third-quarter 2008, Pfizer posted adjusted revenues (1) of $12.2 billion, an increase of 2% compared with $12.0 billion in the year-ago quarter. For the first nine months of 2008, Pfizer posted adjusted revenues(1) of $36.0 billion, an increase of 2% compared with $35.4 billion in the first nine months of 2007. Adjusted revenues(1) were positively impacted by foreign exchange and the solid performance of many key products, and negatively impacted by the loss of U.S. exclusivity of Norvasc, Zyrtec and Camptosar.

For third-quarter 2008, Pfizer recorded adjusted income(1) of $4.2 billion, an increase of 5% compared with $4.0 billion in the year-ago quarter, and adjusted diluted EPS(1) of $0.62, an increase of 7% compared with $0.58 in the year-ago quarter. For the first nine months of 2008, Pfizer recorded adjusted income(1) of $12.0 billion, an increase of 2% compared with $11.7 billion in the year-ago period, and adjusted diluted EPS(1) of $1.77, an increase of 5% compared with $1.68 in the year-ago period. In third-quarter 2008, adjusted income(1) and adjusted diluted EPS(1) were positively impacted by foreign exchange and savings associated with cost-reduction initiatives, which were partially offset by a decrease in net interest income. In the first nine months of 2008 compared with the same period in 2007, adjusted income(1) and adjusted diluted EPS(1) were impacted by the aforementioned factors in addition to the 2007 payment to Bristol-Myers Squibb Company in connection with the apixaban collaboration, as well as the 2008 favorable income tax adjustments.

Reported and adjusted diluted EPS(1) were also positively impacted by the full benefit of Pfizer’s purchase of $10.0 billion of the Company’s common stock in 2007.

Executive Commentary

“We remain on-track to meet our 2008 objectives, despite the turbulent global economy," said Chairman and Chief Executive Officer Jeff Kindler. “We continued to deliver steady results this quarter, with many of our most important medicines performing well around the world, including Lyrica, Celebrex, Viagra, Sutent, Zyvox and Geodon, as well as Lipitor in a highly competitive market. Looking ahead, we are making progress on our growth strategies, including increasing the number of programs in our Phase 3 portfolio from 16 to 25 in the last six months. With the formation of the Primary Care, Specialty Care and Emerging Markets units, which join the existing Oncology and Established Products units, we continue to evolve our pharmaceutical operations into smaller, more focused units that can anticipate and respond more quickly to our customers' and patients’ changing needs.”

Frank D’Amelio, Chief Financial Officer, commented, “Based on our year-to-date performance and outlook for the remainder of 2008, we are raising the lower end of our guidance range for full-year 2008 revenues to $48.0 to $49.0 billion from $47.0 to $49.0 billion. In addition, we have increased our guidance to at least a $2.0 billion reduction of absolute adjusted total costs(2) at the end of 2008 compared with 2006 on a constant currency basis(3). At the end of third-quarter 2008, cost reductions under this program totaled $1.7 billion. We are pleased with our progress and continue to look for new opportunities to further reduce and more effectively manage our costs. Finally, with our strong balance sheet and operating cash flow, we remain confident that we have the financial flexibility to successfully execute our strategies and meet our financial objectives in the face of the current macroeconomic environment.”

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