. First-Quarter 2009 Revenues of $10.9 Billion
. First-Quarter 2009 Reported Diluted EPS(2) of $0.40
. First-Quarter 2009 Adjusted Diluted EPS(1) of $0.54
. Continues to Execute on Strategic and Financial Commitments While Planning for the Pending Wyeth Acquisition Remains On-Track
NEW YORK--(BUSINESS WIRE)--Pfizer Inc (NYSE: PFE):


($ in millions, except per share amounts)
First-Quarter
2009 2008 Change
Reported Revenues $ 10,867 $ 11,848 (8%)
Reported Net Income(2) 2,729 2,784 (2%)
Reported Diluted EPS(2) 0.40 0.41 (2%)
Adjusted Income(1) 3,667 4,099 (11%)
Adjusted Diluted EPS(1) 0.54 0.61 (11%)

See end of text prior to tables for notes.
Pfizer Inc (NYSE: PFE) today reported financial results for first-quarter 2009. Revenues were $10.9 billion, a decrease of 8% compared with the year-ago quarter. Foreign exchange unfavorably impacted revenues by approximately $640 million or 5%. For first-quarter 2009, U.S. revenues were $5.0 billion, a decrease of 10% compared with the year-ago quarter. International revenues were $5.9 billion, a decrease of 7% compared with the prior-year quarter, and reflected operational growth of 3%, which was more than offset by the unfavorable impact of foreign exchange of 10%. U.S. revenues represented 46%, while international revenues represented 54%, of total revenues, comparable with the year-ago quarter. In addition to foreign exchange, other factors that negatively impacted first-quarter 2009 revenues in comparison with the year-ago quarter included the loss of U.S. exclusivity for Zyrtec in January 2008 and Camptosar in February 2008 as well as the revenue declines for Lipitor, as a result of continued intense competition, and for Chantix, mainly due to label changes.

Business Revenues
Effective January 1, 2009, Pfizer expanded its new operating model within the Pharmaceutical business, which is now comprised of five customer-focused units with clear, single points of accountability to enable the Company to more effectively anticipate and respond to the diverse needs of physicians, customers and patients: Primary Care, Specialty Care, Oncology, Established Products and Emerging Markets. In addition to the pharmaceutical business, the Company has a significant Animal Health business.


First-Quarter
($ in millions) 2009 2008 Change Foreign

Exchange
Operational
Primary Care(3) $ 5,322 $ 5,788 (8%) (4%) (4%)
Specialty Care(4) 1,463 1,362 7% (3%) 10%
Oncology(5) 350 421 (17%) (6%) (11%)
Established Products(6) 1,615 1,841 (12%) (2%) (10%)
Emerging Markets(7) 1,352 1,492 (9%) (14%) 5%

Total Pharmaceutical 10,102 10,904 (7%) (5%) (2%)

Animal Health(8) 537 619 (13%) (8%) (5%)
Other(9) 228 325 (30%) (3%) (27%)

Total $ 10,867 $ 11,848 (8%) (5%) (3%)


See end of text prior to tables for notes.

Primary Care revenues for first-quarter 2009 were $5.3 billion, an 8% decline compared with $5.8 billion in the year-ago quarter. In addition to the unfavorable impact of foreign exchange, the decline in revenues compared with the same period last year was primarily driven by continued pressure on Lipitor from generic competition and by the negative impact of the Chantix label changes, as well as by the loss of U.S. exclusivity for Zyrtec in January 2008.

Specialty Care revenues for first-quarter 2009 were $1.5 billion, a 7% increase compared with $1.4 billion in the same period last year. Despite the unfavorable impact of foreign exchange, revenues increased, primarily driven by the solid operational performance in both the U.S. and international markets from certain products, including Xalatan, Zyvox, Vfend and Revatio.

Oncology revenues for first-quarter 2009 were $350 million, a 17% decrease compared with $421 million in the prior-year quarter. In addition to the unfavorable impact of foreign exchange, revenues were unfavorably impacted by the loss of U.S. exclusivity for Camptosar in February 2008, which was partially offset by strong international performance, largely driven by Sutent.

Established Products revenues for first-quarter 2009 were $1.6 billion, a 12% decline compared with $1.8 billion in the year-ago quarter. Since the products in this unit generally have lost patent protection or marketing exclusivity, revenues have declined. This unit was created in 2008 with the goal of recapturing value for these products in developed market geographies by progressively slowing the erosion of, and ultimately stabilizing, revenue and profit from established products. Supporting initiatives within the unit include programs designed to expand patient and payor access to this portfolio, to develop product enhancements, to expand the portfolio and to increase promotional efforts for targeted products.

Emerging Markets revenues for first-quarter 2009 were $1.4 billion, a 9% decrease compared with $1.5 billion in first-quarter 2008. Revenues in Emerging Markets, which also includes revenues from established products sold in these geographies, were unfavorably impacted by foreign exchange, which was partially offset by solid operational growth, led by expansion efforts in China.

Animal Health revenues for first-quarter 2009 were $537 million, a 13% decline compared with $619 million in the year-ago quarter. In addition to the unfavorable impact of foreign exchange, revenues were impacted by global macroeconomic conditions, which negatively affected global spending on veterinary care, as well as by a planned change in terms with U.S. distributors resulting in an anticipated, one-time reduction in U.S. distributor inventories.

Reported Net Income(2) and Reported Diluted EPS(2)

For first-quarter 2009, Pfizer posted reported net income(2) of $2.7 billion, a decline of 2% compared with $2.8 billion in the prior-year quarter, and reported diluted EPS(2) of $0.40, a decline of 2% compared with $0.41 in the prior-year quarter. First-quarter 2009 results were unfavorably impacted by the decrease in total revenues and other income, the increase in the effective tax rate as well as costs incurred in connection with the pending Wyeth acquisition. These factors were partially offset by savings from cost-reduction initiatives and the elimination of in-process research and development charges in 2009. The increase in the effective tax rate on reported results to 28% from 22% in the year-ago quarter was primarily due to the increased tax cost associated with certain business decisions executed to finance the pending Wyeth acquisition.

Adjusted Income(1) and Adjusted Diluted EPS(1)

First-quarter 2009 adjusted income(1) was $3.7 billion, a decrease of 11% compared with $4.1 billion in the year-ago quarter, and adjusted diluted EPS(1) was $0.54, a decrease of 11% compared with $0.61 in the year-ago quarter. Both adjusted income(1) and adjusted diluted EPS(1) were negatively impacted by the decrease in total revenues and the increase in the effective tax rate on adjusted income(1) to approximately 30% from 22% in the prior-year quarter, which were partially offset by savings from cost-reduction initiatives.

In first-quarter 2009, adjusted cost of sales(1) as a percentage of revenues was 12.1% compared with 15.3% in first-quarter 2008. This improvement reflects the benefits from cost-reduction initiatives and foreign exchange. Excluding the impact of foreign exchange, adjusted cost of sales(1) as a percentage of revenues was 14.4% in first-quarter 2009.

Adjusted selling, informational and administrative (SI&A) expenses(1) were $2.8 billion in first-quarter 2009, a decrease of 17% compared with $3.4 billion in the prior-year quarter. The decrease was due to the favorable impact of cost-reduction initiatives and, to a lesser extent, certain insurance recoveries. Also, foreign exchange reduced first-quarter 2009 adjusted SI&A expenses(1) by approximately $140 million compared with the year-ago quarter.

Adjusted research and development (R&D) expenses(1) were $1.7 billion in first-quarter 2009, an increase of 2% compared with $1.6 billion in the prior-year period. The increase was due to a $150 million milestone payment to Bristol-Myers Squibb in this year’s first quarter in connection with the collaboration on apixaban, partially offset by the favorable impact of cost-reduction initiatives. Foreign exchange reduced first-quarter 2009 adjusted R&D expenses(1) by approximately $60 million compared with the year-ago quarter.

Overall, operational improvements resulting from cost-reduction initiatives and, to a much lesser extent, certain insurance recoveries decreased adjusted total costs(10) by approximately $500 million or 7% in first-quarter 2009 compared with the prior-year period, and foreign exchange decreased adjusted total costs(10) by approximately $540 million or 8%. The operational improvements were driven partially by the reduction in workforce to approximately 80,250 colleagues at the end of first-quarter 2009, a decline of 1,650 compared with year-end 2008, and a decline of 6,350 since the beginning of 2008, as well as manufacturing and research and development site exits. The decline of 1,650 colleagues in first-quarter 2009 was net of new colleagues hired in expanding areas across the Company, primarily in emerging markets.

Executive Commentary

“During the quarter, we continued our ongoing efforts to reshape our operating model, made substantial progress in planning for the Wyeth integration, and faced a challenging and dynamic economic and competitive environment. Yet, we remained focused on meeting our commitments - generating revenues consistent with our expectations and continuing to streamline our cost structure. We remain on-track to deliver on our full-year 2009 guidance for revenues and adjusted results(1),” stated Jeff Kindler, Chairman and Chief Executive Officer.

Kindler continued, “Even as we achieve our short-term objectives, we continue to lay the groundwork to increase long-term shareholder value through the pending combination with Wyeth. Our recent announcement on the planned leadership and organizational structure for the company’s combined research and commercial operations demonstrates our intention to advance strong scientific capabilities and to retain top scientific and commercial talent from both organizations as we build the world’s premier biopharmaceutical company.”

Frank D’Amelio, Chief Financial Officer, stated, “We achieved several significant milestones in this quarter in planning for the Wyeth acquisition, making substantial progress in a short period of time. We remain committed to a rapid and successful integration, while at the same time delivering on our 2009 financial goals, which remains a top priority. Today, we’re reaffirming our full-year 2009 financial guidance for revenues and adjusted results(1), and updating our reported diluted EPS(2) guidance to include certain costs associated with the pending acquisition of Wyeth.”

Financial Guidance

For full-year 2009, Pfizer’s financial guidance, at current exchange rates(11) is summarized below. This guidance is unchanged from the guidance provided on January 26, 2009, except for reported diluted EPS(2), which has been reduced to a range of $1.20 to $1.35 from $1.34 to $1.49 to reflect certain costs incurred and expected to be incurred in connection with the pending Wyeth acquisition. These costs include, but are not limited to, transaction costs, pre-integration costs and financing costs. We also continue to expect to achieve net savings compared to 2008 adjusted total costs(10) of $2 billion by the end of 2011 at 2008 foreign exchange rates.


2009 Guidance(12)
Reported Revenues $44.0 to $46.0 billion
Adjusted Cost of Sales(1) as a Percentage of Revenues 14.5% to 15.5%
Adjusted SI&A Expenses(1) $13.5 to $14.0 billion
Adjusted R&D Expenses(1) $7.1 to $7.5 billion
Adjusted Other (Income)/Deductions(1) ($500 to $700 million)
Effective Tax Rate on Adjusted Income(1) Approx. 30%
Reported Diluted EPS(2) $1.20 to $1.35
Adjusted Diluted EPS(1) $1.85 to $1.95