(Source: Business Wire)
Pfizer Inc. (NYSE: PFE):
($ in millions, except per share amounts)
Third-Quarter Year-to-Date
2009 2008 Change 2009 2008 Change
Reported Revenues $11,621 $11,973 (3 %) $33,472 $35,950 (7 %)
Reported Net Income((1)) 2,878 2,278 26 % 7,868 7,838 --
Reported Diluted EPS((1)) 0.43 0.34 26 % 1.16 1.16 --
Adjusted Income((2)) 3,461 4,180 (17 %) 10,377 11,977 (13 %)
Adjusted Diluted EPS((2)) 0.51 0.62 (18 %) 1.54 1.77 (13 %)
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See end of text prior to tables for notes.
Pfizer Inc. (NYSE: PFE) today reported financial results for
third-quarter 2009. Revenues were $11.6 billion, a decrease of 3%
compared with $12.0 billion in the year-ago quarter. Revenues for
third-quarter 2009 compared with the year-ago quarter were unfavorably
impacted by approximately $610 million, or 5%, due to foreign exchange
and were favorably impacted by $217 million, or 2%, due to a one-time
adjustment in the year-ago period for prior years' liabilities for
product returns. For third-quarter 2009, U.S. revenues were $4.8
billion, a decrease of 2% compared with the year-ago quarter.
International revenues were $6.8 billion, a decrease of 4% compared with
the prior-year quarter, and reflected 5% operational growth and a 9%
unfavorable impact of foreign exchange. U.S. revenues represented 41% of
the total, while international revenues represented 59% of the total,
both comparable with the year-ago quarter.
For the first nine months of 2009, revenues were $33.5 billion, a
decrease of 7% compared with $36.0 billion in the same period in 2008.
Foreign exchange unfavorably impacted revenues by approximately $2.3
billion or 6%. U.S. revenues were $14.3 billion, a decrease of 6%
compared with the first nine months of 2008. International revenues were
$19.2 billion, a decrease of 8% compared with the same period last year,
and reflected 3% operational growth and an 11% unfavorable impact of
foreign exchange. U.S. revenues represented 43% of the total compared
with 42% in the year-ago period, and international revenues represented
57% of the total compared with 58% of the total of the first nine months
of 2008.
Business Revenues
Effective January 1, 2009, Pfizer expanded its operating model within
the Pharmaceutical business to include five customer-focused units, in
addition to its Animal Health business. During third-quarter 2009, the
Specialty Care, Emerging Markets and Oncology Pharmaceutical units and
Animal Health generated revenue growth on a constant currency basis. The
Primary Care unit was flat on a constant currency basis while the
Established Products unit, which manages a portfolio of products that
have generally lost patent protection or marketing exclusivity and that
have an expected decline in revenues at this stage in their lifecycle,
declined 9% on a constant currency basis.
Third-Quarter
Foreign
($ in millions) 2009 2008 Change Exchange Operational
Primary Care((3)) $ 5,511 $ 5,769 (4 %) (4 %) --
Specialty Care((4)) 1,573 1,529 3 % (3 %) 6 %
Oncology((5)) 371 389 (5 %) (7 %) 2 %
Established Products((6)) 1,618 1,834 (12 %) (3 %) (9 %)
Emerging Markets((7)) 1,604 1,672 (4 %) (13 %) 9 %
Returns Adjustment -- (217 ) * * *
Total Pharmaceutical 10,677 10,976 (3 %) (5 %) 2 %
Animal Health((8)) 678 708 (4 %) (6 %) 2 %
Other((9)) 266 289 (8 %) (3 %) (5 %)
Total $ 11,621 $ 11,973 (3 %) (5 %) 2 %
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See end of text prior to tables for notes.
* Calculation not meaningful
Primary Care revenues for third-quarter 2009 were $5.5 billion, a
decline of 4% compared with $5.8 billion in the year-ago quarter.
Operationally, Primary Care revenues were flat, as the strong
international performance of Lyrica and Lipitor was offset primarily by
lower Lipitor revenues in the U.S. Operational performance was offset by
the unfavorable impact of foreign exchange.
Specialty Care revenues for third-quarter 2009 were $1.6 billion, an
increase of 3% compared with $1.5 billion in the same period last year.
Operational growth of 6%, largely driven by the solid performance of
Rebif and Revatio, was partially offset by the unfavorable impact of
foreign exchange.
Oncology revenues for third-quarter 2009 were $371 million, a decrease
of 5% compared with $389 million in the prior-year quarter. Operational
growth of 2%, primarily due to the strong performance of Sutent, was
partially offset by the unfavorable impact of the loss of exclusivity of
Camptosar in Europe in July 2009. The operational growth was more than
offset by the unfavorable impact of foreign exchange.
Established Products revenues for third-quarter 2009 were $1.6 billion,
a decline of 12% compared with $1.8 billion in the year-ago quarter,
comprised of a 9% operational decline and the unfavorable impact of
foreign exchange.
Emerging Markets revenues for third-quarter 2009 were $1.6 billion, a
decrease of 4% compared with $1.7 billion in third-quarter 2008. These
results included revenue from both established products and
patent-protected products sold in emerging markets. Operational growth
of 9%, largely attributable to strong growth in high-priority countries,
notably China and India, was more than offset by the unfavorable impact
of foreign exchange.
Animal Health revenues for third-quarter 2009 were $678 million, a
decline of 4% compared with $708 million in the year-ago quarter.
Operational growth of 2%, primarily driven by the solid performance in
emerging markets and for certain new products worldwide, was more than
offset by the unfavorable impact of foreign exchange.
Reported Net Income(1) and Reported Diluted
EPS(1)
For third-quarter 2009, Pfizer posted reported net income(1)
of $2.9 billion, an increase of 26% compared with $2.3 billion in the
prior-year quarter, and reported diluted EPS(1) of $0.43, an
increase of 26% compared with $0.34 in the prior-year quarter. Results
for third-quarter 2009 compared with the same period in 2008 were
favorably impacted by the non-recurrence of the after-tax charge of $640
million resulting from agreements to resolve certain litigation
involving the Company's non-steroidal anti-inflammatory (NSAID) pain
medicines in the year-ago quarter, lower costs associated with our
cost-reduction initiatives and savings generated from those initiatives.
These factors were partially offset by the decrease in revenues,
unfavorable impact of foreign exchange, higher interest expense as a
result of the issuance of notes to partially finance the Wyeth
acquisition as well as an increase in the effective tax rate on reported
results to approximately 28% in third-quarter 2009 from approximately
17% in third-quarter 2008. This increase in the effective tax rate on
reported results was primarily due to the increased tax cost associated
with certain business decisions executed to finance the Wyeth
acquisition.
For the first nine months of 2009, Pfizer posted reported net income(1)
of $7.9 billion, and reported diluted EPS(1) of $1.16, both
comparable with the first nine months of 2008. These results were
impacted by the aforementioned factors as well as costs incurred to
prepare for the Wyeth acquisition and lower in-process research and
development charges. The increase in the effective tax rate on reported
results to approximately 27% in the first nine months of 2009 from
approximately 14% in the first nine months of 2008 was primarily due to
the increased tax cost as discussed above. Additionally, the 2008
effective tax rate was positively impacted by favorable income tax
adjustments.
Adjusted Income(2) and Adjusted Diluted EPS(2)
Third-quarter 2009 adjusted income(2) was $3.5 billion, a
decrease of 17% compared with $4.2 billion in the year-ago quarter, and
adjusted diluted EPS(2) was $0.51, a decrease of 18% compared
with $0.62 in the year-ago quarter. For the first nine months of 2009,
adjusted income(2) was $10.4 billion, a decrease of 13%
compared with $12.0 billion in the first nine months of 2008, and
adjusted diluted EPS(2) was $1.54, a decrease of 13% compared
with $1.77 in the year-ago period. Both adjusted income(2)
and adjusted diluted EPS(2) were negatively impacted by lower
revenues and by an increase in the effective tax rate on adjusted income(2)
to approximately 32% in third-quarter 2009 from approximately 22% in
third-quarter 2008, and to approximately 30% in the first nine months of
2009 from approximately 21% in the first nine months of 2008. These
increases in the effective tax rate were primarily due to the increased
tax cost associated with certain business decisions executed to finance
the Wyeth acquisition. In addition, the effective tax rate for the first
nine months of 2008 was positively impacted by a favorable income tax
adjustment. These factors were partially offset by savings from various
cost-reduction initiatives across all aspects of the business, which
decreased adjusted total costs(10) by approximately $210
million in third-quarter 2009 and $950 million in the first nine months
of 2009.
In third-quarter 2009, adjusted cost of sales(2) as a
percentage of revenues was 15.4% compared with 14.5% in third-quarter
2008. This increase primarily reflects the negative impact of foreign
exchange, which was partially offset by the favorable impact of our
cost-reduction initiatives. Excluding the impact of foreign exchange,
adjusted cost of sales(2) as a percentage of revenues was
14.3% in third-quarter 2009.
Adjusted selling, informational and administrative (SI&A) expenses(2)
were $3.2 billion in third-quarter 2009, a decrease of 6% compared with
$3.4 billion in the prior-year quarter. The decrease was attributable to
the favorable impact of cost-reduction initiatives as well as the
favorable impact of foreign exchange, which reduced third-quarter 2009
adjusted SI&A expenses(2) by $126 million compared with
the year-ago quarter.
Adjusted research and development (R&D) expenses(2) were
$1.6 billion in third-quarter 2009, a decrease of 8% compared with $1.8
billion in the prior-year period.The decrease was due to the favorable
impact of cost-reduction initiatives as well as the favorable impact of
foreign exchange, which reduced third-quarter 2009 adjusted R&D expenses(2)
by $36 million compared with the year-ago quarter.
Overall, operational improvements resulting from cost-reduction
initiatives decreased adjusted total costs(10) by
approximately $210 million, or 3%, in third-quarter 2009 compared with
the prior-year period, and foreign exchange decreased adjusted total
costs(10) by approximately $120 million, or 2%, in
third-quarter 2009 compared with the prior-year period. The operational
improvements were driven partially by the reduction in workforce to
approximately 75,400 at the end of third-quarter 2009, a decline of
1,100 compared with the end of the second-quarter 2009, and a decline of
11,200 since the beginning of 2008, as well as manufacturing and
research and development site exits. In fourth-quarter 2009, a portion
of the operational cost reductions achieved in the first nine months of
2009 is expected to be invested in high-growth opportunities.
Executive Commentary
"We are pleased with our results this quarter and in our ability to once
again deliver solid operational performance in an environment that
continues to be challenging. Excluding foreign exchange, our five
Pharmaceutical units and Animal Health business continued to perform
well enabling us to continue to meet our commitments," stated Jeff
Kindler, Chairman and Chief Executive Officer.
Kindler continued, "The completion of the Wyeth acquisition represents a
significant milestone in the transformation of Pfizer. We are beginning
to implement our integration plan in order to quickly maximize the value
of our expanded and more diversified global product portfolio in key
high-growth areas. With customer-centric businesses, supported by
research organizations, Pfizer is now well positioned to deliver greater
value to patients and shareholders."
Frank D'Amelio, Chief Financial Officer, stated, "During the first nine
months of 2009, we have continued to deliver on our 2009 financial
commitments and our longer-term cost-reduction target. Completion of
both the Wyeth acquisition and associated integration plans is a
testament to the hard work and dedication of talented colleagues
throughout the organization. Looking ahead, we anticipate that our broad
portfolio of products and increased investment in high-growth
opportunities will better position us to generate consistent earnings
growth and continue to deliver on our commitments."
Financial Guidance
Pfizer has updated its 2009 full-year financial guidance, at current
exchange rates(11), as detailed below to reflect the
acquisition of Wyeth on October 15, 2009. This guidance incorporates
Wyeth's operations from the acquisition closing date through Pfizer's
international and domestic year-ends (see note 12 below). The Company
will provide full-year 2010 financial guidance in conjunction with its
fourth-quarter 2009 earnings release in January 2010.
2009 Guidance((12))
Reported Revenues $49.0 to $50.0 billion
(previously $45.0 to $46.0 billion)
Reported Diluted EPS((1)) $1.45 to $1.50
(previously $1.30 to $1.45)
Adjusted Diluted EPS((2)) $2.00 to $2.05
(previously $1.90 to $2.00)
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For additional details, please see the
attached financial schedules, product revenue tables, supplemental
information and disclosure notice.
(1) "Reported Net Income" is defined as net income attributable to Pfizer Inc. in accordance with U.S. generally accepted accounting principles. "Reported Diluted EPS" is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. generally accepted accounting principles.
(2) "Adjusted income" and its components and "adjusted diluted earnings per share (EPS)" are defined as reported net income((1)) and its components and reported diluted EPS((1)) excluding purchase-accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Cost of Sales, Adjusted SI&A expenses and Adjusted R&D expenses are income statement line items prepared on the same basis, and therefore, components of the overall adjusted income measure.