Pfizer continued its transformation in 2008 and, early in 2009, announced a major move to accelerate that process—an agreement to acquire Wyeth, America's fifth-largest pharmaceutical company. The combined organization will be the world's premier biopharmaceutical company: diverse, flexible, a leader in nearly all dimensions of human and animal medicines and vaccines, and well positioned in both developed and emerging markets.
Preparing Pfizer to take this transformational step began with our efforts late in 2006 and in 2007 to reduce the number of layers in the company, streamline decision-making and expand our discovery efforts. Our transformation continued in 2008 with a new strategic framework called "Our Path Forward"—and later that year with the reorganization of the company into smaller, more agile business units. Every step of the way, Pfizer colleagues have worked to increase the ability of the company to deal with a very fast-changing business environment. We've titled this report "Doing Things Differently" because that's exactly the approach we're taking—challenging the status quo of our industry and breaking away from old practices that are no longer relevant in a new environment. A streamlined, more flexible, strategically grounded Pfizer is now ready to create one of the most dynamic and diversified companies in the global health care industry.
Commitments Made, Commitments Kept
Our drive for change, however, starts with one of the oldest paths to trust and accomplishment—keeping our commitments. In these annual letters to you, I've repeated what I believe—that all Pfizer leaders, starting with me, must be accountable for meeting the commitments we've made to find new sources of revenue, become faster and more efficient, and build a strong pipeline of new compounds and product extensions. Action by action, quarter by quarter, we are establishing Pfizer as a company that keeps promises.
At the beginning of 2008, we made or reaffirmed four major commitments to you, our investors. These were:
- To hold revenues steady, despite the deteriorating economic environment and the losses-of-exclusivity we faced in 2007 and 2008.
- To complete the program to achieve an absolute reduction in our adjusted total costs(1) of at least $1.5 billion–$2 billion, on a constant currency basis, as compared with 2006.
- To achieve adjusted diluted earnings per share(2) performance of at least $2.35 per share.
- To improve R&D productivity, as measured by medicines moving into late-stage development.
Here's how we did in meeting each of these commitments.
HOLDING REVENUES STEADY Our 2008 full-year revenues were $48.3 billion, compared with $48.4 billion in 2007. This was in line with the guidance we gave early in 2008. We achieved this goal despite the loss of exclusivity of three large-selling medicines, Norvasc, Zyrtec/ZyrtecD and Camptosar, which accounted for $2.9 billion in 2008 revenue and $5.5 billion in revenue in 2007. We also achieved this goal despite shrinking economies in nearly all of our major markets.