(BUSINESS WIRE)--Pfizer Inc (NYSE: PFE):

Pfizer Inc (NYSE: PFE) today reported results for the fourth-quarter and full-year 2007. For the fourth-quarter 2007, Pfizer recorded revenues of $13.1 billion, an increase of 4% compared with $12.6 billion in the year-ago quarter, despite the March 2007 loss of U.S. exclusivity of Norvasc, which contributed to a decrease in Norvasc revenues of $667 million. Fourth-quarter 2007 revenues were positively impacted by foreign exchange, which increased revenues by approximately $610 million or 5%, and the strong performance of many new and in-line products.

For the fourth-quarter 2007, the Company posted reported net income of $2.9 billion, a decrease of 70% compared with $9.4 billion in the prior-year quarter, and reported diluted EPS of $0.42, a decrease of 68% compared with $1.32 in the prior-year quarter. The decline was primarily attributable to the one-time after-tax gain of $7.9 billion ($1.08 in reported diluted EPS) in the fourth-quarter 2006 related to the sale of the Consumer Healthcare business.

Pfizer recorded full-year 2007 revenues of $48.6 billion, an increase of 1% compared with $48.4 billion in 2006, notwithstanding the loss of U.S. exclusivity of Norvasc and Zoloft, which contributed to a decrease in Norvasc and Zoloft revenues of $3.4 billion. The 1% increase reflects the favorable impact of foreign exchange, which increased revenues by approximately $1.5 billion or 3%, in addition to the strong performance of many new and in-line products.

For the full-year 2007, the Company posted reported net income of $8.3 billion, a decrease of 57% compared with $19.3 billion in 2006, and reported diluted EPS of $1.20, a decrease of 55% compared with $2.66 in 2006. The decline was primarily attributable to the one-time after-tax gain of $7.9 billion ($1.08 in reported diluted EPS) in 2006 related to the sale of the Consumer Healthcare business as well as after-tax charges of $2.1 billion in the third-quarter 2007 related to the write-off of assets and other costs associated with Pfizer’s decision to exit Exubera.

For the fourth-quarter 2007, Pfizer posted adjusted income⁽¹⁾ of $3.6 billion, an increase of 17% compared with $3.0 billion in the year-ago quarter, and adjusted diluted EPS⁽¹⁾ of $0.52, an increase of 21% compared with $0.43 in the year-ago quarter. For the full-year 2007, the Company posted adjusted income⁽¹⁾ of $15.3 billion, an increase of 2% compared with $15.0 billion in 2006, and adjusted diluted EPS⁽¹⁾ of $2.20, an increase of 7% compared with $2.06 in 2006. Fourth-quarter and full-year 2007 adjusted income⁽¹⁾ and adjusted diluted EPS⁽¹⁾ were favorably impacted by foreign exchange and the Company’s cost-reduction initiatives, and were also impacted by revenues as discussed above. Adjusted diluted EPS⁽¹⁾ was also positively impacted by Pfizer’s purchase of $10.0 billion of the Company’s stock in 2007, approximately $2.5 billion of which was purchased in the fourth quarter.

Executive Commentary

“In 2007, we delivered solid performance, and made structural and operational changes to enhance the future performance of our company,” said Chairman and Chief Executive Officer Jeff Kindler. “With strong product performance, cost reductions, improved productivity and the benefits of foreign exchange, we achieved both revenue and adjusted diluted EPS⁽¹⁾ growth despite losing U.S. market exclusivity for Norvasc and Zoloft. This performance highlights not only Pfizer’s operating and financial strength, but also our determination to meet our objectives in a challenging marketplace.”

“We are executing against a broad plan to position Pfizer to deliver long-term value. Our new products -- Lyrica, Chantix, and Sutent -- are performing well. We are continuing to strengthen our senior leadership team and enhance accountability. We are shifting investments into high-priority therapeutic areas, revamping our R&D operations and acquiring new compounds and technologies that we believe are especially promising. These actions taken together have made Pfizer a stronger company than it was a year ago, and we look forward to continued progress in 2008,” added Kindler.

“Our results reflect our solid financial performance this quarter and year,” said Chief Financial Officer, Frank D’Amelio. “We continue to focus on building value by achieving our financial goals, maintaining spending discipline, prudently allocating our capital, and improving our cost structure. With respect to our cost structure, we continue to execute on our plans to reduce expenses and improve productivity. In 2007, among other activities, we reduced headcount by more than 11,000; exited six manufacturing sites and two R&D sites; continued to streamline our organization; and we remain on track to achieve in 2008 an absolute reduction of adjusted total costs⁽⁸⁾ of at least $1.5 to $2.0 billion on a constant currency basis⁽⁹⁾ as compared to 2006.”

“We are increasing our full-year 2008 revenue guidance to a range of $47.0 to $49.0 billion and providing additional full-year details,” continued D’Amelio. “As always, quarterly results may vary depending upon the seasonality of revenues and spending, as well as the timing of the loss of U.S. exclusivity and patent expirations of certain products, among other things. First-quarter 2008 revenues may not be comparable to the first-quarter 2007 revenues as a result of the loss of U.S. exclusivity of Norvasc, Camptosar (February 2008) and Zyrtec (January 2008), which we will cease selling this month following the anticipated launch of over-the-counter Zyrtec. Collectively, these products contributed U.S. revenues of about $1.1 billion in the first-quarter 2007 and $2.7 billion in the full-year 2007. We have considered these factors in our full-year 2008 guidance.”

“In 2007, we purchased $10.0 billion of Pfizer common stock. As part of our continuing effort to deliver strong total shareholder return, the Board of Directors authorized a new program to purchase up to $5.0 billion of the company’s common stock over time. In addition, we announced in December a 10% increase in our first-quarter 2008 dividend to $0.32 a share, marking our 41^st consecutive year of annual dividend increases for Pfizer shareholders.”

Product Performance

Pharmaceuticals

Pharmaceutical revenues for the fourth-quarter 2007 were $11.9 billion, an increase of 2% compared with the prior-year quarter, including the favorable impact of foreign exchange, which increased revenues by approximately $550 million or 5%. Fourth-quarter 2007 revenues from in-line and new products⁽⁴⁾ increased 9% compared with the year-ago quarter. Revenues for Zoloft and Norvasc, which lost U.S. marketing exclusivity in 2006 and 2007, respectively, declined 47% compared with the year-ago quarter.

Full-year 2007 pharmaceutical revenues were $44.6 billion, a decrease of 1% compared with 2006, despite the positive impact of foreign exchange, which increased revenues by approximately $1.3 billion or 3%. Full-year 2007 revenues from in-line and new products⁽⁴⁾ grew 8% compared with 2006. Revenues for Zoloft and Norvasc declined 49% in 2007 compared with 2006.

Lipitor revenues in the fourth-quarter 2007 were $3.4 billion, an increase of 3% compared with the prior-year quarter; this includes the favorable impact of foreign exchange, which increased revenues by approximately $150 million or 4%. In the U.S., Lipitor revenues declined 4% during the quarter, while revenues from international markets rose 13%. Full-year 2007 Lipitor revenues were $12.7 billion, a decrease of 2% compared with 2006; this includes the favorable impact of foreign exchange, which increased revenues by approximately $360 million or 3%. In the U.S., Lipitor revenues declined 8% during 2007, while revenues from international markets increased 9%. The U.S. statin market in particular continues to be highly competitive, with both branded and generic competition in an increasingly cost-sensitive environment. Pfizer continues to respond to this competition with an integrated, multi-channel effort emphasizing Lipitor’s strong clinical profile.

Celebrex revenues in the fourth-quarter 2007 were $637 million, an increase of 18% compared with the year-ago quarter. Full-year 2007 Celebrex revenues were $2.3 billion, an increase of 12% compared with 2006. In the U.S., Pfizer’s focus continues to include a direct-to-consumer advertising campaign aimed at further generating patient interest and initiating a valuable dialogue between patients and physicians about Celebrex.

Revenues from new products, including Chantix (known as Champix outside the U.S.), Sutent and Lyrica, grew significantly in both the fourth-quarter and full-year 2007 compared with the corresponding periods in 2006. In the fourth-quarter 2007, Chantix continued its strong performance with revenues of $280 million compared with $68 million in the fourth-quarter 2006. For the full-year 2007, Chantix revenues were $883 million compared with $101 million in 2006, the year it was launched. Chantix, the first non-nicotine prescription treatment for smoking cessation in almost a decade, has already been used by more than five million patients globally since its launch.

In the fourth-quarter 2007, revenues from Sutent, an important medicine for the treatment of advanced kidney cancer and gastrointestinal stromal tumors, were $182 million, an increase of 75% compared with the year-ago quarter. Sutent revenues for the full-year 2007 were $581 million, an increase of 166% compared with 2006.

In the fourth-quarter 2007, Lyrica revenues were $564 million, an increase of 60% compared with the prior-year quarter. Lyrica revenues for the full-year 2007 were $1.8 billion, an increase of 58% compared with 2006. Fourth-quarter and full-year 2007 revenue growth was driven by strong efficacy and high patient and physician satisfaction in the marketplace, as well as Lyrica’s recent FDA approval for the management of fibromyalgia. Lyrica is the only medicine indicated for this chronic, widespread pain condition. In addition, a branded direct-to-consumer campaign was initiated in the U.S. in late November 2007.

Animal Health

Animal Health revenues for the fourth-quarter 2007 were $785 million, an increase of 20% compared with $655 million in the year-ago quarter. For the full-year 2007, Animal Health revenues were $2.6 billion, an increase of 14% compared with $2.3 billion in 2006. Fourth-quarter and full-year 2007 revenue growth is attributable to strong product performance, as well as the favorable impact of foreign exchange which increased revenues by 7% for the fourth quarter and 5% for the full year.

Expenses

In the fourth-quarter 2007, adjusted cost of sales⁽¹⁾ as a percentage of revenues was 17.4% compared with 16.6% in the fourth-quarter 2006. For the full-year 2007, adjusted cost of sales⁽¹⁾ as a percentage of revenues was 15.9% compared with 14.9% in 2006, above previous guidance of about 15.5%. The favorable impact of our ongoing cost-reduction efforts in both the fourth-quarter and full-year 2007 was more than offset by the unfavorable impact of geographic and business mix as well as unfavorable foreign exchange on expenses compared with the respective year-ago periods.

Adjusted selling, informational and administrative (SI&A) expenses⁽¹⁾ were $4.5 billion in the fourth-quarter 2007, an increase of 1% compared with the prior-year quarter. For the full-year 2007, adjusted SI&A expenses⁽¹⁾ were $15.2 billion, a decrease of 1% compared with 2006. The favorable impact of our ongoing cost-reduction efforts in both the fourth-quarter and full-year 2007 was largely offset by the unfavorable impact of foreign exchange on expenses compared with the respective year-ago periods. Excluding the unfavorable impact of foreign exchange on expenses, adjusted SI&A expenses⁽¹⁾ in the full-year 2007 decreased by $560 million compared to 2006, somewhat less than previous guidance.

Adjusted research and development (R&D) expenses⁽¹⁾ were $2.2 billion in the fourth-quarter 2007, a decrease of 9% compared with the year-ago quarter, due primarily to the realization of savings associated with our cost-reduction initiatives partially offset by the unfavorable impact of foreign exchange on expenses. Full-year 2007 adjusted R&D expenses⁽¹⁾ were $7.5 billion, comparable to 2006 and in-line with previous guidance.

Financial Guidance

For the full-year 2008, Pfizer’s financial guidance, at current exchange rates⁽⁷⁾ except as otherwise noted, is summarized below.

For additional details, please see the attached financial schedules, product revenue tables, supplemental financial information and Disclosure Notice.

(1) "Adjusted income" and its components and "adjusted diluted earnings per share (EPS)" are defined as reported net income and its components and reported diluted EPS 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. As described under AdjustedIncome 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 September 30, 2007, 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. Reconciliations of fourth-quarter and full-year 2007 and 2006 adjusted income and its components and adjusted diluted EPS to reported net income and its components and reported diluted EPS, as well as reconciliations of full-year 2008 adjusted income and adjusted diluted EPS guidance to full-year 2008 reported net income and reported diluted EPS guidance, are provided in the materials accompanying this report. The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and diluted EPS.

(2) Represents worldwide revenues for all pharmaceutical products, excluding revenues included in notes (3) and (5).

(3) Represents worldwide revenues for pharmaceutical products launched in the U.S. since 2005: Chantix/Champix, Eraxis, Lyrica, Macugen, Revatio, Selzentry/Celsentri, Sutent and Zmax.

(4) Total worldwide pharmaceutical revenues excluding the revenues of major products that have lost exclusivity in the U.S. in 2006 and 2007 as described in note (5). See the table accompanying this report.

(5) Represents worldwide revenues for pharmaceutical products that lost exclusivity in the U.S. in 2006 and 2007: Zoloft and Norvasc.

(6) Includes Consumer Healthcare business transition activity, Capsugel and Pfizer Centersource.

(7) Current exchange rates approximate rates at the time of our fourth quarter earnings press release (January 2008).

(8) Represents primarily the total of Adjusted Cost of Sales⁽¹⁾, Adjusted SI&A expenses⁽¹⁾ and Adjusted R&D expenses⁽¹⁾.

(9) Constant currency basis means that the applicable projected financial measure is based upon the actual foreign exchange rates in effect during 2006.

1) Impact of Foreign Exchange on Revenues

The weakening of the U.S. dollar relative to other currencies, primarily the euro, U.K. pound and Canadian dollar, favorably impacted our revenues by approximately $610 million, or 5%, in the fourth quarter of 2007, compared to the same period in 2006, and approximately $1.5 billion, or 3%, in the full-year 2007, compared to the same period in 2006.

2) Charges Related to Exubera

In the third quarter of 2007, after an assessment of the financial performance of Exubera, an inhalable form of insulin for the treatment of diabetes, as well as its lack of acceptance by patients, physicians and payers, we decided to exit the product.

Our Exubera-related exit plans included working with physicians over a three-month period, to transition patients to other treatment options, evaluating redeployment options for colleagues, working with our partners and vendors with respect to transition and exit activities, concluding outstanding clinical trials, implementing an extended transition program for those patients unable to transition to other medications within a three-month period, and exploring asset disposal or redeployment opportunities, as appropriate, among other activities.

As part of this exit plan, in the fourth quarter of 2007, we paid $135 million to one of our partners in satisfaction of all remaining obligations under existing agreements relating to Exubera and a next generation insulin (NGI) under development. In addition, in the event that a new partner is selected, Pfizer has agreed to transfer its remaining rights and all economic benefits for Exubera and NGI. This transfer of Pfizer’s interests would include the transfer of the Exubera New Drug Application and Investigational New Drug Applications and all ex-U.S. regulatory filings and applications, continuation of ongoing Exubera clinical trials and certain supply chain transition activities.

Total pre-tax charges for full-year 2007 were $2.8 billion, virtually all of which were recorded in the third quarter of 2007. The income statement line items in which the various charges are recorded are as follows: