NEW YORK, Jan. 22 /PRNewswire-FirstCall/ -- Pfizer Inc today announced that revenues for full-year 2006 increased 2 percent, reported diluted EPS grew 144 percent, and adjusted diluted EPS(1) grew 6 percent versus 2005. Revenues in the fourth quarter of 2006 were substantially unchanged, reported diluted EPS grew 257 percent, and adjusted diluted EPS(1) decreased 12 percent versus the comparable quarter in 2005.
"In the face of many challenges in 2006, we substantially achieved a number of financial targets that we set early in the year," said Pfizer Chairman and Chief Executive Officer Jeffrey B. Kindler. "We took decisive action and delivered solid performance despite challenges, including the significant revenue impact due to the loss of exclusivity of Zithromax and Zoloft in the U.S. We achieved revenue growth of 2 percent for the year. We delivered adjusted diluted EPS(1) of $2.06, in line with our upwardly revised guidance.
"While we attained nearly all of our financial targets for the year, we continue to face a difficult operating environment, including competitive challenges and the risks inherent in drug development. Our decision to discontinue development of torcetrapib/atorvastatin in early December 2006 was disappointing and brought into sharper focus the need to transform Pfizer over time to succeed in a dynamic healthcare marketplace. We are reviewing every aspect of our business, and I look forward to discussing our priorities when we meet with analysts in New York later today," Mr. Kindler concluded.
"During the fourth quarter of 2006, we strengthened our commitment to enhancing total return to shareholders," said Vice Chairman David Shedlarz. "We completed the divestiture of the Consumer Healthcare business in the quarter, receiving approximately $16.6 billion in proceeds. Combined with projected strong cash flow from operations over the next several years, these proceeds will be used to make key investments in new products and technologies and to support a strong dividend and an active share purchase program.
"In December 2006, Pfizer announced a 21-percent increase in its first- quarter 2007 dividend to 29 cents per share. This significant increase builds on a 26-percent dividend increase in 2006. Pfizer has now increased its dividend every year for 40 consecutive years, and in the past 10 years the company's dividend has increased on average 18 percent per year. The company also continued its substantial share purchase program by buying $2.5 billion of its common stock in the fourth quarter of 2006. Pfizer purchased $7.0 billion of common stock during 2006. During the past five years, Pfizer has purchased more than $35 billion of its common stock."
Pfizer's Pharmaceutical Operations Substantially Meet Targets for Key In-Line Products
"Worldwide pharmaceutical 2006 revenues met our expectations," said Ian Read, President of Worldwide Pharmaceutical Operations. "We focused on the top-line growth of key in-line medicines, including Lipitor, Celebrex, Lyrica, and Geodon, and we launched Sutent, Eraxis, Chantix, and Exubera in the U.S."
Worldwide pharmaceutical revenues were $45.1 billion for full-year 2006, a 2-percent increase compared to full-year 2005. In the U.S., revenues increased 4 percent for the full-year 2006 compared to the same period in 2005. A strong performance in the U.S. was driven by growth from several of our core products, including Lipitor (up 6 percent), Celebrex (up 24 percent), Geodon (up 31 percent), Norvasc (up 13 percent), Xalatan (up 12 percent), Zyrtec (up 15 percent), Detrol (up 14 percent), Zyvox (up 20 percent), Vfend (up 27 percent), Aromasin (up 34 percent), and Caduet (up 95 percent), as well as the successful launches of several new medicines.
Worldwide pharmaceutical operations substantially met the sales targets established at the beginning of the year for several key brands. Notwithstanding our original sales target of more than $13 billion for Lipitor, actual sales totaled $12.886 billion, representing 6-percent growth -- a substantial accomplishment in the face of intense branded and generic competition in the statin market. For Celebrex, sales of $2.039 billion exceeded our original goal of achieving sales of more than $2 billion, demonstrating that we are on our way to rebuilding physician and patient confidence in this important medicine. Worldwide sales of $1.156 billion for Lyrica significantly exceeded both the initial target of more than $900 million and the subsequent, raised target of more than $1 billion, a performance that establishes Lyrica as one of the most successful pharmaceutical market entries in recent years. Geodon reached $758 million in worldwide revenues, just short of our target of about $800 million. Nine Pfizer products surpassed $1 billion in sales in 2006, with Detrol and Lyrica joining this list for the first time.
Pharmaceutical revenues for the fourth quarter of 2006 were $11.7 billion worldwide, comparable to those in the fourth quarter of 2005, and were $6.1 billion in the U.S., down 3 percent, mainly reflecting the loss of exclusivity of Zoloft in the U.S. in June 2006. Worldwide sales of Celebrex, Geodon, and Lyrica in the fourth quarter of 2006 grew 15 percent, 32 percent, and 131 percent, respectively.
New Products Continue to Gain Momentum
2006 was an exciting year of product launches. Against an original target of six new-product entries in the U.S., we launched four products -- Eraxis, Sutent, Exubera, and Chantix. In Europe, Sutent and Exubera entered the marketplace, and Champix (the trade name for Chantix in Europe) was launched beginning in December 2006. Several key medicines received approval for new indications in 2006, including approvals of Lyrica for central neuropathic pain and generalized anxiety disorder in the EU, and Celebrex for juvenile rheumatoid arthritis in the U.S.
Progress Achieved in New-Product Pipeline
"We continued to advance the candidates in our pipeline during the fourth quarter of 2006," said Dr. John LaMattina, President, Pfizer Global Research and Development. Maraviroc, our CCR5 receptor antagonist to treat HIV infection, was submitted for approval in the U.S. and EU in December 2006. Maraviroc has been accepted for filing and granted an accelerated review in the EU.
A supplemental NDA filing for Lyrica in the treatment of fibromyalgia was submitted to the FDA on December 20, 2006. Fibromyalgia is characterized by chronic, widespread pain that affects tens of millions of people worldwide, predominantly women. It is frequently accompanied by disturbed sleep, anxious mood, and poor quality of life. Pfizer is excited about Lyrica as a potential breakthrough for patients for treatment in this area and expects approval and launch of this new indication in the U.S. in the second half of 2007.
Four new programs advanced into Phase 3 during the quarter: -- Axitinib, our next-generation anti-angiogenesis agent to treat thyroid cancer, -- CP-945,598, our cannabinoid-1 antagonist to treat obesity and its devastating complications, -- Sutent for the treatment of metastatic breast cancer, and -- Zithromax/chloroquine to treat malaria, the single greatest killer of children in Africa.
Pfizer recently provided more detail on its pipeline than ever before with the launch of an on-line site for tracking development compounds across Pfizer's largest-ever pipeline. This new website, launched last month, will be updated twice a year and is available at http://www.pfizer.com/pipeline.
Pfizer Achieves Full-Year 2006 Financial Goals
In reviewing full-year 2006 results, Alan Levin, chief financial officer, said, "Pfizer delivered adjusted diluted EPS(1) of $2.06 for the full year, in line with our most recent guidance and representing growth of 6 percent compared to full-year 2005 adjusted diluted EPS(1) of $1.95. Adjusted diluted EPS(1) was well ahead of our original 2006 guidance of about $1.93 (restated to reflect the sale of our Consumer Healthcare business) due in part to greater savings associated with our broad-based Adapting to Scale (AtS) productivity program (savings of approximately $2.6 billion for the full year versus our original goal of about $2 billion), a lower effective tax rate, and fewer shares outstanding given increased share purchases. Reported diluted EPS of $2.66 included a one-time gain of $1.08 ($7.9 billion) associated with the recently completed divestiture of Pfizer Consumer Healthcare (PCH), among other factors.
"For the fourth quarter of 2006, adjusted diluted EPS(1) of $.43 declined by 12 percent relative to the comparable period in 2005, reflecting the timing of certain operating expenses in 2006. The cost of sales pre-tax component of adjusted income(1) in the quarter increased by 11 percent, reflecting the timing of implementation of inventory management initiatives, the impact of foreign exchange, and charges related to certain asset writedowns. The R&D pre-tax component of adjusted income(1) in the quarter grew by 22 percent, reflecting timing considerations associated with the advancement of development programs for pipeline products, expenditures associated with in- licensing of a new compound, and the establishment of various research collaborations with third parties, among other factors. Reported net income of $9.4 billion for the fourth quarter included a gain of $7.9 billion on the sale of our Consumer Healthcare business, as well as purchase-accounting- related charges, costs associated with our expanded AtS productivity initiative, and a $320 million charge related to the impairment of intangible assets associated with Depo-Provera, a contraceptive product.
"We will discuss our forward-looking financial guidance during this afternoon's analyst meeting," Mr. Levin concluded.
For additional details, please see the attached financial schedules, product revenue tables, supplemental financial information, and Disclosure Notice.
(1) "Adjusted income" and "adjusted diluted earnings per share (EPS)" are defined as reported net income and reported diluted EPS excluding purchase-accounting adjustments, acquisition-related costs, discontinued operations, cumulative effect of a change in accounting principles, and certain significant items. As described under Adjusted Income 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 October 1, 2006, 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 2006 and 2005 adjusted income and adjusted diluted EPS to reported net income and reported diluted EPS, as well as a reconciliation of the original $1.93 estimate of full-year 2006 adjusted diluted EPS to reported diluted EPS, are provided in the materials accompanying this report. The adjusted income and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and diluted EPS. PFIZER INC AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (millions of dollars, except per common share data) Fourth Quarter % Incr./ Full Year % Incr./ 2006 2005 (Decr.) 2006 2005 (Decr.) Revenues $12,603 $12,547 - $48,371 $47,405 2 Costs and expenses: Cost of sales(a) 2,217 1,982 12 7,640 7,232 6 Selling, informational and administrative expenses(a) 4,562 4,356 5 15,589 15,313 2 Research and development expenses(a) 2,412 1,970 22 7,599 7,256 5 Amortization of intangible assets 815 830 (2) 3,261 3,399 (4) Acquisition-related in-process research and development charges 322 - * 835 1,652 (49) Restructuring charges and acquisition- related costs 507 573 (12) 1,323 1,356 (2) Other (income)/deductions -- net 54 (306) * (904) 397 * Income from continuing operations before provision for taxes on income, minority interests and cumulative effect of a change in accounting principles 1,714 3,142 (45) 13,028 10,800 21 Provision for taxes on income 223 536 (58) 1,992 3,178 (37) Minority interests 2 6 (65) 12 12 4 Income from continuing operations before cumulative effect of a change in accounting principles 1,489 2,600 (43) 11,024 7,610 45 Discontinued operations: Income from discontinued operations -- net of tax 103 152 (32) 433 451 (4) Gains on sales of discontinued operations -- net of tax 7,857 3 M+ 7,880 47 M+ Discontinued operations -- net of tax 7,960 155 M+ 8,313 498 M+ Income before cumulative effect of a change in accounting principles 9,449 2,755 243 19,337 8,108 138 Cumulative effect of a change in accounting principles -- net of tax - (23) * - (23) * Net income $9,449 $2,732 246 $19,337 $8,085 139 Earnings per common share - Basic: Income from continuing operations before cumulative effect of a change in accounting principles $0.21 $0.35 (40) $1.52 $1.03 48 Discontinued operations -- net of tax 1.11 0.02 M+ 1.15 0.07 M+ Income before cumulative effect of a change in accounting principles 1.32 0.37 257 2.67 1.10 143 Cumulative effect of a change in accounting principles - - - - - - Net income $1.32 $0.37 257 $2.67 $1.10 143 Earnings per common share - Diluted: Income from continuing operations before cumulative effect of a change in accounting principles $0.21 $0.35 (40) $1.52 $1.02 49 Discontinued operations -- net of tax 1.11 0.02 M+ 1.14 0.07 M+ Income before cumulative effect of a change in accounting principles 1.32 0.37 257 2.66 1.09 144 Cumulative effect of a change in accounting principles - - - - - - Net income $1.32 $0.37 257 $2.66 $1.09 144 Weighted-average shares used to calculate earnings per common share: Basic 7,144 7,327 7,242 7,361 Diluted 7,171 7,368 7,274 7,411 (a) Exclusive of amortization of intangible assets, except as discussed in footnote 4 below. * Calculation not meaningful. M+ Change greater than one-thousand percent. Certain amounts and percentages may reflect rounding adjustments. 1. The above financial statement presents the three-month and twelve- month periods ended December 31 of each year. Subsidiaries operating outside the United States are included for the three-month and twelve- month periods ended November 30 of each year. 2. In December 2006, we sold our Consumer Healthcare business for approximately $16.6 billion. The above financial statement reflects this business as discontinued operations for all periods through December 20, 2006, including our international subsidiaries. 3. As required, the estimated value of Acquisition-related in-process research and development charges(IPR&D) is expensed at acquisition date. In 2006, we expensed $835 million of IPR&D, of which $322 million related to our acquisition of PowderMed Ltd. in the fourth quarter and $513 million primarily related to our acquisition of Rinat Neurosciences Corp. in the second quarter. In 2005, we expensed $1.7 billion of IPR&D, of which $1.4 billion related to our acquisition of Vicuron Pharmaceuticals, Inc in the third quarter and $262 million related primarily to our acquisition of Idun Pharmaceuticals, Inc. in the second quarter. 4. Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute our products are included in Amortization of intangible assets as they benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function are included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate. 5. Other (income)/deductions -- net for the fourth quarter and full year 2006 includes a charge of $320 million related to the impairment of the Depo-Provera intangible asset and, for the full year 2005, includes a charge of $1.2 billion related to the impairment of the Bextra intangible asset. 6. Discontinued operations -- net of tax is primarily related to our Consumer Healthcare business. 7. Provision for taxes on income in the full year 2006 includes a downward revision ($124 million) of the estimated tax costs related to repatriation of foreign earnings in 2005 and tax benefits associated with the resolution of certain tax positions ($441 million). Full year 2005 includes tax benefits associated with the resolution of certain tax positions ($586 million) and a tax provision related to the repatriation of foreign earnings of $1.7 billion. PFIZER INC AND SUBSIDIARY COMPANIES RECONCILIATION FROM REPORTED NET INCOME AND REPORTED DILUTED EARNINGS PER SHARE TO ADJUSTED INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (UNAUDITED) (millions of dollars, except per common share data) Fourth Quarter % Incr./ Full Year % Incr./ 2006 2005 (Decr.) 2006 2005 (Decr.) Reported net income $9,449 $2,732 246 $19,337 $8,085 139 Purchase accounting adjustments -- net of tax 899 569 58 3,131 3,967 (21) Acquisition-related costs -- net of tax 5 214 (98) 14 599 (98) Discontinued operations -- net of tax (7,960) (155) M+ (8,313) (498) M+ Cumulative effect of a change in accounting principles -- net of tax - 23 * - 23 * Certain significant items -- net of tax 654 208 214 813 2,293 (65) Adjusted income $3,047 $3,591 (15) $14,982 $14,469 4 Reported diluted earnings per common share $1.32 $0.37 257 $2.66 $1.09 144 Purchase accounting adjustments -- net of tax 0.13 0.08 63 0.43 0.54 (20) Acquisition-related costs -- net of tax - 0.03 * - 0.08 * Discontinued operations -- net of tax (1.11) (0.02) M+ (1.14) (0.07) M+ Cumulative effect of a change in accounting principles -- net of tax - - * - - * Certain significant items -- net of tax 0.09 0.03 200 0.11 0.31 (65) Adjusted diluted earnings per common share $0.43 $0.49 (12) $2.06 $1.95 6 * Calculation not meaningful. M+ Change greater than one thousand percent. Certain amounts and percentages may reflect rounding adjustments. 1. The above reconciliation presents the three-month and twelve-month periods ended December 31 of each year. Subsidiaries operating outside the United States are included for the three-month and twelve-month periods ended November 30 of each year. 2. Adjusted income and Adjusted diluted earnings per common share as shown above reflect the following items: (millions of dollars) Fourth Quarter Full Year 2006 2005 2006 2005 Purchase accounting adjustments: In-process research and development charges(a) $322 $- $835 $1,652 Intangible amortization and other(b) 806 802 3,220 3,289 Total purchase accounting adjustments, pre-tax 1,128 802 4,055 4,941 Income taxes (229) (233) (924) (974) Total purchase accounting adjustments -- net of tax 899 569 3,131 3,967 Acquisition-related costs: Integration costs(c) 13 159 21 543 Restructuring charges(c) (1) 149 6 375 Total acquisition-related costs, pre-tax 12 308 27 918 Income taxes (7) (94) (13) (319) Total acquisition-related costs -- net of tax 5 214 14 599 Discontinued operations: Income from discontinued operations(d) (150) (230) (643) (695) Gains on sales of discontinued operations(d) (10,206) (5) (10,243) (77) Total discontinued operations, pre-tax (10,356) (235) (10,886) (772) Income taxes 2,396 80 2,573 274 Total discontinued operations -- net of tax (7,960) (155) (8,313) (498) Cumulative effect of a change in accounting principles -- net of tax - 23 - 23 Certain significant items: Asset impairment charges and other associated costs(e) 320 24 320 1,240 Sanofi-aventis research and development milestone(f) - - (118) - Restructuring charges - Adapting to Scale(c) 495 265 1,296 438 Implementation costs - Adapting to Scale(g) 241 192 788 325 Gain on disposals of investments and other(h) (13) (134) (173) (134) Total certain significant items, pre-tax 1,043 347 2,113 1,869 Income taxes (389) (104) (735) (654) Resolution of certain tax positions(i) - - (441) (586) Tax impact for the repatriation of foreign earnings(i) - (35) (124) 1,664 Total certain significant items -- net of tax 654 208 813 2,293 Total purchase accounting adjustments, acquisition-related costs, discontinued operations, cumulative effective of a change in accounting principles and certain significant items -- net of tax $(6,402) $859 $(4,355) $6,384 (a) Included in Acquisition-related in-process research and development charges. (b) Included primarily in Amortization of intangible assets. (c) Included in Restructuring charges and acquisition-related costs. (d) Discontinued operations -- net of tax is primarily related to our Consumer Healthcare business. (e) Included primarily in Other (income)/deductions -- net. For the fourth quarter and full year 2006, includes $320 million related to the impairment of the Depo-Provera intangible asset, and for the full year 2005, includes $1.2 billion related to the impairment of the Bextra intangible asset. (f) Included in Research and development expenses. (g) Included in Cost of sales ($114 million), Selling, informational and administrative expenses ($83 million) and Research and development expenses ($44 million) for the three months ended December 31, 2006 and included in Cost of sales ($392 million), Selling, informational and administrative expenses ($243 million), Research and development expenses ($176 million) and in Other (income)/deductions-net ($23 million income) for the full year ended December 31, 2006. Included in Cost of sales ($87 million), Selling, informational and administrative expenses ($75 million) and Research and development expenses ($30 million) for the three months ended December 31, 2005 and included in Cost of sales ($124 million), Selling, informational and administrative expenses ($151 million), Research and development expenses ($50 million) for the full year ended December 31, 2005. (h) Included in Other (income)/deductions -- net. (i) Included in Provision for taxes on income. PFIZER INC SEGMENT/PRODUCT REVENUES FOURTH QUARTER 2006 (millions of dollars) WORLDWIDE U.S. INTERNATIONAL % % % 2006 2005 Chg 2006 2005 Chg 2006 2005 Chg TOTAL REVENUES 12,603 12,547 - 6,404 6,609 (3) 6,199 5,938 4 PHARMA- CEUTICAL 11,666 11,653 - 6,055 6,246 (3) 5,611 5,407 4 - CARDIOVASCULAR AND METABOLIC DISEASES 5,243 5,068 3 2,865 2,787 3 2,378 2,281 4 LIPITOR 3,335 3,357 (1) 1,945 2,069 (6) 1,390 1,288 8 NORVASC 1,317 1,244 6 686 613 12 631 631 - CARDURA 140 146 (4) 2 2 35 138 144 (4) CADUET 115 65 77 109 63 71 6 2 333 ACCUPRIL/ ACCURETIC 68 44 56 5 (25)(122) 63 69 (9) CHANTIX/ CHAMPIX 68 - * 68 - * - - * - CENTRAL NERVOUS SYSTEM DISORDERS 1,251 1,673 (25) 597 1,023 (42) 654 650 1 ZOLOFT 166 808 (79) 76 653 (88) 90 155 (42) LYRICA 353 153 131 214 82 160 139 71 98 GEODON/ ZELDOX 210 159 32 176 131 34 34 28 24 NEURONTIN 120 141 (15) 18 27 (34) 102 114 (11) ARICEPT** 98 90 9 - - * 98 90 8 XANAX/ XR 81 102 (21) 15 35 (59) 66 67 (1) RELPAX 81 63 27 52 38 38 29 25 11 - ARTHRITIS AND PAIN 737 650 13 477 402 19 260 248 5 CELEBREX 540 472 15 412 357 16 128 115 12 - INFECTIOUS AND RESPIRATORY DISEASES 866 1,111 (22) 256 513 (50) 610 598 2 ZYVOX 223 164 36 144 118 22 79 46 70 ZITHROMAX/ ZMAX 109 402 (73) (3) 262 (101) 112 140 (20) VFEND 148 112 31 49 40 23 99 72 36 DIFLUCAN 109 128 (15) (13) (1) M+ 122 129 (5) - UROLOGY 754 727 4 429 410 5 325 317 3 VIAGRA 450 430 5 222 212 5 228 218 5 DETROL/ DETROL LA 290 283 2 201 193 5 89 90 (3) - ONCOLOGY 641 497 29 273 167 64 368 330 11 CAMPTOSAR 235 237 (1) 127 124 3 108 113 (4) ELLENCE 76 94 (20) 11 17 (33) 65 77 (17) AROMASIN 91 71 29 30 25 23 61 46 33 SUTENT 104 - * 69 - * 35 - * - OPHTHALMOLOGY 396 362 9 123 116 6 273 246 11 XALATAN/ XALACOM 391 361 8 123 116 6 268 245 9 - ENDOCRINE DISORDERS 261 266 (2) 67 86 (23) 194 180 7 GENOTROPIN 209 204 3 61 60 2 148 144 3 - ALL OTHER 1,127 991 14 746 559 33 381 432 (11) ZYRTEC/ ZYRTEC D 374 327 14 374 327 14 - - * - ALLIANCE REVENUE (Aricept, Macugen, Mirapex, Olmetec, Rebif and Spiriva) 390 308 26 222 183 21 168 125 34 ANIMAL HEALTH 655 630 4 281 283 (1) 374 347 8 OTHER *** 282 264 7 68 80 (15) 214 184 16 * - Calculation not meaningful. ** - Represents direct sales under license agreement with Eisai Co., Ltd. *** - Includes Capsugel and Pfizer CenterSource. M+ - Change greater than one-thousand percent. Certain amounts and percentages may reflect rounding adjustments. Certain prior year data have been reclassified to conform to the current year presentation. PFIZER INC SEGMENT/PRODUCT REVENUES TWELVE MONTHS 2006 (millions of dollars) WORLDWIDE U.S. INTERNATIONAL % % % 2006 2005 Chg 2
