Company's Plan Focuses On: NEW YORK, Jan. 22 /PRNewswire-FirstCall/
-- Pfizer Chairman and Chief Executive Officer Jeffrey B. Kindler
today announced the company's immediate priorities to drive
improved performance, position Pfizer for future success and
enhance total shareholder return. Executing on those priorities
will mark the beginning of an ongoing process to change the way
Pfizer does business. "Pfizer is a great company with a great
future," Kindler said. "We are facing significant challenges,
however, in a profoundly changing business environment. I believe
we must fundamentally change the way we run our company to meet
these challenges and to take advantage of the diverse and
attractive opportunities that we see in the marketplace. "We need
to maximize near- and long-term revenues from our current product
portfolio, from our pipeline and from external opportunities," he
added. "We must reduce our absolute costs and put in place a more
flexible cost structure. We are establishing smaller operating
units that can enhance innovation and accountability while still
drawing on the advantages that our scale and resources provide. We
also are taking steps to enhance our collaborations with patients,
customers, scientists and business partners, as well as to make
Pfizer an even better place to work for our people. We believe
executing against these key priorities will help Pfizer continue as
a market and industry leader in the 21st century, and in the
process, deliver superior shareholder returns over the short,
medium and long term." PFIZER'S IMMEDIATE PRIORITIES In a meeting
with financial analysts today, Kindler and several other members of
Pfizer's leadership team -- including David Shedlarz, Vice
Chairman; Ian Read, the head of Worldwide Pharmaceutical
Operations; and Dr. John LaMattina, the head of Pfizer Global
Research and Development -- discussed the challenges and
opportunities facing the company and summarized Pfizer's most
immediate priorities. Priority One: Maximize revenues in both the
short and the long term. * Pfizer plans to maximize revenues from
its current in-line portfolio and new products. In 2007, the
company will further highlight Lipitor's unique package of
benefits, build on an outstanding 2006 for Celebrex, continue
Lyrica's momentum, and introduce campaigns in support of newer
medicines. In pursuing these efforts, Pfizer plans to work
differently with its customers - listening better, testing new
approaches, scaling up what's working and, in the process, making
the company's medicines even more valuable. * To expand future
revenues, Pfizer is taking a number of actions to deliver more
products of greater value more quickly. The company will step up
its Research and Development investment in areas that are
especially promising. In biotherapeutics, Pfizer will strengthen
its capabilities in vaccines and antibodies. It is also
dramatically simplifying the organizational structure of R&D to
increase accountability, flexibility, innovation and
entrepreneurship. In addition, the company will complement its
accelerated internal efforts with business development activities
that will secure new medicines as well as related products and
services designed to enhance the value of its medicines. David
Shedlarz said, "We recognize that business development is critical
to our ability to drive revenue growth in the medium to long term,
along with growing our core products, successfully launching new
products, and developing and accelerating our internal R&D
pipeline. We are making the changes needed to our strategy,
approach and capital allocation to best ensure our success in this
area." Pfizer plans to launch two new externally sourced products
each year beginning in 2010. Priority Two: Establish a smaller and
more flexible cost base. * Pfizer will generate cost savings
through site rationalization in research and manufacturing,
streamlined organizational structures, staff function reductions,
increased outsourcing and procurement savings. The company will
reallocate many of these cost savings to more value-added
activities. After making those investments, Pfizer plans to achieve
an absolute net reduction in the pre-tax total expense component of
adjusted income(1) of between $1.5 billion and $2 billion by the
end of 2008, while continuing to invest in R&D, business
development, emerging markets and new marketing approaches. * The
company's cost reduction initiatives will result in the elimination
of about 10,000 positions or about 10 percent of Pfizer's total
worldwide workforce by the end of next year. This includes the U.S.
sales organization reductions announced previously. In Europe,
Pfizer will take steps to streamline its operations, with a
proposed reduction to its European field force by more than 20
percent -- subject to consultation with works councils and local
labor law -- while maintaining a competitive share of voice for its
medicines and a strong organization going forward. * Pfizer will
continue to consolidate its worldwide manufacturing operations with
the closure of two additional manufacturing sites -- Brooklyn, NY
and Omaha, NE. In addition, the company will pursue the sale of a
third site in Feucht, Germany, subject to consultation with works
councils and local labor law. From 2003 to 2008, Pfizer will have
reduced its network of manufacturing plants around the world from
93 to 48, including sites announced today. Pfizer manufacturing has
achieved and will continue to achieve substantial cost savings
while maintaining its high-quality manufacturing standards. * In
Research and Development, the company is planning to close three
research sites in the United States -- Ann Arbor, MI, Esperion
(also in Ann Arbor) and Kalamazoo, MI (where the company will
continue to maintain a large manufacturing and Animal Health
presence) -- and is proposing to close research sites in Nagoya,
Japan and Amboise, France, subject to consultation with works
councils and local labor law. "These and other actions will allow
us to reduce costs in support services and 'bricks and mortar' and
to redeploy hundreds of millions of dollars into the discovery and
development work of our scientists," said Dr. LaMattina. Pfizer
said it will do everything it can to offer support and benefits to
all colleagues affected by these difficult actions, and said it was
committed to working with community leaders to mitigate the impact
of these closures in whatever way it can. "These are, of course,
complex issues where we must balance many different considerations,
and they are, without doubt, among the most difficult decisions we
have to make," said Kindler. "We have thought long and hard about
these steps, because we are acutely aware of their impact on
colleagues and the communities where we are located." Priority
Three: Create smaller, more focused and entrepreneurial business
units that will enhance innovation and draw on the advantages of
our scale and resources. * Pfizer is restructuring U.S.
Pharmaceutical Operations into four distinct business units, each
led by a general manager with profit-and- loss accountability, and
a fifth business unit responsible for customer support and
specifically focused on managed care and access. No change in the
field force organization will be required as these units mirror the
existing structure. Each unit will have the dedicated resources
needed to drive the business, including medical, marketing and
sales. * Pfizer said it will simplify its R&D organization and
improve productivity by consolidating each of the research teams
focused on any given therapeutic area (TA) -- currently distributed
in multiple locations around the globe, in many cases -- to one of
four major sites. Each TA will be run by a single leader with more
responsibility, authority and accountability, as well as more
control over resource decisions. Pfizer plans to exit discovery
research in gastroenterology and dermatology, but will continue to
develop compounds already in the pipeline and to seek external
opportunities in these areas. "Our simplified structure will help
drive the growth of our expanding pipeline -- including our goal to
deliver four new internally generated products per year by 2011 --
while maintaining current R&D investment levels," said Dr.
LaMattina. "This will give us the 'best of both worlds' -- the
entrepreneurial spirit of a small company, aligned with the
world-class technologies, platforms and capabilities that only a
company of Pfizer's size can provide." Priority Four: Actively and
more meaningfully engage with customers, patients, physicians and
other collaborators to provide them with greater value. * Pfizer
said it will experiment with new approaches to bringing its
products to market, seeking new and more effective ways of
communicating with physicians and patients, inviting payers earlier
into the development process, and enhancing its collaboration with
academic and other research institutions. * Pfizer is also
committed to playing a more significant role in the national
dialogue on improving the delivery of care and patient access. "We
must be a constructive voice with our stakeholders on healthcare
policy and regulation of our products," said Kindler. "We must be
seen as a responsible and active company that is focused on
solutions that work for everyone - not just for Pfizer." Priority
Five: Make Pfizer a great place to work. * Pfizer said that, as
part of an ongoing effort to cut down on bureaucracy and reduce
management layers, it has eliminated many unnecessary committees
and cross-functional teams and is in the process of cutting at
least three to four layers of management in its pharmaceutical,
R&D and manufacturing divisions, as well as company-wide
support functions. "By reducing middle management and increasing
spans of control, we're getting leaders closer to colleagues and
customers and giving colleagues a clearer line of sight to those
aspects of the business for which they are accountable. As a
result, our managers will delegate, empower and focus on developing
colleagues more than ever, and our colleagues will grow and take on
more responsibility than ever," said Kindler. Kindler concluded, "I
am convinced that products and services that contribute
meaningfully to the public's health -- and that address areas of
major unmet medical need -- will always be highly valued. But I
believe Pfizer must transform the way we've done business in the
past in order to be successful in the future." "Obviously, this
change won't happen overnight. It will take time, it will take
discipline, and it will take determination to turn these
aspirations into reality," Kindler said. "But at Pfizer today, our
goals are clear. Our leadership understands both our challenges and
our opportunities. And we are committed to providing the value our
customers need, the working environment our employees want and the
results our owners deserve." Financial Guidance for 2007 and 2008
Pfizer provided the following financial guidance, at current
foreign exchange rates. For 2007: * Revenues Comparable to 2006 *
SI&A Pre-tax Component of Adjusted Income(1) Decreases by about
$500 Million * R&D Pre-tax Component of Adjusted Income(1)
Essentially Flat from 2006 Expenditures * Effective Tax Rate of
22.5% on Adjusted Income(1) before Taxes * Reported Diluted EPS of
$1.45 to $1.55 * Adjusted Diluted EPS(1) of $2.18 to $2.25,
Representing Growth of 6% to 9% * Up to $10 Billion in Common Stock
Purchases * Cash Flow from Operations of $12.5 Billion to $13.5
Billion For 2008: * Revenues Comparable to 2006 * Total Cost as a
Pre-tax Component of Adjusted Income(1) About $1.5 Billion to $2.0
Billion Lower than 2006 * Reported Diluted EPS of $1.75 to $1.93 *
Adjusted Diluted EPS(1) of $2.31 to $2.45, Representing Growth of
6% to 9% Long Term Outlook -- 2009-10 * Resumption of Revenue
Growth Given Contribution of New and In-Line Products and
Dissipation of Loss of Exclusivity Impact For additional details,
please see the attached supplemental financial information and
Disclosure Notice. (1) "Adjusted income" and "adjusted diluted
earnings per share (EPS)" are defined as reported net income and
reported diluted EPS excluding purchase- accounting adjustments,
acquisition-related costs, discontinued operations, cumulative
effect of a change in accounting principles, and certain
significant items. As described under Adjusted Income in the
Management's Discussion and Analysis of Financial Condition and
Results of Operations section of Pfizer's Form 10-Q for the
quarterly period ended October 1, 2006, management uses adjusted
income, among other factors, to set performance goals and to
measure the performance of the overall company. We believe that
investors' understanding of our performance is enhanced by
disclosing this measure. Reconciliations of forecasted full-year
2007 and 2008 adjusted income and adjusted diluted EPS to
forecasted reported net income and reported diluted EPS are
provided in the materials accompanying this report. The adjusted
income and adjusted diluted EPS measures are not, and should not be
viewed as, substitutes for U.S. GAAP net income and diluted EPS.
For more information on Pfizer Inc, or to request
broadcast-standard video related to this announcement, please visit
http://www.pfizer.com/. PFIZER INC SUPPLEMENTAL FINANCIAL
INFORMATION 1) Reconciliation of Forecasted 2007 and 2008 Adjusted
Income(1) and Adjusted Diluted EPS(1) to Forecasted 2007 and 2008
Reported Net Income and Reported Diluted EPS Full-Year 2007
Forecast ($ billions, except per-share amounts) Net Income(a)
Diluted EPS(a) Income/(Expense) Forecasted Adjusted Income/ Diluted
EPS(1) ~$15.1 - $15.6 ~$2.18 - $2.25 Purchase Accounting Impacts,
Net of Tax (2.4) (0.35) Adapting to Scale Costs, Net of Tax (2.4 -
2.7) (0.35 - 0.38) Forecasted Reported Net Income/ Diluted EPS
~$10.0 - $10.8 ~$1.45 - $1.55 Full-Year 2008 Forecast ($ billions,
except per-share amounts) Net Income(a) Diluted EPS(a)
Income/(Expense) Forecasted Adjusted Income/ Diluted EPS(1) ~$15.6
- $16.6 ~$2.31 - $2.45 Purchase Accounting Impacts, Net of Tax
(2.0) (0.30) Adapting to Scale Costs, Net of Tax (1.5 - 1.8) (0.22
- 0.26) Forecasted Reported Net Income/ Diluted EPS ~$11.8 - $13.1
~$1.75 - $1.93 (a) Forecasts in the table exclude the effects of
business-development transactions not completed as of December 31,
2006. (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 forecasted full-year 2007 and 2008 adjusted
income and adjusted diluted EPS to forecasted reported net income
and 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. DISCLOSURE NOTICE: The information
contained in this document and the attachments is as of January 22,
2007. The Company assumes no obligation to update any
forward-looking statements contained in this document or the
attachments as a result of new information or future events or
developments. This document and the attachments contain
forward-looking information about the Company's financial results
and estimates, business plans and prospects, in-line products, and
product candidates that involve substantial risks and
uncertainties. You can identify these statements by the fact that
they use words such as "will," "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe," "target," "forecast", and
other words and terms of similar meaning in connection with any
discussion of future operating or financial performance or business
plans and prospects. Among the factors that could cause actual
results to differ materially are the following: the success of
research and development activities; decisions by regulatory
authorities regarding whether and when to approve our drug
applications as well as their decisions regarding labeling and
other matters that could affect the availability or commercial
potential of our products; the speed with which regulatory
authorizations, pricing approvals, and product launches may be
achieved; the success of external business development activities;
competitive developments, including with respect to competitor
drugs and drug candidates that treat diseases and conditions
similar to those treated by our in-line drugs and drug candidates;
the ability to successfully market both new and existing products
domestically and internationally; difficulties or delays in
manufacturing; trade buying patterns; the ability to meet generic
and branded competition after the loss of patent protection for our
products and competitor products; the impact of existing and future
regulatory provisions on product exclusivity; trends toward managed
care and health care cost containment; possible U.S. legislation or
regulatory action affecting, among other things, pharmaceutical
pricing and reimbursement, including under Medicaid and Medicare,
the importation of prescription drugs that are marketed outside the
U.S. and sold at prices that are regulated by governments of
various foreign countries, and the involuntary approval of
prescription medicines for over-the-counter use; the impact of the
Medicare Prescription Drug, Improvement and Modernization Act of
2003; legislation or regulations in markets outside the U.S.
affecting product pricing, reimbursement, or access; contingencies
related to actual or alleged environmental contamination; claims
and concerns that may arise regarding the safety or efficacy of
in-line products and product candidates; legal defense costs,
insurance expenses, settlement costs, and the risk of an adverse
decision or settlement related to product liability, patent
protection, governmental investigations, ongoing efforts to explore
various means for resolving asbestos litigation, and other legal
proceedings; the Company's ability to protect its patents and other
intellectual property both domestically and internationally;
interest rate and foreign currency exchange rate fluctuations;
governmental laws and regulations affecting domestic and foreign
operations, including tax obligations; changes in generally
accepted accounting principles; any changes in business, political,
and economic conditions due to the threat of future terrorist
activity in the U.S. and other parts of the world, and related U.S.
military action overseas; growth in costs and expenses; changes in
our product, segment, and geographic mix; and the impact of
acquisitions, divestitures, restructurings, product withdrawals,
and other unusual items, including our ability to realize the
projected benefits of our Adapting to Scale multi-year productivity
initiative, including the projected benefits of the broadening of
this initiative over the next few years. A further list and
description of these risks, uncertainties, and other matters can be
found in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, and in its reports on Forms 10-Q and
8-K. This document may include discussion of certain clinical
studies relating to various in-line products and/or product
candidates. These studies typically are part of a larger body of
clinical data relating to such products or product candidates, and
the discussion herein should be considered in the context of the
larger body of data. DATASOURCE: Pfizer Inc CONTACT: Media - Andy
McCormick, +1-212-733-5469, or Paul Fitzhenry, +1-212-733-4637, or
Investors - Ron Aldridge, +1-212-573-3685, or Carol
Schimmelpfenneg, +1-212-573-2718 Web site: http://www.pfizer.com/
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