Pfizer, Inc. (PFE)

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Pfizer, Inc. (PFE)

Q1 2009 Earnings Call

April 28, 2009 10.00 AM ET


Chuck Triano - Senior Vice President of Investor Relations

Jeffrey Kindler - Chief Executive Officer and Chairman

Frank D'Amelio - Chief Financial Officer

Ian Read - President, Worldwide Pharmaceutical Operations

Amy Schulman - Senior Vice President and General Counsel


Catherine Arnold - Credit Suisse

Chris Schott - JPMorgan

Tim Anderson - Sanford Bernstein

Jami Rubin - Goldman Sachs

Roopesh Patel - UBS

David Wiesinger - Morgan Stanley

John Boris - Citigroup

Seamus Fernandez - Leerink Swann



Welcome to the Pfizer First Quarter 2009 Earnings Conference Call. I would now turn the call over to your host Mr. Chuck Triano, Senior Vice President of Investor Relations. You may begin, sir.

Chuck Triano

Thank you, operator. And good morning everyone. And thank you for joining us today to review our first quarter 2009 performance. I'm here with Jeff Kindler, Frank D'Amelio, Ian Read, Martin Mackay and Amy Schulman.

The financial charts that will be presented on this call can be viewed on our home page at in the Investor Presentations tab by clicking on the link Quarterly Corporate Performance First Quarter 2009.

We know this is a busy day for many of you with other companies reporting earnings. And our conference call will last one hour, and we will end at 11 o'clock.

Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ are discussed in Pfizer's 2008 annual report on Form 10-Okay, and in our reports on Form 10-Q and Form 8-K.

Also, the discussion during this conference call will include certain financial measures that we're not prepared in accordance with the Generally Accepted Accounting Principles. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Pfizer's current report on Form 8-K dated April 28, 2009. These reports are available on our website again at in the Investor's SEC filing section.

With that, I'll now turn the call over to Jeff Kindler. Jeff?

Jeffrey Kindler

Thanks Chuck, and good morning everyone and thanks for joining us today. I'll start this morning with an overview of our first quarter results. Then make some brief comments about the operating environment, provide you with an update on our new business unit model and conclude by reviewing the status of our planning for the pending Wyeth integration.

First, our results. During the first quarter, we continued reshaping our operating model, made substantial progress in planning for the Wyeth integration and continued to face challenging economic and competitive conditions. Yet despite all of that, our colleagues remain intensely focused on meeting our current commitments to our shareholders. As a result, I'm pleased to report that we produced revenues consistent with our expectations and continued to deliver significant cost reductions. And we remain on track to meet our financial goals for the year.

Today, we are reaffirming our 2009 guidance for revenues and adjusted results. As you saw on our release, we posted revenue of $10.9 billion, an 8% decrease, compared to the first quarter of last year. The decline was due primarily to foreign exchange and last year's loss of U.S. exclusivity for Zyrtec and Camptosar. It also reflects lower revenues for Lipitor and the year-over-year decline in Chantix sales following last year's U.S. label changes.

As for the bottom line, we are building on the achievements of the last two years as we continued to streamline our cost base. Our adjusted total costs showed a reduction of roughly $500 million on a constant currency basis due primarily to our cost reduction initiatives and to a lesser extent certain insurance recoveries.

Mike will take you through the numbers in more detail, but I'd like to comment on two particular aspects of the operating environment: the economy, and potentially U.S. healthcare reform. While the recession has clearly had some impact on the business, particularly in the United States, so far that impact has been inline with the expectations that were build into our 2009 guidance, which we are reaffirming today.

I believe this is an environment in which we will see the benefits of our customer focus business units, since they are well positioned to adapt quickly to the changes they each see in their very different therapeutic and geographic markets.

As for potential U.S. healthcare reform, we continued to participate actively in the discussions in Washington, and continued to see a strong effort by policy makers to engage all stakeholders and solutions that improve quality and reduce costs while recognizing the critical importance of maintaining strong incentives through medical innovation.

We firmly believe that there can be tremendous long-term value created for both our customers and our shareholders, and a healthcare system that is more efficient, more performance oriented and more financially sustainable than the one that we have now.

Meanwhile, we continued to make tremendous progress in reshaping Pfizer. Our move to customer focused business units is proceeding very well. Today, we operate in a much more diversified way than in the past, as it is appropriate, given the many different geographic and therapeutic markets in which we compete.

Collectively, the business units in our pharmaceutical business have full P&L responsibility, from proof of concept through the end of the product lifecycle. This approach, unique in our industry, introduces a new level of market discipline. It demands clear focus and accountability, which is leading to faster, smarter, clear decision making.

Here are some examples. In March, our Primary Care business launched a reshaped U.S field organization that is designed to reflect our projected needs after Lipitor loses exclusivity, while also protecting our market position today. This team now operates in five regions, where we are able to adapt the level of resources required. Use sophisticated segmentation analysis to identify customer trends and preferences and deploy this data to micro target customers, focusing on high value opportunities. This approach is enabling us to tailor decisions for our key brands.

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