Pfizer, Inc. (PFE)

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Pfizer (PFE)

Q1 2011 Earnings Call

May 03, 2011 10:00 am ET

Executives

Ian Read - Chief Executive Officer, President, Director, Chairman of Executive Committee, Member of Executive Compliance Committee and Group President of Biopharmaceutical Businesses

Charles Triano - Senior Vice President of Investor Relations

Frank D'Amelio - Chief Financial Officer, Executive Vice President of Business Operations and Member of Executive Compliance Committee

Geno Germano - President of Pfizer Specialty Care & Oncology and General Manager of Pfizer Specialty Care & Oncology

David Simmons - President of Emerging Markets & Established Products units and General Manager of Emerging Markets & Established Products units

Analysts

David Risinger - Morgan Stanley

David Maris - Credit Agricole Securities (USA) Inc.

John Boris - Citigroup Inc

Catherine Arnold - Crédit Suisse AG

Tim Anderson - Sanford C. Bernstein & Co., Inc.

Jami Rubin - Goldman Sachs Group Inc.

Steve Scala - Cowen and Company, LLC

Seamus Fernandez - Leerink Swann LLC

Christopher Schott - JP Morgan Chase & Co

Gregory Gilbert - BofA Merrill Lynch

Marc Goodman - UBS Investment Bank

Charles Butler - Barclays Capital

Presentation

Operator

Good day, everyone. And welcome to Pfizer's First Quarter 2011 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

Charles Triano

Thank you, operator. Good morning. And thank you for joining us today to review Pfizer's first quarter 2011 performance. I'm here with our CEO, Ian Read; Frank D'Amelio, our CFO; Olivier Brandicourt, President and General Manager of Primary Care; Mikael Dolsten, President of Worldwide Research and Development; Geno Germano, President and General Manager of Specialty Care and Oncology; Amy Schulman, General Counsel and Business Unit Lead for Nutritionals; and David Simmons, President and General Manager of Emerging Markets and Established Products. The slides that will be presented on this call can be viewed on our home page, pfizer.com, by clicking on the link for Pfizer Quarterly Corporate Performance First Quarter 2011, which is located in the Investor Presentation section in the lower right-hand corner of this page.

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. The factors that could cause the actual results to differ are discussed in Pfizer's 2010 annual report on Form 10-K and in our reports on Forms 10-Q and 8-K.

Also, the discussions during this conference call will include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliation of those 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 today, May 3, 2011. These reports are also available on our website at pfizer.com in the Investors SEC Filings section.

With that, I'll now turn the call over to Ian Read. Ian?

Ian Read

Thank you, Chuck. Good morning, everyone. During my remarks this morning I will briefly recap the highlights from the quarter, speak to the perimeters we are making in executing on our R&D strategy, provide updates regarding our late-stage product portfolio and capital allocation initiatives. And I will close with an update on the business portfolio review work we have underway.

Our year is off to a good start, our results were favorably impacted by revenue growth from several key products, growth in Emerging Markets, the addition of legacy King products and the benefits from cost reduction initiatives, among other things. At the same time, revenues were also negatively impacted by the lost of exclusivity of several products in the U.S. and other geographies.

Frank will take you through the details of the quarter but here are a few of the noteworthy highlights. We saw a strong growth in the Prevnar franchise, Enbrel, Zyvox, notably in the U.S. and Japan. We saw growth from several other products including Lyrica, Spiriva and Celebrex in key international markets. We had 8% operational growth in the Biopharmaceutical Emerging Markets business, including 10% operational growth in the BRIC-MT countries. This was highlighted by a strong growth in China, India and Turkey. Sales were impacted by a large vaccine sales in the first quarter 2010. Our overall global innovative core of the patent-protected Biopharmaceutical products had operational growth in the mid-single digits.

Within our Established Products business, if we exclude revenue additions to the business unit from off-patent Wyeth and King products as well as LOE transfers from the other business units since beginning of 2009, we saw a 7% growth. This performance was driven by both the legacy Pfizer Established Products from the unit as of 2009 and those products added to the portfolio expansion strategy. This is a good measure of the progress we've made since creating this business unit in 2008. With the goal of transforming what was a shrinking revenue base to a growth opportunity.

We continue to remain focused on efforts to reduce costs with our more disciplined and deeply-rooted cost management effort. Operating savings were realized during the quarter due to the Wyeth integration, workforce reductions, actions taken with the R&D portfolio as well as savings from our smaller physical footprint.

So far this year through April 30, we've returned approximately $3.8 billion to our shareholders through dividends and share repurchases. And in early April we announced an agreement to sell Capsugel business for $2.375 billion in cash to KKR. Looking ahead through the rest of the year, I believe our performance during the first quarter firmly positions us for executing our 2011 plan in achieving our financial guidance.

Read the rest of this transcript for free on seekingalpha.com