Pfizer, Inc. (PFE)

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Pfizer (PFE)

Q3 2010 Earnings Call

November 02, 2010 10:00 am ET

Executives

Jeffrey Kindler - Chairman of the Board, Chief Executive Officer, Chairman of Executive Committee and Chairman of Executive Compliance Committee

Charles Triano - Senior Vice President of Investor Relations

Amy Schulman - Senior Vice President, Corporate Secretary, General Counsel and Member of Executive Compliance Committee

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

Ian Read - Senior Vice President, Member of Executive Compliance Committee and Group President of Biopharmaceutical Businesses

Mikael Dolsten - Senior Vice President and President of Pfizer Worldwide Research & Development

Analysts

David Risinger

Catherine Arnold - Crédit Suisse AG

John Boris - Citigroup Inc

Jami Rubin - Goldman Sachs Group Inc.

Tim Anderson - Bernstein Research

Jeffrey Holford - Jefferies & Company, Inc.

Manoj Garg - Soleil Securities Group, Inc.

Steve Scala - Cowen and Company, LLC

Seamus Fernandez - Leerink Swann LLC

Christopher Schott - JP Morgan Chase & Co

Marc Goodman - UBS Investment Bank

Charles Butler - Barclays Capital

Presentation

Operator

Good day, everyone, and welcome to Pfizer's Third Quarter 2010 Earnings Conference Call. [Operator Instructions] 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, and good morning, everyone, Thanks for joining us today to review Pfizer's third quarter 2010 Performance, 2010 financial guidance and 2012 long-range targets.

I'm here with Jeff Kindler, Frank D'Amelio, Ian Read and other members of our leadership team. The financial charts that will be presented on this call can be viewed on our homepage at pfizer.com by clicking on the link for Pfizer Quarterly Corporate Performance Third Quarter 2010, located in the Investor presentations tab at 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. And the factors that could cause actual results to differ are discussed in Pfizer's 2009 annual report on Form 10-K and in our reports on Form 10-Q and Form 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, November 2, 2010. These reports are also available at our website at pfizer.com in the Investors SEC Filings section.

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

Jeffrey Kindler

Thanks, Chuck, and hello, everyone. I'd like to start by making five key points.

First, for the third consecutive full quarter since we closed the Wyeth deal, we are reporting solid operating performance. Second, given this performance and our continued confidence in the business, we are increasing both the top end and the bottom end of our 2010 adjusted diluted EPS guidance range. Third, we are once again reaffirming the financial targets that we've set out for 2012. It's important to emphasize that we are raising this year's guidance and reaffirming the 2012 targets despite uncertainty in the global economy, strong competitive challenges and significant changes in the regulatory and public policy environment across the markets in which we operate.

Fourth, consistent with our commitment to enhancing total shareholder value, we are continuing to return cash to our owners. During the second and third quarters of this year, we repurchased a total of $1 billion in stock at an average price of $16.40 per share.

And finally, fifth, also consistent with that commitment, we are on track to paying nearly $6 billion in dividends this year. As we have previously stated, barring any unforeseen circumstances, we expect the Board of Directors to raise the dividend in December, and we continue to target a dividend payout ratio comparable to the current industry average in about three years.

Now on the subject of capital allocation, I want to highlight a particularly important point illustrated this quarter. As we said we would do, we have continued to deploy your capital in discipline business development activities that allow us to shape our balanced business portfolio in order to maximize shareholder value. And I'd like to spend a few minutes this morning discussing the deals we announced since the beginning of September in the context of the balanced business portfolio that I described on last quarter's earnings call.

First, let me review briefly the context. We closed the Wyeth acquisition just over a year ago, and since then, we have moved quickly to integrate the companies to achieve our planned cost synergies and to deliver solid financial performance form the combined company. The people and assets that Wyeth brought to us, together with the changes we have made in our leadership, culture and operating model over the last three years have positioned us to deliver three important things: One, producing steady, reliable, adjusted earnings growth over time; two, returning cash to shareholders through dividends and buybacks; and three, making disciplined internal and external investments in innovative new treatments and cures that produce good returns on your capital.

The foundation for these results is a dynamic portfolio of businesses, products, geographies and areas of research that balances both our risks and our opportunities. That portfolio enables us to advance our strategies of growing our patent-protected portfolio in priority therapeutic areas, in vaccines and Biologics and Established Products, in Emerging Markets and in appropriate Diversified businesses. Now each of the five actions that we recently announced significantly advances these strategies and helps us further balance our portfolio, businesses and products. And let me show you what I mean.

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