Pfizer Reports Third-Quarter 2010 Results

NEW YORK, Nov. 2, 2010 /PRNewswire-FirstCall/ --

• Third-Quarter 2010 Revenues of $16.2 Billion

• Third-Quarter 2010 Adjusted Diluted EPS⁽¹⁾ of $0.54; Reported Diluted EPS⁽²⁾ of $0.11

• Tightens Ranges for 2010 Financial Guidance Components, Increases Range for Adjusted Diluted EPS⁽¹⁾ and Reduces Range for Reported Diluted EPS⁽²⁾; Reaffirms 2012 Financial Targets

• Advances Strategic Priorities with Agreement to Acquire King Pharmaceuticals, Inc., Acquisition of  FoldRx, Alliance with Biocon and Pending Alliance with Laboratorio Teuto Brasileiro S.A.; Reviewing Alternatives for Capsugel

Pfizer Inc. (NYSE: PFE) today reported financial results for third-quarter 2010.  Since the acquisition of Wyeth was completed on October 15, 2009, legacy Wyeth products and operations are reflected in the first three quarters of 2010, but not reflected in the first three quarters of 2009.  Third-quarter 2010 revenues were $16.2 billion, an increase of 39% compared with $11.6 billion in the year-ago quarter.  Revenues for third-quarter 2010 compared with the year-ago quarter were favorably impacted by $5.2 billion, or 44%, due to the addition of the legacy Wyeth products, negatively impacted by $458 million, or 4%, due to legacy Pfizer products, and negatively impacted by $160 million, or 1%, due to foreign exchange.  For third-quarter 2010, U.S. revenues were $7.1 billion, an increase of 48% compared with the year-ago quarter.  International revenues were $9.1 billion, an increase of 33% compared with the prior-year quarter, which reflected 35% operational growth partially offset by a 2% unfavorable impact of foreign exchange.  U.S. revenues represented 44% of total revenues in third-quarter 2010 compared with 41% in the year-ago quarter, while international revenues represented 56% of total revenues in third-quarter 2010 compared with 59% in the year-ago quarter.

For the first nine months of 2010, revenues were $50.2 billion, an increase of 50% compared with $33.5 billion in the same period in 2009.   Revenues for the first nine months of  2010 compared with the year-ago period were favorably impacted by $15.9 billion, or 48%, due to the addition of the legacy Wyeth products, and by $1.2 billion, or 3%, due to foreign exchange, and negatively impacted by $285 million, or 1%, due to legacy Pfizer products.  U.S. revenues were $21.8 billion, an increase of 52% compared with the first nine month of 2009.  International revenues were $28.4 billion, an increase of 48% compared with the same period last year, which reflected 42% operational growth and a 6% favorable impact of foreign exchange.  U.S. revenues represented 43% and international revenues represented 57% of total revenues in the first nine months of 2010, comparable with the first nine months of 2009.  

Business Revenues

Pfizer operates two distinct commercial organizations: Biopharmaceutical and Diversified.  Biopharmaceutical includes the Primary Care, Specialty Care, Established Products, Emerging Markets and Oncology customer-focused units, while Diversified includes Animal Health, Consumer Healthcare, Nutrition and Capsugel.  

For third-quarter 2010, revenues from Biopharmaceutical were $13.9 billion, an increase of 31% compared with $10.7 billion in the year-ago quarter.  Operationally, revenues increased $3.4 billion, or 33%, which included $3.9 billion, or 37%, attributable to legacy Wyeth products, primarily Premarin in the Primary Care unit, Enbrel and the Prevnar/Prevenar franchise in the Specialty Care unit, Protonix and Zosyn/Tazocin in the Established Products unit as well as Enbrel and the Prevenar franchise in the Emerging Markets unit, partially offset by a decline of $468 million, or 4%, due to legacy Pfizer products.  In addition, foreign exchange unfavorably impacted Biopharmaceutical revenues by 2% or $173 million.

Within the Biopharmaceutical units, legacy Pfizer operational performance was impacted in third-quarter 2010 compared with the year-ago quarter primarily by the loss of exclusivity of certain products and by the resulting reclassification of Camptosar European revenues among the units.  Legacy Pfizer Primary Care unit revenues in third-quarter 2010 were negatively impacted by 4% due to the loss of exclusivity of Lipitor in Canada in May 2010 and in Spain in July 2010.  Legacy Pfizer Oncology unit revenues no longer include Camptosar's European revenues due to its loss of exclusivity in July 2009.  Camptosar's European revenues are included in the Established Products unit beginning in first-quarter 2010.  This reclassification of revenues negatively impacted the legacy Pfizer Oncology unit's performance by 16% in third-quarter 2010 compared with the prior-year quarter.  Further, legacy Pfizer Established Products unit revenues in third-quarter 2010 were adversely impacted by 6% due to the loss of exclusivity for Norvasc in Canada in July 2009, partially offset by the favorable impact of 1% due to the addition of Camptosar's European revenues.  Finally, legacy Pfizer Emerging Markets unit revenues in third-quarter 2010 were essentially flat reflecting solid growth in key priority countries, most notably China, offset by Eastern European pricing pressure and wholesaler purchasing patterns driven by economic conditions.

For third-quarter 2010, revenues from Diversified were $2.2 billion, an increase of 151% compared with $855 million in the year-ago quarter.  This increase of $1.3 billion was primarily attributable to legacy Wyeth products, principally Centrum, Advil and Caltrate in Consumer Healthcare and infant and toddler Nutrition products.  The impact of foreign exchange on Diversified revenues was immaterial.

Reported Net Income⁽²⁾ and Reported Diluted EPS⁽²⁾  

For third-quarter 2010, Pfizer posted reported net income⁽²⁾ of $866 million, a decrease of 70% compared with $2.9 billion in the prior-year quarter, and reported diluted EPS⁽²⁾ of $0.11, a decrease of 74% compared with $0.43 in the prior-year quarter.  For the first nine months of 2010, Pfizer posted reported net income⁽²⁾ of $5.4 billion, a decrease of 32% compared with $7.9 billion in the first nine months of 2009, and reported diluted EPS⁽²⁾ of $0.66, a decline of 43% compared with $1.16 in the prior-year period.  Third-quarter 2010 results were favorably impacted by revenues from legacy Wyeth products, and negatively impacted primarily by the expenses associated with the legacy Wyeth operations as well as purchase accounting adjustments, integration charges and restructuring charges associated with the Wyeth acquisition, impairment charges of $1.5 billion (pre-tax) related to certain intangible assets acquired in connection with the Wyeth acquisition and a $701 million (pre-tax) charge for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc.  For the first nine months of 2010, results were impacted by the aforementioned items as well as the favorable impact of foreign exchange and the unfavorable impact of higher net interest expense primarily due to borrowings used to partially fund the Wyeth acquisition.

In addition, the effective tax rate on reported results increased to approximately 39% in third-quarter 2010 from approximately 28% in third-quarter 2009, and approximately 37% in the first nine months of 2010 from approximately 27% in the first nine months of 2009.  These increases were primarily the result of higher expenses incurred as a result of the acquisition of Wyeth and the mix of jurisdictions in which those expenses were incurred.  Also, the lower rates in the third quarter and first nine months of 2009 compared to the same periods in 2010 reflected a tax benefit of $174 million related to the final resolution of a previously disclosed settlement.

Additionally, reported diluted EPS⁽²⁾ in third-quarter 2010 and the first nine months of 2010 was impacted by the increased number of shares outstanding in comparison with the corresponding periods in 2009 resulting from shares issued to partially fund the Wyeth acquisition.

Adjusted Income⁽¹⁾ and Adjusted Diluted EPS⁽¹⁾

Third-quarter 2010 adjusted income⁽¹⁾ was $4.4 billion, an increase of 26% compared with $3.5 billion in the year-ago quarter, and adjusted diluted EPS⁽¹⁾ was $0.54, an increase of 6% compared with $0.51 in the year-ago quarter.  For the first nine months of 2010, Pfizer posted adjusted income⁽¹⁾ of $14.2 billion, an increase of 37% compared with $10.4 billion in the first nine months of 2009, and adjusted diluted EPS⁽¹⁾ of $1.76, an increase of 14% compared with $1.54 in the prior-year period.  Results were favorably impacted by revenues from legacy Wyeth products and, to a lesser extent, foreign exchange, which were partially offset by the expenses associated with the legacy Wyeth operations as well as lower overall revenues from legacy Pfizer products and higher net interest expense primarily due to borrowings used to partially fund the acquisition of Wyeth.  

In addition, the effective tax rate on adjusted income⁽¹⁾ decreased to approximately 30% in third-quarter 2010 compared with approximately 32% in third-quarter 2009, and increased to approximately 31% in the first nine months of 2010 compared with approximately 30% in the first nine months of 2009.  The changes in the effective tax rate on adjusted income⁽¹⁾  were primarily the result of the change in the jurisdictional mix of earnings in the respective periods. 

Additionally, adjusted diluted EPS⁽¹⁾ in third-quarter 2010 and the first nine months of 2010 was impacted by the increased number of shares outstanding in comparison with the corresponding periods in 2009 resulting from shares issued to partially fund the Wyeth acquisition.

In third-quarter 2010, adjusted cost of sales⁽¹⁾ as a percentage of revenues was 18.3% compared with 15.4% in third-quarter 2009.  This increase primarily reflects the change in the mix of products and businesses as a result of the Wyeth acquisition.  Excluding the impact of foreign exchange, adjusted cost of sales⁽¹⁾ as a percentage of revenues was 19.7% in third-quarter 2010.  

Adjusted SI&A expenses⁽¹⁾ were $4.6 billion in third-quarter 2010, an increase of 43% compared with $3.2 billion in the prior-year quarter.  This increase was attributable primarily to the addition of the legacy Wyeth operations.  Foreign exchange decreased third-quarter 2010 adjusted SI&A expenses⁽¹⁾ by $32 million compared with the year-ago quarter.  

Adjusted R&D expenses⁽¹⁾ were $2.2 billion in third-quarter 2010, an increase of 33% compared with $1.6 billion in the prior-year period. This increase was attributable primarily to the addition of the legacy Wyeth operations and continued investment in the late-stage development portfolio.  Foreign exchange decreased third-quarter 2010 adjusted R&D expenses⁽¹⁾ by $15 million compared with the year-ago quarter.

Overall, foreign exchange decreased adjusted total costs⁽¹⁴⁾ by $298 million, or 4%, in third-quarter 2010 compared with the prior-year period.

Executive Commentary

Jeff Kindler, Chairman and Chief Executive Officer, stated, "It's been just over a year since the closing of the Wyeth acquisition.  I am particularly pleased with the speed of the integration, the cost synergies achieved to date as well as our solid financial performance this quarter and year-to-date in this difficult economic environment.  This combination is clearly creating opportunities to provide greater value for our shareholders."

"We continue to carefully evaluate and make prudent capital allocation decisions.  We recently announced several business development transactions that we believe will enhance shareholder value by enabling continued growth in several of our business units.  Our pending acquisition of King Pharmaceuticals, Inc. is consistent with our stated objective of seeking a larger presence in the pain market within the Primary Care unit, while our acquisition of FoldRx enhances the orphan and rare disease pipeline portfolio of our Specialty Care unit.  Further, our alliance with Biocon is expected to advance our biosimilars strategy by positioning us competitively in the diabetes market over time, while our agreement with Laboratorio Teuto Brasileiro S.A. is expected to broaden our Emerging Markets presence.  Also, we are reviewing strategic alternatives for Capsugel in order to optimize the value of this asset.  We believe these actions, taken together, will serve to improve our business profile and provide both near-term and longer-term financial benefit," continued Mr. Kindler.

Frank D'Amelio, Chief Financial Officer, stated, "Given our solid year-to-date performance and continued confidence in the business, we are once again reaffirming our 2012 financial targets, and we are narrowing the ranges for the components of our 2010 financial guidance.  Additionally, we are increasing our 2010 adjusted diluted EPS⁽¹⁾ guidance to a range of  $2.17 to $2.22 from a range of $2.10 to $2.20.  Further, we repurchased approximately $500 million, or 30 million shares, of our common stock in the third quarter, and we continue to review our capital allocation options with the goal of maximizing value for our shareholders."

2010 Financial Guidance⁽¹⁶⁾

For full-year 2010, Pfizer's financial guidance, at current exchange rates⁽¹⁵⁾, is summarized below.

2012 Financial Targets

The Company is reaffirming all elements of its 2012 financial targets.  As previously stated, given the longer-term nature of these targets, they are subject to greater variability and less certainty as a result of potential material impacts related to foreign exchange fluctuations, macroeconomic activity including inflation, and industry-specific challenges including changes to government healthcare policy, among others.

For 2012, at current exchange rates⁽¹⁵⁾, Pfizer is targeting reported revenues between $65.2 and $67.7 billion, reported diluted EPS⁽²⁾ between $1.58 and $1.73, adjusted diluted EPS⁽¹⁾ between $2.25 and $2.35, adjusted R&D expenses⁽¹⁾ between $8.0 and $8.5 billion, adjusted operating margin⁽¹⁾ in a range of the high 30%s to low 40%s and adjusted other (income)/deductions⁽¹⁾ between $1.0 and $1.2 billion in deductions.  The effective tax rate on adjusted income⁽¹⁾ is targeted at approximately 30%, while operating cash flow is expected to be at least $19.0 billion.

Additionally, the Company remains on-track to achieve the cost-reduction target of approximately $4 to $5 billion, by the end of 2012, at 2008 average foreign exchange rates, in comparison with the 2008 pro-forma adjusted total costs⁽¹⁴⁾ of the legacy Pfizer and legacy Wyeth operations.  

For additional details, please see the attached financial schedules, product revenue tables, supplemental information and disclosure notice.

1. "Adjusted Income" and its components and "Adjusted Diluted Earnings Per Share (EPS)" are defined as reported net income⁽²⁾ and its components and reported diluted EPS⁽²⁾ excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items.  Adjusted Cost of Sales, Adjusted SI&A expenses, Adjusted R&D expenses and Adjusted Other (Income)/Deductions are income statement line items prepared on the same basis, and therefore, components of the overall adjusted income measure.  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 fiscal quarter ended July 4, 2010, 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 third-quarter 2010 and 2009 and the first nine months of 2010 and 2009 adjusted income and its components and adjusted diluted EPS to reported net income⁽²⁾ and its components and reported diluted EPS⁽²⁾, as well as reconciliations of full-year 2010 guidance and 2012 targets for adjusted income and adjusted diluted EPS to full-year 2010 guidance and 2012 targets for reported net income⁽²⁾ and reported diluted EPS⁽²⁾, are provided in the materials accompanying this report. The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. generally accepted accounting principles (GAAP) net income and its components and diluted EPS.
2. "Reported Net Income" is defined as net income attributable to Pfizer Inc. in accordance with U.S. generally accepted accounting principles. "Reported Diluted EPS" is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.
3. The Primary Care unit includes revenues from human pharmaceutical products primarily prescribed by primary-care physicians, and may include, but are not limited to, products in the following therapeutic and disease areas: Alzheimer's disease, anxiety, cardiovascular (excluding pulmonary arterial hypertension), diabetes, pain, genitourinary, obesity, osteoporosis and respiratory.  Examples of products in this unit include, but are not limited to, Celebrex, Lipitor, Lyrica, Premarin, Pristiq and Viagra.  All revenues for such products are allocated to the Primary Care unit, except those generated in emerging markets⁽⁶⁾ and those that are managed by the Established Products⁽⁵⁾ unit.
4. The Specialty Care unit includes revenues from human pharmaceutical products primarily prescribed by physicians who are specialists, and may include, but are not limited to, products in the following therapeutic and disease areas: antibacterials, antifungals, antivirals, bone, inflammation, gastrointestinal, growth hormones, multiple sclerosis, ophthalmology, pulmonary arterial hypertension and psychosis.  Examples of products in this unit include, but are not limited to, Enbrel, Genotropin, Geodon, the Prevnar/Prevenar franchise, Xalatan and Zyvox.  All revenues for such products are allocated to the Specialty Care unit, except those generated in emerging markets⁽⁶⁾ and those that are managed by the Established Products⁽⁵⁾ unit.
5. The Established Products unit generally includes revenues from human prescription pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions.  In certain situations, products may be transferred to this unit before losing patent protection or marketing exclusivity in order to maximize their value.  This unit also excludes revenues generated in emerging markets⁽⁶⁾.  Examples of products in this unit include, but are not limited to, Arthrotec, Effexor, Medrol, Norvasc, Protonix, Relpax and Zosyn/Tazocin.
6. The Emerging Markets unit includes revenues from all human prescription pharmaceutical products sold in emerging markets, including, but not limited to, Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe, Russia and Turkey.  
7. The Oncology unit includes revenues from human oncology and oncology-related products.  Examples of products in this unit include, but are not limited to, Aromasin, Sutent and Torisel.  All revenues for such products are allocated to the Oncology unit, except those generated in emerging markets⁽⁶⁾ and those that are managed by the Established Products⁽⁵⁾ unit.
8. Animal Health includes worldwide revenues from products to prevent and treat disease in livestock and companion animals, including vaccines, paraciticides and anti-infectives.
9. Consumer Healthcare generally includes worldwide revenues from non-prescription medicines and vitamins and may include, but are not limited to, products in the following therapeutic categories: pain management, nutritionals, respiratory and GI-topicals.  Examples of products in Consumer Healthcare include, but are not limited to, Advil, Centrum, Caltrate, ChapStick and Robitussin.
10. Nutrition generally includes revenues from a full line of infant and toddler nutritional products sold outside of North America.  Examples of products in Nutrition include, but are not limited to, the S-26 and SMA product lines as well as formula for infants with special nutritional needs.
11. Capsugel generally includes worldwide revenues from capsule products and services for the pharmaceutical and associated healthcare industries.  On October 6, 2010, the Company announced that it is reviewing strategic alternatives for Capsugel, which may include a divestiture.
12. Includes revenues generated primarily from Pfizer Centersource.
13. In Biopharmaceutical, revenues from South Korea in 2009 have been reclassified from the Emerging Markets unit to the appropriate developed market units to conform to the current-year presentation, which reflects the fact that the commercial operations of South Korea, effective January 1, 2010, are managed within the appropriate developed market units.  
14. Represents the total of Adjusted Cost of Sales⁽¹⁾, Adjusted SI&A expenses⁽¹⁾ and Adjusted R&D expenses⁽¹⁾.
15. The current exchange rates assumed in connection with the 2010 financial guidance are a blend of the average of the actual exchange rates in effect from December 2009 through September 2010 and the mid-October 2010 exchange rates for the remainder of the year.  The current exchanges rates assumed in connection with the 2012 financial targets are the mid-October 2010 exchange rates.
16. This guidance does not assume the completion of any business-development transactions not completed as of October 3, 2010, with the exception of the Biocon transaction.  This guidance also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of October 3, 2010.  

PFIZER INC.

SUPPLEMENTAL INFORMATION

1. Change in Reported Cost of Sales

Reported cost of sales increased 118% in the third quarter of 2010, compared to the same period in 2009, and increased 142% in the first nine months of 2010, compared to the same period in 2009. The increases primarily reflect purchase accounting adjustments associated with the Wyeth acquisition, a write-off of Wyeth-related inventory of $212 million (which includes a purchase accounting fair value adjustment of $104 million), the addition of Wyeth manufacturing costs, as well as the change in the mix of products and businesses as a result of the Wyeth acquisition, partially offset by a favorable impact of foreign exchange for both the third quarter and first nine months of 2010. The write-off of inventory primarily relates to unfinished inventory acquired from Wyeth that became unusable after the acquisition date.

Reported cost of sales as a percentage of revenues increased 8.7 percentage points to 24.1% in third-quarter 2010, compared to the same period in 2009, reflecting the aforementioned factors.

2. Change in Reported Selling, Informational & Administrative (SI&A) Expenses and Reported Research & Development (R&D) Expenses

Reported SI&A expenses increased 41% in the third quarter of 2010, compared to the same period in 2009, and increased 46% in the first nine months of 2010, compared to the same period in 2009. The increases primarily reflect the addition of Wyeth operating costs. Foreign exchange had a favorable impact on reported SI&A expenses in the third quarter of 2010 and an unfavorable impact for the first nine months of 2010.  

Reported R&D expenses increased 34% in the third quarter of 2010, compared to the same period in 2009, and increased 31% in the first nine months of 2010, compared to the same period in 2009. The increases are primarily due to the addition of legacy Wyeth operations and continued investment in the late-stage development portfolio. Foreign exchange had a favorable impact on reported R&D expenses in the third quarter of 2010 and an unfavorable impact for the first nine months of 2010.  

3. Other (Income)/Deductions - Net

4. Effective Tax Rate

Reported

The effective tax rate on reported Income from continuing operations before provision for taxes on income for third-quarter 2010 was 39.2% compared to 27.5% in the third quarter of 2009, and in the first nine months of 2010 was 37.2% compared to 27.3% in the first nine months of 2009. The higher tax rates in the third quarter and first nine months of 2010 are primarily the result of:

• higher expenses, incurred as a result of our acquisition of Wyeth, and the mix of jurisdictions in which those expenses were incurred;
• the expiration of the U.S. research and development tax credit; and
• the non-recurrence of a tax benefit of $174 million that was recorded in the third quarter of 2009 related to the final resolution of a previously disclosed settlement that resulted in the receipt of information that raised our assessment of the likelihood of prevailing on the technical merits of our tax position;

partially offset by:

• the tax impact of the charge incurred for asbestos litigation.

The effective tax rate for the first nine months of 2010 was additionally impacted by the write-off of the deferred tax asset of approximately $270 million related to the Medicare Part D subsidy for retiree prescription drug coverage, resulting from changes in the U.S. healthcare legislation enacted in March 2010 concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012, offset by $460 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax authorities.  

Adjusted

The effective tax rate on adjusted income⁽¹⁾ decreased to 30.2% in third-quarter 2010 compared to 31.8% in third-quarter 2009, as a result of the change in the jurisdictional mix of earnings, partially offset by the expiration of the U.S. research and development tax credit.

The effective tax rate on adjusted income⁽¹⁾ for the first nine months of 2010 was 30.7% compared to 29.9% in the first nine months of 2009.  In addition to the aforementioned factors, the effective tax rate on adjusted income⁽¹⁾ for the first nine months of 2010 was impacted by the write-off of the deferred tax asset of approximately $270 million related to the Medicare Part D subsidy for retiree prescription drug coverage, resulting from changes in the U.S. healthcare legislation enacted in March 2010 concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012, offset by $460 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax authorities.

5. Reconciliation of 2010 Adjusted Income⁽¹⁾ and Adjusted Diluted EPS⁽¹⁾ Guidance to 2010 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Guidance ^(a)

6. Reconciliation of 2012 Adjusted Income⁽¹⁾ and Adjusted Diluted EPS⁽¹⁾ Targets to 2012 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Targets ^(a)

(1) "Adjusted income" and "adjusted diluted earnings per share (EPS)" are defined as reported net income attributable to Pfizer Inc. and reported diluted EPS attributable to Pfizer Inc. common shareholders excluding purchase accounting adjustments, acquisition-related costs, discontinued operations 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 fiscal quarter ended July 4, 2010, 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. 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 earnings release and the attachments is as of November 2, 2010. The Company assumes no obligation to update forward-looking statements contained in this earnings release or the attachments as a result of new information or future events or developments.

This earnings release 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 involves 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, including, without limitation, the ability to meet anticipated clinical trial completion dates and regulatory submission dates for product candidates; decisions by regulatory authorities regarding whether and when to approve our drug applications as well as their decisions regarding labeling, ingredients 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 the impact on our competitive position of new product entrants, in-line branded products, generic products, private label products and product candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates; the ability to meet generic and branded competition after the loss of patent protection for our products or competitor products; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; trade buying patterns; the impact of existing and future legislation and regulatory provisions on product exclusivity; trends toward managed care and healthcare cost containment; the impact of U.S. healthcare legislation enacted in 2010 – the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act; U.S. legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs, the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries, direct-to-consumer advertising and interactions with healthcare professionals, and the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines; legislation or regulatory action in markets outside the U.S. affecting pharmaceutical 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; significant breakdown, infiltration, or interruption of our information technology systems and infrastructure; legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent protection, government investigations, consumer, commercial, securities, environmental and tax issues, 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, without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside of the U.S. that result from the enactment in August 2010 of the Education Jobs and Medicaid Assistance Act of 2010 and that may result from pending and possible future proposals; changes in U.S. generally accepted accounting principles; uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our lenders, our customers, our suppliers and counterparties to our foreign exchange and interest rate agreements of weak global economic conditions and recent and possible future changes in global financial markets; any changes in business, political and economic conditions due to actual or threatened 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 acquisition of Wyeth and of our cost-reduction initiatives. A further list and description of 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, 2009, and in its reports on Forms 10-Q and 8-K.

This earnings release 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.

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SOURCE Pfizer Inc.