To create smaller and more accountable business units, the firm created five separate business units in the U.S. for the patent protected portfolio.
- A new separate unit has been established focused solely on optimizing the performance of established products, products that are near or past their loss of exclusivity.
- This new unit is led by a skilled executive with substantial pharmaceutical experience around the world, including end markets where these established products are very successful.
- In R&D, the firm put each therapeutic area in a single location allowing colleagues to have a clear line of sight to a smaller more focused enterprise and also created a separate biotherapeutics and bioinnovation center led by world-class scientists to discover license and acquire more new candidates for the pipeline.
New scientific alliances, include Icagen, for pain; Tacere Therapeutics which offers an RNAi approach to the treatment of Hepatitis C and Taisho Pharmaceuticals, which presents opportunities in the schizophrenia area.
- A unique collaboration with the Scripps Research Institute was entered into and that is already bearing fruit.
- The Pfizer Incubator was created to work with academic, biotech, and venture communities on innovative ways to answer some tough questions.
- The firm has significantly streamlined the organization, reducing layers and increasing spans of control.
Long Term Strategies:
- The firm will refocus and optimize the patent-protected portfolio and try new opportunities for established products.
- It will also accelerate growth in emerging markets and invest in complementary businesses.
- Additionally, it will establish and sustain an unwavering commitment to innovation and a culture of continuous improvement.
Product Highlights:
- Lipitor worldwide revenues increased 3% to $3.4 billion compared with the year ago quarter.
- Revenues in the U.S. declined 4% due to continued intense competition and payer pressure while revenues from international markets increased 13% of which 11% was due to foreign exchange and the remainder due to operating growth.
- Given the U.S. patent expiration in December 2007 and pending launch of over-the-counter Zyrtec, the firm will cease selling the product this month.
- The firm will also lose U.S. patent protection for Camptosar in February 2008.
Key new products, including Chantix, Lyrica and Sutent, continued to deliver strong during the quarter.
- Chantix, the prescription treatment to aid smoking cessation achieved revenues of $280 million, an increase of 311% compared with the year ago quarter.
- The firm updated the label for Chantix to include an additional warning for patients.
- Lyrica, the medicine for the management of neuropathic pain and more recently, fibromyalgia, delivered revenues of $564 million, an increase of 60% compared with the year ago quarter.
- Sutent, the product for advanced kidney cancer and gastrointestinal stromal tumors posted revenues of $182 million, an increase 75% compared with the year ago quarter.
- Zoloft and Norvasc which lost U.S. exclusivity in August of 2006 and March of 2007 respectively, continued to decline.
- Compared with the year ago quarter, Norvasc revenues decreased 51% to $650 million, and Zoloft revenues decreased 20% to $134 million.
Fiscal 2008 Outlook:
- Annual revenues expected to be in the range of $47 billion to $49 billion, reflecting an increase of $500 million to both the bottom and the top ends of the previous range.
- Adjusted cost of sales as a percentage of revenue are 14.5% to 15.5% resulting from the full year benefit in 2008 of manufacturing site exits in 2007 and ongoing cost savings efforts.
- The firm expects adjusted R&D in the range of $7.3 billion to $7.6 billion and adjusted SI&A in the range of $14.4 billion to $14.9 billion.
- It anticipates reported diluted EPS in the range of a $1.78 to $1.93 reflecting, a 3 cents increase in the bottom end of the previous range.
Key questions and answers from the fourth quarter earnings call conducted by Pfizer Inc. on January 23, 2008.
Timothy Anderson (Prudential Equity Group, LLC): On Lipitor, provide us an update on what the unrestricted tier 2 access is in the U.S. for the product in 2008 relative to what it was for 2007?
Ian Read: Tier-2 access in 2007 was above 65% on tier-2 access. And we expect to maintain or slightly improve that in 2008. The vast majority of it is unrestricted.
David Risinger (Merrill Lynch): What was the FX contribution to the bottom line EPS?
Frank D''Amelio: For the fourth quarter, give or take, it was about $200 million and for the year it was about $600 million.
Christopher Schott (Banc of America Securities): What is happening with Vytorin following ENHANCE?
Jeffrey Kindler: LDL was not dismissed as a surrogate. It was how you lower LDL with the issue. And clearly there is a wealth of evidence that lowering LVL with statins gives positive outcome. Lipitor has 10 landmark trials on that issue.
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