Pfizer Inc. (PFE)
Q2 2010 Earnings Call Transcript
August 3, 2010 10:00 a.m. ET

Executives

Charles E. Triano – Senior Vice President, Investor Relations
Jeffrey B. Kindler – Chairman and Chief Executive Officer
Frank A. D''Amelio – Senior Vice President and Chief Financial Officer
Ian C. Read – Senior Vice President and Group President, Pfizer Biopharmaceutical Businesses

Analysts

David Risinger – Morgan Stanley
Christopher Schott – J.P. Morgan
Marc Goodman – UBS
John Boris – Citigroup
Jami Rubin – Goldman Sachs
Timothy Anderson – Sanford C. Bernstein
Eric Lo – Bank of America/Merrill Lynch
David Maris – CLSA
Seamus Fernandez – Leerink Swann & Company
Anthony Butler – Barclays Capital
Bert Hazlett – BMO Capital
Steve Scala – Cowen and Company

Presentation

Charles E. Triano

Good morning and thank you for joining us today to review Pfizer''s Second 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 home page at www.pfizer.com in the Investor Presentations tab by clicking on the link Quarterly Corporate Performance Second Quarter 2010. Also, I would add that this quarter, we’ve begun providing a more detailed geographic revenue breakdown in our financial tables.

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 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, August 3, 2010. These reports are available at our website at pfizer.com in the Investor''s SEC filing section.

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

Jeffrey B. Kindler

Thanks, Chuck and good morning, everyone. I''ll start with six key points. First, for the second consecutive full quarter since we closed the Wyeth deal, we are reporting strong top and bottom-line results across the business. Second, we are improving our outlook for the rest of this year. We are now projecting adjusted diluted earnings per share in the upper end of our range.

Third, we are reaffirming every element of our targets for 2012 despite the headwinds of global economic challenges, U.S. healthcare reform, European pricing challenges and foreign exchange fluctuations. Fourth, as I discussed last quarter, we recognize that returning cash to our shareholders is an important part of how we deploy your capital. Consistent with that, we are today reporting on our repurchase of common stock during the quarter.

Fifth, also consistent with that important principle, we are today reaffirming that barring significant unforeseen events, we expect our Board to approve an increase in the dividend at its December meeting. And sixth, we are announcing today that, in light of our current assessment of the company''s solid financial position and its strong operational prospects, we''re now targeting a dividend payout ratio comparable to the current industry average in about three years.

Looking ahead, we intend to continue delivering strong, steady and consistent results, even in times of economic uncertainty and even as different parts of our business face different challenges and seize the different opportunities offered by healthcare needs around the world. We believe we are well-positioned to do this based on the key factors that have driven our performance over the two complete quarter since we acquired Wyeth.

First, a relentless insistence on operational execution produced by our customer-focused, accountable business units. Second, a disciplined deployment of capital to achieve the right returns for the distinct risks and opportunities offered by different areas of medical research, products, end markets, coupled with an ongoing drive across the company for continuing improvements in productivity and third, a business mix of products, businesses, geographies and areas of medical research that balances both our risks and our opportunities.

To reinforce this last point, please take a look at this chart. This chart shows the share of our revenue generated by each business unit during this quarter compared to the same quarter last year before the Wyeth acquisition.

I''d like to call your attention to the share represented by our Business Care -- our Primary Care Business unit, the blue slice on the pie chart. This business sells patent-protected Primary Care products in developed countries, including the United States, Western Europe, Japan, Canada and Australia.