Filed by Pfizer Inc.
Pursuant to Rule 425
Under the Securities Act of 1933
Subject Company: Wyeth
Commission File No.: 001-01225
Forward Looking Statements
This transcript includes "forward-looking statements" within the meaning of the
safe harbor provisions of the United States Private Securities Litigation Reform
Act of 1995. Such statements may include, but are not limited to, statements
about the benefits of the proposed merger between Pfizer and Wyeth, including
future financial and operating results, the combined company's plans,
objectives, expectations and intentions and other statements that are not
historical facts. Such statements are based upon the current beliefs and
expectations of Pfizer's and Wyeth's management and are subject to significant
risks and uncertainties. Actual results may differ from those set forth in the
forward-looking statements.
The following factors, among others, could cause actual results to differ from
those set forth in the forward-looking statements: the possibility that the
expected synergies from the proposed merger of Pfizer and Wyeth will not be
realized, or will not be realized within the expected time period, due to, among
other things, the impact of pharmaceutical industry regulation and pending
legislation that could affect the pharmaceutical industry; the ability to obtain
governmental and self-regulatory organization approvals of the merger on the
proposed terms and schedule; the failure of Wyeth stockholders to approve the
merger; the risk that the businesses will not be integrated successfully;
disruption from the merger making it more difficult to maintain business and
operational relationships; the possibility that the merger does not close,
including, but not limited to, due to the failure to satisfy the closing
conditions; Pfizer's and Wyeth's ability to accurately predict future market
conditions; dependence on the effectiveness of Pfizer's and Wyeth's patents and
other protections for innovative products; the risk of new and changing
regulation and health policies in the U.S. and internationally and the exposure
to litigation and/or regulatory actions. Additional factors that could cause
results to differ materially from those described in the forward-looking
statements can be found in Pfizer's 2007 Annual Report on Form 10-K, Wyeth's
2007 Annual Report on Form 10-K and each company's other filings with the
Securities and Exchange Commission (the "SEC") available at the SEC's Internet
site (http://www.sec.gov).
Additional Information
In connection with the proposed merger, Pfizer will file with the SEC a
Registration Statement on Form S-4 that will include a proxy statement of Wyeth
that also constitutes a prospectus of Pfizer. Wyeth will mail the proxy
statement/prospectus to its stockholders. Pfizer and Wyeth urge investors and
security holders to read the proxy statement/prospectus regarding the proposed
merger when it becomes available because it will contain important information.
You may obtain copies of all documents filed with the SEC regarding this
transaction, free of charge, at the SEC's website (www.sec.gov). You may also
obtain these documents, free of charge, from Pfizer's website, www.pfizer.com,
under the tab "Investors" and then under the tab "SEC Filings". You may also
obtain these documents, free of charge, from Wyeth's website, www.wyeth.com,
under the heading "Investor Relations" and then under the tab "Financial
Reports/SEC Filings".
Pfizer, Wyeth and their respective directors, executive officers and certain
other members of management and employees may be soliciting proxies from Wyeth
stockholders in favor of the merger. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the solicitation of the
Wyeth stockholders in connection with the proposed merger will be set forth in
the proxy statement/prospectus when it is filed with the SEC. You can find
information about Pfizer's executive officers and directors in its definitive
proxy statement filed with the SEC on March 14, 2008. You can find information
about Wyeth's executive officers and directors in its definitive proxy statement
filed with the SEC on March 14, 2008. You can obtain free copies of these
documents from Pfizer and Wyeth using the contact information above.
The following information is available at www.premierbiopharma.com
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FINAL TRANSCRIPT
Thomson StreeEvents [sm]
PFE - Pfizer to Acquire Wyeth, Creating the World's Premier
Biopharmaceutical Company
Event Date/Time: Jan. 26. 2009 / 8:30AM ET
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
Premier Biopharmaceutical Company
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CORPORATE PARTICIPANTS
Chuck Triano
Pfizer Inc. - SVP, IR
Jeff Kindler
Pfizer Inc. - Chairman & CEO
Bernard Poussot
Wyeth - Chairman & CEO
Frank D'Amelio
Pfizer Inc. - SVP & CFO
Martin Mackay
Pfizer Inc. - President, Global R&D
Greg Norden
Wyeth - SVP & CFO
Ian Read
Pfizer Inc. - President, Worldwide Pharmaceutical Operations
Amy Schulman
Pfizer Inc. - SVP & General Counsel
CONFERENCE CALL PARTICIPANTS
Catherine Arnold
Credit Suisse - Analyst
David Risinger
Banc of America - Analyst
Barbara Ryan
Deutsche Bank - Analyst
Tony Butler
Barclays Capital - Analyst
Jami Rubin
Morgan Stanley- Analyst
Roopesh Patel
UBS - Analyst
Chris Schott
JPMorgan - Analyst
Tim Anderson
Sanford Bernstein - Analyst
Seamus Fernandez
Leerink Swann - Analyst
Steve Scala
Cowen & Co. - Analyst
Bert Hazlett
BMO Capital Markets - Analyst
PRESENTATIONN
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Operator
Ladies and gentlemen, thank you for standing by. All participants are in a
listen-only mode. Following the presentation, the lines will be open for
questions and answers. I would now like to turn the call over to Mr. Chuck
Triano, Pfizer's Senior Vice President of Investor Relations. Please go ahead.
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Chuck Triano - Pfizer Inc. - SVP, IR
Thank you, operator and good morning, everyone. Thank you for joining us today
to discuss today's announcement that Pfizer has entered into an agreement to
acquire Wyeth. I am herewith our Chairman and Chief Executive Officer, Jeff
Kindler.
The presentation that accompanies today's call can be viewed on Pfizer.com. This
call is scheduled to last one hour and I would also add that today's call is in
lieu of our earnings conference call that was originally scheduled for this
Wednesday.
The discussion during this conference call will include certain financial
measures that were not prepared in accordance with US generally accepted
accounting principals. Reconciliation of those non-US GAAP financial measures to
the most directly comparable US GAAP financial measures can be found in Pfizer's
current report on Form 8-K dated January 26, 2009.
Discussions during the conference call will also include forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements. The factors that could cause actual results to
differ are discussed in Pfizer's 2007 annual report on Form 10-K and in our
reports on Form 10-Q and Form 8-K. These reports are available at our website,
www.pfizer.com in the investors SEC filings section.
With that, I'd like to turn the call over to Jeff Kindler.
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Chuck. Good morning, everyone and thank you for joining us today. I
am here with members of Pfizer's senior management and we're also very honored
this morning to be joined by Bernard Poussot, Chairman and Chief Executive of
Wyeth. And with Bernard are three members of his senior management team -- Greg
Norden, Chief Financial Officer; Larry Stein, General Counsel; and Justin
Victoria, Vice President of Investor Relations.
We're very excited about today's announcement that Pfizer and Wyeth will combine
to become the world's premier biopharmaceutical company. I know that Bernard
shares my enthusiasm for this combination and for the opportunities it will
create for patients today, for patients tomorrow and for patients around the
world.
So I'd like to begin by asking Bernard to share his thoughts with you.
Bernard?
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Bernard Poussot - Wyeth - Chairman & CEO
Thank you very much, Jeff and good morning, everyone. I appreciate the
invitation to comment on the value that Wyeth will bring to this great company
in the making.
Our vision at Wyeth for over 20 years has been to establish a very strong
foundation in science, focused on providing new solutions to patients and their
families. As a result, we've created over the year what is today a global
pharmaceutical company with striking diversity. We established strengths in
biotechnology and vaccines when others were just recognizing recently the highly
desirable strategic objective.
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Our execution has been relentless about building what I just described. We have
created diverse business platforms ranging from pharmaceuticals, biopharma,
vaccines, but also nutritionals, consumer healthcare and animal healthcare.
Today, at the end of 2008, 60% of our revenues are from non-traditional
pharmaceuticals. We've built industry-leading biotechnology and vaccine
manufacturing capacity and capabilities. As a result, we have established a
diverse business sector of leadership. Biopharma Enbrel has become now the
number one biologic product in the world. The vaccine [field], Prevnar, is today
the largest selling vaccine in the world. At the same time, we established
pharmaceutical blockbusters such as Effexor, (inaudible), who are both number
one in their categories.
We have also a strong nutritional franchise and we are number one in markets
where we compete. Consumer health is an important piece of our business with
brands like Advil, Centrum, Robitussin. In animal health, we have been a key
provider of biologics and vaccines for animals.
There are many opportunities remaining in those key franchises. Just to name a
few in the field of rheumatoid arthritis and the psoriasis market, where we are
leading with Enbrel, we expect a $10 million expansion between now and 2012. In
the field of vaccines, we are, as you know, preparing our Prevnar 13 valent of
products not only for infants, but also is a totally new indication in adults.
And even in consumer health, we have been adding the TheremaCare acquisition to
our consumer pain franchise led by Advil.
We are also pleased to add a diverse portfolio of innovative new products.
Pipracil, Torisel, Pristiq, [Senta], Relistor are all recent new product
approvals and we are still in the process of launching those products worldwide.
Collectively, they offer a multibillion dollar peak potential.
I just want to finish in highlighting prevention. As a key driver in our view to
manage rising healthcare costs nothing is more efficient than prevention to do
this. We have built that key business over the years with Prevnar, as I
mentioned and we are working actively on a meningitis additional vaccine that
could prove instrumental to children around the world.
We have done the same in animals in providing the world with first vaccines
in West Nile virus, but also H5N3 against avian flu. So we are very concerned
about safeguarding the food chain also as nutrition after all is the ultimate
form of prevention.
Along the same spirit, vitamins and supplements in our consumer division with
Centrum and Caltrate, [also] changes to people to manage their help better. And
lastly, our infant formula business represents also quality food at a very
critical age, which is another form of prevention.
I think we have done all this in fostering a culture of science first at Wyeth.
We've actually encouraged our scientists to go for the stars and look for
diseases that are very difficult to fight. Such an example is our Alzheimer's
effort, which has an unprecedented size and diversity of approaches ranging from
biotechnology small molecule [oral] vaccine to fight this terrible disease, but
I could also mention cancer, meningitis, as I said, pneumonia, a number of
significant problems.
So that is what our scientists have been doing and building and I am very proud
here to represent their good work. At Wyeth, we have said that our scientists
are our strategic planners and they should be the ones leading the direction of
the Company. So not surprisingly, Jeff and Pfizer realized what we have built
over the years and I am very proud here to acknowledge what our good people have
been building patiently year after year.
We believe that we have reached now a transaction level, which is structured in
such a way that our Board and our shareholders will find very attractive. Thank
you.
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
Premier Biopharmaceutical Company
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Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Bernard. And that is a terrific summary of the great work that you
and your leadership team and Wyeth have done building a great company. What I am
going to do now is I'm going to talk a little bit about the transaction from my
perspective. Then I will turn it over to Frank who will give a brief overview of
our fourth-quarter results and then we will have a financial overview of the
transaction for Frank together with our targets for the combined company and
then we will turn to your questions.
So this acquisition comes after months of careful consideration as we reviewed
literally hundreds of strategic options. It became clear that the acquisition of
Wyeth would most meaningfully advance our strategic priorities. As we have told
you in the past, these priorities include enhancing our in-line and pipeline
patent-protected portfolio in key and best-to-win disease areas, areas where
there are significant unmet medical needs and where we believe we can help
address those needs, becoming a top-tier player in biotherapeutics and vaccines,
accelerating our growth in emerging markets, creating new opportunities for
established products, investing in complementary businesses and establishing a
lower, more flexible cost base. In one single step, this acquisition advances
each and every one of those strategies that we have put forward.
Combining with Wyeth will extend our global healthcare leadership, clearly
establishing Pfizer as a leader in human health, animal health, consumer health
and nutritionals as the number one company in primary care and the number two
company in specialty care, as a top-tier player in biotherapeutics and vaccines
and as the company with unrivaled geographic reach.
The operational discipline that we have been shaping at Pfizer for more than two
years will drive this diverse product base forward and produce ever improving
performance. Our unique model, combining the speed and agility of our smaller,
more focused business units with the scale and resources of a global enterprise,
will enable us to seize new opportunities in markets around the world while
maintaining clear accountability for each P&L.
Investors will be pleased to know that this deal definitively addresses the
revenue lost from Lipitor's loss of exclusivity. The combined company will
solidify Pfizer's ability to deliver consistent and stable earnings growth and
strong operating cash flow and it will bring us many new points of product entry
across the world to better serve patients, physicians and customers.
And finally and fundamentally, this deal will significantly enhance the ability
of our world-class people to advance our core mission, applying innovative
science to improve world health.
The reason why we are able today to seize the unique opportunity created by this
combination is because of all the hard work that the people at Pfizer have done
over the last two years to strengthen our Company. Frankly, until we improved
the leadership structure and culture of this company and establish the critical
importance of accountability, discipline and meeting our commitments, we simply
weren't prepared to move forward in this way. And while the job is never done,
we have made so much progress over the last two years that we are now highly
confident that we can successfully integrate and operate the great company that
this combination will produce.
Let me just take a moment to summarize how we have strengthened the foundation
of this Company. First, we assembled a world-class leadership team from inside
and outside of Pfizer. Second, we set out to establish a lower and more flexible
cost base. Just two years ago this week, we said we would reduce our cost base
by between $1.5 billion and $2 billion on a constant currency basis by the end
of 2008. This morning, we reported that we have substantially exceeded that
goal. Over that two-year time period, we reduced our total adjusted cost base by
$2.8 billion.
The difficult, painful, but very necessary work that had to be done to achieve
that included, among other things, reducing headcount by approximately 16,000
employees, eliminating unnecessary layers of bureaucracy, refocusing the work in
our R&D labs to high-priority disease areas and optimizing our manufacturing
network by closing 15 manufacturing sites. As a result of these and other
actions, we are now a much leaner, more agile organization than we were just two
years ago.
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Third, we revamped our research enterprise, narrowing our focus on those disease
areas with significant unmet medical needs in which we believe we can make a
difference, establishing therapeutically-focused research organizations led by
world-class chief scientific officers, creating the unique biotherapeutics and
bioinnovation center and aggressively seeking new science and technology from
the world outside our labs.
Fourth, we established distinct business units, each focused on a different
customer segment, each with a clearly accountable leader. And each with
responsibility for everything from deciding which compounds with proofs of
concept warrant the significant investment required to develop them, all the way
to how to maximize the opportunities for products that have lost exclusivity.
And finally, while again this work is never done, I believe we have meaningfully
changed our culture to one that is financially disciplined and focused on clear
accountability for results. These changes and others put us in a very strong
position from which we can successfully seize the unique opportunity presented
by combining Wyeth and Pfizer and Wyeth is without doubt the perfect partner for
Pfizer.
With this transaction, we will be on our way to becoming the third largest
biotherapeutics company in the world. Enbrel is the world's leading biologic.
Along with it comes a robust pipeline of biopharmaceutical candidates, as well
as Wyeth's world-class pharmaceutical science capabilities and its high-quality
and high-volume manufacturing plants, including the one in Grange Castle,
Ireland, the largest integrated biotechnology manufacturing facility in the
world.
The Wyeth combination also allows us to enter the growing vaccines market in a
powerful position. We will have the fourth-largest vaccines business globally
and our portfolio will include Prevnar, the largest vaccine in the world.
This deal will also expand our in-line and pipeline portfolio in many of the
key disease areas that we have identified as ones in which we want to invest
to win. It will also support our expansion in emerging markets and our
established products business and it will add complimentary businesses in
nutritionals and consumer health, as well as strengthening our animal health
business.
Now this transaction also meaningfully diversifies our therapeutics offerings
and platforms. Within human health, it decreases our reliance on primary care
medicines and creates the number two specialty company. By 2012, the proportion
of our revenue that comes from primary care products will decrease by
approximately a full 20% to just over half of revenues. And we expect no drug
will account for more than 10% of the combined company's revenue.
As I noted, this acquisition further diversifies the Company by strengthening
our position in the attractive biologics and vaccines spaces. As you see on this
slide, this diversification creates a more desirable balance in our portfolio,
reducing small molecule dependence from 90% to 70% by 2012.
On their own, Pfizer and Wyeth both have strong pipelines, but bringing them
together creates a single pipeline that is larger and more diverse with
world-class technology platforms and a talent pool of scientists that is best in
class. Such a broad pipeline requires expensive investments in multiple platform
technologies. Bringing the pipelines of these two companies together will enable
us to realize their potential more fully than if they remain separate.
Just as an example, Wyeth's expertise in commercial and medical immunology,
particularly across rheumatology and dermatology, will help advance development
of ourJAK3 inhibitor. In addition, we will be able to apply Pfizer's commercial
scale and clinical development capability to Wyeth's products and registration,
Phase III and Phase II, and our patient marketing expertise will help maximize
the global potential of the Prevnar vaccine.
Now this slide shows the impressive industry rankings that the combined company
will have in many of the fastest growing therapeutic areas. With this
acquisition, we remain the leader in primary care of course. We will also
advance our CNS, infectious
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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disease and specialty franchises to become number two in those important areas.
And as I have noted, we will bolster our leading position in animal health as
well.
Geographically, the company's combined global footprint will be unrivaled. Going
forward, we will lead the pharmaceutical markets of the United States, Europe,
Latin America, Japan and the rest of Asia. In addition, we will have leading
marketshare positions in important growth areas such as Brazil, Russia, India
and China.
We see continued upside in emerging markets and we expect that to come from,
among many other things, applying Pfizer's commercial presence to Wyeth's
portfolio, particularly Enbrel, Prevnar and Wyeth's well-known and well-regarded
nutritionals.
In the context of a fast-changing global healthcare environment, the new company
will be a well-balanced biopharmaceutical enterprise made up of diverse
businesses with the scale, breadth and reach to deliver healthcare solutions and
address the needs of patients, physicians and other customers around the world.
Before Frank discusses the numbers, I would like to emphasize one last point a
bout the structural benefits of the new organization and some of the reasons why
we believe we are positioned to successfully and quickly integrate the company
and move forward. As a $70 billion global company, clearly, we will be an
enterprise with significant scale and resources and real relevance to payers and
patients. This gives us great competitive advantages. We will have the ability
to benefit from the fixed costs of research, commercialization and manufacturing
and enable important platform investments while also maintaining financial
flexibility.
At the same time, we know that a company that is that large cannot be managed in
a centralized monolithic way and that is why we remain committed to our
operating model of focused, agile, patient-centric business units. This model
provides us clear accountability for performance. The world-class leaders of
these businesses can manage their businesses to achievethe greatest return while
taking advantages of the benefits of the global enterprise. We will continue to
promote an entrepreneurial culture and the ability to harness scale where it is
a competitive advantage for the business. And with that, I will turn it over to
Frank to review the fourth-quarter results, our 2009 guidance and the terms and
details of this transaction. Frank?
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Frank D'Amelio - Pfizer Inc. - SVP & CFO
Thank you, Jeff. I want to start by saying how pleased I am to talk to you today
about what we believe is a great opportunity for both Pfizer and for Wyeth. The
potential for the combination of our companies is greater than each company
could have achieved on its own.
With that, let me briefly review our fourth-quarter 2008 results before we
review the transaction. We delivered solid results in 2008, achieving our key
financial metrics, including exceeding our cost reduction target in the face of
a very challenging global economy. Reported revenues were $12.3 billion, a
year-over-year decrease of 4%, driven by the negative impacts of the loss of US
exclusivity of Zyrtec and Camptosar and the loss of exclusivity for Norvasc in
Korea and Japan whose collective fourth-quarter revenue decreased year-over-ear
by $515 million.
Foreign exchange, which decreased revenues by approximately $380 million, or 3%,
which were partially offset by the solid performance of key products. Reported
net income was $266 million for the quarter compared with $2.7 billion in the
year-ago quarter. The reported diluted EPS was $0.04 versus $0.40. These
significant year-over-year decreases were primarily driven by a $2.3 billion
pretax and after-tax charge resulting from an agreement in principle to resolve
previously disclosed investigations regarding allegations of past off-label
promotional practices concerning Bextra, as well as other open investigations.
And to a lesser extent by the $1.2 billion pretax increase in restructuring and
implementation charges related to cost-reduction initiatives, as well as the
increased effective tax rate, which were partially offset by savings resulting
from cost-reduction initiatives.
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Adjusted revenues were $12.3 billion, a 4% decrease year-over-year driven by the
unfavorable impact of the loss of US exclusivity of Norvasc, Zyrtec and
Camptosar and foreign exchange, which once again partially offset solid
performance of key products.
Adjusted income increased 29cYo year-over-year to $4.4 billion and adjusted
diluted EPS increased 30% to $0.65, both of which benefited from savings
associated with our cost-reduction initiatives, which were partially offset by
an increase in the effective tax rate.
As you can see, we achieved essentially all elements of our full-year guidance
with the exception of reported diluted EPS, which includes the negative impact
of the previously mentioned litigation-related matters. We achieved our adjusted
revenue and adjusted diluted EPS guidance and we exceeded our adjusted total
cost target, adjusted cost of sales, adjusted SI&A and adjusted diluted EPS
targets. We also expect to achieve cash flows from operations within our
estimated range of $17 billion to $18 billion.
Looking to 2009, we expect, on the top line, annual revenues in the range of $44
million to $46 billion, which assumes a $3 billion year-over-year reduction
versus 2008 directly related to the strengthening of the US dollar. And on the
bottom line, adjusted diluted EPS in the range of $1.85 to $1.95. It is
important to note that this guidance includes a $1 billion reinvestment in key
high-growth areas of our business, including later-stage research and
development programs, emerging markets and establish product strategies.
Now I would like to provide a bridge from '08 actuals to 2009 guidance. We
expect '09 adjusted diluted EPS to be negatively impacted by approximately $0.21
due to the expected $3 billion year-over-year revenue decline related to foreign
exchange, $0.21 related to increasing the effective tax rate to 30% reflecting
financial strategies in connection with the proposed acquisition of Wyeth, $0.04
due to increased pension expenses and $0.04 resulting from a decrease in
interest income. All of these factors translate into a negative impact of
roughly $0.50 on 2009 adjusted diluted EPS versus 2008.
Now under the terms of the agreement, Pfizer is acquiring all Wyeth's
outstanding common shares at a current value of about $50 per share. Wyeth's
shareowners will receive $33 per share in cash plus a current value of
approximately $17 per share of Pfizer stock based on a fixed exchange ratio of
0.985. The transaction will be funded through a combination of cash, debt and
equity.
Upon completion, Pfizer shareowners will own approximately 84% of stock in the
combined company and Wyeth shareowners will own 16%. We anticipate the
transaction to be accretive within the second full year following the close,
which we expect to occur at the end of the third quarter, but during the fourth
quarter 2009. The resulting transaction is currently valued at approximately $68
billion.
As I mentioned, the sources of funding for the transaction include $22.5 billion
in cash, $22.5 billion of debt, and about $23 billion in Pfizer stock. We have
received commitments for debt financing from a syndicate of five banks.
Based on recent discussions with rating agencies wherein we have reviewed this
transaction, we expect to receive the following ratings -- a Moody's rating of
Al stable long term and P1 affirmed short term and an S&P rating of AA stable
long term and Al plus confirmed short term.
Given the amount of cash and debt being used to fund this transaction, beginning
in the second quarter, we are reducing our quarterly dividend to $0.16 per
share, which continues to be competitive with our peers. As part of this
transaction, we expect to realize about $4 billion in synergies.
It is important to note that the $4 billion in synergies is incremental to the
$400 million already achieved by Wyeth, $2.8 billion of savings that Pfizer
achieved at the end of '08 under our previous cost-reduction initiative and in
addition to the $2 billion of anticipated net savings from our new
cost-reduction initiative announced today. We anticipate achieving 50% of these
synergies
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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within the first 12 months after the close, 75% within the first 24 months and
the full benefit of the synergies in the first 36 months.
We expect about half of these synergies to come from SI&A with the remaining
from R&D and manufacturing, resulting from a variety of activities, which
include the consolidation of support functions, implementing a global
procurement structure, achieving economies of scale, rationalizing our global
network of plants and using a single platform for core research, among other
things. As a result of these actions, we expect to reduce the combined company's
global workforce by approximately 15%. This reduction includes the 10% reduction
to Pfizer's workforce associated with its new cost-reduction initiative.
Now I would like to move on to our 2012 financial targets, which are based on
our current long-range forecast. Please note that these are to be subject to
changes as a result of potential material negative impacts related to foreign
exchange fluctuations, macroeconomic volatility, industry-specific challenges
and changes to government healthcare policy, among other things.
We expect the revenue level of the combined company to be comparable with our
proforma 2008 revenue level of approximately $70 billion. By managing our mix
of business and total cost structure of the Company, we expect overall
operating margins in the high 30s to low 40s percentage range, which we
believe appropriately aligns with our expected revenue levels.
We anticipate adjusted diluted EPS to be roughly the same as Pfizer's 2008 level
of $2.42 per share. We also expect our operating cash flow to be in the low $20
billions and we expect that in 2012,the combined company will be in a net cash
position. As you can see, the combination of Pfizer and Wyeth clearly addresses
the revenue decline resulting from the loss of exclusivity of both Lipitor and
Effexor. Now I will turn it back to Jeff.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thanks so much, Frank. So we will turn to your questions in a moment. Let me
just sum up. This is the right transaction at the right time for both Pfizer
and for Wyeth. And we are entering into it for the right reasons -- to create
value for shareholders, customers and patients today, patients tomorrow and
patients everywhere.
Going forward, we will have a greater ability to maximize our product
portfolio while having the resources to invest in breakthrough science in
valuable therapeutic areas. A diversified revenue base will better position
the Company for long-term growth. We will continue to operate with business
units empowered to meet the needs of specific customers and able to benefit
from the scale of an even stronger global organization.
The new combined company is one with a broader portfolio, a stronger pipeline of
innovative new products, more opportunities for growth and an ability to offer
patients a range of treatments for every stage of life. By joining together with
Wyeth, Pfizer is creating the world's premier biopharmaceutical company and we
are excited about the opportunities to come. So let's turn to your questions.
--------------------------------------------------------------------------------
QUESTIONS AND ANSWERS
Operator
(Operator Instructions). Catherine Arnold, Credit Suisse.
--------------------------------------------------------------------------------
Catherine Arnold - Credit Suisse - Analyst
Good morning. Thanks for taking my question. I wanted to ask you about the
leadership of the combined company. I think the press is reporting that Bernard
will not be staying with the company. I don't think that was addressed in your
comments and I
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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wondered if you could talk about how you plan to integrate the expertise of
Wyeth into the new Pfizer organization to prevent exodus of key employees
because it's obviously key to the integration. And then I wondered if you could
comment on biosimilars. Will this accelerate your ability to pursue biosimilars
as a strategy and was that one of the arguments for the deal?
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Sure, thank you, Catherine. First, Bernard and I have gotten to know each other
quite well as you can imagine. I have enormous respect for his experience and
talents and skills. We share similar values and similar views about where our
healthcare environment is going and what we need to do as a company. And I have
been very gratified that he has agreed after the closing to continue to work
with us to ensure a smooth transition and to see where we go from there.
Obviously he is running Pfizer -- I'm sorry--he is running Wyeth until the
closing, but we are very grateful that he has agreed to stay on.
With regard to the rest of management at Wyeth and the tremendously talented
group of people there both in leadership and across the company, we are very
excited about looking for the right opportunities for people. You are absolutely
right that we have to focus on retention. We are not just buying assets and
buildings and compounds; we are building an enterprise that was created by
people, great people that have done a fabulous job creating a great company and
we are very mindful of that. I will let Bernard elaborate on those two points
maybe and then I'll go to your question about biosimilars.
--------------------------------------------------------------------------------
Bernard Poussot - Wyeth - Chairman & CEO
Yes, Catherine, my commitment is certainly to run Wyeth and present Wyeth at the
closing in the best possible condition as you can count on that, number one.
Second, I will dedicate a lot of my time and energy to work through the
combination and make sure that Pfizer builds a very strong team. It is all about
talents that drive those businesses, not just products or assets. The people
observed that, of course, many times in the past. As far as my own role, I think
I will do that and we have sometime with Jeff to discuss what could happen after
that. So we have some time to do that.
In terms of biotechnology, yes, it is definitely an art sometimes more than a
science and we have been not from only the research side, but also from the
manufacturing side, the product is a process in this arena and that is very
different from small molecules. And I think we have lined up some unbelievable
talents -- Ph.D.s, engineers --that have designed state-of-the-art manufacturing
sites who can do things that not even some of our peers can. I mean Genentech
came to us to manufacture Herceptin two years ago. That tells you the kind of
technology and know-how we have. So we would be very happy to make sure Jeff and
his team sees the talent we have brought and help build this very strong company
that we will (inaudible).
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you. One more point on that one, Catherine. I think Bernard expressed
extremely well one of the major attractions and capabilities of Wyeth that
contribute to the value of this transaction. We are very proud of our
pharmaceutical sciences group, both in small and large molecules, but we also
appreciate the tremendous value in capability and scientific expertise that
Wyeth has developed over many years.
I mentioned theirworld-class facility in Castle Grange and as Bernard said, the
ability to manufacture biotherapeutical products at scale. It is a very
complicated and intensive process and the ability to do that is absolutely a
competitive advantage and certainly, we will be looking at whether or not to
bring that advantage to bear on biosimilars, as well as branded products.
--------------------------------------------------------------------------------
Catherine Arnold - Credit Suisse - Analyst
Thank you.
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Operator
David Risinger, Banc of America.
--------------------------------------------------------------------------------
David Risinger - Banc of America - Analyst
Good morning. Thanks very much for taking my questions. I actually have a number
of them. I will try to be quick though. First, could you discuss the necessity
for the dividend cut in light of the much stronger 2012 cash flow outlook and
earnings outlook and specifically you have provided a target for 2012 earnings
that I think is much higher than consensus expectations. Second, with respect to
repatriation of ex-US cash, can you discuss the negative impact on earnings per
share? And then third, I am not sure if it is possible, but I am hoping that you
can discuss the interest rate on the debt that you expect to take on. Thank you.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc.- Chairman & CEO
Thank you, Dave. !will turn all three of those over to Frank.
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP & CFO
So first on the dividend cut, I think -- look at that from a couple of
perspectives. One, clearly to assist in the financing of the transaction. Two,
to redeploy capital. We've talked about total shareholder return as the focus of
how we deploy capital. It is not just about paying a dividend, but also about
redeploying some of that capital to get revenue and earnings expansion and price
earnings multiple expansion. So clearly this is very consistent with what we
have talked about before relative to shareholder return and redeploying capital
opportunistically to get that.
In terms of the repat impact on EPS, think about that as the effective tax rate
going from what was about 22% in 2008 to 30% in 2009 and that having a negative
impact on 2009 earnings relative to 2008 of $0.21, which we called out in the
bridge chart that I used in the deck. And then on the interest rate relative to
the deal, it will be at market rates.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Frank. Next question please.
--------------------------------------------------------------------------------
Operator
Barbara Ryan, Deutsche Bank.
--------------------------------------------------------------------------------
Barbara Ryan - Deutsche Bank - Analyst
Good morning. Congratulations. I guess mine was a follow-on to David's for you,
Frank. I mean I sort of came up with a pro forma number of $2.43 in 2012 and
probably the biggest unknown is what rate we should assume on the debt. So when
you say a market rate, obviously this is a challenged market so we don't have a
lot of reference transactions to look at. I am assuming that, obviously, you
have the lost interest income on the $22 billion in your own cash, which would
be, in this environment, pretty de minimis, maybe 2% and then assuming that the
cost of the other $22 billion would be in the range of 7% to 9%. I am just
wondering if you can comment on where you see that range.
--------------------------------------------------------------------------------
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Frank D'Amelio - Pfizer Inc. - SVP & CFO
So without giving a specific rate, I think once again in market rates, the
numbers that you used I wouldn't dispute. And then the other thing I would say
is, remember, one of the things I called out on that 2012 chart, Barbara, is
that we would be in a net cash position. I think it is important to note that
we will be in a net cash position come 2012, which needs to be factored into
your modeling on combination of interest expense, but also interest income.
--------------------------------------------------------------------------------
Barbara Ryan - Deutsche Bank - Analyst
Right. So should we also assume that as the years go forward and you pay down
big chunks -- I mean of course we may have a changed interest rate environment
-- but that your rate may start out higher than it winds up in the end?
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP & CFO
What ?would say is, once again, it will depend on what is going on in the market
and then it also depends on how much of the bridge facility we have remaining.
So I think the short answer to that for now is market rates and I tried to guide
you a little bit based on your comments.
--------------------------------------------------------------------------------
Barbara Ryan - Deutsche Bank - Analyst
Okay, thanks very much.
--------------------------------------------------------------------------------
Operator
Tony Butler, Barclays Capital.
--------------------------------------------------------------------------------
Tony Butler - Barclays Capital - Analyst
Good morning, Jeff. Thanks very much. Clearly you can drive some accretion with
the combination of this transaction and that is great. But I am curious about a
couple things. When you mentioned lower cost base and greater flexibility and
you repeat that over and over again, I am just curious if today, over the past
-- given the past two years and the cost-cutting initiatives that you have
undertaken -- if actually even today Pfizer is totally right-sized. And I ask
this because if you think about the combination and the 15% cost reductions out
of the combined operating expenses that seems relatively low to me. So I would
like some additional color on that. I would have argued much higher.
And then second, and it is more to Frank's comment about total shareholder
return and price earnings multiples, if you think longer term, even 2012 and
beyond, given the consolidated large revenue base, it strikes me as very
difficult to see that growth coming from revenues. And so I would love to sort
of incorporate some thoughts, if you could incorporate some thoughts into
revenue growth, if that even is on the chart with respect to total shareholder
return and expansion of P multiples. Thanks.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Okay, Tony. I will let Frank start on both.
--------------------------------------------------------------------------------
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Frank D'Amelio - Pfizer Inc. - SVP & CFO
So Tony, on the 15%, that 15% was I called it a combined company workforce
number. So if you think about it, Wyeth has about 50,000 employees, slightly
below that. We have about 80,000 employees, slightly above that. We were talking
about 15% of that combined number, which includes the 10% for the standalone
Pfizer number, which was the $2 billion net. And you have got to realize there
will be, as you know, there will be synergies above and beyond workforce-related
savings. So that is the way to think about the 15%. It was really talking about
the workforce.
In terms of revenue, what we did is we put a target out there for 2012 that is
comparable to 2008 and clearly we see lots of opportunities for revenue growth.
Quite frankly, it is much of what we have been talking about before as a
leadership team -- leveraging established products, leveraging emerging markets.
We talked about complementary space. We now have lots of that complimentary
space as a result of the transaction with Wyeth. So it is the things we have
talked about and quite frankly, what it all comes down to is executing, which is
what we are going to do.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
I just would add one qualitative comment to all of that. The business units that
we have created and that will be enhanced by virtue of this transaction are in a
position to really maximize revenues and identify the appropriate cost base that
are in both cases appropriate to their business. And by empowering these
business leaders, giving them clear accountability, we are really going to
unleash their ability to find new sources of revenues, to grow their respective
businesses, as well as to manage the cost base that is best for them, which may
be different in different cases. So that is where I think there is a tremendous
amount of dynamism in the way we are approaching running the business. Next
question please.
--------------------------------------------------------------------------------
Operator
Jami Rubin, Goldman Sachs.
--------------------------------------------------------------------------------
Jami Rubin - Morgan Stanley - Analyst
Thank you. Can you hear me okay? I am on speakerphone. So I have a few
questions. My first question relates to the timing of the deal being closed. You
said third to fourth quarter. I am wondering if you feel there is any upside to
that and if you could comment on where you see potential issues with respect to
FTC, any overlaps in the business. We don't see much in the pharma business, but
maybe there are in the animal health.
Secondly, we were curious to know if Wyeth is allowed to pay their quarterly
dividend up until the deal closes. And my third question relates to
opportunities going beyond justthe$4 billion in cost savings and wondering if
you can elaborate on whether or not there are any specific restrictions to
spinning off assets to pay down debt. Thanks.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Okay. I will make a couple comments and then turn it over to Frank. With regard
to antitrust, one of the many beautiful things about this deal is the companies
are very, very complementary. And we are looking forward to working
constructively with the antitrust authorities to review any potential issues
that may come down the pike. With regard to closing and the opportunities beyond
the $4 billion and possibilities of other dispositions of assets, I will turn it
over to Frank.
--------------------------------------------------------------------------------
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
Premier Biopharmaceutical Company
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Frank D'Amelio - Pfizer Inc. - SVP & CFO
Yes, so first, Jami, I would answer the question about the Wyeth dividend. So on
the dividend, the answer is we expect current plans are for Wyeth to continue to
pay its dividend.
--------------------------------------------------------------------------------
Bernard Poussot - Wyeth - Chairman & CEO
Yes, I confirmed that.
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP &CFO
Thank you. And then in terms of restrictions on assets, obviously once the deal
closes, there is no restrictions on anything relative to asset sales. Relative
to between now and then, we will work collaboratively with Wyeth based on
certain terms and conditions in the contract.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Anything about closing you want to add to --?
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP & CFO
We will close as quickly as we can.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc.- Chairman & CEO
Okay, very good. Next question, please.
--------------------------------------------------------------------------------
Operator
Roopesh Patel, UBS.
--------------------------------------------------------------------------------
Roopesh Patel - UBS - Analyst
Thanks. I have got a few questions. First, Jeff, I was wondering if you could
kindly address the risk this deal poses to R&D momentum and the steps the
Company plans to take to minimize this. Secondly, on revenue growth, the
presentation states that 2012 revenues will be roughly the same as 2008. In
light of several patent expiries that are scheduled in 2013,'14 and '15, I am
curious if you expect any revenue growth even in those outyears? And then
lastly, between now and deal closing, I am wondering whether Wyeth will continue
with its cost-cutting initiatives or whether, now that this deal is announced,
that is on hold. Thanks.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc.- Chairman & CEO
Okay, so I will make a couple of comments and then I will ask Frank, Martin and
Bernard to add to them. With regard first to R&D, we are obviously very mindful
that research and development are the core innovation engine for our business.
We have learned a lot from prior transactions, as well as some of the other
activities that we have undertaken in the last couple of years. We intend to
proceed with great speed and focus and we are very mindful of the importance of
protecting that very, very
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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important core of our business. Let me ask Martin Mackay, our head of R&D, to
elaborate a little bit about that and then I will come back to your other
questions.
--------------------------------------------------------------------------------
Martin Mackay - Pfizer Inc. - President, Global R&D
Thanks, Jeff and just briefly, (inaudible) to build on what Jeff said. I have
been a long-time admirer of the Wyeth R&D organization and a very long-time
admirer of Mikael Dolsten, the head of R&D. I have had the opportunity over the
last few years to speak with Mikael and we both have very similar thoughts on
productivity and the absolute necessity to name products and maintain
productivity. There is no (inaudible) acquisitions in the past for (inaudible)
organization. I think we have learned from that greatly. So when this deal
closes, we will be able to launch an R&D organization, maintain our goal
milestones and commitments and I think really build something special given the
complementarity of both R&D organizations.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Martin. With regard to your question about post-2012, we really
believe we are creating a company herewith a wide range of diverse assets,
investments in growth opportunities and the financial wherewithal to move the
business forward. We are obviously very focused on the here and now and 2012,
but this is a very long-term business and we believe this deal positions us
extremely well for long-term shareholder value creation through this collection
of businesses and their various opportunities in the future. I will ask Frank if
he wants to add anything to that and then I'll ask Bernard to comment on Wyeth's
cost-cutting.
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP & CFO
So just I think what I will do to just punctuate Jeff's comments on revenue
growth, I will come back a little bit to what I talked to Tony Butler about,
maybe put a little more detail to that. Then I will ask Greg Norden to comment
on the cost question relative to Wyeth.
So once again, I talked about opportunities we see, significant opportunities in
emerging markets, established products and other parts of the industry. Let me
just punctuate it with some numbers. If you look at Asia-Pacific, if you take
out Japan, New Zealand and Australia, the current market there we view,
addressable market of about $50 billion of which we have 4%. 4% on $50 billion
is $2 billion. We see that market growing between now and 2012 from $50 billion
to $80 billion. We believe we can not only maintain our share there, but grow
our share to 6%. 4% on $80 billion is $3.2 billion. Just by holding share, we
pick up $1.2 billion. If we can pick up two points of share and go to 6%, that
is $4.8 billion versus today's $2 billion, almost $3 billion of incremental
growth.
Our job is to execute on those opportunities, build a strong platform, get real
strong momentum, get the number that we have targeted for 2012 and then build
upon that momentum going forward into 2013 and beyond. That is what we plan on
doing, which is why I talked about we need to execute and we will execute. Greg,
do you want to talk a bout the Wyeth cost reduction?
--------------------------------------------------------------------------------
Greg Norden - Wyeth - SVP &CFO
Yes, thanks, Frank. Just as it relates to Wyeth, I think what you have seen over
the past couple of years, and what you've seen continuing through this year, is
very strong and disciplined financial management and we have been able to
execute on our cost-management strategies for quite some time.
Between now and the time of closing, we certainly have an obligation and
responsibility to continue to run our business as if we were going to remain
independent and as such, we will continue to run the business the best we can
and along the lines of the way we have in the past and that includes continuing
with the cost-containment initiatives that we started with project impact. So we
are going to continue that through 2009 is the answer to your question.
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Greg. Next question, please.
--------------------------------------------------------------------------------
Operator
Chris Schott, JP Morgan.
--------------------------------------------------------------------------------
Chris Schott - JPMorgan - Analyst
Good morning. How are you doing? Just two quick questions for you. First of all,
when we think about debt you are taking on with this transaction, how
aggressively should we think about Pfizer paying down that debt? I know you
mentioned 2012 net cash. But I guess I am trying to get at here tax rate
obviously on the 30% in 2009, should we think of it up in that 30% range a
couple years after that and then maybe when we look at 2012 and beyond, should
we think about the tax rate maybe coming back down to this low to mid-20% range?
And maybe just a second question on the top-line for 2009, I know -- adjusting
for currency, it doesn't seem like you have got much organic growth here. I just
would be interested in your comments or thoughts overall on the impact the
weakened economy is having on the pharma business as a whole as it relates to
your business, as well as Wyeth's?
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP &CFO
So on the tax rate, Chris, we will obviously be looking to pay down the debt. I
will call it kind of in a consistent way going forward, which is why we said net
cash by 2012. So in terms of your assumptions, I would assume that 30% and I
would keep it at roughly that level going forward for the next couple years.
That would be point one.
In terms of the revenue guidance for '09, we put a range out there of $44
billion to $46 million and we said $3 billion negative impact from foreign
exchange. Just to run the numbers, if you added that $3 billion back, if foreign
exchange was constant, $44 billion to $46 billion would be $47 billion to $49
billion. Midpoint of that is roughly $48 billion, which is pretty much what we
have printed this year. And we did, to your point, we did assume some negative
impact of the macroeconomic environment on the guidance that we are providing
for 2009.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Frank. Next question, please.
--------------------------------------------------------------------------------
Operator
Tim Anderson, Sanford Bernstein.
--------------------------------------------------------------------------------
Tim Anderson - Sanford Bernstein - Analyst
Thank you. I have three questions. Jeff, this big transaction goes against what
you described in March of '08, which was that you would not likely do another
big pharma deal. My question to you is what changed over the course of those 10
months?
The second question is whether at some point you might consider splitting up the
combined company into something like truly separate publicly traded entities?
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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And the third question is for Bernard. Can you talk about how Wyeth arrived
at a $50 share as being fair value? I think the case could be made that that
is a pretty low price, given what the future prospects for Wyeth have looked
like.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thanks, Tim. Well, as far as what I have said in the past, I have always been
very clear that we never say never and that we are open to every opportunity.
And I have identified the conditions that would have to prevail for us to
undertake a transaction like this, including obviously the value, the strategic
value, and our ability to manage the inevitable risks and disruptions that come
from any large-scale merger of that kind.
We, as I said in my opening comments, are in a much stronger position than we
were two years ago. In fact, I would have to say we have gotten there faster
than I might have even hoped. And our confidence in our ability to execute on a
transaction like this is very high, thanks to the very hard work of our people.
We have also laid out very clearly all the strategic priorities that we have,
and I went through them earlier this morning, and this is a very, very unique
deal. I don't think there was anything else that could have been done that would
have more perfectly matched those strategic priorities all achieved in a single
transaction. So it is for all the reasons I said at the beginning, the right
deal at the right time and for the right reasons.
And as far as potential future considerations of the portfolio are concerned,
what we are very excited about is that this transaction creates a very
broad-based, diversified portfolio of businesses that are complementary with one
another. And I continue to believe that these various businesses benefit from
the combination both of their own ability to maximize their opportunities but at
the same time take advantage of the scale and resources of the combined company.
Bernard?
--------------------------------------------------------------------------------
Bernard Poussot - Wyeth - Chairman & CEO
Thank you, Jeff. The answer to your question is this; the Board of Wyeth
obviously reviewed this question very, very thoroughly and evaluated exactly
what this offer was at versus our standalone prospect. And I would just tell you
that this transaction at Friday closing values for the Pfizer stock represent a
$16 billion premium, which in the current environment is not bad. 85% of the
synergies created to Wyeth.
I remind you also that the deal is structured with 65% in cash. And lastly, that
the 35% component, which is Pfizer stock, offers also an ability to go op
when/if the deal is understood and people realize the strength of the
combination. So between now and closing, we will work with Jeff to do that.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc.- Chairman & CEO
Thank you, Bernard. Next question, please.
--------------------------------------------------------------------------------
Operator
Seamus Fernandez, Leerink Swann.
--------------------------------------------------------------------------------
Seamus Fernandez - Leerink Swann - Analyst
Thanks very much. Can you hear me?
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
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Jeff Kindler - Pfizer Inc. - Chairman & CEO
Yes.
--------------------------------------------------------------------------------
Seamus Fernandez - Leerink Swann - Analyst
Okay, so just a couple of quick questions. Frank, I was hoping you could discuss
the context of the $1 billion reinvestment that you mentioned would occur this
year on the R&D side, and in some of the other parts of the business.
And then you mentioned the market share that Pfizer would hold in emerging
markets and the growth you anticipate in those markets. Can you tell us what the
combined share of the two companies would be? And also, Frank, could you just
clarify for us the combined cost reductions as I read them are $4 billion from
the combination with Wyeth with an incremental $2 billion from the additional
cost program that you envision for Pfizer itself. Is that correct?
--------------------------------------------------------------------------------
Frank D'Amelio - Pfizer Inc. - SVP & CFO
Let me do this; I will answer the last question first. Then Ian, you are
going to talk about the reinvestment question, and then on the revenue growth
question that I gave with the addressable markets. I think what we will do is
just keep that to the Pfizer numbers only for now, unless you want to add
anything to that, Ian.
The answer to your last question is yes. You take the $4 billion in synergies
that we talked about from the combined company, and you would add the $2
billion that we laid out from the standalone Pfizer. So the short answer to
the last question is yes. Ian?
--------------------------------------------------------------------------------
Ian Read - Pfizer Inc. - President, Worldwide Pharmaceutical Operations
The reinvestment is to ensure we can continue to drive the revenue of the top
line, so it includes probably a portion into supporting the portfolio,
progressing the Phase II and Phase III pipeline, which is very important to our
2012 imposed revenue opportunities. It is building infrastructure with a field
force in emerging markets that is in Turkey and in China and in Russia, Korea.
And lastly, building our offering in established products. As we widen our
portfolio offering in these markets, we need to invest in ensuring we have
supply and we appropriate dossiers so as to widen that offer.
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Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you, Ian. Next question, please.
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Operator
Steve Scala, Cowen and Company.
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Steve Scala - Cowen & Co. - Analyst
Thank you. I have three questions. First, Pfizer sold its consumer business a
few years ago because it apparently did not make strategic sense. Why does the
Wyeth OTC business make greater strategic sense, or should we assume a similar
fate?
Second, has FTC review of the Lipitor patent settlement been finalized? And if
not, Bernard, what analysis has Wyeth completed regarding the Lipitor patent
settlement? It would appear to be a key variable in your ability to make 2012
targets.
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FINAL TRANSCRIPT
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Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
Premier Biopharmaceutical Company
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And then lastly, Bernard, when was your last -- or when was your most recent
update on the bapineuzumab Phase III trials such as perhaps a DSMB update or
some other knowledge of how things are progressing in Phase III? Thank you.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Okay, thanks, Steve. I will address the first question and I will ask Amy
Schulman, our General Counsel, to give you a Lipitor patent update and then I'll
turn it over to Bernard for the questions you've asked him.
On the consumer business, a decision was made at the time based on the view that
prevailed at that time. Where we are today is I think this is a terrific
business and one that is very complementary with our portfolio and one that we
believe creates tremendous opportunities for increased shareholder value. Amy,
if I could ask you to give Steve an update on the Lipitor patent situation.
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Amy Schulman - Pfizer Inc. - SVP & General Counsel
We are very comfortable with the FTC review of the Lipitor patent situation and
[as] the course of the diligence, both Wyeth and we went through each other's
products and various issues at some length, and both of us were comfortable with
what we found.
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Jeff Kindler - Pfizer Inc. - Chairman & CEO
Well, he asked you specifically about the FTC review.
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Amy Schulman - Pfizer Inc. - SVP & General Counsel
The FTC review is completed.
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Jeff Kindler - Pfizer Inc. - Chairman & CEO
Thank you. Bernard?
--------------------------------------------------------------------------------
Bernard Poussot - Wyeth - Chairman & CEO
Yes, bapineuzumab was the question. First of all, we do not comment on DSMB
reviews as a matter of policy. Regarding the ongoing Phase III programs, I can
tell you that they are advancing in most cases. We have resumed activities
ex-US. In most countries, a couple of situations still need to be addressed. But
we are confident that, within weeks, we will be back in full gear in those
countries. And the North American portion is progressing accordingly. So we are
pleased and continue to hope for the original timing that we have for
bapineuzumab.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc.- Chairman & CEO
Thank you very much.
--------------------------------------------------------------------------------
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publication may be reproduced or transmitted in any form or by any means without
the prior written consent of Thomson Financial.
FINAL TRANSCRIPT
--------------------------------------------------------------------------------
Jan. 26. 2009 / 8:30AM, PFE - Pfizer to Acquire Wyeth, Creating the World's
Premier Biopharmaceutical Company
--------------------------------------------------------------------------------
Amy Schulman - Pfizer Inc. - SVP & General Counsel
Can I just clarify so that there is no confusion? The FTC review is completed.
They have not yet issued a decision. So I didn't want there to be any ambiguity
about what I meant by completed.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc.- Chairman & CEO
Okay. Thank you, Amy. We have time for one more question.
--------------------------------------------------------------------------------
Operator
Bert Hazlett, BMO Capital Markets.
--------------------------------------------------------------------------------
Bert Hazlett- BMO Capital Markets - Analyst
Thanks. My question is specific to the Alzheimer's therapeutic area and the
pipeline compounds. Jeff, clearly Pfizer has an effort therewith multiple
compounds, multiple licenses, as well as monoclonal antibodies, as does Wyeth.
Do you expect thereto be a divestiture in this area of one of the anti-A beta
monoclonal antibodies from the pipeline? Thanks.
--------------------------------------------------------------------------------
Jeff Kindler - Pfizer Inc. - Chairman & CEO
Burt, let me start by saying you are right to point out that both companies
have invested a great deal into this very, very important area of critical
unmet medical need and both have very exciting programs, which we believe are
very complementary one with the other and we don't anticipate any issues
along the lines you are talking about. We actually think these two efforts
put together will be very complementary and most importantly give us the
opportunity to really see if we can't address this very serious unmet medical
need.
I think that concludes the time we have available and I appreciate everybody
listening in today. Thank you and have a great day.
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