10-QPeriod: Q3 FY1999

PFIZER INC Quarterly Report for Q3 Ended Jul 4, 1999

Filed August 17, 1999For Securities:PFE

Summary

Pfizer Inc. reported strong financial performance for the second quarter and the first six months of 1999, driven by significant growth in total revenues, up 14% and 21% respectively compared to the prior year. This growth was primarily fueled by the Pharmaceutical segment, which saw a 16% increase in Q2 and 24% in H1, with notable contributions from alliance revenues and the launch of Celebrex. Net income also saw a healthy increase of 13% for the quarter and 15% for the half-year. The company's balance sheet reflects a robust increase in total assets and a strategic shift towards higher short-term investments, funded in part by increased short-term borrowings. Looking ahead, Pfizer expressed confidence in meeting analyst expectations for full-year diluted earnings per share, projecting a 20-25% growth rate. The company also provided an update on its Year 2000 compliance efforts, estimating total costs of $140 million and confidence in mitigating potential disruptions through comprehensive business continuity plans. While legal proceedings and environmental matters are ongoing, the company believes they will not have a material adverse effect on its financial position or results of operations.

Key Highlights

  • 1Total revenues increased by 14% in Q2 1999 to $3.78 billion and by 21% in H1 1999 to $7.71 billion, driven by strong pharmaceutical sales and alliance revenues.
  • 2Net income grew by 13% in Q2 1999 to $709 million and by 15% in H1 1999 to $1.52 billion, demonstrating robust profitability.
  • 3Pharmaceutical segment revenue increased significantly, with worldwide sales up 16% in Q2 and 24% in H1, boosted by new product launches like Celebrex and strong performance of key drugs such as Norvasc and Zoloft.
  • 4Alliance revenue surged by 143% in Q2 and 154% in H1, primarily due to the co-promotion of Lipitor, Aricept, and the newly launched Celebrex.
  • 5The company repurchased approximately 15.2 million shares of common stock in Q2 1999 for about $1.8 billion year-to-date, indicating a commitment to shareholder returns.
  • 6Research and Development expenses increased by 21% in Q2 and 28% in H1, reflecting continued investment in drug discovery and development.
  • 7The company is actively managing its Year 2000 compliance efforts, with an estimated cost of $140 million and contingency plans in place to minimize potential operational disruptions.

Frequently Asked Questions

Pfizer reported a 14% increase in total revenues for the second quarter of 1999, reaching $3.78 billion, and a 21% increase for the first six months of 1999, totaling $7.71 billion, compared to the same periods in 1998.

Revenue growth was primarily driven by the Pharmaceutical segment, with strong sales of existing products like Norvasc and Zoloft, increased alliance revenues from co-promoted drugs such as Lipitor and the newly launched Celebrex, and expansion in international markets.

Net income increased by 13% to $709 million in the second quarter and by 15% to $1.52 billion in the first half of 1999. Diluted earnings per share were $0.18 for the quarter and $0.39 for the first six months, showing solid profitability growth.

Pfizer expressed confidence in meeting the majority of analysts' estimates for full-year diluted earnings per share in the range of $2.40 to $2.50 (pre-split basis), representing an expected 20-25% growth rate over 1998. Adjusted for the recent stock split, this translates to an outlook of 80 to 83 cents per share.

The company is involved in various legal proceedings, including antitrust litigation related to its former Food Science Group, patent infringement cases concerning Procardia XL, and issues surrounding the antibiotic Trovan's liver-related safety profile, which led to suspensions or restrictions in certain markets. Pfizer states that it believes these matters, individually or in aggregate, will not have a material adverse effect on its financial position or results of operations.