10-QPeriod: Q2 FY2008

PFIZER INC Quarterly Report for Q2 Ended Jun 29, 2008

Filed August 8, 2008For Securities:PFE

Summary

Pfizer Inc. reported strong revenue growth in the second quarter of 2008, with a 9% increase to $12.1 billion, driven by a 9% rise in Pharmaceutical segment revenues and a 13% increase in Animal Health. For the first six months of 2008, revenues grew 2% to $24.0 billion. The company saw significant gains in income from continuing operations, which more than doubled to $2.8 billion in Q2 2008, aided by lower restructuring costs and significant tax benefits. Acquisitions played a key role in strategic growth, with notable additions in the biopharmaceutical and biotechnology sectors. While facing ongoing challenges like generic competition, Pfizer demonstrated resilience and financial strength, with substantial operating cash flow and a solid liquidity position. Despite the loss of exclusivity for key products such as Zyrtec/Zyrtec D and Camptosar, Pfizer's revenue performance was bolstered by newer products like Sutent and Chantix/Champix, as well as strong growth from Lyrica. The company continued its cost-reduction initiatives, making progress towards its targeted expense reductions. Overall, the report indicates a positive operational performance with strategic investments in acquisitions, offset by the impact of patent expirations and associated market dynamics.

Financial Highlights

27 data points
Beta

Revenue

$12.13B

81.1% Gross Margin

Net Income

$2.78B

22.9% Net Margin

EPS (Diluted)

$0.41

Cash & Equivalents

$820.00M

Free Cash Flow

$7.45B

Financial Statements
Beta
Revenue$12.13B
Cost of Revenue$2.29B
Gross Profit$9.84B
SG&A Expenses$3.86B
Net Income$2.78B
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)6.73B
Shares Outstanding (Diluted)6.75B

Key Highlights

  • 1Total revenues increased by 9% to $12.1 billion for the three months ended June 29, 2008, compared to $11.1 billion for the same period in 2007.
  • 2Income from continuing operations more than doubled to $2.8 billion for the three months ended June 29, 2008, compared to $1.3 billion in the prior year period.
  • 3Pfizer completed several strategic acquisitions in Q2 2008, including Encysive Pharmaceuticals Inc. and Serenex, Inc., to bolster its product pipeline.
  • 4Research and development expenses decreased by 9% to $2.0 billion for the three months ended June 29, 2008, compared to $2.2 billion in the prior year period.
  • 5Net cash provided by operating activities significantly increased to $8.3 billion for the six months ended June 29, 2008, compared to $4.9 billion in the same period of 2007.
  • 6The company made progress on its cost-reduction initiatives, achieving $1.2 billion of a targeted $1.5 billion to $2.0 billion reduction by year-end 2008.
  • 7Earnings per diluted share for the three months ended June 29, 2008, were $0.41, an increase from $0.18 in the prior year period.

Frequently Asked Questions

Pfizer reported a 9% increase in revenues for the second quarter of 2008, reaching $12.1 billion, compared to $11.1 billion in the second quarter of 2007. For the first six months of 2008, revenues grew 2% to $24.0 billion, up from $23.6 billion in the same period of 2007.

While major products like Zyrtec/Zyrtec D and Camptosar experienced revenue declines due to loss of U.S. exclusivity, newer products such as Sutent and Chantix/Champix, along with strong performers like Lyrica and Celebrex, contributed positively. International revenues saw significant growth driven by favorable foreign exchange impacts, while U.S. revenues were affected by patent expirations and increased rebates.

Pfizer continued its strategic focus on acquisitions, completing the purchases of Encysive Pharmaceuticals Inc. and Serenex, Inc. in the second quarter of 2008, aimed at strengthening its pipeline in areas like oncology and inflammatory diseases. The company also advanced its cost-reduction initiatives, targeting significant expense savings through network optimization, restructuring, and outsourcing.

Acquisitions led to increased 'Acquisition-related in-process research and development charges,' impacting reported net income. However, cost-reduction initiatives helped lower restructuring charges and implementation costs compared to the prior year, contributing to improved income from continuing operations. The company reported progress in achieving its cost-reduction targets, aiming for substantial savings by year-end 2008.