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Pfizer Reports Second-Quarter 2013 Results

Pfizer Inc. (NYSE: PFE) reported financial results for second-quarter 2013. As a result of the full disposition of Zoetis (1) on June 24, 2013, the financial results of the Animal Health business are now reported as a discontinued operation in the condensed consolidated statements of income for second-quarter and year-to-date for both 2013 and 2012. Results and guidance are summarized below.

OVERALL RESULTS

($ in millions, except

per share amounts)
       
Second-Quarter Year-to-Date
2013     2012     Change 2013     2012     Change
Revenues $ 12,973     $ 13,968     (7%) $ 25,383     $ 27,813     (9%)
Adjusted Income (2) 4,003 4,449 (10%) 7,743 8,604 (10%)
Adjusted Diluted EPS (2) 0.56 0.59 (5%) 1.08 1.14 (5%)
Reported Net Income (3) 14,095 3,253 * 16,845 5,047 *
Reported Diluted EPS (3) 1.98 0.43 * 2.34 0.67 *
                                     

* Calculation not meaningful.
 
 

BUSINESS UNIT (4) REVENUES
($ in millions)

Favorable/(Unfavorable)
Second-Quarter Year-to-Date
2013 2012 % Change 2013 2012 % Change
        Total     Oper.         Total     Oper.
Primary Care $ 3,333 $ 4,018 (17%)     (15%) $ 6,571 $ 8,115 (19%)     (18%)
Specialty Care 3,378 3,497 (3%) -- 6,542 7,077 (8%) (6%)
Emerging Markets 2,615 2,620 -- 4% 5,035 4,919 2% 5%
Established Products 2,385 2,681 (11%) (7%) 4,737 5,482 (14%) (12%)
Consumer Healthcare 800 769 4% 5% 1,611 1,496 8% 8%
Oncology 399 323 24% 28% 771 611 26% 29%
Other (5) 63     60     5%     7% 116     113     3%     4%
Total $ 12,973     $ 13,968     (7%)     (4%) $ 25,383     $ 27,813     (9%)     (7%)
                                                 
 
 

SELECTED ADJUSTED COSTS AND EXPENSES (2)
($ in millions)

(Favorable)/Unfavorable
Second-Quarter Year-to-Date
2013 2012 % Change 2013 2012 % Change
        Total     Oper.         Total     Oper.
 
Cost of Sales (2) $2,194 $2,293 (4%) 2% $4,423 $4,593 (4%) (1%)
Percent of Revenues 16.9% 16.4% N/A N/A 17.4% 16.5% N/A N/A
SI&A Expenses (2) 3,550 3,648 (3%) (1%) 6,728 7,312 (8%) (7%)
R&D Expenses (2) 1,521     1,565     (3%)     (2%) 3,139     3,233     (3%)     (3%)
 
Total 7,265     7,506     (3%)     -- 14,290     15,138     (6%)     (4%)
 
Effective Tax Rate (2) 27.9% 28.5% 27.4% 28.6%
                                                 
 

2013 FINANCIAL GUIDANCE (6)

All components of Adjusted financial guidance are reaffirmed. The guidance for Reported Diluted EPS (3) has been updated to reflect the following:
  • Gain associated with the full disposition of Zoetis (1)
  • Income from a litigation settlement with Teva Pharmaceuticals Industries, Limited (Teva) and Sun Pharmaceutical Industries, Limited (Sun) for patent-infringement damages resulting from their “at-risk” launches of generic Protonix in the U.S.
                   
             
Revenues $50.8 to $52.8 billion
Adjusted Cost of Sales (2) as a Percentage of Revenues 18.0% to 19.0%
Adjusted SI&A Expenses (2) $14.2 to $15.2 billion
Adjusted R&D Expenses (2) $6.1 to $6.6 billion
Adjusted Other (Income)/Deductions (2) Approximately $800 million
Effective Tax Rate on Adjusted Income (2) Approximately 28.0%
Reported Diluted EPS (3) $3.07 to $3.22

(previously $1.44 to $1.59)
Adjusted Diluted EPS (2) $2.10 to $2.20
                   
 

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, “I am pleased with our recent accomplishments focused on creating greater value for our shareholders, including the completion of the full disposition of Zoetis (1) which generated over $17 billion in value as well as the announcement of our new commercial model. This new model represents the next step in Pfizer’s journey to further revitalize our innovative core, enhance the value of our consumer and off-patent established brands and maximize the use of our capital to create value for Pfizer and our patients, consumers and shareholders.”

“Within our innovative businesses, during second-quarter 2013, revenues in our Oncology business increased 28% operationally due to the uptake of new products, primarily Inlyta and Xalkori in several major markets, and various key products performed well, notably Lyrica, which grew 14% operationally in developed markets, and Celebrex, which grew 13% in the U.S. We continue to expect our Emerging Markets business growth to accelerate in the second half of the year, led by China. From a total company view, we are tracking to our expectations for the full year and continue to capitalize on the investments we are making to better position Pfizer for long-term success,” Mr. Read concluded.

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