Pfizer has had a strong first half, with volume increases contributing 13 percentage points to revenue growth driven by the strong performances of internally developed and copromoted products. This clearly indicates our continued momentum, which we are supporting by accelerating several new-product marketing programs while continuing to fully fund R&D at $2 billion for the year. This is a key step toward our goal of becoming the world’s premier research-based health care company early in the next century.

During the rest of 1997, we expect our demonstrated operational strength to continue. We are accelerating investment spending, absorbing adverse foreign exchange, and targeting growth of not less than 10% in revenue, net income, and earnings per share for the full year.

Total revenues for the first half were $5,914 million, up by 11% over the same period in 1996. Net income increased 16% to $1,059 million, and earnings per share grew 14% to 81 cents for the half.

Foreign exchange reduced reported revenue growth by 3 percentage points for the first half. The impact of foreign exchange has been particularly significant, given the substantial decline in the value of the Japanese yen and key major European currencies against the dollar. At current exchange rates, foreign exchange would have approximately a 3 percentage point adverse impact on total revenue growth for the year.

Notable first-half events included the highly successful launches of two copromoted products: Lipitor^® (Lipitor is a trademark of Warner-Lambert), for the treatment of elevated blood cholesterol in patients with high cholesterol (discovered and developed by the Parke-Davis research division of the Warner-Lambert Company); and Aricept,^® for the treatment of mild-to-moderate Alzheimer’s disease (discovered and developed by Eisai).

Lipitor has been launched in the United States, Canada, Germany, the Netherlands, and the United Kingdom, and is expected to be launched in about a dozen additional countries this year. Aricept has been launched in the United States, Switzerland, and the United Kingdom, and in July received regulatory approval, under mutual recognition, in 12 other countries in Europe, including France, Germany, and Italy.

Over the next few months, with our copromotion partners, we plan to launch Lipitor and Aricept on an accelerated basis in a number of new markets around the world. Our current major products are benefiting from additional launches overseas and supplemental indications. Early in 1998 and throughout the year, we expect to begin to commercialize the next wave of innovative Pfizer-developed pharmaceutical products, including Trovan, our new antibiotic with a broad spectrum of activity; Zeldox, for the treatment of schizophrenia; Viagra, for the treatment of male erectile dysfunction; and dofetilide, for the treatment of cardiac arrhythmias. In addition, we plan to increase the size of our specialist sales forces and establish another primary-care field force in the United States.

Six-month revenues for the health care segment increased 11% to $5,038 million. Pfizer Pharmaceuticals Group (PPG) revenues increased by 13% to $4,360 million. PPG revenues in the United States increased by 16% to $2,399 million, and by 9% outside the United States to $1,961 million. Medical Technology Group revenues remained relatively unchanged at $678 million. Sales were driven by stents—devices used to maintain flow through obstructed esophageal, biliary, urological, and other vessels—and musculoskeletal products.

Worldwide Animal Health revenues increased by 9% to $609 million at mid-year. Growth was driven by Dectomax, our antiparasitic used in livestock; Stafac, a leading antibacterial for poultry and swine; and Rimadyl, a new prescription nonsteroidal anti-inflammatory for dogs.

Consumer Health Care revenues increased by 10% to $267 million, driven by the success of targeted acquisitions such as Cortizone, as well as prescription to over-the-counter product switches, such as Reactine in Canada, Diflucan in the United Kingdom, and OcuHist in the United States.

I’m pleased to announce that we have elected two new members to Pfizer’s Board of Directors as of June 26: Henry McKinnell, Ph.D., executive vice president, and president of the Pfizer Pharmaceuticals Group, with additional responsibility for Consumer Health Care and Corporate Strategic Planning and Policy; and John Niblack, Ph.D., executive vice president, responsible for Central Research, Animal Health, Licensing and Development, and Quality Control. The election of Drs. McKinnell and Niblack enhances the Board’s interaction with the two largest organizations within Pfizer.

Finally, it is clear that our abundance of opportunities validates our commitment to innovation. The compelling medical and commercial promise of the products at hand and on the horizon should sustain Pfizer through the end of this century and well into the next.

William C. Steere, Jr. Chairman of the Board and Chief Executive Officer August 18, 1997

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