Good day, everyone and welcome to Pfizer’s First Quarter 2015 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir..

Good morning and thank you for joining us today to review Pfizer’s first quarter 2015 performance.

I am joined here today by our Chairman and CEO, Ian Read; Frank D’Amelio, our CFO; Mikael Dolsten, President of Worldwide Research and Development; Albert Bourla, President of Vaccines, Oncology and Consumer; Geno Germano, President of Global Innovative Pharma; John Young, President of Established Pharma; and Doug Lankler, our General Counsel.

The slides that will be presented on this call can be viewed on our homepage, pfizer.com by clicking on the link for Pfizer Quarterly Corporate Performance First Quarter 2015, which is located in the Investor Presentations section in the lower right hand corner of the page.

Before we start, I’d like to remind you that our discussions during this call will include forward-looking statements and that 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 2014 Annual Report on Form 10-K and in our reports on Forms 10-Q and 8-K. Discussions in the call will also include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles.

Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Pfizer’s current report on Form 8-K dated today. We will now make some prepared remarks and then we will move to a Q&A session. With that, I’ll now turn the call over to Ian Read.

Ian?.

Thank you Chuck and good morning everyone. During my remarks this morning, I will briefly recap the highlights from the quarter, provide some thoughts about the pipeline and close with a few comments about actions we’ve taken to strengthen our core businesses.

Starting with the quarter, our performance for the quarter was solid with good performance on both top and bottom-line. Overall, revenues grew by 2% operationally even with a negative impact from the loss of exclusivity of Celebrex in U.S. and the end of Spiriva co-promotion agreement also in the U.S.

In addition, we saw 12% operational growth in emerging markets, driven by both our GEP and Innovative businesses. While majority of LOEs and co-promote expiries are behind us, we still face some LOEs this year and next, making it difficult to generate revenue growth despite the strong performance of our newest products.

That said, we believe the impact from any remaining LOEs will diminish over time as we continue to see a building revenue base resulting from investments we’ve made in key growth areas and recent product launches. I’ll touch upon some noteworthy areas. Prevenar 13 had a very strong quarter, particularly in the U.S.

where revenues increased 80% this was primarily due to strong uptake amongst adults 65 years of age and older following the positive recommendation from U.S.

Center for Disease Control and Prevention’s Advisory Committee on Immunization Practices as well as the timing of government purchases for the pediatric indication compared to the year ago quarter. Revenues for the adult indication were approximately $300 million in the quarter.

Physicians’ response to Prevenar 13 continues to build steadily and our strong Q1 sales suggest these physicians are actively vaccinating adults who have never been vaccinated as well as those who were previously vaccinated with PNEUMOVAX from Merck. Each year several million people in the U.S. turn 65 who are eligible to receive Prevenar 13.

And of those adults in the U.S. who are already 65, there are many millions eligible that have never been vaccinated or were previously vaccinated.

We are increasing awareness amongst adults about the seriousness of pneumococcal pneumonia and the importance of talking to their physicians or pharmacists about vaccination to protect them from its devastating effects. We believe our efforts are increasing the sense of urgency to vaccinate and driving consumers to request the Prevenar vaccine.

In December, CMS changed their guidance to cover both pneumococcal vaccines which ensures coverage for senior 65 years and older under Medicare Part D, aligning with a positive ASIP recommendations from August 2014.

Eliquis is gaining significant momentum worldwide as it continues to increase share amongst cardiologists who recently -- and recently has become the number one oral anticoagulant that’s NOAC prescribed by cardiologists for new to brand patients in the United States and Japan.

In addition, Eliquis is now the number one NOAC prescribed by cardiologists for new to brand patients for the nonvalvular atrial fibrillation indication in the UK and Spain and we’re continuing to see increasing uptake in Germany.

We are pleased with the continued progress Xeljanz has made towards becoming a key product based on approvals in 40 countries in rheumatoid arthritis, launches and revenue growth of the RA indication and the initiation of filing for the potential second indication in plaques psoriasis. In the U.S.

rheumatologists’ satisfaction with the product continues to be positive, Xeljanz now ranks number three amongst rheumatologists in new to brand prescription share of self administrated rheumatoid arthritis therapies and is on track to become the third new to brand therapy overall in the U.S.

We have put significant focus and resources behind building our oncology business. The portfolio was strengthened with some recent advancements. In February, we received accelerated approval from the FDA for Ibrance and have quickly launched in the U.S. While it is still very early, I’m extremely pleased with its performance.

Physicians have been embracing the product; the number of new patient starts have been increasing since the FDA approval and we are seeing early success of reimbursement to date. The Ibrance team has done a remarkable job in ensuring we were able to get the product to patients as quickly as possible following approval.

We also announced this month a Phase 3 trial of Ibrance for recurrent breast cancer had met its primary endpoint of progression-free survival. We will be presenting detailed efficacy and safety results from PALOMA-3 at the upcoming ASCO.

In addition, we have several presentations at ASCO including oral data presentations for our immune-oncology asset 4-1BB and avelumab, the PD-L1 being co-developed for alliance with Merck KGa.

Also last week we announced another encouraging development in our oncology pipeline, a Phase 3 trial for inotuzumab met the primary end point of demonstrating a higher complete hematological remission rate in adults who relapsed or refractory B-cell acute lymphoblastic leukemia compared to that achieved with standard of care chemotherapy.

We’re discussing these data with the FDA and other regulatory agencies. The trial will continue to evaluate overall survival which is a separate primary end point; the data will be submitted for presentation at upcoming medical meetings.

I believe our recent accomplishments and news flow in research and development demonstrate that we are in one of the most productive times for our pipeline.

We have strong presence in the areas where the science is quickly moving where there is market potential where we believe we have clinical differentiation most importantly where the patients’ needs are the greatest.

Today we published a comprehensive update of the pipeline; you will see that we have a rich modality mix across small and large molecules and vaccines, novel mechanisms and potential new indications.

This includes the development of bococizumab; the ongoing development of Xeljanz; a CDK 4/6 platform with Ibrance; a comprehensive immune-oncology program with our partner Merck KGa for the first wave of potential single agent mono-therapy treatment regimes with several tumor types and assets to position us for the next wave of potential I/O combination therapies including 4-1BB, OX40 and ADCs.

Vaccines for Staph aureus and C difficile, a next generation ALK/ROS1 inhibitor, a world leading kinase capability with unique JAK drugs in development, a strong rare disease portfolio in the areas of hematology, neuroscience inherent to metabolic disorders and pulmonology, our novel neuroscience work in Parkinson’s and our development portfolio of monoclonal biosimilars continues to progress well with full products now in Phase 3 development.

In total, we have 88 programs in clinical development with the 30 programs in late stage development or registration as of today.

Over the last several years, we have rebuilt the pipeline and transformed our approach to R&D and we believe we’re well positioned to bring forth over the next several years therapies that will significantly improve people’s lives.

Now for a few comments on how we continue to take steps to expand our sources of revenue and strengthen our core businesses. As always, we continue to look for business development opportunities that will create value with the bias towards deals with a potential for creating value in the near-term.

M&A activity in the pharma space has been very active recently and Pfizer regularly reviews potential opportunities but remains disciplined with our shareholders’ capital to ensure transactions we may pursue generate an appropriate return for our shareholders.

That is why this quarter you saw us announce two transactions, one to drive greater sustainability of GEP business over the long-term and one to expand the vaccines portfolio.

Hospira is an excellent strategic fit in attractive and growing market segment including sterile injectables and biosimilars and we expect the acquisition to accelerate the growth trajectory to GEP business. We remain on track for a closing in the second half of this year.

And our deal for Redvax expands our vaccine development portfolio by giving us access to a promising vaccine in preclinical development of human cytomegalovirus, a virus that can lead to serious disabilities in infants when passed from newly infected mothers to their new borns.

We now have a broader marketed vaccine portfolio for preventing serious illnesses, which includes the most widely used conjugate vaccine in the world, Prevenar 13 with more than 750 million doses distributed.

Remember recently approved to prevent invasive disease caused by group B meningitis in people age 10 to 25 and vaccines to protect against disease caused by group C meningitis and to help prevent tick-borne encephalitis through acquiring Baxter International’s market in vaccines.

As you’ve heard us say on several occasions, business development is not a strategy, it is one lever of several we have available for strengthening our two basic businesses, innovative product business and established products business.

This year’s off to a good start with momentum in the pipeline growing, market penetration for our newest in line products and strategic additions to the portfolio.

Our focus for the year will continue to be on supporting our recent new product launches, in particular Ibrance and Prevenar 13 adult, accelerating and differentiating key programs in the pipeline to deliver breakthrough products, continuing to look for attractive business development opportunities that strengthen our businesses, and doing all of these things while we deploy our capital in a way that yields the greatest value to shareholders.

I’ll now turn it over to Frank..

Thanks Ian, good day everyone. As always, the charts I’m reviewing today are included in our webcast.

First quarter 2015 reported revenues were approximately $10.9 billion and reflect operational growth of $250 million or 2% year-over-year, mainly driven by the strong performance of Prevenar 13 and Eliquis in developed markets and Lyrica, Nexium 24HR, Xeljanz and Viagra primarily in the U.S. The launch of Ibrance in the U.S.

is February of this year and 12% operational growth in emerging markets which were more than offset by the unfavorable impact of foreign exchange of approximately $739 million or 7%, the loss of exclusivity in immediate multi-source generic competition for Celebrex in the U.S.

in December of 2014, other product losses of exclusivity and the termination of the Spiriva co-promotion collaboration in certain countries. Adjusted diluted EPS was $0.51 versus $0.57 in the year ago quarter.

The decrease was primarily due to a $0.04 negative impact due to foreign exchange and a $0.03 negative impact due to the 295 million upfront payment to OPKO, during the first quarter of 2015.

Adjusted diluted EPS was favorably impacted by a lower effective tax rate and fewer diluted weighted average shares outstanding which declined by 148 million shares versus the year ago quarter due to ongoing share repurchases which includes the partial-quarter impact of our $5 billion accelerated share repurchase agreement effective February 2015.

Reported diluted EPS was $0.38 compared with $0.36 in the year ago quarter due to the previously mentioned factors and the favorable impact of lower legal charges which were partially offset by a higher effective tax rate.

Foreign exchange negatively impacted first quarter reported revenues by $739 million or $0.07 and positively impacted adjusted cost of sales, adjusted SI&A expenses, and adjusted R&D expenses in the aggregate by $462 million or 7%.

As a result, foreign exchange negatively impacted fourth quarter adjusted diluted EPS by approximately $0.04 compared with the year ago quarter.

Now moving on to the financial highlights of our business segments, in the first quarter, Global Innovative Pharmaceutical revenues increased 7% operationally year-over-year due to the strong operational growth from Lyrica, primarily in the U.S.

and Japan and the performance from recently launched products including Eliquis globally and Xeljanz primarily in the U.S.

Although operationally revenues increased 7% and cost of sales decreased 1%, income before taxes declined 9% operationally mainly because of a 59% operational increase in R&D expenses primarily due to the previously mentioned upfront payment to OPKO Health and to a lesser extent, an 11% operational increase in SI&A expenses due to increased investments in new products and certain in-line brands.

First quarter VOC revenues increased 29% operationally due to the 51% operational revenue growth from our Global Vaccines business as a result of Prevenar 13 which grew 80% in the U.S. and 15% internationally and the inclusion of Baxter’s market of vaccines in Europe, Nexium 24HR in the U.S., the launch of Ibrance in the U.S.

in February and Xalkori and Inlyta globally.

Income before taxes increased 41% operationally, mainly due to increased revenues with an associated improvement in gross margin, partially offset by a 19% operational increase in SI&A expenses due to investment in Prevenar 13 adult indication, Nexium 24HR and the Trumenba and Ibrance launches, and the 7% operational increase in R&D expenses due to increased investment in the Ibrance development program and the global immuno-oncology alliance with Merck KGaA and other oncology products.

In the first quarter Global Established Pharmaceuticals revenues decreased 10% operationally, mainly due to the loss of exclusivity and immediate multi-source generic competition for Celebrex in the U.S.

in December of 2014 and to a lesser extent from the loss of exclusivity of Lyrica in certain developed markets in Europe during the first quarter of 2015 and Zyvox IV in the U.S. in January 2015, continued generic competition for Lipitor in developed markets and determination of the Spiriva co-promotion agreement in most countries including in U.S.

in April of 2014. All of these were partially offset by strong operational growth of 10% in emerging markets, driven by Lipitor; Viagra and Norvasc.

Income before taxes declined 14% operationally due to the decrease in revenues and 1% operational increase or 2.1 percentage point increase as a percentage of revenues and cost of sales due to an unfavorable change in product mix.

Flatter R&D expenses primarily due to increased spending in our biosimilars development programs offset by lower clinical trial expenses, all of which were partially offset by 9% operational decrease in SI&A expenses driven by cost reduction and productivity initiatives.

Now, I would like to walk you through the updated full year 2015 guidance ranges for reported revenues, reported diluted EPS and adjusted diluted EPS relative to our 2014 actual results.

I want to point out that there are no unfavorable changes to our operational outlook; we’re only updating the 2015guidance ranges for these elements solely due to the negative impact of recent changes in foreign exchange rates in relation to the U.S. dollar from mid-January to mid-April, primarily driven by the weakening of the euro.

This updated guidance assumes an FX rate for the euro of approximately $1.06. As a result, we are lowering our reported revenue range by $500 million and now expect the range to be $44 billion to $46 billion. It’s important to note that the actual negative impact of foreign exchange in our full year 2015 revenues is actually greater than $500 million.

However, the operational strength of our revenues is allowing us to absorb this. In addition, we are lowering our reported and adjusted diluted EPS ranges by $0.05 and now expect reported diluted EPS to be in the range of $1.32 to $1.47 and adjusted diluted EPS to be in the range of $1.95 to $2.05.

Before moving, I want to point out that actual rates in mid-April 2015 do not include the impact of a potential devaluation of the Venezuela and Boulevard. We’re reaffirming the remaining elements of our 2015 financial guidance which we issued on January 27, 2015.

Moving on to key takeaways, we recorded solid financial performance in the first quarter. While we have no one favorable changes in our operational outlook for the remainder of 2015, we have updated our financial guidance solely to reflect the negative impact of recent changes in foreign exchange rates.

We entered into an agreement to acquire Hospira for a total enterprise value of approximately $17 billion. Subject to the appropriate regulatory approvals, we continue to expect to complete transaction in the second half of 2015.

We achieved several key R&D milestones so far in 2015 including receiving accelerated approval from the FDA for Ibrance with letrozole for first line advanced breast cancer, our Phase 3 PALOMA-3 study for Ibrance with fulvestrant met its primary efficacy end point, the FDA lifting the partial clinical hold on our tanezumab development program and we’re preparing to resume Phase 3 activities with our partner Eli Lilly and the EC approved an expanded indication for the use of Prevenar 13 adults aged 18 years and older.

We continue to create shareholder value through prudent capital allocation; in the first quarter of 2015 we’ve returned $7.8 billion to shareholders through dividend and share repurchases.

It’s important to note that after repurchasing $6 billion of our common stock, the first quarter 2015 including our $5 billion accelerated share repurchase, we have already met our 2015 share repurchase target and do not currently expect to repurchase additional shares this year.

We continue to expect to return approximately $13 billion to shareholders in 2015 through a combination of dividends and share repurchases. Finally, we remain committed to delivering attractive shareholder returns in 2015 and beyond. Now, I’ll turn it back to Chuck..

Thank you, Ian and Frank.

Operator, can we please poll for questions now?.

[Operator Instructions]. Your first question comes from Mark Schoenebaum from Evercore ISI..

I will use my question please to ask about use of capital, if I may. I know it’s something you’ve discussed a lot but I think we’re always interested in even subtle changes in how you answer these questions.

But Ian, I was just wondering, when you think about use of capital, are you at this point, I think in the past you remarked that if the numbers make sense, you would be open to a large deal similar to the AstraZeneca proposal last year; just wanted to take your temperature on that.

And then also would you in theory be interested in buying a company that in adding small molecule and DA capabilities to the established products business or do you feel that the acquisition of Hospira kind of filled the gaps that -- the main gaps that that business may have had? And finally as you look across the landscape in biotech, do you have general thoughts on biotech valuations and opportunities there? Thank you..

I think the organization is agnostic to the size of BD; it has to be BD that will move the needle.

And I’m not concerned about doing a large transaction if the value was there for shareholders, vis-à-vis between adding to Innovative or adding to GEP adding to Consumer, we’re driven by value; does it create value for shareholders; we have the capacity to add businesses in any one of those areas.

And the last part of the question was I think valuation; I think I said last quarter, I thought that the valuation of biotech was bland; I still believe it remains there.

So, it means we’re very careful as we evaluate deals we -- there’s probably no deal that actually occurs that we haven’t looked at and evaluated, but we have a strong focus on creating shareholder value and that’s what guides us..

Your next question comes from Jami Rubin from Goldman Sachs..

Thank you very much. Ian, in your prepared remarks you failed to mention tax conversions. I’m just curious to know how much of a priority a tax conversion still is or unlocking the value of your overseas cash flows.

And if you were to abide by the current IRS laws today, doesn’t that mean that there are fewer large targets available to you than before; can you confirm that and really just your appetite? And then secondly, you’ve said before that the earliest you can break up the company is in 2017; I’m assuming that’s day one 2017 because we will at that point have three full years of financials.

And if that’s correct, are you targeting a decision sometime next year, I would think that once you make the decision, it’s going to take about a year or so before you actually execute on the split or maybe it won’t take quite that long but are you targeting a decision next year and if so what at this point are you waiting for to make that decision?.

Well, taking the first question -- the last question first, I believe what we said is that we would be in a position to -- if we so took the decision, to effectuate or start the split in ‘17 which probably means we’d have to take a decision in latter part of ‘16.

We do need three years of financials; we will get those three years of financials by the end of ‘16. And what are we waiting for, as we said before Jami, I want to see how these two divisions operating inside of Pfizer, are they on their own sustainable businesses.

So I’m waiting to see our pipeline develop; I’m waiting to add as we have done with Hospira, more attractive assets into established products and then I’m also looking to see how does the street value the Pfizer as it is today does and what -- and we’ve given you a lot of information on our segments; so is the sum of the parts different from the whole and we will make that decision around that latter part of ‘16.

So I think that answers that question. We are as always focused in our decision making on creating shareholder value. And I think those three elements I laid out to you would describe how we would judge whether any such action will create shareholder value. On the issue of lowering our tax rate or re-domiciling, tax is one of our largest expenses.

We, as any management should be, are focused on trying to prudently manage our expenses. The new proposed rule change does make it more difficult to immediately realize any benefits from being re-domiciled but it really depends upon the target, very complex issues of where the assets and where the cash and the tax position of the target.

And so really it’s very, very different for say what the universe of possible targets are but rest assured then when we look at those type of BD deals, we’re looking at the creation of value..

Your next question comes from David Risinger from Morgan Stanley..

So, with respect to the potential separation of the businesses, I’m guessing that you’re not willing to disclose the relative cash flow of the two segments.

But my assumption is that the cash flow of the Innovative business is an even smaller percentage of the total company cash flow than the earnings that you disclosed from the Innovative business would suggest.

So anyway Frank, I was just hoping that you could speak to that and help us understand whether that’s accurate and whether the lack of cash flow in the innovative business is something that could potentially constrain your ability to separate or monetize that business..

So, a couple of comments, David.

Let me just start by saying, reminding everyone this quarter when we file our 10-Q, we’ll be including balance sheet information for this segment but we won’t have debt or cash for example by segment; we’ll have on the asset side accounts receivable, inventory, tax assets and other assets and then on liability side we’ll have on accounts payable accrued compensation and other liability.

So, we’ll start providing balance sheet information but we won’t be providing debt or cash by various segments, since those are really enterprise assets, enterprise liabilities at this point. What I would say is this that I don’t see capital structure. So, I’m going to raise it up a little bit.

You asked about cash but I’ll answer the question by saying, I don’t see capital structure and somehow impeding our decision making. So, let’s hit to whether or not to execute a split of the company.

We believe, I believe we can clearly manage our way through capital structure, so that’s not in any way, shape or form some sort of impeding factor relative to our decision..

Your next question comes from Chris Schott from JPMorgan..

Just a few here, first on Ibrance; can you just discuss a little bit more about the launch and commercial plans from here for the asset? And as part of that, can you just give us a little bit of color on the importance of PALOMA-3 for the market opportunity and the ramp of the product; and how big of an opportunity does this open up for Pfizer? My second question was coming back to GEP.

Do you have the capacity to pursuing the large deal here or are you primarily focused on Hospira integration at this point, not so much financial capacity but just you have -- but personnel in place of another big deal where available could you pursue it?.

So, let me just talk about the deal. We’ve done several large integrations. We’re working well with Hospira. We expected to close in the second half of this year. Should value be there, this organization has a capability of undertaking our deals independent of size, if it was important for our shareholder. So, I’m not concerned about that.

I would pass it over to Albert to talk about Ibrance..

Overall, we are very pleased with the results. And so far Ibrance is being well received by oncologists. We have over 800 healthcare practitioners prescribing it. We have over 2000 patients in one quarter and we have approximately 3000 total scripts written so far.

First line market share is already approaching 10% that’s way ahead of previous analogues. And also we see strong reinvestment so far. Now expectation is that Ibrance will gradually grow to become a new standard of care, a first line treatment of this group of patients.

But over time momentum in breast cancer will build beyond first line as other studies read out positive. For example, you mentioned the results of PALOMA-3 which will be presented at ASCO but we plan to work with the FDA to expand the label to other lines of therapy based on these results.

And also as a reminder, there are several other breast cancer studies running in early and recurrence settings. And needless to say but also we have many non-breast tumor studies including head and neck, lung, melanoma et cetera.

Now for your particular importance of PALOMA-3, as I said, so far there is limited medical use in second and third line given that the label is in first line. So as I said, we will work with FDA to expand the label to other lines of therapy.

But beyond label amendment, I think we should see the PALOMA-3 in the way that adds to the level of confidence in the mechanics of action and of course is also confirmation of an additional effective Ibrance combination, but this time with Faslodex, before we had with flat fulvestrant. [Ph].

And we are at Pfizer and very focused on speed and maximizing the opportunity of Ibrance and getting this great product to patients as fast as possible. And I believe we will be filing in the EU in the second half of this year.

Is that right?.

This is correct, Ian..

Your next question comes from Tim Anderson from Bernstein..

Enbrel was down 8% operationally in Europe; I am wondering how much of this reflects the impact of biosimilar Remicade and if you can talk about expectations for that product going forward in Europe, both in terms of volume growth and pricing.

And then going back to this topic of splitting up, looking to see if you could give us odds of the possibility that Pfizer chooses not to split up, you consistently leave that open as a possibility for the last several years that we’ve talked about this topic.

And as I am sure you’re aware, most investors want you to do something beyond just buying more targets and getting bigger.

So it would be helpful to know with odds of that hope not being delivered on our -- is it less than 10%, less than 20%, less than 50% or what exactly?.

Let me try and deal with split before we ask Geno to deal with Enbrel. What I would say Tim is that I think this management team has established a reputation of focusing its actions on shareholder value.

So, I don’t really think it’s useful to give odds; what I think is useful is to say we will do what’s best for shareholders in creating value for them. And some of our transactions, when we were looking at previous once last year, at times we talked about getting bigger to get smaller.

Because by getting bigger, we could add and strengthen the independent businesses and then get smaller if it made sense. Frankly, we’re focused on creating value for shareholders. And if a split or getting bigger and then splitting make sense, we will execute that because the prime driver of this management team is to create shareholder value.

With that I’ll pass it over to Geno to talk about Enbrel in Europe..

Tim, the situation in Europe with Enbrel was that we implanted a new distribution model in the UK. We started at the end of last year where we moved away from the retail channel into just the hospital channel and directed patients.

So, we saw in the first quarter this year was some inventory work down in the first quarter and that affected our sales in the UK. We had good strong sales in Italy and France and Spain. So, we really didn’t see anything more widespread than the distribution change.

In terms of effective biosimilar Remicade on the Enbrel business, we really haven’t seen an impact there either. So, we’re expecting to see continued modest growth to very large base of business; it’s a very well accepted product throughout Europe and the rest of the world.

And we anticipate continuation of modest growth for the brand outside the U.S..

Your next question comes from Gregg Gilbert from Deutsche Bank..

First Frank, just mechanistically, how would a very large transaction if you did one affect the timing of a potential split? Clearly the Hospira deal did not affect your timeline but I imagine certain deals could. And secondly for John; it’s good to see another strong quarter from Hospira.

Is it fair to say that the addition of Hospira in your mind takes gap from flat to declining in sales in the out years to pretty squarely into growth territory? Thanks..

Just to reiterate what I said before and then I’ll answer the question specifically. We’re doing all the things we need to do, in particular the three years of prospective audited financials, so that we’d be in a position to exercise our option in 2017, if we chose to do so. And as I said before, the Hospira acquisition does not impact that timeline.

But then Gregg, specific to your question, if we were to do a large transaction, and as Ian said before, we’re agnostic to size, it’s really all about we believe we create shareholder value for our shareholders, it could, it clearly could impact our timeline.

If we were to do a transaction and if it were to impact our timeline, please know we’ll proactively tell you all that as soon as we know..

So, first of all, just to reiterate, as you know, we obviously don’t provide guidance by individual business. But obviously we’re very pleased to see the continued positive strong momentum for the Hospira business this quarter. The GEP business has been subject to some LOEs which I think Ian mentioned in his script and as we’ve -- it applies.

We knew that in the short-term that will therefore impact the revenue trajectory of the base GEP business over the next year or two. But overall, the transaction certainly represents an immediate incremental source of revenue growth with products that can be expanded into additional markets, given Pfizer’s global reach.

And I think the excitement that I think we’ve seen in the financial community that certainly we share really is around the transaction bringing together two excellent businesses that will deliver not only near-term profitable revenue growth but also provide a platform for future growth that can be enhanced through Pfizer’s global reach and infrastructure.

So, we remain very positive about the combination of the two businesses..

Your next question comes from John Boris from SunTrust..

First one just has to do with the Hospira transaction.

Can you give any clarity on when you might anticipate HSR clearance? Most notably one thing that we noticed was that on medium and broad spectrum, antibiotics and beta-lactams that there’s some overlap and then certainly the overlap in the biosimilars, so any kind of commentary on product divestitures would be helpful.

And then second question on your oncology business, if you look at Xalkori, you have number one, number two competitors in oncology launching all positive compounds globally; Inlyta, in light of I/O data that potentially is becoming available, can you maybe discuss the OS benefit Inlyta has potentially to being able to compete with I/O? And then on Ibrance just potentially competitive threat since competitors are indicating that could have data in the ‘16 to Ibrance, just your thoughts on your competitive positioning of that franchise going forward here..

Okay John, thank you, some very optimistic questions there.

Why don’t we deal first of all with Hospira; Doug can you do that?.

Sure. So, we’re looking at all the aspects relative, beyond obviously biosimilars as well, we’re working closely with regulators and we’re pleased with the progress that we’re making. We continue to expect to close the transaction during the second half of 2015..

And on the oncology issues, would you like to comment upon what we expect the competition launching and then our second generation or third generation ALK/ROS and then perhaps Mikael may want to comment on some of the competitive dynamics..

Absolutely and thanks John for the question. In Ibrance, I spoke a little bit before; and right now we are really the only company that has randomized data out there, so we can make any comparison. We have the most advanced and the most broad program in CDK 4/6.

I say more advanced because we are the only one, so that we have registration to start with and we have already announced positive results of a second study in a different population and of course we are having already initiated, right now we have in this year running already four Phase 3 studies on the breast cancer.

And we’re running beyond breast cancer over 30 studies in multiple tumor indications. So I have a lot of respect for competitors but I think in that one really we are way ahead..

I think one competitor just demand that they may be finishing their Phase 3 in ‘17, is that right?.

In ‘16, second half of ‘16, yes. What we expect -- we have already registrations and for the same type, we expect the confirmatory study to come to completion at last the quarter this year in August. And as Ian said before also, we have discussions with EU authorities and we plan to file for Ibrance in the second half of this year as well..

Mikael, any comments?.

Yes, I want to just briefly comment on your discussion about our ALK franchise. I think we should look up on it as an ALK franchise, where Xalkori is most experienced drug with a very much recognized stable profile. We shared at recent conferences including presentation at AACR our third generation ALK inhibitor with 3922 number name.

And it’s really unique compound that hits all known ALK mutations including the G1202R. And to the best of my knowledge, it’s still only compound so far that have shown strong effect across all mutation independent whether the patient has experienced several of the currently available ALK inhibitors.

Moreover, several responses also against brain metastases have been reported for this drug. So, I think the combined ALK franchise from place that will over time be very strong. Inlyta can nicely also be combined with a immune-oncology product as per our strategy.

So, we shouldn’t see Inlyta as alone facing other entrants but we and Merck Serono are exploring immune-oncology avelumab, Inlyta and other agents. So, I think you will see us building a strong position in renal cell carcinoma..

And John, I sort of see the competition coming in and extending the survival time of patients with the ALK mutation s very positive for our third generation when it comes to market.

As you’ll have of all patients that have gone through our first line as Xalkori increases second line on products of competitors and creating a more substantial patient base for our third generation ALK. So thanks for the questions..

Next question comes from Vamil Divan from Credit Suisse..

I got two quick ones on the product side and one of the expense side. So just on to products, just if you can kind of give us a sense of your optimism on tanezumab at this point. I know you’re talking about the Phase 3 now.

But just given the kind of safety issues that have been before, do you see that’s potentially a blockbuster to products or is it more of a niche product just given some of the safety questions.

Lipitor, quick question on the real world study there, I know it’s completed, has been completed over some time; any update on when we might see the data there? And then just on the last on the expense side, if I read the release correctly, you had quite a bit of expenses allocated to the other bucket as opposed to being allocated to one of the three specific business units? In other words are five quarters in to the company operating as three separate units; how should we think about in terms of your ability to actually split into two entities if we want to without having significant amount of dis-synergies as given there is some -- there will be a lot of overlap in how the expenses are being expected?.

Geno, tanezumab?.

Tanezumab, look, we see this as a real innovation; one of the first real breakthroughs in pain management in many, many years and a significant unmet need over use of opioids being a big problem and a substantial number of patients with the conditions that we’re pursuing osteoarthritis, chronic low back pain and cancer pain.

So we see that this drug has significant potential. We know a lot about this medicine; we’ve completed quite a number of studies and we’re anxious to see it advance through this next phase of development and enter the market..

Albert, real world, real life study Lipitor?.

The actual use trial was completed in December. So the results are expected this quarter. The results of study will inform next steps and timelines for potential NDA filing. And we will continue to update you as we have more news on that..

And Frank on expenses?.

The major items in that other bucket are WRD. So, Mikael’s organization and I’ll call it corporate. We think about corporate as what we call the enabling function. So, it’s IT; finance; legal; HR; facilities; public relations, all those functions basically are what are in our corporate bucket there.

Last year in the Q, we gave you all percentages on how to allocate those various items to the segments. The key there is in terms of the basis of what’s underpinning those percentages that we gave you. There is really three buckets of allocations there; I’ll call it specific assignments, regional allocations and general allocations.

The specific assignments are about 40%; the regional allocations are about 20%; the general allocations are about 40%. So, we provide all that details, so that you can basically drive it to segment. And what that tells you is much of it, the specific assignment and the regional allocation is very specific to an individual segment..

Your next question comes from Seamus Fernandez from Leerink..

Just a few quick questions, couple on the pipeline and then one for Ian. On the pipeline, maybe just to start off, maybe we could talk a little bit about when we might see data with your 4-1BB and what combinations we may see.

Interestingly, we’d love to hear your thoughts on AstraZeneca’s deal with Celgene and their comments on the challenges of getting into hem tumors. The second question, just given the broad success of Opdivo in second line lung cancer, when and how do you see your recently announced study recruiting in the U.S.

or perhaps even in Europe over the next 12 months as approvals are likely received? And then lastly for Ian, when you say that you are agnostic to the creation of shareholder value, I think everybody has asked the question of the possibility that you go out and buy more assets.

However, I do think that there certainly is the possibility of lowering your tax rates with the willingness to perhaps merge with an overseas entity with that entity being the controlling entity.

How agnostic are you truly to that kind of an outcome?.

I’ll ask Mikael to comment on the 4-1BB. I don’t really think it’s appropriate first to comment on AZ strategy and how they go about financing their pipeline. And then on lung cancer perhaps Mikael or Albert can deal with that. Then I’ll come back to on how agnostic I feel..

As you know, we believe that the field of I/O combinations is going to increasingly be prominent. And we have invested in a broad number of I/O combinations; we’ll have up to five I/O drugs in the clinic this year and expect every year probably, two new entering. Specifically for 4-1BB, we will share additional data at ASCO.

We have growing experience with 4-1BB in lymphoma on rituximab background that said yes the stable activity and good volatility profile.

And I think suggest that this class of combining check point activators with check point inhibitors may be the route to go as we have learned combining multiple check point inhibitors as CTLA-4 and PD-1, mainly to decreasing therapeutic window while 4-1BB we’re very encouraged that the therapeutic window will be large and the drug is an interesting part of this new I/O combination.

I also wanted to make a pitch that we actually are now entering the clinic with our OX40 antibody that also will be planned to explode as mono-therapy and later in combination with avelumab.

Briefly just on second line lung cancer, as we announced avelumab into several solid tumor indications, we expect over the years of ‘17, ‘18, ‘19 and ‘20 to see multiple pivotal trials readout and opportunities for drug registrations across several of the solid tumors including lung cancer..

Thank you Mikael. Now Seamus, I think you mentioned; I think you perhaps misquoted me there. I’m not agnostic on value; I’m agnostic on size and I’m totally focused on value. And I think it’s sort of alluding your questions about the -- whether you’re 80-20 or 60-40 to maximize your benefits.

And once again I’m open to any sort of combinations that when we look at it, produces clear value for our shareholders. Thank you..

Your next question comes from Steve Scala from Cowen..

I have a couple. First for Frank, isn’t the full year share count guidance 6.2 billion shares versus Q1’s nearly 6.3 billion; that difference is 3.2 billion in share repurchase? And related to that, I’m surprised the share count was not much lower in Q1 versus Q4, given the 150 million share repurchase.

I guess the answer might be that you weren’t expecting the stock to be so strong but maybe you can clarify.

And then secondly how much of the 300 million in Prevenar sales in adults in Q1 would you consider catch up versus the cohort of people that just turned 65 and are receptive to vaccination?.

So on the share repurchase Steve, our projection for the end of the year is a little bit higher than the number you quoted and we obviously factored that into our guidance.

And then in terms of the shares from Q4 to Q1, remember on that accelerated share repurchase, we got a partial quarter benefit for that in the number, because we didn’t put that in place until February, so kind of think about it as a mid quarter impact.

But if you go to the full year, we’re a little bit higher than the 6.2 and what’s really been driving that and it’s a good issue is, stock price is higher than we thought it was going to be.

From a share repurchase assumption perspective, in terms of what we assumed in our planning, it’s higher than what we had planned for, but net-net it’s all factored into our guidance..

Al, if you’d like to sort of try and dissect it, interesting market for adult vaccines in the U.S. and potentially internationally..

I don’t have specific data yet as to how much is catch up or not but it’s an indication of, the 300 is an indication of the significant potential of this market. Let me run some numbers for you. Every year 4 million adults in U.S. alone are turning 65.

There are 27 million adults that have been previously vaccinated with PPV 23 and additional 20 million adults that have never been vaccinated, that’s a pool of 47 million adults in U.S. Both of these cohorts are now recommended and reimbursed to receive Prevenar 13. And the same comes with Europe.

In Europe, we have already received the label, the prevention of pneumonia for adults 18 and older. We are working country by country to ensure recommendations and after that reimbursement which will take some time but typically it’s happening. And in general, we are very pleased with the first quarter, the results.

They were driven of course by the broad recommendation. We had the severe flu season that also played a role and also our commercial efforts were very successful. Going forward in the spring months, we expect the revenues to moderate given the seasonality of the business but we expect strong revenue growth will resume in the fall.

And overall we expect very strong growth for the year..

Your next question comes from Andrew Baum from Citi..

A question on your immune-oncology portfolio; do you have any evidence to date to conclude that the ADC enabled properties of your PDL-1 are positively significantly differentiated versus the other non-factor enabled PDL 1s that aren’t clinically approved.

Second, is it still the case that you haven’t shared any solid tumor responses with your anti-CD-137 or is that changed? And then lastly, perhaps you could comment on the strategic outlook of your consumer health business, given it’s a very active market out there with numerous potential buyers who I’m sure would be interested in your assets?.

Mikael, could you take us through the immune-oncology questions?.

I think you asked briefly about ADCs and then mainly around differentiation for our immune-oncology assets. Maybe I’d just say a few words on ADCs. We have built up seven ADCs in the clinic. You’ heard recently about our clindamycin ADC, inotuzumab showing positive and good data for the first of two primary end points, hematological remissions.

We have next wave in Phase 1/2 studies; I can particular mention one that you think you should keep an eye on that we will also believe will continue to established ADC as an important modality. And we are indeed quite encouraged by the idea of combining the selectivity of ADCs with immune-oncology.

So I think your question was really good by asking about those modalities. Our PDL-1, as you know, our view is that data available to-date suggests that it will have a similar profile to that on other advance PD-1 and PDL-1 antibodies that are presented data in unselected patient.

And as you continue to explore enrichment of patients such as increase level of PDL-1, it’s expected that response rate will further increase as well as with a drug combination.

There’s been some suggestion as from a reported ASR that avelumab may also on the positive end pick up some ADCs to rank itself; it remains to be proven what tumor types this could potentially be a differentiation.

But so far we have said that avelumab has a competitive profile similar to the PD-1, PDL-1 and we are very excited to advance the molecule and we’ll share an update at ASCO..

And on the Consumer business, it actually had a very quarter, very good growth. And so it’s a business that we like to be in. I think it’s a strategically important business for us. And we will continue to develop it and if we have opportunities to do acquisitions to grow, we’ll also look at those. So it’s a good business to be in..

Your next question comes from Colin Bristow from Bank of America..

Couple of quick questions, on the biosimilar Avastin; what’s your view with regards to what agencies were required for approval? Do you think response rates will be sufficient, would you anticipate meeting survival data? And also do you see any issues with recruitment here, given there is question of more incentives to trial the biosimilar versus the innovator? And then last question on Xeljanz; I see you’re filing based on 5 and 10 milligrams data in plaque psoriasis; is that potential for this data set to assist any approval of the 10 milligram data in RA?.

Biosimilar, Avastin, Mikael comments on that?.

I would say that for each of the biosimilars, we negotiate end point with the regulatory agencies. And we expect that data that indicate you have equivalence analytical on the drug pharmacokinetics and clinical profile in general will lead to registration across multiple indications.

I can’t specifically speculate on what would be required for Avastin but I will in general be optimistic that readout such as response rates or PFS will be likely confirm by equivalence if you do have also strong robust data on the other aspect by equivalence.

We have now five antibodies working closely with GEP in the pipeline and we are very pleased so far with all of those; four are in Phase 3 studies..

On the 10 milligram data in psoriasis; as you know the psoriasis patient population is a much different patient population then RA.

However, as we accumulate more and more data on the 10 milligram in both in RA post marketing surveillance studies in the additional indications including psoriasis and ulcerative colitis and other indications, the data base continues to grow.

And that will serve as our support for continuing to evaluate the 10 milligram across all of the indications as time goes by..

Your final question comes from Alex Arfaei from BMO Capital Markets..

A follow-up on biosimilars on your outlook; could you comment on some of the intellectual property barriers that you might face in bringing biosimilars to the market and specifically I am wondering about the Humira biosimilars that you have in development.

What’s your expected time line for that product given some of the IP that AbbVie [ph] keeps referring to?.

I think what we’d say is obviously we’re looking at full range of considerations when we develop our portfolio of biosimilars.

As Mikael just said and answered to the previous question, we engage very strongly with the regulators to make sure that have an appropriate clinical program and clearly we’re very mindful of the IP landscape which frankly varies by asset, is very complex ranging from base patents to a range of other patents.

So we work very closely with our legal team to assess the likely time of entry to the marketplace for all of our biosimilars and we take that into full consideration when we’re constructing our development program and making our forecast for the long range..

Thanks John. And thank you everybody for your attention this morning..

Thank you. Have a good day..

Ladies and gentlemen this does conclude today’s Pfizer’s first quarter 2015 earnings conference call. You may now disconnect..