A statement by Robert Essner, Chairman and Chief Executive Officer of Wyeth is given below. The statement has been taken from the company’s annual report 2006.
I am pleased to report that 2006 was an excellent year for Wyeth. Building on our strong performance in 2005, we once again delivered on our commitment to expand our growth, strengthen our position for the future and lead the way to a healthier world.
Driven by the steady growth of our key products, Wyeth reported record revenue. We filed four New Drug Applications (NDA) for new products, demonstrating solid productivity from our research and development (R&D) efforts. Overall, our new product pipeline significantly expanded and advanced. By maximizing productivity, controlling costs and delivering high value, we helped position Wyeth to address the economic realities of a changing health care environment. And, as we have done every year, during 2006 we continued to listen to our stakeholders, to learn from them and to apply those lessons to our business.
Highlighted below are some of Wyeth’s significant achievements during 2006 and in early 2007. These demonstrate the success of our efforts and our potential to build upon them:
- Wyeth’s 2006 net revenue increased 9 percent to nearly $20.4 billion, a record high for the Company. Pro forma earnings grew 14 percent, the second consecutive year of double-digit growth. An in-depth review of our 2006 performance is provided in Wyeth’s 2006 Financial Report, the companion piece to this Annual Review.
- We achieved annual sales of more than $1 billion for each of six core product franchises: Effexor, Prevnar, Protonix, Enbrel,Wyeth Nutrition and the Premarin family – demonstrating the breadth and diversity of our portfolio.
- Revenue from all of our biotechnology products in 2006 reached $5.7 billion, representing about a third of Wyeth Pharmaceuticals’ total revenue and making Wyeth the fourth largest biotechnology company in the world.
- In January 2007, we received an approvable letter from the U.S. Food and Drug Administration (FDA) for Pristiq, a serotonin-norepinephrine reuptake inhibitor for the treatment of major depressive disorder, which will be launched with a specific focus on women.
- Wyeth Consumer Healthcare provided an important revenue contribution and positioned itself for future growth through the introduction of innovative new products such as Advil PM.
- Sales for Fort Dodge Animal Health rose 6 percent, driven by increased revenue from its companion animal and livestock products. The division’s robust new product pipeline is expected to continue as a source of strong growth.
- We increased our dividend to stockholders for the second consecutive year, demonstrating the confidence we have in our Company’s future and in the strength of its financial resources.
In the section that follows this report, you will read about how we’re striving to improve world health and sustain our growth through a near-term pipeline of innovative products. And in a special feature story on an area of enormous unmet need – Alzheimer’s disease – you will read about how Wyeth researchers are seeking critical breakthroughs for patients, their caregivers and society.
Our pharmaceutical business delivered outstanding results by extending the reach of our products and enhancing their potential for further growth. At the same time, Wyeth Pharmaceuticals took significant steps to increase the efficiency and responsiveness of its sales organization and to expand a variety of educational efforts for patients.
Effexor and Effexor XR continued as the world’s number one antidepressant franchise. Sales reached $3.7 billion in 2006, an increase of 8 percent. An additional indication for use of Effexor XR in panic disorder contributed to growth while the results of the PREVENT study provided further evidence of the sustained efficacy of Effexor XR in treating major depressive disorder.
Prevnar (Prevenar outside the United States) was the number one selling vaccine in the world, with 42 million doses manufactured and net sales of nearly $2 billion, an increase of 30 percent over 2005. Strong global usage of Prevenar accelerated in 2006 as nine more countries, including Germany, Mexico and the United Kingdom, added Prevenar to their National Immunization Programs (NIP). In total, 16 countries have incorporated Prevenar into their NIPs, and growing evidence of the vaccine’s high value creates opportunities for further expansion.
Protonix, for erosive acid reflux disease, grew 7 percent to approximately $1.8 billion. During the year, RENEW, an innovative patient educational program for Protonix, was launched, providing sample starter medications and educational materials to facilitate discussions between patients and their physicians and to help ensure patient compliance over the longer term.
Worldwide net sales for Enbrel, the number one biotechnology product in its category in North America, grew 20 percent to more than $4.4 billion. This includes sales in the United States and Canada that are recorded by our marketing partner Amgen Inc.
While all regions contributed to growth, strongest results came from Europe, where sales increased 33 percent, making Enbrel the number one ranked biotechnology product there.
Wyeth Nutrition is a world leader in the development, manufacture and distribution of scientifically based nutritional products for infants and toddlers.Wyeth Nutrition continued to grow at double-digit rates in 2006. Global sales grew to $1.2 billion, an increase of 15 percent over 2005.The two regions enjoying the fastest growth were Asia/Pacific, which comprised nearly 60 percent of global nutritional sales and grew 23 percent, and Latin America, which made up 16 percent of global sales and grew 15 percent.
Having recently celebrated its 90th anniversary, Wyeth Nutrition has evolved into a significant international player with 60 affiliates selling our products around the world. The Company markets its premium product line under the Gold banner and, in late 2006, was first to market with an innovative new product called Gold with lutein, which seeks to protect the eyes of infants. To meet increasing demand for providing infants and toddlers with high-value products like the Gold line, Wyeth Nutrition increased its manufacturing capacity in Mexico and began construction of an expanded facility in the Philippines.
Wyeth remained a global leader in hormone therapies and was the U.S. market leader as sales of the Premarin family of products increased 16 percent globally and 21 percent in the United States. New data published in 2006 helped to further clarify the benefits and risks of hormone therapy for women, and Wyeth currently is working with physicians and their patients to appropriately address patient needs based on the emerging data.
Zosyn (Tazocin outside the United States) continued to be the largest selling I.V. antibiotic worldwide with global net sales of $972 million, a 9 percent increase over 2005. The success of Zosyn is attributable to its clinical efficacy and its ability to help hospitals control the emergence of resistant bacteria.
Tygacil, our new antibiotic product, also delivered net sales growth during the year. Since its launch in 2005, it has gained 55 worldwide regulatory approvals and now is available in 33 markets.Tygacil is particularly important in hospitals for patients infected with common as well as more dangerous resistant infectious pathogens in complicated skin/skinstructure and intra-abdominal infections.
All these products require the right selling model for a changing health care environment. We’re pleased to report that the new primary care selling model we implemented in the United States last year is working well. In 2006, we jumped from No. 8 to No. 1 in the Health Strategies Group’s annual primary care physician audit, which demonstrates physicians’ initial satisfaction with our new structure.
Wyeth Consumer Healthcare
Excluding the impact of revenue from Solgar Vitamin and Herb, which was divested in 2005, sales for Wyeth Consumer Healthcare increased 1 percent to more than $2.5 billion in 2006, spurred largely by a strong focus on supporting our core global brands.Three growth drivers – Advil, Centrum and Caltrate – benefited significantly from this strategy.
The Advil franchise grew 7 percent around the world, largely fueled by new marketing efforts. In Canada, Advil increased its market share and became the leader in the analgesic category for the first time. The Centrum family of vitamin products achieved 4 percent sales growth, driven by innovations in Europe and growth in the age 50+ population. Centrum Advantage was launched in the Canadian market in 2006.
Caltrate grew 3 percent largely due to international expansion. Overall, international sales increased 2 percent while U.S. sales declined 3 percent. The decline in the United States primarily resulted from the ongoing impact of legislative restrictions on sales of pseudoephedrine-containing cough/cold formulations. In response to these restrictions, Wyeth Consumer Healthcare transitioned most of its products to an alternative active ingredient.This reformulation is expected to impact sales favorably in 2007. Outside the United States, a number of major international markets enjoyed double-digit growth, including Canada, China, Colombia, Mexico, Portugal, Taiwan, Thailand and Venezuela. Wyeth Consumer Healthcare was particularly successful in achieving operating efficiencies to fund new investments and increase net income. Innovation also was a key contributor to growth, highlighted by the successful launch of Advil PM.
Opportunities for future growth now are being developed, including an innovative Caltrate food-grade line in China, the start of a consumer health care business in Russia, and an intense research and development effort to deliver new forms of Advil.
Fort Dodge Animal Health
Sales of our Fort Dodge Animal Health products moved closer to $1 billion, reaching $936 million and increasing 6 percent over the prior year. In 2006, Fort Dodge received pan-European regulatory approval to market ProMeris/ProMeris Duo, products offering flea and tick protection for dogs and flea protection for cats. Approval in the United States is expected in the first half of 2007. Another key achievement was the U.S. launch of Suvaxyn PCV2 One-Dose, a vaccine for the prevention of porcine circovirus, a disease that leads to a wasting syndrome in pigs. In the face of global concerns over avian influenza, Fort Dodge received approval for Poulvac Flufend, a new inactivated reverse genetics vaccine for poultry that addresses the potential pandemic strain of the avian influenza virus.
Research and Development
Our greatest challenge at Wyeth is to create breakthrough medicines that serve the needs of patients in an increasingly competitive environment. From a research and development standpoint, that challenge requires thinking and acting differently in discovering and advancing to market potentially important compounds. That is why we have instituted a new Learn and Confirm paradigm for drug development – a two-phase approach to streamlining the traditional multiple phases of development. This effort places greater emphasis on high-performing teams, rapid decision making and improved clinical trial designs.
Other accomplishments include the creation of a global network of 10 early clinical development centers to optimize our global patient mix, the streamlining of clinical data collection processes using electronic data capture, and the simplification of clinical trial material shipments and processes through a strategic alliance with a leading, worldwide logistics provider.
We continued to realize solid results from our R&D organization, drawing upon our expertise in three distinct discovery platforms: small molecules, biologics and vaccines. In 2006, Wyeth filed NDAs for Viviant, for prevention of postmenopausal osteoporosis; Pristiq, for non-hormonal treatment of moderate to severe vasomotor symptoms associated with menopause; Torisel, for patients with advanced renal cell carcinoma, which received priority review status; and bifeprunox – filed with our partner Solvay Pharmaceuticals – for the treatment of schizophrenia. In addition, we submitted regulatory applications for a reformulation of BeneFIX, one of our hemophilia agents, as well as for a new adult granule-dose formulation of Protonix, and we received regulatory approval for new dosing recommendations for Rapamune in high-risk renal transplant patients.
Wyeth also is seeking to expand its presence in the contraceptive market with Lybrel, currently awaiting final FDA approval. Lybrel is a novel, continuous-use oral contraceptive that is designed to provide significant benefits in terms of menstrual-cycle regulation.
During the year, we successfully advanced 15 new molecular entities and two new vaccine constructs from discovery into development. In total, over the past six years, 75 new drug candidates were placed into development, the majority having potential to be first- or best-in-class therapies. That has made Wyeth a leading company within our industry peer group in discovering novel molecules and advancing them rapidly into clinical development. We also believe that our pipeline is among the most robust in the industry. Others share our positive views. For example, early in 2007, R&D Directions magazine recognized Wyeth as the company with the best central nervous system product pipeline in the industry.
In 2007, we expect to submit several important filings, including Viviant, for the treatment of osteoporosis; Aprela, for the treatment of menopausal symptoms and prevention of postmenopausal osteoporosis; methylnaltrexone subcutaneous, for opioidinduced constipation in advanced medical illness; methylnaltrexone I.V., for post-operative ileus; and Tygacil, for use in community-acquired pneumonia and hospital-acquired pneumonia.
A Special Report on Alzheimer’s Disease Research
I believe that Alzheimer’s disease is the biggest health care issue of my generation. More than 4.5 million Americans suffer today, and, as the baby boomer generation ages, it is expected that this number will grow substantially. Add to that millions more affected by the disease – the families and caregivers of Alzheimer’s patients – and the billions of dollars in health care costs borne by society, and the nature of the challenge and the critical importance of doing everything we can to overcome it become clear. Clinical research in this field is complex and expensive with outcomes uncertain, but the impact of success would be enormous.
We’re proud that Wyeth is at the cutting edge in seeking new drugs not only to treat Alzheimer’s disease symptoms better than currently available therapies but potentially to stop or even reverse the course of this crippling and ultimately fatal disease. Our goal is to turn the corner on this terrible illness and provide new hope.
Success will come not just in the laboratory but also on the regulatory front and through the development of strong partnerships with patient groups, government, regulatory agencies, and scientists in industry and academia. We must encourage additional research, accelerated and informed new drug reviews, and more aid to caregivers who bear the brunt of this health scourge. You will read about some of the patients and their caregivers in this report. These family members are courageous beyond measure in doing everything in their power to try to care for their loved ones at home.
The People of Wyeth
Our Company has exhibited a track record of consistency, performance and responsibility. The people of Wyeth know that to continue on this path, we must maintain a relentless focus on improving our Company and running it even more efficiently. Our people understand that we have an imperative to change Wyeth fundamentally in order to succeed in the years ahead. At its core, this effort is based on two simple ideas. First, every year we will aim to grow our revenue through the quality of our products and their value to the people we serve. And second, every year we will aim to grow our profit at a faster rate than our revenue by running our Company more efficiently and productively. These goals drive our results and determine how they are evaluated and how we plan to improve upon them in the future.
Changes in Management
I am pleased that we have continued to strengthen the leadership of our organization in a variety of ways. In October 2006, we welcomed Raymond J. McGuire to our Company’s Board of Directors. Mr. McGuire is a Managing Director and Co-Head, Global Investment Banking, for Citigroup Global Markets Inc. I know he will provide important perspectives on our business operations and strategy. In January 2007, Bernard Poussot was elected Chief Operating Officer of Wyeth and joined the Company’s Board of Directors. Earlier in 2006, he was promoted to President and Vice Chairman of Wyeth. In his more than 20 years with our Company, Mr. Poussot’s leadership has helped us transform our organization and set it on a course for continual growth. Also in 2006, Kenneth J. Martin was promoted to Chief Financial Officer and Vice Chairman of Wyeth. In addition to heading our finance organization, Mr. Martin took on responsibility for our infrastructure initiative, which is critical to our operating efficiency and, therefore, to our future success. Further supporting our management team, Joseph M. Mahady was named President – Global Business for Wyeth Pharmaceuticals and continues as a Senior Vice President of Wyeth. In his new role, Mr. Mahady assumes operational responsibility for Wyeth’s global pharmaceutical business. With this expanded responsibility, I am certain he will bring significant insights to our worldwide business and commercial portfolio. In addition, Geno J. Germano was named President and General Manager, Wyeth Pharmaceuticals – United States and Wyeth Pharmaceutical Business Unit. Robert E. Landry, Jr., was elected Treasurer of Wyeth.
Corporate Social Responsibility
Wyeth recognizes its significant responsibilities as a global corporate citizen. One of the most important actions we can take in this regard is to expand access to our medicines. Our patient assistance programs in 2006 provided free Wyeth medicines, valued at $160 million, to 250,000 Americans who were without adequate prescription drug coverage or insurance. Outside the United States, we worked to support maternal health care, ensure access to reproductive and child health resources, and develop a new treatment option for river blindness. We are working with the Global Alliance for Vaccines and Immunization to find an affordable and sustainable way to bring vaccines to children in the developing world. We also are working hard to help protect and enrich the environment in the communities where we live and work by steadily reducing environmental emissions and ensuring the safety of employees at all of our facilities.
Looking to the Future
As we look to the future, we know that we will be operating in a tough environment around the world. To compete, we will continue to attract, retain and engage a diverse workforce that broadens our perspectives, enhances our customer connections and increases our creativity.The more productive and innovative we are in our operations, the better we will be in addressing concerns about pricing and access to our medicines. We have made important progress in a relatively short time as part of a longer-term effort to find new and more efficient ways to meet the challenges of the 21st century. The momentum we now have can be accelerated. We will continue to foster a high-performance culture where every person has a role, every person takes responsibility and every person acts to make a difference. We will continue to execute against aggressive plans and develop systems to help ensure both success and compliance with the highest legal and ethical standards around the world. And we will foster innovation through our creativity, challenging what we do every day and seeking improvements and opportunities for the years ahead. Our goal, over the next decade, is to make Wyeth a stronger company with an even higher value portfolio of products to fuel growth.
I want to take this opportunity to thank the people of Wyeth for making a difference for our Company and those we serve.Thanks to their efforts, our growth has accelerated, our pipeline never has been stronger and we are on the path to deliver important new medicines to a world in great need.