Amal Naj, Head of Development. Please begin the call.

Head of Investor Development. Good afternoon and thank you for joining us on this call to review our fourth quarter 2007 performance. I am here with Jeff Kindler, Chairman and CEO; Frank D'Amelio, Chief Financial Officer, and other members of our senior management. The financial chart that will be presented on this call can be viewed on our homepage at www.pfizer.com in the Investor Presentations tab by clicking on the link Quarterly Corporate Performance - Fourth Quarter 2007. We will end our conference call at 1 o'clock sharp, and as we would like you to... as we would like to hear from as many as you and in this time we would appreciate if you would limit yourself to just one part question. Time permitting we will come back to you for any follow-ups. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. 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 2006 annual report on Form 10-K and in our reports on Form 10-Q and Form 8-K. Also, the discussions during this conference call will include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliations 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 January 23, 2008. These reports are available on our website at www.pfizer.com in the Investors SEC Filings section. Now, I would like to turn this over to Jeff Kindler. Jeff?

Thanks Amal. Good afternoon and welcome everyone. Thank you very much for joining us today. Frank will review the numbers for the quarter and the year in a few moments, but I'd like to just make a few opening remarks. When I took this position it was clear that fundamental change was imperative at Pfizer. The tough decisions had to be made, and that we had to act with a sense of urgency. We faced an environment where our traditional business model had come under attack. We saw a company facing significant losses of exclusivity, weighed down by layers of bureaucracy, slow to make decisions and in many cases at odds with regulators, payers and policymakers. For success in the decade ahead, we needed to get our house in order, and we needed to get moving. We knew that quick fixes were simply not the answer. We set out to create a company that has the advantages of global scale, but also the agility, speed and decisiveness of a small enterprise. One year ago, we announced a set of immediate priorities to rebuild the foundation of our business and improve Pfizer's performance. These set the stage for the sweeping changes that Pfizer needs to make in order to succeed in the changing industry. Today while we still have a lot of work to do, we are in a much stronger position to meet our challenges and capitalize on our opportunities than we were one year ago. We achieved both revenue and adjusted diluted earnings per share growth in 2007, despite losing U.S. market exclusivity for Norvasc and Zoloft while making important structural and operating changes to enhance our future performance. We did this with solid product performance across a broad and diverse portfolio, cost reductions and the benefits of foreign exchange. By the end of last year, we had in place our new leadership team, and I am particularly pleased with the group that we have assembled. It has in my view a good balance between leaders with strong and extensive experience in our industry, and people from other industries who bring fresh ideas and perspectives. Each member of our team fully appreciates what we need to do and is fully aligned behind our plans to achieve success. Before turning it over to Frank, I'd like to briefly highlight how we're making progress against our priorities and outline the next phase of our plan which we'll cover in much more detail at our March 5th analyst meeting. Our five priorities last January were: first, maximize revenues in both the short and the long term. Second, establish a lower and more flexible cost base. Third, create smaller, more focused and accountable business units. Fourth, build more collaborative relationships to deliver greater value for patients, physicians and customers, and fifth, make Pfizer a great place to work. On our first priority, we are maximizing revenues from both our new products as well as our current in-line portfolio. Three new products are noteworthy. Lyrica, an innovative treatment for diabetic nerve pain and post-herpetic neuralgia, and now the first medicine to ever win FDA approval for the management of fibromyalgia. Sutent, a breakthrough way to fight too tough-to-treat cancers and a drug with the potential to treat other devastating cancers, including breast cancer. And Chantix, which has now been tried by more than 5 million smokers and is growing rapidly worldwide. Meanwhile, Lipitor continues to hold its own, generating sales only slightly less than last year despite an unprecedented commercial and competitive attack. Even now after ten years, new data still comes in showing why it remains the industry leader. And we have a host of other innovative products doing well, like Celebrex, Geodon and Zyvox, and our animal health business continues to deliver outstanding performance. In terms of future revenues, in 2007 we accelerated a new compound for generalized anxiety disorder into Phase III and moved three high value oncology indications, melanoma, breast and lung cancer into Phase III. We're also moving forward aggressively on the largest Phase II portfolio in Pfizer's history. And to supplement our efforts internally, we've revamped our business development group to capitalize on external opportunities like our apixaban collaboration with Bristol-Myers Squibb. We entered into 14 deals last year. These include our acquisitions of BioRexis with its diabetes candidates and novel peptide technology platform, Coley Pharmaceutical Group with its vaccine adjuvant technology and a new class of drug candidates, and CovX which will substantially enhance our biotherapeutics capabilities. We also entered into an important collaboration with Adolor to develop two novel compounds for the treatment of pain, a therapeutic area in which we already have a strong and leading position. To deliver on our second priority, establishing a smaller, more flexible cost base, we took some tough actions last year including a 10% reduction in our global workforce and 20% in the U.S. sales force. We said we would do everything possible to minimize disruptions to our business, and we did. It's worth noting that even with all of the changes this year our U.S sales force was once again ranked the best in the industry by physicians for the 13th year in a row. And our terrific sales people around the world are earning similar recognitions. To enhance R&D efficiency and productivity, we closed two U.S. R&D sites and announced the closure of three international sites. We streamlined our therapeutic area structure and cut the layers of management in PGRD between myself and the bench scientists from 13 to 8. In manufacturing, we exited six sites in 2007 and plan to exit 12 more. And we achieved significant production cost reductions on key products. These actions were painful, but they were necessary. We significantly cut costs in 2007, and we're on track to achieve absolute reductions of our total adjusted costs next year of between $1.5 billion and $2 billion on a constant currency basis compared to 2006. To create smaller and more accountable business units, our third priority, we created five separate business units in the U.S. for our patent protected portfolio. The new U.S. business units already have lots of success stories demonstrating their new agility and speed. We also recently established a new separate unit focused solely on optimizing the performance of our established products, products that are near or past their loss of exclusivity. This new unit is led by a skilled executive with substantial pharmaceutical experience around the world, including end markets where these established products are very successful. In R&D, we put each therapeutic area in a single location allowing colleagues to have a clear line of sight to a smaller more focused enterprise. We have new leadership in several of these therapeutic areas, and we're well on our way to ensuring greater focus, accountability and entrepreneurship in each of these R&D units. We also created a separate biotherapeutics and bioinnovation center led by world-class scientists to discover license and acquire more new candidates for the pipeline. We also have good progress to report on our fourth priority, building more meaningful collaborations with other individuals and organizations with whom we can partner to add value. We have signed over 1000 new scientific alliances this past year. These include major deals, such as Icagen, which provides a novel opportunity in pain; Tacere Therapeutics which offers an RNAi approach to the treatment of Hepatitis C and Taisho Pharmaceuticals, which presents opportunities in the schizophrenia area. We also entered into a unique collaboration with the Scripps Research Institute that is already bearing fruit. And we created The Pfizer Incubator to work with academic, biotech, and venture communities on innovative ways to answer some tough questions. We've also significantly improved our relationships with key trade and managed care costumers. We've improved our formulary positions for some of our key products, giving us the opportunity to provide our products to millions of patients. We're also actively exploring collaborations with best-in-class companies, in a number of areas where we can work together to create value, including improving patient outcomes and achieving joint clinical support. Finally, our fifth priority, making Pfizer a great place to work. We've significantly streamlined the organization, reducing layers and increasing spans of control. The move towards smaller units will empower thousands of colleagues. Among many other important changes we've brought in a world-class talented development leader from Microsoft. Most importantly, from my perspective, we've urged our colleagues to be as candid and open as possible, and I'm very encouraged by the way they have responded. They are telling us quite clearly what is working and what is not working. We are listening to that, and we are moving quickly to respond to their views at every level. Overall, while we have lots more to do, we're making steady progress in establishing Pfizer as a company where open communications, empowerment, focus and accountability are the norm, with a performance-based culture that recognizes and rewards outstanding contributions from Pfizer colleagues. We will continue to execute against these five priorities in every part of Pfizer. Our objective, of course, is to position the company to deliver strong total shareholder return. And at our March 5th analyst meeting, we'll talk in detail about longer term strategies to invest in our future, create value with our science and technology and deliver innovative health care. For today, I'll simply list in broad terms the areas where we are concentrating. We intend, first, to refocus and optimize the patent-protected portfolio. Second, try new opportunities for established products; third, accelerate our growth in emerging markets; fourth, invest in complementary businesses, and fifth, establish and sustain an unwavering commitment to innovation and a culture of continuous improvement. We'll have much more to say about all of these on March 5th, including outlining key milestones by which you can track our progress. A final comment before I turn this over to Frank. Much has changed at Pfizer. Much will change. The urgent challenges we face present great opportunities. They have galvanized us to react fast, rebuild our foundation and renew our determination. I am pleased with our progress. But all of us at Pfizer know that we have more work ahead, to deliver on our commitments to our shareholders and build the value of our business for the long term. Frank? Frank D'Amelio: Thanks Jeff. Good day everyone. Now to the results. The charts I will be reviewing today are included in our webcast and will help facilitate the discussions of our fourth quarter and full year 2007 results. With that, let me get to our financials. Today, we reported revenues for the fourth quarter of 2007 of $13.1 billion, a 4% increase compared with the year ago quarter, despite Norvasc loss of U.S. exclusivity, which contributed to a $666 million decrease in Norvasc revenues. Fourth quarter revenue was positively impacted by foreign exchange which increased revenues by approximately $610 million or 5% and the strong performance of many new and in-line products. Reported net income of $2.9 billion for the fourth quarter decreased 70%. Reported diluted EPS of $0.42 decreased 68% compared with the year ago quarter. These declines are primarily due to the one-time after-tax gain of $7.9 billion or about $1.08 per diluted share in the fourth quarter of 2006 related to the sale of the Consumer Healthcare business, which was partially offset by the favorable impact of foreign exchange, lower acquisition related IPR&D charges and other items. Adjusted income of $3.6 billion for the fourth quarter increased 17%, and adjusted diluted EPS of $0.52 increased 21% compared with the year ago quarter. These increases were primarily the result of the favorable impact of foreign exchange as well as our cost reduction initiatives. Now to the full year. Full year 2007 revenues increased 1% to $48.6 billion compared with 2006 despite the loss of U.S. exclusivity in both Norvasc and Zoloft, which decreased by approximately $1.9 billion to $1.6 billion respectively. Full year revenues were again positively impacted by foreign exchange of approximately $1.5 billion, which increased revenues by about 3% and the strong performance of many new and in-line products. Full year 2007 reported net income of $8.3 billion declined 57% compared with 2006, and full year reported diluted EPS of $1.20 declined 55% year-over-year. The year-over-year comparison negatively impacted by the one-time after-tax gain of $7.9 billion or $1.08 per diluted share related to the sale of the Consumer Healthcare business. The after-tax charges of $2.1 billion, we recorded in the third quarter of 2007 primarily related to the write-off of assets and other costs associated with our decision to exit Exubera, and higher after-tax charges of $2.7 billion associated with our cost reduction initiatives, which increased from $1.4 billion in 2006. Full year adjusted income increased 2% to $15.3 billion, and adjusted diluted EPS increased 7% to $2.20 compared with 2006. Full year adjusted income and adjusted diluted EPS were favorably impacted by foreign change and our ongoing cost reduction initiatives. In addition, adjusted diluted EPS was also favorably impacted by our share purchase program. Let me point out several significant items that are included in our reported results for the fourth quarter. More detailed disclosures will be provided in our Form 10-K filing with the SEC. In the fourth quarter, we incurred $230 million in restructuring charges as compared with $495 million in the prior year quarter. These charges are primarily associated with employee costs and asset impairments. In addition, we incurred $525 million of implementation costs compared with $241 million in the prior year quarter. These costs are primarily related to sites we exited or are in the process of exiting. These amounts are reported in cost of sales, R&D and SI&A expenses, and are detailed more fully in the supplemental information accompanying the release. Throughout the year, specific cost reduction initiatives spanned essentially all divisions, functions, markets and sites across Pfizer. Broad categories of activity included sales force reductions, manufacturing and research site exits and outsourcing. We reduced our U.S. sales force by about 20% and have implemented similar reductions in many other markets. We have exited six manufacturing plants and two R&D sites in 2007. Furthermore, we are in the process of exiting an additional 12 manufacturing plants and four R&D sites. To date, all transitions are proceeding according to plan. In addition, research programs and development projects have been transferred and stabilized in their new location with minimal disruption. Moreover, a wide array of outsourcing opportunities are in various stages of implementation. Manufacturing, logistics, finance, facilities, legal and IT are among the functions contributing to the financial and operational benefits of this strategy. Now I would like to provide more details regarding our adjusted income components. Adjusted revenues for the quarter were $13 billion, an increase of 3% versus the prior year quarter despite Norvasc loss of U.S. exclusivity in March 2007, which contributed to a $666 million decrease in Norvasc revenues. Adjusted cost of sales as a percentage of revenue was 17.4% in the fourth quarter compared with 16.6% in the year ago quarter. The increase was primarily driven by the unfavorable impact of foreign exchange. In fact, cost of sales as a percentage of revenues actually improved modestly, excluding the effect of foreign exchange. And to a lesser extent, unfavorable geographic and business mix which more than offset savings from ongoing cost reduction initiatives. Adjusted SI&A expenses were $4.5 billion for the quarter, an increase of 1% compared with the year ago quarter. Adjusted R&D expenses were $2.2 billion, a decrease of 9% compared with the year ago quarter. Adjusted SI&A and R&D expenses as well as adjusted cost of sales were favorably impacted by savings from our ongoing cost reduction initiatives. However, this was offset by the unfavorable impact of approximately $480 million from foreign exchange on total costs. Our effective tax rate on adjusted income for the quarter was 18.2% which decreased due to changes in our geographic income mix. I would also like to highlight the performance of selected products during the fourth quarter. First, Lipitor worldwide revenues increased 3% to $3.4 billion compared with the year ago quarter. The favorable impact of foreign exchange is approximately $150 million which increased revenues by about 4%. Revenues in the U.S. declined 4% due to continued intense competition and payer pressure while revenues from international markets increased 13% of which 11% was due to foreign exchange and the remainder due to operating growth. As you can see, most key in-line products grew in the fourth quarter as compared to the prior year quarter, with the exception of Zyrtec. Given the U.S. patent expiration in December 2007 and pending launch of over-the-counter Zyrtec, we will cease selling the product this month. Full year 2007 revenues for Zyrtec were $1.5 billion. In addition, I want to point out that we will also lose U.S. patent protection for Camptosar in February 2008. Full year 2007 revenues for Camptosar were $969 million, of which $539 million was from the U.S. Key new products, including Chantix, Lyrica and Sutent, continued to deliver strong during the quarter. Chantix, our prescription treatment to aid smoking cessation achieved revenues of $280 million, an increase of 311% compared with the year ago quarter. Last week, we updated the label for Chantix to include an additional warning for patients. The potential impact of this action has been considered in our guidance for 2008. Lyrica, our medicine for the management of neuropathic pain and more recently, fibromyalgia, delivered revenues of $564 million, an increase of 60% compared with the year ago quarter. Finally, Sutent, our product for advanced kidney cancer and gastrointestinal stromal tumors posted revenues of $182 million, an increase 75% compared with the year ago quarter. As expected, revenues from Zoloft and Norvasc, which lost U.S. exclusivity in August of '06 and March of '07 respectively, continued to decline during the fourth quarter. Compared with the year ago quarter, Norvasc revenues decreased 51% to $650 million, and Zoloft revenues decreased 20% to $134 million. As you can see from the chart, we exceeded our 2007 top line and bottom line expectations, regarding our '07 financial guidance which we previously announced on last quarter's conference call. We posted $48.4 billion of adjusted revenues, meeting our previous expectations and achieved reported diluted EPS of $1.20 and adjusted diluted EPS of $2.20 both exceeding the previous expected ranges. Our 2007 adjusted SI&A expenses decreased by $560 million from '06 levels on a constant currency basis, slightly lower than our previous expectation of approximately $600 million. Total adjusted SI&A expenses of $15.2 billion were essentially at or guidance at approximately $15.1 billion. In addition, we recorded adjusted R&D expenses of $7.5 billion consistent with our guidance. Our effective tax rate on adjusted income was 21%, slightly better than our expectations. And we expect to generate cash flows from operations at or above our guidance of $12 billion to $13 billion. Also, our Lipitor revenues declined 2% for the year, better than our previous guidance of a 3% to 5% decline in comparison to 2006. That said, our adjusted cost of sales as a percentage of revenues was 15.9% for the year versus guidance of 15.5%. As I previously mentioned, this variance was due to the unfavorable geographic and business mix and the unfavorable impact of foreign exchange which more than offset savings from our ongoing cost reduction initiatives. Looking to 2008, our full year guidance is as follows. We expect annual revenues in the range of $47 billion to $49 billion, reflecting an increase of $500 million to both the bottom and the top ends of our previous range, a reduction of adjusted total cost from 2006 levels of at least $1.5 billion to $2 billion on a constant currency basis. Adjusted cost of sales as a percentage of revenue are 14.5% to 15.5% resulting from the full year benefit in 2008 of manufacturing site exits in 2007 and ongoing cost savings efforts. We also expect adjusted R&D in the range of $7.3 billion to $7.6 billion. Adjusted SI&A in the range of $14.4 billion to $14.9 billion, reported diluted EPS in the range of a $1.78 to $1.93 reflecting, a $0.03 increase in the bottom end of our previous range; adjusted diluted EPS in the range of $2.35 to $2.45 reflecting a $0.04 increase to the bottom end of our previous range, and effective tax rate of 22% to 22.5% on adjusted income, cash flows from operations of $17 billion to $18 billion, which is $1 billion less than our previous guidance due primarily to the estimated timing of tax payments. As always, results may vary from quarter-to-quarter based on the seasonality of revenues and spending and the timing of the loss of U.S. exclusivity and patent expirations of certain products among other things. First quarter 2008 revenues may not be comparable to the first quarter 2007 revenues as a result of the loss of U.S. exclusivity of Norvasc, Camptosar and Zyrtec which we will cease selling this month following the anticipated launch of an over-the-counter Zyrtec. Collectively, these products contributed U.S. revenues of about $1.1 billion in the first quarter of '07 and $2.7 billion in the full year 2007. It is important to note that we have considered these factors in our full year 2008 guidance. Going forward, our focus remains on building total shareholder value by achieving our financial goals, maintaining spending discipline, prudently allocating our capital and improving our cost structure. So, to summarize the key takeaways. We exceeded our '07 revenue and EPS guidance provided last quarter. Regarding 2008 guidance, we increased the top and bottom ends of our previous revenue guidance range by $500 million and increased the bottom end of our adjusted diluted EPS range by $0.04 and our reported diluted EPS by $0.03. Our new products, especially Lyrica, Chantix, and Sutent continued to deliver strong growth and partially offset decreasing revenues from products that have lost exclusivity. Revenue from these three new products increased to $3.3 billion in 2007 from $1.5 billion in 2006. Finally, we're continuing to execute on our plans to reduce costs, and we expect to continue to realize savings with these initiatives in 2008.

Thank you very much Frank. And now we'd be happy to take your questions. Question And Answer [Technical Difficulty]

On Lipitor, hoping you can provide us an update on what the unrestricted tier 2 access is in the U.S. for the product in 2008 relative to what it was for 2007. If you could remind us what that figure was for 2006 that will be helpful. And related to that, do you foresee the recent ENHANCE results bettering the formulary replacement of Lipitor or not?

Okay, thank you. That was... is that Tim Anderson?

Yes. Thank you.

Okay, thank you, Tim. We had a little technical difficulty there. Ian, would you like to... Ian Read, the President of Worldwide Pharmaceutical Operations.

Tim, I think a T2, tier-2 access in... I don't have the '06 numbers. '07 was above 65% on tier-2 access. And we expect to maintain or slightly improve that in '08. In regard to ENHANCE, it's really too early to tell the impact vis-à-vis the formulary position. I mean our formulary position is in place, we're in tier 2. So just too early to tell.

And that 65% is unrestricted to tier 2?

The vast majority of it is unrestricted.

Thank you.

Thank you, Tim. Next question please.

Next question comes from the line of John Boris with Bear Stearns.

Okay, thanks for taking the questions. Just on the first quarter revenues. Traditionally when you take your annual price increase, you do traditionally allow wholesalers an opportunity to buy in for a period of time. Can you at the old 2007 pricing level, can you confirm how that might have an impact on revenues going into the first quarter, if it will, at all? And then a question on gross margins. I believe Zyrtec, being a partner product from UCB is below your current gross margin. Can you also confirm if Camptosar is also below your current gross margin? And then just finally on foreign exchange, you have disclosed 5% benefit. Can you comment on what the contribution of price and volume was in the quarter? Thanks.

Okay John, thanks for following the request to stick to one question at a time. We'll start with the first question regarding first quarter revenue impact of on Lipitor. Frank D'Amelio: Yes so I think the way... and let me take a shot at this. I think the way I will answer that is by saying, if you look at our weeks on hand at the end of the year, they were basically 2.5 weeks, which were down from the year ago quarter. If you look at our third quarter, weeks on hand, that was also down on a year-over-year basis. So in terms of what we are doing relative to our distributors, inventory levels were actually down, kind of point one. In terms of Camptosar and the gross margin on Camptosar, relative to our overall gross margin, obviously many of our products have higher gross margins, relative to our overall gross margins, of which Camptosar is one of those. And then, in terms of the last question on FX, I think the way I'll answer that is just what we have included in the release, which was if you look at the positive impact of FX for the year, it was about $600 million, $610 million for the year in the top line, so about a $1.5 billion on the top line for the full year. So $600 million in Q1, $1.5 billion for the full year, obviously with that having a benefit on the bottom line as well.

Thank you.

Next question please.

Question comes from the line of David Risinger with Merrill Lynch.

Hi Dave.

Yes thank you. With respect to FX, I was hoping that you could provide a little bit more color on the FX contribution to the bottom line EPS in the fourth quarter of '07 and in the full year '07. Thank you.

Thanks Dave. Go ahead Frank. Frank D'Amelio: Yes Dave, it's Frank. And I can clearly do that. For the fourth quarter, give or take, it was about $200 million. And for the year it was about $600 million. And that's when you basically factor in the positive impact on the top line. And I'll call it, the increase it causes in cost of sales SI&A and R&D. And then when all said and done, the flow-through of all that to the bottom line, including other income. So all said and done about $200 million for the quarter, about $600 million for the full year.

And could you provide any color on your assumption for '08 the benefit to '08 EPS? Frank D'Amelio: Yes. It's what we did is for '08 guidance. We basically use current exchange rates. So January exchange rates, so we are not making any assumptions about what's going to happen to exchange on a going forward basis. We basically use the January exchange rates. The only place where we didn't do that was in the total adjusted cost number where we said $1.5 billion to $2 billion reduction from 2006 spending levels at constant exchange rates. So that's the one subtlety where we didn't do it. Other than that, it's all that January current exchange rates.

Okay, thank you, Dave. Next question please.

Question comes from the line of Christopher Schott with Banc of America Securities.

Great, thank you. Just a quick question relative to what's happening with Vytorin following ENHANCE. I know it's probably too early to tell regarding Pfizer's potential benefit from this data. But maybe just from a sector level, when we see a surrogate like LDL kind of seemingly dismissed in the markets in the face of just one conflicting data point. I guess first of all, are you surprised by that? And second, how do you view that in the context of your investment you are making in more kind of prophylactic types of therapy? Thanks.

Well Chris I don't think that LDL was dismissed as a surrogate. It was how you lower LDL with the issue. And clearly there is a wealth of evidence that lowering LVL with statins gives positive outcome. Lipitor has 10 landmark trials on that issue. So I think the role the LDL plays is firmly established and will continue to be so. So, what was the second part of your question?

I guess it was just a general question of maybe as we're looking outside of even the statin market. When we look at these more prophylactic type of therapies, are you looking at maybe having to run more outcome studies, dealing to get drugs approved than in the past? It just seems like it's pretty difficult environment right now.

Martin, would you like to address that?

Problem with that [ph], even that's early, I to have to see Chris on what we would do with those in terms of the studies that we need to conduct on prophylaxis.

Okay. Thank you. Next question please.

And now our next question comes from the line of Jamie Rubin with Morgan Stanley.

Thank you.

Hi, Jamie

Thank you. Just wanted to go back to the gross margin question. Think obviously, the gross margin was hurt this quarter by foreign currency, even though revenues were highly benefited from foreign currency, as well as strength of other products. Can you tell us what the gross margin in the fourth quarter and the full year 2007 would that been without the foreign currency effect, so that we can sort of look at 2008 on an apples-to-apples basis if that's fair?

Yes, so let just... let me run the numbers Jamie and then I'll go down a layer and I'll answer the question, okay?

Thanks.

So if you look at... you are welcome. If you look at Q4 gross margin, if I'm going to flip it to cost of sales, just because it's easier for me. If you look at the cost of sales, Q4 '06 to Q4 '07, they went from 16.6% to 17.4%. If you would have strip out on FX the 16.6% would have actually declined modestly, so literally declined modestly. If you look at the full year gross margins went from 14.9% to 15.9%, roughly half of that increase was due to FX. So think about it as fairly evenly distributed between FX and then unfavorable to geographic and business mix from the 49 to 59, roughly half of that was FX.

So the midpoint guidance for 2008, roughly assumes flat gross margin?

So if you look at the midpoint, it's 15% right? So what I'd say, it was 49 to 59, roughly half of that due to FX, so that would bring you closer to I'll call it 15.5, right? And then what's really happening there is, why 15.5% or 59 on an adjusted basis, versus the range of 14.5% to 15.5%. So let me, if I may, let me spend a minute or two on that. So there is really several things going on there. One is we exited six manufacturing facilities in 2007. We will get the benefit, the full year benefit of that in 2008. We have also announced 12 manufacturing facility exits that are in process. We'll get some benefit from that in 2008. In terms of other things we're doing to reduce costs, we are basically expecting to lower our sourcing costs, so think about kind of the raw material sourcing costs by establishing strategic partnerships with some lower cost vendors. We have many projects underway. They're not all cooked. They're in various stages of implementation, but on many of those, we'll get benefit in 2008. And then, we have multiple projects going on in many of the divisions in the company with manufacturing, logistics, facilities, IT. We will generate savings in 2008, some of which will accrue to the cost of sales line item. So it's based on all of that, when we provided... we obviously incorporated all that into our guidance for '08, which gets you into that 14% to 15.5% range, even though the number was 15.9% in 2007.

That's helpful, thank you. Thank you.

Thanks Jamie. Next question please.

Our next question comes from the line of Roopesh Patel with UBS.

Hello Roopesh.

Hi good afternoon, thanks. And I have a couple of very quick questions. First, what's the price and volume breakdown of overall revenue growth during the fourth quarter? And then separately, on Lipitor what's the status of the patent challenges in Canada and other key international markets? I am wondering whether, in any of these markets there is the potential for Lipitor to encounter genetic competition in 2008? Thanks.

Okay Roopesh. I'll let Frank address the first question. Allen Waxman, our General Counsel will answer the second. Frank D'Amelio: Allen, do you want to go first on the--

Sure. So in Canada, there are two proceedings with two different generics that are ongoing at this point. First, we are awaiting an appellate decision on the case with Ranbaxy with respect to the enantiomer patent that has been argued. It's been fully briefed, and we are awaiting that decision. We received a favorable decision against Ranbaxy on our crystalline form patents which holds them off the market, most likely through 2008. So, that's Ranbaxy. Apotex, we are taking an appeal on our recent unfavorable ruling on the enantiomer patent. We also have crystalline form trials against Apotex, too early to determine outcomes of those cases. With respect internationally in Europe, almost in every market the basic patent expires after the enantiomer patent, that expires in 2011. And so thus far we have been successful in holding on to that date of expiry. In Spain, there are some cases on appeal that we are waiting outcomes on that could have an impact in that market, just too early to tell.

Thank you, Allen. And Roopesh, let me just add to that, that the potential outcomes in Canada are reflected in the guidance for '08 that we provided today. With regard to your question about price and volume I'll let Frank have a crack in that. Frank D'Amelio: Yes Roopesh, let me take a shot at this in terms of how we... what we provide relative to this. I think at an overall level, cost to total company, price had a favorable impact. Volume had an unfavorable impact, both of which were in the low single-digits for the full year. Kind of low-single digits on price, call it low to mid single digits on volume.

Okay, Roopesh. Thank you. Next question please.

Our next question comes from the line of Scott Braunstein with JPMorgan Asset Management.

Hello Scott.

Hi guys. Would you mind just walking us through the Norvasc patent expiries throughout European and rest of the world?

Sure, Ian has that right in front of him ready... why do I think if it's Scott. The Norvasc patent expiration basically is done other than three markets Canada, Japan and Italy. Japan and Italy will go in late... well Japan will go in September of '08. Italy will go in March of '08 and Canada will go in September '10.

Thanks so much. I appreciate it, I appreciate your disclosure.

Thank you. And Scott as I am sure you know the declines that we experienced when products go off patent internationally, a much more gradual than what we experienced in the United States is I am sure you know. Okay next question please. Next question.

Our next question comes from the line of Harlan Sonderling with Columbia Management.

Hello Harlan.

Hi good afternoon.

How are you doing?

Hello good afternoon. I am well, thank you, Kindler. Good afternoon, gentlemen. My question is about the $5 billion addition to the share repurchase authorization. That compares with the $10 billion that you accomplished in '07 and a five year average prior to that of $7 billion. I am curious to know whether you are just taking it less at a time now or whether this is a more of husbanding of cash for a future corporate activity please?

Okay Harlan, Frank will take that one. Frank D'Amelio: Yes, a couple of comments on this one. First in '07 we bought a $10 billion of our shares. We need to remember we had some cash in '07 from the sale of the Consumer Healthcare business in 2006. So we had a lot of cash, much of which we used in 2007 to do share buybacks. In terms of going forward Harlan, our focus has been, continues to be on delivering total shareholder return. If you look at the share purchase program, it's a new program, it's open ended. So there is no timeframe for completion relative to the $5 billion. We will be opportunistic relative to how we deploy capital including share buybacks. The other thing to remember is when we look at total shareholder return another major element of that is the dividend. And if we increased our dividend in 2008 by 10%, we had said it would be moderated versus prior year increases, but 10% versus 21% and 26% in '07 and '06 respectively. So a very large increase. That absolute number by the way on the dividend now is give or take $8.5 billion. So lot's of capital being deployed in the area of total shareholder return. And then finally to your point, there is lots of opportunities for us to deploy capital beyond dividends and beyond share buybacks, whether it be with internal investments or external investments. And we are factoring all that in to how we deploy our capital. But hopefully, we are demonstrating no change in terms of our focus on delivering total shareholder return.

Thank you, Harlan.

Yes thank you and my compliments on the additional disclosures as well in the release.

Thank you Harlan. And thank you for the call. Next question please.

Next question comes from the line of Catherine Arnold with Credit Suisse.

Good afternoon. I wanted to ask you about Chantix. You had indicated in your opening remarks that you have incorporated the recent neuropsychiatric warning in your guidance for '08. But could you give us a little more detail on the percentage of the target market that either has a pre-existing physic illness or may exhibit some of the neuropsychiatric symptoms that are mentioned in the label? And as you look at your patient into the last 12 months, how these are different from the percentage of the target market if you will? How much swing might be in the forecast whether... in regards to the impact that this might have?

Okay. Catherine, I'll let Ian respond.

Catherine, I'll have to get back to you. I don't have the split of the target marketplace between those conditions. I would like to say that the important thing about this label change is it does allow a dialogue between patient and physician and that medium term... long term is very good for the product. The physicians, our research has shown in the last two months given the fact that in fact, most of this information or all of it was already updated in our label in November. Physicians continue to see a very strong benefit through the use of Chantix. So we will continue to promote Chantix both physicians and patients, and you'll believe, this label change in that context is manageable.

Yes, let me Catherine just add to things to that. First I want to mention that we have been in dialogue with the European regulators on the label as well. And we expect shortly to have a communication in which a similar label in Europe is adopted to the one we have here in the United States. I just thought I'd just add my perspective to this for a second if I could. This is a really a very unusual situation from my point of view. The benefits of this drug are really quite extraordinary for individual patients and for public. Catherine, when you consider the hundreds of thousands of people that die every year from smoking related illness and there are many, many patients that have and will obtain the benefit of this drug on. But as Ian says there's also a great value in enhancing patient-physician communications about potential side effects of this or any other drug. So I think this is a really powerful opportunity to make a big difference in public health, and from everything we can tell, the physicians understand these tremendous benefits and are well prepared to have these good dialogues with their patients. And in the long run, I think this is going to be a terrific drug not just for Pfizer but frankly for public health. Could I have the next question please?

Next question comes from the line of Steve Scala with Cowen.

Thank you. Can you provide additional perspective on your December 21st release relative to the additional data with regard to dalbavancin and the issue of non-inferiority trial designs? What is the FDA asking? And what do you need to do to get dalbavancin approved? Thank you.

Okay Steve. Martin Mackay, our head of R&D will take that question.

Just briefly Steve there is nothing new to disclose from December 21st. We will provide additional data to the FDA. We are working with the agency to respond to the requirements. And it's simply too early to say if we will need additional trials or in fact timing of the approval.

Thank you.

Okay. Thank you Steve. Next question please.

Next question comes from the line of James Kelly with Goldman Sachs.

Thank you and good afternoon.

Hi James.

Just a little more follow-up on Chantix and the size of the patient opportunity and what's you've learned since the launch on this product. First in the U.S you mentioned that 5 million patients had tried it. If... do you have any sense in on what is the real addressable market of people who might consider trying pharmacotherapy in the U.S and the number of people who might be returning to it? And then also just over in Europe a place where we don't have a lot of visibility though do see a lot of news around inability to smoke in certain public places emerging all around the... around Europe. Any news there on reimbursement and how the products being adopted in Europe? Thank you.

Thank you Jim. Go ahead Ian.

So in the U.S., we are probably talking about something like 50 million smokers as a potential target. This could segment them into four segments, probably two of them are more immediately leverageable [ph] or incentivated to look for treatments. That's about 25 million patients that we think are features of treatments on alternatives. The other 25 million are probably more of a medium to longer term market development opportunity. Vis-à-vis Europe, you are correct. It's... there is a less of a culture of smoking ban. It's beginning to get traction in Europe, the UK has it, Ireland has it. I believe Spain is moving towards that as is France, Sweden. And as those bans come in place, it creates a lot more sort of propitious marketplace for us. So the product is doing well where we have reimbursements, Sweden and the UK and reimbursement is beginning to get traction alongside the smoking bans. But I would look at international markets as a medium term development opportunity for Chantix and--

Yes, I was about to say let's not forget Asia. That's a huge opportunity for us as well. Okay thank you. Next question please.

Next question comes from the line of Mike Krensavage with Raymond James and Associates.

Good afternoon. I was wondering why you cut the cash flow target by a $1 billion. I know you mentioned timing of payments, but what payments, and how is the timing changed? Thank you.

Okay, as long as you are not from the IRS, Frank will answer that question. Frank D'Amelio: So, Mike let me make a couple of points on this. And second point I make I'll answer the question specifically. But just one thing in terms of it, if you look at the rhythm of the numbers in terms of the cash flow we are generating from operations, for 2007, we had guidance out there of $12 billion to $13 billion. And we said we would be at or above that guidance range. So, close to that range. For 2008 the previous guidance was $18 billion to $19 billion. We lowered it to $17 billion to $18 billion, but higher than what we had done in 2007. It's really driven by some assumptions we had made relative to estimated payments, relative to tax. In terms of when we would make those payments, the size of those payments and quite frankly, our estimates that will... in terms of the guidance we just updated first, the estimates that were made previously changed. And those changes relative to the timing of those payments is what had us change our guidance and take it down.

Okay. Thanks.

Thank you. Next question please.

Next question comes from the line of Seamus Fernandez with Leerink Swann.

Thanks very much. Just a quick question. I was hoping that you could give us a little bit of context in the current economic environment. Co-pays have been going up. There is more branded drugs on tier-3. And I'm just wondering what we've seen historically the last time we went through a recession what happened on IMS prescription trends? And do you have an overall view into your business that characterizes the impact of an economic environment in tier-3 access? Thank you.

Good question. Obviously our data shows that as tier-3 or even of they're on tier 2 and co-pays increase. It is not positive for scripts or scripts being filled. So, that would indicate that we would see a more difficult environment. But on the other hand, you have these positive impacts of Part D and in government programs. And so I think right now it's well balanced in that context. So, I don't see a material impact in '08 for those trends.

Thank you. Next question please.

Next question comes from the line of David Risinger with Merrill Lynch.

Yes, thank you. It's my impression that Lipitor is a very low tax product. And so I was wondering if you could confirm that the tax rate on Lipitor profits are below the corporate average. And if so, how should we think about its impact on the tax rate of the company when Lipitor goes generic early in the next decade? Thank you.

So Dave we don't really provide that information regarding each individual product, different products at different tax rates in different parts of the world. And they aggregate into the corporate tax rate that we articulate. And that's constantly monitored, an event that we look at. And we look for opportunities to deal with it and report our aggregate tax rate. Next question please.

And now our next question comes from the line of Steve Scala with Cowen.

Thank you. Again on ENHANCE, you said a couple of times that it's simply too early to assess the impact of this study. But can you or have you already changed your marketing tactics in response to this data? Are your reps out talking about ENHANCE and perhaps drawing parallels to the REVERSAL study? Or are you engaging in any other tactic using this data?

Well the short answer is our reps are out there promoting the advantages of Lipitor in the data that supports it. And we feel very strongly that that is the best way to position Lipitor, and they are out there doing that even as we speak. If you have anything to...

Yes Steve, it's consistent with the way we have always positioned Lipitor that we have safety across the dose range, that we have LDL potency across lowering across the range. And we have landmark trials. So this sort of confirms and validates our positioning for Lipitor in the marketplace.

Thanks Steve. Next question please.

And our final question comes from the line of John Boris with Bear Stearns.

Thanks for taking the follow-up. Can you just comment on performance based contract rebates? I think they were about $390 million in the third quarter '07. Can you disclose what they were in the fourth quarter and what percent of the rebates might be attributed to Lipitor? Thanks. Frank D'Amelio: Yes. So John it's Frank. I think the way I will answer this is overall rebates for the year, so the total consolidated Pfizer were essentially flat, in fact slightly down on a year-over-year basis,. So I think I would say 0.1, 0.2 in terms of Lipitor, overall rebates were up. They are actually up year-over-year, call it by about 2% is the way I will think about it. So overall, essentially flat, relative to Lipitor up about 2% of revenue.

Thanks.

Okay John, does that help?

Can we get the absolute number in the quarter? Frank D'Amelio: So the absolute number in the quarter 2% or so, call it a couple of hundred million, approximately $200 million I think.

$200 million. Frank D'Amelio: Yes for Lipitor.

For Lipitor. How about for the whole business? Frank D'Amelio: Overall we will need to get back on that John.

Okay. Very good. Frank D'Amelio: Yes.

Okay. Operator, are there any other calls in the queue?

There are no questions. Frank D'Amelio: In fact let me just remind, John overall for the company total year had it essentially flat. Think about it in the kind of the mid single digit range, about mid single digits.

Okay, John I hope you heard that. All right, well thank you everybody for joining us today and have a good afternoon.