Now we have Amal Naj, Head of Investor Development. You may now begin.

Good morning, and thank you for joining us today to review our first quarter 2008 performance. I am here with Jeff Kindler, Chairman and CEO; Frank D'Amelio, Chief Financial Officer; Ian Read, Head of our Worldwide Pharmaceutical Operations; Martin Mackay, Head of our Worldwide Research and Development; David Reid, General Counsel. We will start this morning with a review of our results, and the financial charts that will be presented on this call can be viewed on our home page at www.pfizer.com in the Investor Presentations tab by clicking on the link, Quarterly Corporate Performance - First Quarter 2008. Our conference call will last an hour and we will end at 11:00 AM. We'd like to hear from as many of you as we can in this time. So we ask you to limit yourself to just one question. Time permitting, we'll come back to you for any additional questions. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements. Actual results could materially vary from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in Pfizer's 2007 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 April 17th, 2008. These reports are available on our website at www.pfizer.com in the Investors – SEC Filings section. I will now turn the call over to Jeff Kindler. Jeff?

Thanks, Amal. Good morning, everyone, and thanks for joining us today. Before Frank reviews the numbers, I would like to make a few brief comments. The first quarter reflects a business reality that we highlighted in January. Our quarterly results may vary depending upon the seasonality of revenues and spending as well as the timing of the loss of U.S. exclusivity and patent expiration of certain products among other things. Due to the loss of U.S. exclusivity of two major products, the comparison of our 2008 quarterly results to 2007 is difficult this quarter. We lost U.S. exclusivity for Norvasc in late March 2007 and we lost U.S. exclusivity for Zyrtec in late January 2008, we stopped selling that product at that time. Together, the revenues from these products declined by approximately $900 million in the quarter. Further, we also lost U.S. exclusivity of Camptosar in February 2008, but impact of that LOE in this quarter was much less in comparison to the other two products. Now, we all know that losses of exclusivity are a fact of life in the branded pharmaceutical business, but nevertheless there were a number successes in other areas that partially offset the revenue decline associated with Norvasc and Zyrtec. For example, we’ve continued to generate steady overall growth from our diversified portfolio of in-line products including Lyrica, Viagra, Xalatan and Geodon. Additionally, Lipitor continues to be a strong global brand, demonstrating operational growth in China, Latin America, Spain, Canada and other international markets. Around the world and particularly in the U.S., we continue to execute a comprehensive communication strategy to reinforce the extensive evidence supporting Lipitor's strong clinical profile. And two of our new products, Sutent and Chantix, are containing to perform well. Now, we've seen some impact in the U.S. from the Chantix label changes in January, but we're moving forward on many fronts including aggressive educational and promotional efforts to drive growth as this innovative medicine continues to roll out around the world. We've now launched Chantix or Champix in 56 countries, including 20 countries within the past 12 months, countries like Italy, India and Korea. Launches in more than 20 additional countries are anticipated in the next 12 months. Further, we've launched Sutent in 61 countries and are developing this important medicine for additional tumors, including breast, lung and colorectal cancer in late-stage clinical trials. I am also very pleased that we recently approved... we received approval in Japan, which is the largest pharmaceutical market in the world outside the United States for these two important medicines, Chantix in January and Sutent just yesterday. This was accomplished in part by the great collaboration between our R&D organization and the Japanese regulatory authorities, and we look forward to more of these opportunities to bring products to market quickly in this important market. But beyond individual product performances, we continue to see operational growth in many of our major international markets. The significance of this trend goes well beyond just one quarter. As we said at our March 5th Analyst Meeting, we pursuing strategies to take advantage of these opportunities and we believe our international business will be a significant source of growth for us in the coming years. And finally, we're continuing to see the benefits of productivity and efficiency improvements throughout our company. We're on tack to meet our goal of reducing our adjusted total costs by at least $1.5 billion to $2 billion by the end of this year compared to 2006 on a constant currency basis. We are sharply focused on meeting our full-year guidance. With growth in many of our new and in-line products, strong performances in key markets and aggressive cost reductions, we are reaffirming that guidance today. At the same time, we continue to make fundamental changes in the operations, structure and culture of the business by executing on the strategies we outlined at our March Analyst Meeting to build long-term value. Through the hard work and dedication of our colleagues, we have over the past year fixed many of the key elements of our business and established a strong foundation with which to overcome our challenges and seize the many opportunities before us, and we're making substantial progress in other elements of our business. For example, we're pursuing new revenue opportunities across geographies, therapeutic areas and products, particularly in those areas that we've identified where we will invest to win. In one very important-to-win disease area, oncology, I'm pleased to tell you that we're now initiating a Phase III clinical trial of our IGF-1R antibody for the treatment of non-small cell lung cancer, an area with significant unmet medical need and large market potential. In addition, we are active in business development and scanning the marketplace for opportunities while maintaining discipline in how we invest our shareholders’ capital. During the quarter, we announced an agreement to acquire Serenex, which will bring us proprietary compounds in science, in oncology. And we recently acquired a controlling interest in Encysive, which fits very well with our strong cardiovascular franchise. Additionally, yesterday we announced an agreement with AVANT to license a Phase II therapeutic vaccine for a specific type of brain tumor. We're also applying innovative approaches and new business models across our business to both our existing assets and new products. Now, one of the main objectives of these strategies and something that I would like to emphasize is risk diversification. We all know that we are and we're going to remain in an industry with many risks, not only those inherent in drug development but also those associated, for example, with things like safety and pricing. Our path forward, including the five strategies we outlined at our March 5th Analyst Meeting, is designed to mitigate and diversify that risk while maximizing revenues. Pfizer has a uniquely strong and broad global footprint, which we consider a powerful competitive advantage. We are a leader in most of the markets and many of the disease areas in which we compete. This allows us to execute on a range of strategies, involving a portfolio of both patent protected and established products in developed as well as emerging markets. Our goal over time is to take advantage of the many opportunities this presents and to become less dependent on any one in-line or pipeline product. Let me give you an example. Unlocking the value of our established products with a new comprehensive focus and a business unit within our Pharmaceutical segment that will be run like an entrepreneurial venture, as we outlined on March 5, is another tangible step towards divorcing our risk and maximizing of revenues. The established products market around the world is big, profitable and growing at double-digit rates right now. It's expected to grow to over $500 billion by 2012. Two things are required to succeed and grow share in this market and we have them both, a significant commercial footprint and strong brands. Our new established business unit is intensely focused on increasing revenues and taking a greater share of this market through our broad and diversified existing portfolio of brands as well as through the potential acquisition of additional established brands and value-adding technologies. We see a very real opportunity to gain a larger share of a fast-growing market with good operating margins and as a result drive new profitable revenues. Just to pick one example among many, we have very strong prospects in Latin America due to the strengthening of the economy and a growing, emerging middle class. Brazil and Mexico are beginning part of the leading world economies and Pfizer is already acting to take a growing share of these important markets. Brazil is currently the tenth largest economy in the world and is expected to grow to the eighth largest by 2012. In this one of the most important emerging markets in the world, our business continues to grow at double-digit rates, despite the fact that several of our products have no patent protection. The power of the Pfizer brand combined with the well-respected brands of our established products enables us to remain the market leader in Latin America despite the presence of multiple generic versions of our products. We see similar successes across the developing world, giving us confidence that our new focus on emerging markets and established products will produce significant value for Pfizer in the years up to and beyond the Lipitor loss of exclusivity. With these and all of our initiatives, we're focused on driving sustainable changes across Pfizer, improving our performance, and enhancing the total return we deliver to our shareholders. And now, I will turn it over to Frank to talk about this quarter's numbers. Frank D'Amelio: Thanks, Jeff. Good morning, everyone. Now, to the results. The charts I'm reviewing today are included in our webcast and will help facilitate the discussion of our first quarter 2008 results. Now, let me get to our financials. Today, we reported revenues for the first quarter 2008 of $11.8 billion, a 5% decrease year-over-year. To remind you, we discussed on our year-end earnings call that first quarter 2008 revenues might not be comparable to first quarter 2007 revenues due to loss of U.S. exclusivity of Norvasc in March of 2007; Zyrtec in January of 2008, which we ceased selling late that month; and Camptosar in February of 2008, for a total decrease of $937 million. As we expected, first quarter revenues were negatively impacted by these factors. Specifically, Norvasc revenues decreased $556 million, Zyrtec revenues decreased $344 million, Camptosar revenues decreased to a much lesser extent by $37 million [ph]. Again, these results are as we expected and clearly considered in our full-year 2008 guidance, which we are reaffirming today. Partially offsetting this negative impact were foreign exchange, which increased reported revenues by approximately $570 million or 5% and the solid performance of many new and in-line products. First quarter, reported net income of $2.8 billion decreased 18% and reported diluted EPS of $0.41 decreased 15% year-over-year, primarily attributable to this quarter's expected decrease in Norvasc and Zyrtec revenues and to a lesser extent increased in-process R&D expenses associated with our acquisitions, primarily CovX and Coley. These were partially offset by lower cost and expenses related to our cost reduction initiatives and foreign exchange. First quarter adjusted income of $4.1 billion decreased 15% and adjusted diluted EPS of $0.61 decreased 10% year-over-year, again driven by expected decrease in Norvasc and Zyrtec revenues and partially offset by savings from our cost-reduction initiatives and foreign exchange. Finally, both reported and adjusted diluted EPS were favorably impacted by the full-year benefit of our $10 billion share repurchase program in 2007. We had several significant items included in our reported results this quarter. More detailed disclosures will be provided in our Form 10-Q filing with SEC. In the first quarter, we incurred $177 million in restructuring charges compared with $795 million in the prior-year quarter. This significant decrease was driven by charges related to employ severance payments and costs related to [inaudible] recorded in the year-ago quarter. Restructuring charges are primarily associated with employee costs and asset impairments. We also incurred $357 million of implementation costs compared with $174 million in the prior-year quarter, primarily related to sites we exited or are in the process of exiting. These implementation amounts are primarily reported in cost of sales, R&D and SI&A expenses and are detailed more fully in the supplemental information accompanying the release. Now, I would like to provide more details regarding our first-quarter adjusted income components. Adjusted revenues were $11.8 billion, a decrease of 5% year-over-year. Adjusted cost of sales as a percentage of revenue was 15.3% in the first quarter versus 14% in the year-ago quarter. This year-over-year increase reflects the negative effect of foreign exchange. In fact, adjusted cost of sales as a percentage of revenue would have been 14.5% excluding the effect of foreign exchange. In addition, cost of sales was to a lesser extent unfavorably impacted by geographic and business mix. These two factors more than offset the savings we achieved from our ongoing cost reduction initiatives. Adjusted SI&A expenses were $3.4 billion, a year-over-year increase of 3%. Adjusted R&D expenses were $1.6 billion, a slight increase of 1% year-over-year. Although adjusted cost of sales, SI&A and R&D expenses benefited from our ongoing cost-reduction initiatives, the $330 million negative impact of foreign exchange on adjusted total cost more than offset that benefit. That said, excluding foreign exchange, our first quarter adjusted total cost actually decreased by $170 million operationally year-over-year. Our effective tax rate on adjusted income for the quarter is 21.9% versus 21.7% in the year-ago quarter. I would also like to provide some quarterly product highlights. As you can see, most key in-line products grew year-over-year with the exception of Lipitor, which had revenues of $3.1 billion, a year-over-year decrease of 7% including the favorable impact of foreign exchange, which increased revenues by approximately $135 million or 4%. In the U.S., Lipitor revenues declined 18% due to the continuing intensely competitive generic market and the overall stat market growing at a slower rate than we had previously expected. Internationally, Lipitor revenues increased 13%, of which 10% was due to foreign exchange and the remainder due to operating growth. Lyrica, the only FDA-approved treatment for fibromyalgia continued to deliver strong performance with revenues of $582 million, an increase of 47% year-over-year. We expect Lyrica to be a key contributor to Pfizer's performance in 2008 and beyond, and U.S. volume for fibromyalgia will be the largest contributor to Lyrica's growth as our prescription volume and market share continues to grow significantly. In addition, Lyrica continues to lead in DPN and PHN pain conditions with limited treatment options, which combined accounts for a larger proportion of prescriptions than any other single condition. Finally, we anticipate continued growth across indications supported by an active lifecycle management program. Xalatan and Geodon also posted solid performance with revenue increases of 13% and 12% respectively and demonstrated growth in both the U.S. and international markets. Key new products, especially Chantix and Sutent, continued to deliver strong growth during the first quarter as compared to prior-year quarter. Year-over-year, overall Chantix revenues increased 71% and U.S. revenues increased 33%. In January, we updated the Chantix U.S. label to include additional safety information and as a result we've recently seen in the U.S. an unfavorable impact on prescription trends, which has been considered in our full-year 2008 guidance. We believe that the issues raised in the label change can be managed with an active patient-physician dialogue. In addition, as a result of our initial interactions with physicians over the past several months, we believe that the benefit-risk proposition for Chantix is sound. Finally, we will continue our aggressive educational promotional efforts with a focus on the Chantix benefit-risk proposition, significant health consequences of smoking and the importance of the physician-patient dialogue. That said, in international markets Chantix achieved triple-digit revenue growth year-over-year, albeit off of a smaller base. Chantix launches are continuing outside the U.S. In fact, over the past year we have launched Chantix in 20 countries and most recently in Singapore, India and Japan, the world's second-largest pharmaceutical market. Currently, we have launched Chantix in 56 countries and we expect launches in 20 more countries in the next 12 months. Sutent, our treatment for advanced kidney cancer and gastrointestinal stromal tumors, posted revenues of $190 million, an increase of 86% compared with the year-ago quarter. Sutent was recently approved for these indications in Japan. In Europe, Sutent has achieved access wins in Northern England and Birmingham, and we are currently conducting Phase III trials with Sutent for patients with breast, colorectal and lung cancer. As we expected, revenues from products that recently lost U.S. exclusivity declined year-over-year. Norvasc revenues declined 52% to $513 million, Zyrtec revenues declined 75% to $117 million, and Camptosar revenues declined 16% to $192 million. Today, we are reaffirming adjusted income and its components as well as adjusted diluted EPS guidance for full-year 2008 based on a number of factors. From a revenue perspective, the continued growth in many of our new and in-line products such as Chantix and Sutent as well as Lyrica, Geodon, Xalatan and Viagra. It's important to remember that beginning in the second quarter of 2008 and through the remainder of year, the impact from the decline in Norvasc revenue will be included in the quarterly results for both 2007 and 2008 because Norvasc lost U.S. exclusivity in March 2007. And we continue to expect operational growth in many international markets. From a cost perspective, we expect to generate savings in 2008 from our continued cost reduction efforts. These efforts continue to span essentially all divisions, functions and markets and sites across Pfizer. Broad categories of activity include manufacturing and research site exits, outsourcing, and targeted workforce reduction such as our ongoing, previously announced European field force reduction. We are continuing our process to exit an additional 13 [ph] manufacturing plants. By the end of 2009, we expect to reduce our network of these plants around the world to 44. In addition, we are continuing to exit the four remaining R&D sites of the six that has been identified for closure. In 2008, we will recognize the full-year benefit from 2007 site exits and a partial-year benefit from 2008 exits. In addition, we are decommissioning the insulin-related operations at two dedicated facilities as a result of our decision to exit Exubera. Also, we have a wide array of outsourcing opportunities at various stages of implementation. Manufacturing, logistics, finance, facilities, legal and IT are among the functions contributing to the financial and operational benefits of the strategy. Finally, we're continuing to match our workforce level with market reality. At the end of 2006, our colleagues totaled about 98,000. At the end of 2007, we had approximately 86,600 colleagues, and as of March 30th, 2008, our headcount level was approximately 85, 000, representing a sequential decrease of about 1600 colleagues. As a result of our continuing efforts, we are on track to decrease our adjusted total cost by at least $1.5 billion to $2 billion on a constant currency basis by the end of '08 versus 2006. To reflect the effects of business development transactions completed this quarter, we're updating the range of our reported diluted EPS guidance to $1.73 to $1.88, from $1.78 to $1.93. As we noted last quarter, the reported diluted EPS guidance did not reflect the charges associated with business development transaction that had not yet closed as of December the 31st, 2007. This range we are providing today includes the impact of IPR&D charges associated with acquisitions that closed in the first quarter, Coley, CovX and two smaller acquisitions related to Animal Health. As always, results may vary from quarter to quarter based on the seasonality of revenues, spending, timing of the loss of U.S. exclusivity, and patent expirations of certain products among other things. So to summarize the key takeaways, we are reaffirming our 2008 revenue guidance and are on track to meet our commitments. This quarter, many new products, including Chantix and Sutent continued to deliver solid performance and we are seeing steady growth in several in-line products, including Lyrica, Geodon, Viagra and Xalatan. This quarter's results were negatively impacted by loss of exclusivity products. We've considered this impact and clearly factored it into our full-year guidance. And we are continuing to execute and make progress on our cost-reduction plan and continue to expect to generate savings in 2008.

Thank you very much, Frank, and now we're happy to take your questions. Question and Answer

[Operator Instructions]. Our first question comes from James Kelly of Goldman Sachs. Please proceed with your question.

Thank you very much, and good morning. My question has to do with cash balances and where they are domiciled currently and just helping us get comfortable with the longer-term guidance around the dividend being maintained at least at the current levels due to the loss of Lipitor exclusivity. Could you please take us through that, maybe a little bit on a mechanistic way, on how we should think about that when we deal with that big of a change in the earnings at that time? Thank you.

Thanks, Jim. Frank, do you want to take the question? Frank D'Amelio: Sure. Jim, let me... so let me address the question this way. There is really in my mind two underlining... underlying points to this question. The first point is the sustainability of the dividend and the second issue being if we expect to sustain the dividend will that cause a decrease in future earnings. So now given that, let me talk to each of them. First, we are a global company, we generate a significant amount of operating cash from both inside the U.S. and outside the U.S. Last year, that was $13.4 billion. This year we’ve forecasted that to be $17 billion to $18 billion per our guidance. Now, we have a variety of options available to us to fund our business including the dividend. One of those options is obviously cash flow from operations, including by the way increasing our cash flow from operations. Another option that's available to us is repatriating cash from foreign tax jurisdictions, which is something we do from time to time as a normal course of business. Now, to the extent that we repatriate cash from high tax jurisdictions, that will have a minimal impact on the effective tax rate. To the extent that we repatriate cash from low tax jurisdictions, that will put upward pressure on the effective tax rate. I will come back to that. Another option that is available to us is of the capital markets to borrow money. We have a very strong balance sheet that provides us with flexibility and capacity to borrow money at favorable rates. Once again, this is something we do from time to time as a normal course of business. In fact, you'll see at the end of Q1 when we file our 10-Q, you'll see that our debt levels are somewhat higher at the end of Q1 than [ph] they are at the beginning of the year. However, by the end of the year we expect those debt levels to be lower than where they are at the end of Q1. And the incremental interest associated with that debt to get [ph] incorporated into our guidance and is not material relative to our overall results for the year. Now, all that said and done, the potential impact on our EPS going forward, or more specifically, the potential negative impact on our EPS if we were to choose to borrow money or repatriate cash can be mitigated through a variety of actions. Let me go through what some of those actions are. First, I am continuing with our tax planning initiatives. We have a very good track record in this area of tax planning and obviously we expect to continue to want to do very prudent, very effective tax planning on a going-forward basis. Second area of opportunity is what I call, where and how we choose to deploy capital. We clearly have choices that we can make that would increase, for example, our U.S. cash flow. Third is our ongoing cost reduction initiatives. Cost reduction initiatives will generate incremental cash flow in multiple tax jurisdictions, all of which I view is good. Cash is fungible. The interest on that cash can be repatriated back to the U.S. through [inaudible] tax regulations. So, all that I view is good. So to kind of wrap this up, the way I think about it is based on all those factors I believe that the dividend is sustainable and the potential negative effects can be mitigated.

Thank you, Frank. Next question please.

Our next question comes from Jamie Rubin, Morgan Stanley. Please proceed with your question.

Thank you. I just wanted to follow-up on Jim's question. So, when I look at cash flow from operations, Frank, and as you’ve said most of this comes from outside the U.S., it looks to me and it has become abundantly clear that U.S. cash flow is actually running at a deficit. And just based on the way we see it, it's hard to see how that's going to improve over the near-term and certainly over the long-term, given the lack of visibility post-Lipitor. So, my question to you is how concerned are you about being in a negative U.S. cash flow situation? And while you’ve highlighted a number of options available to you, I'm still confused as to how those options don't hurt earnings when obviously repatriating cash you do so at a much higher tax rate. I understand that your Head of Taxation recently left. So I'm a little confused about that. If you deploy capital such that you decide to sell asset, doesn't that increase your exposure to Lipitor? Obviously, taking now more debt increases, your interest expense, all that to fund the dividend and working capital, how can that not hurt earnings? If you can just elaborate on that a little bit, it would be very helpful. Thanks. Frank D'Amelio: Yes, sure. Thanks, Jamie. So, let me say it again and I won't go through everything I just said in the previous answer, I'll just kind of touch on some of the points you made. So you talked about through [ph] Lipitor, so let me touch on that part of the question and then I'll come back to the earnings part of the question. So, relative to through Lipitor, the LOE on Lipitor I assume is June of 2011, so give or take three years away. Clearly, one of the things we're trying do in addition to some of the other options I called out is continue to grow revenues, generate new sources of revenues through the five growth strategies that we laid out at our Analyst Meeting in the beginning of the month. Clearly, to the extent that we generate incremental revenues, those incremental revenues will generate incremental cash flow and then it's basically all the things that I alluded to before, one. Two, in terms of earnings, what I said before was that basically we can do things that I believe can mitigate the potential negative impact on earnings, and I went through some of them. Tax planning initiatives clearly have the ability to mitigate the impact on earnings. And cost reduction initiatives clearly have the ability to mitigate the impact on earnings. So, when I factor all that in, all the things that we're doing that I made the statement that I made relative to the options that are available to us, relative to how we fund the business and the variety of actions that are available to us to mitigate the potential impact of those actions on our earnings in the future.

And just... I'd just add Jamie, you made reference to the news [ph] that our Head of Tax, who did an extraordinary job, retired after a very long and distinguished career and has been succeeded by an outstanding global expert on taxes. He’s a terrific guy and will do a great job. Frank D'Amelio: And they are in transition mode, [inaudible] the new person is here, they are transitioning and that transition will take place over the next several months.

Okay. Thank you, Jamie. Next question, please.

Our next question comes from Roopesh Patel, UBS. Please proceed with your question.

Yes, thank you. My question is on Lipitor. I was wondering if you could please discuss the current competitive dynamics in the cholesterol lowering market, both in the U.S. and internationally. So far, it appears that Lipitor doesn't seem to be benefiting a lot from Vytorin’s declines, why not, and what should we expect going forward? It also appears that the enhanced study result hasn't had much of an impact internationally on Lipitor. I was wondering if you could comment on that as well. Thanks.

Thank you, Roopesh. I'll turn that question over to Ian Read.

So, Roopesh, thanks for the question. International sales, to deal with that first, are quite strong, up 13% and up I think 3% operationally. So I think you've seen, especially in Europe, a stabilization of Lipitor post the generic onslaught in simvastatin. Vytorin will not really particularly impact our international operations as it was never a big player, I'd say, to begin with. If we turn to the U.S., our sales in the quarter were down 18%, scripts are down 12%. This is the usual fluctuations we see, especially in the first quarter between the recorded data on our net sales. That will smooth itself out over the full year. Now regarding ENHANCE, we've only seen in the script so for two days impact from ENHANCE… from the second round of ENHANCE and I tend to agree with you that initially most of the gains will be made by generic simvastatin, which is paradoxical as patients are on Vytorin because they can't get to go with simvastatin. So I do expect initially to see most of the gains going to generics simvastatin and then as these patients come back into the physicians’ office for their lipid testing and their levels, there will not be [inaudible] and then you begin to see a transition towards Lipitor, which is positioned in that space. So overall, I sort of see a sustained impact on Lipitor over the year as we've positioned statin of first choice, strength across the range, landmark trial, get to go with Lipitor, and I think the best we have been positioned for some time. Does that cover your questions?

Okay. Thank you, Roopesh.

Thank you. Our next question comes from Mr. Tim Anderson of Sanford Bernstein. Please proceed with your question, sir.

Thank you. A couple of big picture questions for Jeff. When I look at your scheduled expirations through 2015, it seems like you stand us up for losses that are almost the highest in that group, and it's not just Lipitor but a lot of other drugs. And I guess I still struggle with how you are realistically going to deal with these pending losses, given the approach you outlined in your recent Analyst Day. So I'm hoping you can reiterate what the longer-term strategy is here? And then Jeff, on the call today you mentioned diversifying your risk. Back in 2006 you sold off your sizable consumer business and I guess I question the rational behind that fission. In retrospect, I'm wondering if you think that was a wise thing to do, and maybe you can give us some details on your comments about how you might diversify risk in the future?

Okay. Thanks, Tim. Yes, absolutely we're looking ahead at significant losses of exclusivity on products, there is no question about that. And what we're all about is as I said before finding every opportunity that we can to maximize revenue across a whole host of opportunities that we have; whether they be in branded and patent protected therapeutic areas where we're making decisions to invest to win, in significant areas of high-end medical needs like oncology; whether they be in our in-line products, which as we discussed earlier, many of them are growing quite healthily; whether they be an established products, which as I indicated before we see is a huge opportunity for us, and in all these ways and others we think there is a whole host of opportunities to maximize revenues, and that's our job, that's what we're all about trying to do. Now, I've acknowledged that when Lipitor goes off patent, that's going to be a meaningful event, there is no question about it. It will have a meaningful impact when it occurs on our revenues and earnings. But the important point is that as we come out of that, all of these opportunities that we have to grow revenues are addressed and optimized to the maximum extent possible. And moreover, as I've also said, we'll size the business appropriate to the revenues that we have at that time. So that's sort of the overall big picture. Regarding diversifying our risk, the consumer sale produced substantial shareholder value [inaudible] an asset for which there was a price of $16 billion paid for it. That decision was made, we're beyond that now. But what I'm talking about in terms of diversifying risk is I think that sometimes it's under-appreciated that the number of therapeutic areas that we're in, the number of products we sell, our global footprint as you travel around the world, I think in just about every market is second to none. And I think that as I look at the pharmaceutical industry in general, Tim, it is a risky business. And I think, we all want to find a way not to be so dependent on a particular huge blockbuster, which when it loses patent in the United States has such a big impact. And so, we have to find ways and we will find ways of taking advantage of this tremendous global footprint that we have and that includes obviously the pipeline where we feel we have an extremely strong pipeline that is going to hopefully generate a lot of products in the time period that you are talking about and we've made very clear commitments in that regard that Martin described on March 5th and we intend to meet those commitments. And beyond that this global footprint that we have, the range of products we have, the range of therapeutic areas that we're in has the opportunity for us to really not just diversify risk, but create a multitude of opportunities for revenue enhancement. And another way we are going about doing that, as I've said many times, is by trying to establish very clear focused accountability on the different parts of this very large business, so that each leader of these different components of the business is highly incentivized to maximize his or her contribution to the overall picture. And that's in a few words the overall approach that we are taking, and we are pursuing it very aggressively.

Thank you, sir. Our next question comes from David Risinger of Merrill Lynch. Please proceed with your question.

Yes, thanks very much. So my question is a legal one. I was just hoping that you could discuss the departure of Allen Waxman after the Analyst Meeting and update us on Lipitor's patent expiration in March of '10. I think Frank said that you're assuming June of '11 is loss of exclusivity, but the U.S. Patent Office took patent away. So, if you could discuss the timeline to get that reinstated. Thank you.

Okay. Thank you, David. Regarding Allen, it was an entirely personal matter that had to do with his own personal circumstances and absolutely nothing to do with the business and we regret that he has left the company. He made great contributions. And I will turn the rest of your question over to David Reid who is the acting General Counsel.

Yes, David here. The questions about the status of the two Lipitor patents, the main ones, the first is the basic, the 893 patent that is in for re-examination. We responded to the Patent Office's communication on that. Our response went in on March 7, 2008 and so we await their response to that most recent communication. On the second patent, the enantiomer patent, that's the 995 patent that expires in June 2011. We filed for re-issuance of that in early 2007. We had a response from the Patent Office. We responded to that response in October 2007 and we are waiting for further communication from them on that.

David, does that answer your question? Okay. I'm told they’re muting you because cannot persist your questions. I want to make sure you are okay with it. So, Dave, if you have further questions, just come back, and that's true of everybody of course. Can I have the next question please?

Yes, sir. Our next question comes from Kevin Scotcher of HSBC. Please proceed with your question.

Thanks for taking my question. Jeff, you mentioned that in the first quarter, the significance of the international growth goes beyond the quarter. You also mentioned that the gross margin in the first quarter was impacted by geographic mix. Can you tell whether the gross margin impact will also go beyond the first quarter?

I'll let Frank address that, and the whole impact, Frank, about international growth as it pertains to our overall margins. Frank D'Amelio: Sure. So, the way to think about this is, I'll start with the revenues and then I'll peel down to cost of sales, talk about it for the quarter and then talk about it for the year. So if you look at our overall business, the rhythm of the revenue numbers, last year in Q1 of '07, U.S. revenues were 55% of the business, international revenues were 45% of the business. If you look now at Q1 of '08, U.S. revenues are about 46.5% of the business, international revenues about 53.5% of the business, so a big swing in terms of the geographic mix of revenues from, I'll call it, 45 international last year to 53.5 international this quarter, kind of point one. Point two, it's clearly not all revenues are created equally, so some of the revenues we generate outside the U.S. have lower gross margins than revenues that we generated in the U.S. So, that's part of what we call geographic mix, and when we explain our gross margin. Now, for this quarter, cost of sales went from 14% last year to 15.3% this year for the quarter, so 130 basis points increase. In that 130 basis points increase, 80 basis points is foreign exchange. Without foreign exchange, the cost of sales will be 14.5%. Then, the bridge between the 14% and the 14.5% is a combination of geographic mix and some business mix, which is what I just covered relative to the geographic mix. Now, the year, we provided guidance for the year on cost of sales of 14.5% to 15.5% and we've clearly included this geographic mix trend in that guidance. So, we have obviously had the trend, we've incorporated that trend into the overall guidance for the year, and so the 14.5% to 15.5% factors that in.

Okay, thank you. Next question, please.

Yes, sir. Our next question comes from Mr. John Boris of Bear Stearns. Please proceed with your question.

Thanks for taking the question. Just financial related question, can you comment at all, Frank, on... in the quarter, what operational cash flow was and free cash flow in particular was and any split you can give between U.S., ex-U.S would be helpful. And then on share repurchase, were there any shares re-bought in the quarter? Thanks. Frank D'Amelio: So John, on a cash flow from ops, we will have that when we file the Q. So that will be available to everybody in a couple of weeks. And then in terms of share purchases, we did not buy back any shares this quarter. You remember, last year we brought back 10 billion shares... $10 billion worth of shares, 395 million shares is what it translated to, but for the quarter we did not buy back any shares. And the way I think about this is we have many choices for our capital, one of which is our purchasing shares, and clearly what we are trying to do and what we do is deploy capital in ways that we believe provides the best return to our shareholders and that's what we will continue to do on a going forward basis.

Okay. Thank you. Next question, please.

Thank you. And our next question comes from Mr. Steve Scala of Cowan. Please proceed with your questions, sir.

Thank you. To achieve even the low end of your full-year EPS guidance, earnings growth needs to average mid-teens or so for the next three quarters. Other than the second quarter, the compares are not particularly easy, and I appreciate that Norvasc pressure has annualized but Zyrtec and Camptosar pressure is just beginning and Lipitor is unlikely to accelerate dramatically. Do you still believe that the high end of your earnings range is as likely as the low end or would you care to direct us one way or the other at this point? Thank you. Frank D'Amelio: Yes, so Steve, I think… it's Frank, I'll start on the question and then I think Ian will add some comments. So first, the one thing you said in the question that I just want to come back to is the impact of Zyrtec because the fact is we saw a big impact of Zyrtec in the quarter. On a going-forward basis, that impact will not be any larger than what it was in Q1, just to be clear. So that’s just one point you have, but then Camptosar to your point [inaudible] going through the year. All of that has been factored into the guidance that we provided for the year. In terms of where are we in the guidance, quite frankly, the reason we provide a range is so that we can basically work within that range. Now obviously, we want to be as much into the range as we can possibly be, but the reason we provide a range is so that we can work within the range, given the size of the company and the fact that there is lots and lots of different things that can work for us and that can work against us. So, I don't want to pinpoint where we are in the range. Obviously, we want to be as high into the range as we can be. Well, we give a range so that we can work within the range given all those things that can change during the course of the year.

I'll just add to that. I mean, if you look at the revenues and the components of that, I mean we've had very strong performance on the international arena with Canada up 36%, Latin America up 28%, Asia up 19%. If you look at products, Lyrica is growing at 47%. We continue to… we’ll continue to focus on Lyrica and drive its growth in fibromyalgia and DPN and PHN. Xalatan has been a strong performer. We expect to focus on Geodon in the second half of this year. I think [inaudible] our products that we partner a very strong growth with Spiriva and with Aricept. Sutent is... has aggressive growth internationally. And we have work to do on Chantix in the U.S. to continue to grow that and we have plans in place to do that. So… and I agree with you, the second quarter last year is an easier comparator, but overall we have growth products in both in-line and new.

Thanks, Ian. Next question, please.

From Barbara Ryan, Deutsche Bank. Please proceed with your question, ma'am.

Good morning. Thank you for taking my question. Frank, I'm just wondering since obviously you've laid out what you anticipate on a spending basis during the year, we have no idea obviously what you're expecting for the first quarter. So, I'm just wondering if you can tell us where you’ve come in relative to your expectations specifically on spending for the quarter and with that… obviously talked about currency, mitigating some of the benefits, and so what are you assuming about currency in your guidance going forward, because you did say ex-currency $1.5 billion to $2 billion reduction in the cost base relative to the end of '06? And what kind of wiggle room do you have to maneuver around a negative impact from currency on your spending? Frank D'Amelio: Okay.

Thanks. Frank D'Amelio: You are welcome. So Barbara, in terms of I'll call it our expectations, the results that we presented today were very much as we expected. In fact we tried to say that in the release and in some of our comments, and really as we expected in multiple dimensions, in terms top line, in terms of spending levels, right through to the bottom line, so very much I would say as we expected. That's what I would say on that. Relative to currency, the way we handle this or the way I handle this for the quarter is, we basically provided guidance based on current exchange rates, so through April. So think about the guidance based on April current exchange rates and that's what we assume basically in the annual guidance. Now, to the extent that the exchange rates change and move between now and the end of the year, that's something we'll obviously have to continue to monitor. But then, once again, it’s part of the reason why we provide a range in our guidance, to accommodate that. So you used the term wiggle room, to me part of the wiggle room is while we provide a range, so that we can accommodate some of these kinds of things to a degree. And then back to the question I had before, obviously we will work as best we can to be as high in the range as we can, but there is lots of things that can move during a year, which is why we provide a range on the numbers.

Okay. Thank you. Next question, please.

Yes, sir. Our next question comes from Seamus Fernandez of Leerink Swann & Company. Please proceed with your question.

Thanks very much. So, just a couple of questions, on the last comment there in terms of the expectation, I guess one expectation that I certainly didn't have coming into the quarter was the impact of the ENHANCE study on the overall cholesterol marketplace. So, can you just help me understand what your expectations were for Lipitor overall? And then in the fourth quarter... on the fourth quarter conference call, Frank, you actually mentioned that the inventory levels were running at about 2.5 weeks. Jeff, you actually mentioned seasonality. So, can you just help me understand the mix of those two things? When we talk about seasonality, are we talking about wholesaler buying patterns? And on that front and if we are at 2.5 weeks, where are we at the inventory at this point on the overall business? And can you update us in terms of where we are on Lipitor in terms of overall wholesaler stocking levels?

Okay. Thanks. I'll ask Ian to talk about the Lipitor part of your question and then Frank will address the seasonality issues that you raised.

Seamus, on Lipitor, in the quarter Lipitor was on our expectations. So, on your second question, vis-à-vis the ENHANCE impact I'm not quite sure what you're ENHANCE do. We've seen initially in the switch part of the market a reasonably dramatic impact where our switches have dropped in half away from Lipitor. So that's a very positive impact for us. The issue of course is new patient acquisition, and as I was describing before, I think initially [ph] a lot of the Vytorin loss of volume will go to simvastatin because of the pressure of managed care and then subsequently I think when cholesterol levels are measured they will have to go back to Lipitor to get to go. So I think that covers the part of it.

So, Ian, I think part of Seamus' question had to do with the overall statin market growth. You want to talk about that?

Well, the market growth is, I think in January we talked about market growth as mid-single to high-single digits. We're now seeing it at mid-single, perhaps slightly lower, and we'll see what happens post-ENHANCE and what happens in the statin market. It is difficult to predict it right now what the growth will be.

Okay, thank you. Thanks, Ian. Frank, do you want to talk about the seasonality and inventory question. Frank D'Amelio: Yes, I mean, in terms of weeks on hand, the way that we look at this is really on a year-over-year basis. If you look at the weeks on hand, that's in our wholesalers now. From Q1 of '07 to Q1 of '08, the weeks on hands are essentially flat. There was no change from one quarter to the next, so constant year-over-year.

Okay. Thank you. Next question, please.

A follow-up question coming from Roopesh Patel of UBS. Please proceed, sir.

Yes, thank you. What was the impact of price on overall revenue growth? If you could give us a rough sense, that would be very helpful. And then, in terms of the $1.5 billion to $2 billion in overall targeted cost cuts this year, can you clarify what those numbers would be in today's dollars, in other words, at current exchange rates? Thanks.

Okay. Frank? Frank D'Amelio: Yes, so in terms of… the first part of the question.

Price impact on revenues. Frank D'Amelio: So on price, it was favorable for the quarter to the tune of 2%. In fact, the way the quarter worked overall, price helped, volume hurt and FX helped, and the [inaudible] that were essentially 2% on price to answer your question specific. In terms of the $1.5 billion to $2 billion, the way I think about that is kind of in almost '06 dollar terms, because what we were really doing is looking at that based on constant currency that goes back to 2006 where we were deriving the $1.5 billion to $2 billion. We obviously achieved some of that through last year through 2007. We are working to achieve the rest of that through this year. We reaffirm that number and it is based on those constant currency rates as of 2006.

Okay. Thank you. Next question, please.

And this question comes from Mr. Mike Krensavage of Raymond James. Please proceed with your question, sir.

Good morning. I want to know how much of a tail Lipitor might have after it goes generic in the U.S.? If you look at Merck's Zocor, for example, it’s still annualizing at more than $800 million, but mostly with the international sale. So would Lipitor have a similar tail? Thank you.

Well, let me just say, and I will turn this over to Ian for a minute… in a minute, but obviously there is a big difference between international and U.S. when it comes to that. And as I mentioned earlier… and this is one of the reasons why I think there is a lot of opportunity in our established products markets. As Dave Simmons laid out on March 5th, the world is very different in different parts of the world and there are markets in which there has been no patent protection and we are selling Lipitor in competition with a whole variety of atorvastatin products and in fact still leading those particular markets. So, in many parts of the world, particularly in the developing markets, brand remains very important because the driving force from the consumption side are the physicians and the patients. And obviously, it is quite different here in the United States where managed care is much more dominant and therefore the fall-off [ph] is much more precipitous. I certainly wouldn't want to predict exactly what sorts of sales we might have in the U.S. at that time, but if you want it, Ian can give some qualitative thoughts about it?

Well, I think as Jeff said, we're focused on maximizing value from Lipitor post-patent expiration. And in that sense, we're focused on ensuring that in percentage wise vis-à-vis perhaps other patent expirations like Zocor that we maintain as good or not higher percentage of that business. An important factor to look into on the size of the tail in fact will be a dynamic that’s difficult to calculate, but when Lipitor goes off patent, I think there will be... I think it's a fundamentally large expansion in the use of atorvastatin in the lipid market, which will also influence the tail of Lipitor. So I think the dynamics of Lipitor patent expiration will be very different from the dynamics of Zocor patent expiration.

Thanks very much, Ian. Next question, please.

And our last question comes from Mr. David Risinger of Merrill Lynch. Please proceed sir.

Yes. Thanks very much. There has been a lot of discussion about foreign exchange, but Frank, I was hoping that you could tell us what the bottom line EPS impact of FX was in the first quarter of '08 and if you can... if you could compare that to the bottom line EPS impact of FX a year ago in the first quarter of '07 and also in the fourth quarter of '07 sequentially? Thank you. Frank D'Amelio: So Dave, for this quarter it was $0.03. So… and basically, we called out in the quarter to $560 million, $570 million of revenue depending on reported versus adjusted. And then the impact on cost was 330 million. So when you do the math, you get roughly $0.03. And quite frankly, in terms of the EPS numbers for first quarter and fourth quarter of last year, I don't remember the specific number. It was a comparable number, but I just don't remember what the exact numbers were. So that's something we can obviously... we can get back to you on. But it was $0.03 for this quarter.

Okay. Thank you, David. And thank you everyone for listening in this morning. We appreciate your time, and that will be it for today. Have a good day.