Good day everyone, and welcome to Pfizer's second quarter 2012 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning and thank you for joining us today to review Pfizer's second quarter 2012 performance. I'm joined today by our Chairman and CEO, Ian Read; Frank D'Amelio, our CFO; Olivier Brandicourt, President and General Manager of Emerging Markets and Established Products; Mikael Dolsten, President of Worldwide R&D; Geno Germano, President and General Manager of Specialty Care and Oncology; Amy Schulman, General Counsel, President and General Manager of Pfizer Nutrition; and John Young, President and General Manager of Primary Care. The slides that will be presented on this call can be viewed on our homepage at pfizer.com by clicking on the link for Pfizer Quarterly Corporate Performance Second Quarter 2012 located in the Investor Presentations section in the lower right-hand corner of this page. Before we start, I would like to remind you that our discussions during this conference call will include forward-looking statements and that actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in Pfizer's 2011 annual report on Form 10-K and in our reports on Forms 10-Q and 8-K. The discussions during this call will include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in Pfizer's current report on Form 8-K dated today, July 31, 2012. In addition, we’ll offer some brief comments regarding our preparation and target timeline for the potential initial public offering of the minority stake in our animal health business Zoetis. As I am sure you’ll understand, we're not going to able to respond to questions on that subject in light of the quiet period imposed by the securities laws. With that, I'll now turn the call over to Ian Read. Ian?

Thank you, Chuck. During my remarks this morning, I'll briefly discuss the quarter and provide some context concerning recent late-stage pipeline developments. Beginning with the quarter, our performance was solid. Noteworthy highlights include solid revenue and margin performance compared to the year-ago quarter despite the negative revenue impact of $1.8 billion resulting primarily from the losses of exclusivity of Lipitor in most major markets as well as Caduet, Xalatan and Geodon in the US. We had strong performance in emerging markets with 14% operational growth quarter-over-quarter, driven by volume growth mainly in key markets such as China and Russia as well as the timing of government purchase of Prevnar 13 in Turkey and ENBREL in Brazil. Of particular note, China grew 36% operationally driven in large part by the targeted investments we’ve made in our Chinese, our China sales force and the strength of our cardiovascular portfolio in China. We had greater expense discipline resulting from our ongoing efforts to streamline operations and Focus R&D programs. Quarter-over-quarter adjusted SI&A expenses decreased 16% operationally and adjusted R&D expenses decreased 18%. The Animal Health and Consumer Healthcare businesses achieved good operational performance quarter-over-quarter. Animal health grew 7% and our consumer healthcare grew 11%, driven primarily by the addition of products from recent acquisition of Ferrosan and Alacer Corp. And we're continuing to create value for shareholders through share repurchases. During the quarter, we repurchased $1.3 billion of common stock and purchased about $3 billion since the beginning of this year. On a full-year basis, we expect to repurchase approximately $5 million of common stock. Regarding animal health, we anticipate filing a registration statement with the Securities and Exchange Commission by mid-August for a potential initial public offering of up to 20% ownership stake in the business. To be named Zoetis we are targeting completion of the IPO in the first half of 2013. As we continue to work towards this potential IPO and the potential full separation, we remain open to all alternatives that would maximize the after-tax return for our shareholders. Concerning the pending sale of the nutrition business to Nestlé, we remain on track to close the sale by the first half of 2013. We’ll work to maximize the after-tax proceeds and expect to allocate those proceeds for share repurchases, while also considering other value creating opportunities with the return on share repurchases remaining the case to beat. Given our performance year-to-date I believe we are well positioned going into the second half of this year. By staying focused on our current course we are building a sustainable innovative core and creating shareholder value. A few words about the innovative core. The actions we set in motion early in 2011 to improve R&D productivity are starting to bear results. We have a pipeline that I believe includes potential high-value assets at all stages of the development continuum across our key therapeutic areas. Of particular note is the strength of our oncology vaccines, inflammation and cardiovascular portfolios. And our early stage portfolio is increasingly comprised of new therapies based on precision medicine approach, an approach we believe yields more targeted treatment for patients. We have precision medicine efforts underway at various stages by applying across several therapeutic areas including diabetes, oncology and cardiovascular. We have a sharp focus on innovative core. I believe we are able to create a portfolio that matches our areas of expertise and that positions us for long-term growth. In terms of the late stage pipeline we are in ongoing discussions with the FDA about the regulatory views of Eliquis and tofacitinib and remain enthusiastic about the potential commercial prospects for each of these important therapies. Regarding Eliquis, as we and our alliance partners, Bristol-Myers Squibb previously said, the FDA has requested additional information on data management and verification from the Eliquis Aristotle trial. They have not requested any new studies and along with Bristol-Myers we are working closely with the FDA and are confident we can address and resolve their questions. We will provide an update when we have new information to share on the status of the review. Concerning tofacitinib as you know the FDA advisory committee recommended approval on May 9. Subsequent to that meeting, the FDA requested additional analysis of the existing data in our NDA. We are planning on providing them that information in early August. Given the timing of the additional analysis requested, we anticipate that the FDA may require additional time beyond the August 23 PDUFA date to review this information. In another tofacitinib development, we now have the top line results of our Phase 3 Study 1069, also known as ORAL Start. As a reminder this study was conducted in methotrexate-naïve moderate-to-severe RA patients and it evaluated the use of tofacitinib, 5 or 10 mg twice daily doses as monotherapy compared to methotrexate. 1069 included a structural endpoint. I am pleased to share with you that the study met all of its primary endpoints at both the 5 and 10 BID doses including demonstrating statistically significant changes versus methotrexate in inhibiting structural damage. We are issuing a press release on these top line results following today’s call and we will provide more information about this study at upcoming scientific meetings. Because the study only recently read out, it was not part of our NDA submission and it's not under FDA review. We are exploring the most appropriate method and timing to submit this information. Overall we are confident in the efficacy and safety profile of tofacitinib and believe they would make an important contribution to the treatment of RA. And now a few comments about the recent top line results for bapineuzumab, study 302 in patients with mild to moderate Alzheimer’s disease who carry the ApoE4 genotype. As we recently reported, Study 302 did not meet the co-primary clinical end points; no statistically significant benefit was seen in changes in cognitive or functional performance in the bapineuzumab treating group compared to placebo. Study 302 was the first of four placebo controlled Phase 3 studies complete in the bapineuzumab development program. The Janssen led study in non-carrier Study 301 has just completed and the data is being evaluated. We plan to report the data to regulators and announce the top line results in August. Of note both Study 301 and 302 have been accepted as late-breaker presentations and we presented at the European Federation for Neurological Societies meeting in Stockholm in September. Looking ahead to the second half of this year, we will continue to work on our cost structure, inclusive of everything from manufacturing, corporate functions, our go-to-market strategy and continuing to execute on our existing R&D plans. Our work across these areas should enhance our ability to create incremental value for our shareholders. And invest in potentially new treatments that address unmet medical needs in such areas as cancer, neuroscience, pain and vaccines for infectious diseases. For the foreseeable future, we expect that our operating environment will remain challenging and uncertain especially in Europe and we will have to offset the impact of upcoming LOEs as well as expirations of co-promotion and licensing rights over the next couple of years as we embark on new product launches and generate growth in emerging markets. Despite these challenging market forces, we are demonstrating through our quarterly performance both in this quarter and in recent quarters that the fundamentals of our business are strong, capital allocation decisions are sound and our colleagues are skilled in navigating in uncertain and sometimes inconsistent markets. For these reasons I remain optimistic about our ability to generate consistent, predictable earnings per share growth over time. To sum up, we turned in another quarter of solid performance. We remain enthusiastic about the potential commercial opportunities we see for tofacitinib, Eliquis, Prevnar 13 adult. We continue to build a track rate of consistent performance that provides us with a firm foundation for steady future earnings per share growth. Now I will turn it over to Frank for additional details on the quarter. Frank D'Amelio: Thanks Ian and good day everyone. As always the charts I am reviewing today are included in our webcast. I want to remind you that the nutrition business is presented as a discontinued operation and consolidated statements of income for all periods presented given the pending sale of that business to Nestle. As you know, discontinued operations are excluded from adjusted financial results and consequently throughout 2012. The results of the nutrition business will be excluded from adjusted results. Now let's move on to the financials. Second quarter revenue is at $15.1 billion, decreased 9% year-over-year reflecting an operational decline of approximately 6% driven mainly by the loss of exclusivity of several key products and certain geographies notably Lipitor in most major markets. Adjusted diluted EPS of $0.62 increased approximately 5% which primarily reflects the favorable impact of lower expenses resulting from cost reduction and productivity initiatives and fewer weighted average shares outstanding due to our share repurchases and the unfavorable impact of the loss of exclusivity of certain products including Lipitor in most major markets. Foreign exchange negatively impacted second quarter revenues by 3% to $451 million and favorably impacted adjusted cost of sales adjusted SI&A and adjusted R&D expenses by $396 million or 4%. As a result, foreign exchange negatively impacted second quarter adjusted diluted EPS by less than $0.01. In the second quarter, emerging markets biopharmaceutical revenue increased 8% to approximately $2.6 billion, reflecting operational growth of 14% and a negative impact of foreign exchange of 6%. Volume growth of 15% in emerging markets primarily in China and Russia were partially offset by price reductions of 1%, resulting in operational growth of 14%. The second quarter emerging markets biopharmaceutical revenues approximately 41% was generated by established products, 33% by specialty in oncology products and 26% by primary care products. Established products revenues generated by sales in emerging markets increased to 17% operationally year-over-year. Specialty care and oncology total revenues in emerging markets increased 14% operationally and primary care revenues in emerging markets increased 12% operationally. With respect to BRIC-MT markets, second quarter biopharmaceutical revenues increased to 12% to approximately $1.2 billion, reflecting operational growth of 20% in the negative impact of foreign exchange of 8%. Of the second quarter BRIC-MT biopharmaceutical revenues, approximately 42% was generated by established products, 32% by specialty and oncology products and 26% by primary care products. Revenues for established products sold in BRIC-MT markets increased to 24% operationally year-over-year, specialty care and oncology total revenues in BRIC-MT markets grew 21% operationally and primary care revenues in BRIC-MT markets grew 13% operationally. During the second quarter, biopharmaceutical volume growth of 24% in the BRIC-MT markets was partially offset by price reductions of 4% resulting in operational growth of 20%. These markets contributed about 62% of emerging market biopharmaceutical operational growth first to second quarter 2011. Year-to-date operational growth in the BRIC-MT markets was 15% versus the year ago period reflecting volume growth of 20%, partially offset by price reductions of 5%. We are reaffirming all components of our 2012 financial guidance which we updated in our first quarter, 2012 earnings announcement in May to exclude the results of the nutrition business from our revenue guidance and our adjusted financial guidance. Our second quarter results reflect our continued solid operational performance despite the negative impact of the loss of exclusivity of certain products in most major markets mainly Lipitor in the US and in most major markets. We anticipate following a registration statement with the SEC by mid-August for a potential initial public offering of up to a 20% ownership stake in the Animal Health business to be named Zoetis. We are targeting the first half of 2013 to complete the potential IPO. As we continue to work toward a potential separation of the business, we remain open to all alternatives to maximize the after tax return for our shareholders. We expect to complete the sale of our nutrition business to Nestle by the first half of 2013; additional repurchases of our common stock remained the case to be for the use of the after tax proceeds following the completion of the transaction. Given the potential of our late stage and emerging pipeline, our strong operating cash flow, streamed line organization and disciplined approach to capital allocation, we remain confident that we are well positioned for long-term success. Finally, we remain committed to delivering attractive shareholder returns in 2012 and beyond with approximately 3 billion or 136.6 million shares repurchased to July 30, and we continue to expect to repurchase approximately $5 billion of our common stock in 2012. Now I will turn it back.

Thank you Frank. And at this point operator, if we could please poll the participants for questions.

(Operator Instructions) Your first question comes from Jami Rubin from Goldman Sachs

I actually have a number of questions, but may be Ian if we could start with sort of bigger picture given the activity around Nutritionals and Animal Health, if you could frame for the investment community you are thinking around how you envision the reshaping of Pfizer post the Nutritionals and Animal Health spend? What is Pfizer going to look like and do you envision an opportunity to further reshape the portfolio going forward? Secondly for you Frank, is it safe to assume that the changes in the FX rate since you reported your first quarter and obviously the Euro has dropped quite a bit would have an impact on the balance of 2013 but that you are able to absorb it and how? And then my third question back to you Ian and they are further million other questions on the call relates to the Animal Health spend, is there a minimum time line for which you would have to wait to spend the 80% of the Animal Health business that you would continue to own after the partial IPO? Just trying to get a sense for how quickly you could fully monetize the entire business once you have taken the 20% to the market? Thanks.

Thank you, Jami. I'll ask Frank actually to handle both the FX and the Animal Health in a minimum spin time. And as your first question about reshaping when we completed, I think we have discussed this several times, when we have completed the separation of nutritional and the potential separation of animal health. I basically see us as a company that has two core businesses with consumer fitting into even one of those, but the two core businesses, one being what we would call Innovative Co or Growth Co and the other being a value company. The value company being represented by large brands sold around the world with reasonably large infrastructure, good channel presence and the Innovative Co being a company which has growth from innovative products, a research organization to size, that size of that opportunity. And we have started already down this path of managing the company that way by our BU structure where we have basically Innovative Co inside the BU structures of specialty and oncology and primary care. And then outside of that, we manage emerging markets in a more traditional method of country-based organizations. So through ’13 and ’14 we will continue to refine our operational structure to maximize the values of those two distinct businesses and we will see how the value of those businesses are reflected in our growth and our share price and then take decisions based on that. Frank? Frank D'Amelio: Sure thanks Ian. So Jamie on the FX question, if you look at our basket of currencies and you look from our last earnings call, where our guidance was based on mid-April rates and then you look at this earnings call where our guidance is based on mid-July FX rates, currency has moved against us and its moved against us for the year to the tune of a few cents and we absorbed that in our guidance and obviously reaffirmed guidance is a result. The way we did that was through a combination of things, but primarily our cost reduction and productivity initiatives. If you look at our numbers for the quarter, on a year-over-year basis, our adjusted cost of sales, our adjusted SI&A and our adjusted R&D, all-in were down about 12% operationally and so its that performance and its down 10% operationally on a year-to-date basis that allowed us to mitigate the adverse effect of foreign exchange from the previous quarter to this quarter. In terms of the other question you asked about the timeline on animal health, and to make sure I’ve got it right which was, you know from the time of the potential IPO to the time of I’ll call it the potential full separation, what were we thinking about; I will tell you how we think about it, which is, you know, typically, you want a quarter or two of some operational performance of the company, so you can kind of demonstrate what I call the rhythm of the businesses. So I think one will be, one quarter or two of operating performance to the extent this demonstrate rhythm and then two, the other thing that will inform us is the macroeconomic conditions; what's going on in the markets, and you know, those things in combination will drive the timeline between the potential IPO and then a potential full separation.

Your next question comes from Gregg Gilbert from Merrill Lynch.

I will ask three quick ones upfront. First on Eliquis, were the issues raised by the FDA in the CRL and could be raised by other regulatory bodies around the world and have you been proactive about that? Secondly Ian, what's your latest thinking on whether to weed or feed your generic business over the coming months and years? And third, can you talk about the decision to drop the Acura program and what can we read in to regarding in better remarks Ian your commitment to that franchise? Thanks.

Thank you Gregg. I am now ask John to answer the Eliquis question and also the Acura question. Regarding, weed or feed our generic business, I mean we have Greenstone in the U.S. it's a well run business. It’s I think an important part of our overall established products presence. We continue to invest where appropriate in branded generics and generics we take a regional approach to that. We've done investments in Brazil, we've done investments in China. We take, you know, this is a very local business and we're committed to being successful in the presence in these BRIC-MT markets. So we will continue to be opportunistic on how we spend in those businesses. Geno, would you take the other question, the Acura question?

Okay, thanks Gregg. So taking other first of all, as we obviously previously stated, the CRL we received from the FDA requested some additional information on the data management and verification from our pivotal ARISTOTLE study. So you know, it's a very big study, right about 18,000 patients in atrial fibrillation relation. I think one point which is really important for me is, that it’s our belief that the information requested doesn’t impact the outcome measures of the trial and importantly as Ian has already said, we haven’t been requested to conduct any additional studies. So our confidence and the results from both the ARISTOTLE trial and the AVERROES trial hasn’t changed. In terms of our discussions with other regulators around the world, both in the EU and other countries, those discussions are progressing in line with the timelines and our final dates that previously announced. If I then pick up on the King products, just to give you an update on where we are there with EMBEDA as we previously communicated, we're very confident that we’ll be able to return EMBEDA to the marketplace and we expect to submit the prior approval supplementary FDA by the first half of 2013. On Remoxy, as we previously stated there, based on the work completed by our technical team over the past several months, we remain cautiously optimistic to be able to bring Remoxy to the marketplace. We have preliminary results from two bioavailability studies that are currently being analyzed along with data from experiments designed to optimize the formulation composition and our nautical methods for that product. And upon completion of those analyses we will determine the timing and the nature or our engagement with the FDA to address the complete response letter that we received in June last year and at this time we are certainly hoping to meet with the FDA in the fourth quarter of 2012. So lastly, if I just pick up briefly on Acura, we decided to return the license development and commercialization rights to three smaller early stage immediate release assets to our development partner Acura based on our ongoing portfolio prioritization, for not only our opioids portfolio but in line with our standard practice. I think it’s important to say in regard to those particular technologies that immediate release wasn’t a high priority are for Pfizer, but we do continue to work on Oxecta that was launched earlier on this year.

The next question comes from Marc Goodman from UBS.

Yes, first can you help us just quantify on Prevnar some of the one-offs just so we understand what the underlying growth is for Prevnar? Second, can you talk about where you are in taking expenses out of the business something that we half way through the nine inning game; are we three quarters of the way through; I know you have talked about Europe as an area that you are really focusing on and trying to take some cost out; you could give us some specifics on kind of what you have left to do there? And then third just on the gross margin, can you just remind us again like what’s going on kind of behind the scenes on the gross margin which seems to be much stronger than we would expect that I didn’t hear the numbers that you had called as far as were FX related? And then I was just curious I mean obviously with LIPITOR going off at one thought that gross margin would fall-off much more and yet it’s not? Thanks.

Okay thank you Marc, I will ask Frank to take the European gross margin first probably and then ask Geno to make some comments on overall vaccine growth? Frank D'Amelio: So on gross margins, let me run the numbers and then I’ll answer the question which is are and I will do it in terms of just cost of goods sold as a percentage of revenue. So this quarter it was 17.7% it was down from 18.3% in the year ago quarter, but if you adjust that 17.7% for foreign exchange, it was actually about 19% which is you know I’ll call it in line with the guidance we provided out for the year. Now what’s going on there Marc is, clearly the benefit of cost reductions and I’ll talk to that in the second question that you asked me and then what kind of what’s working against that; it was actually the impact of LIPITOR, when you put that all together you get the 17.7% that we reported, but it had the benefit of foreign exchange which if you remove would take it to about 19%. The FX benefit to COGS this quarter was $285 million, so it reduced cogs by $285 million which is how I get from the 17.7% to 19% or so. In terms of where we are, I think you said you know you used the baseball analogy in terms of what inning are we relative to cost reduction; I would describe it is we are not in the early innings anymore; I think we are clearly in the middle innings, but clearly with opportunities quite frankly throughout the business. We continue to work on things like streamlining our manufacturing network to productivity initiatives and working on the productivity of each of our individual plants. We have announce that you know over the next several years we believe we can further reduce our plant network by another 10 facilities or so you know still lots of opportunities there. In SI&A, we continue to streamline our corporate functions. In R&D, we continue to execute on our engine for sustainable innovation product in terms of the therapeutic areas that we focused on and the therapeutic areas that we discontinued and the work that we do in those areas. So if I had to net it all out, I would say we are in the middle innings and then still with everything that we've accomplished, there's still significant opportunities going forward.

Yeah, Mark just to comment on Prevnar, on the pediatric business, business is good in Europe and the United States and what we are seeing now is a return to kind of the stable growth that we've experienced in the past now that the catch up opportunity is fundamentally completed. So we are looking at quarterly and year-to-date results on the developed markets that are similar to a base line that we can expect going forward. Japan, we continue to see strong growth as the formal immunization program is continuing to roll out there. Remember that's Prevnar 7 and we are continuing through registration process introduced for 13-valent and expect to pursue a catch up opportunity when we do have the 13-valent there as well. And then in the emerging markets we continue to see very strong growth of the Prevnar business for the quarter and year-to-date on what's becoming a reasonable base now, not just good growth on a small base. On the adult side, we are making good progress. As you know in the US this is a business that's driven by ACIP recommendations. Fortunately the ACIP did make a recommendation to support immunization of immuno-compromised patients. That's a good step in the right direction. We've also seen progress with some quality measures through CMS that we expect to help open the door for additional growth for Prevnar adult going into the end of the year and the beginning of next year and around the world, we continue to see registrations and all of the developed and emerging markets for adult and we are starting to see promotion and some limited uptick there as we start to introduce the adult vaccine on a global basis.

Your next question comes from Mark Schoenebaum from ISI Group.

I had a couple of questions, the first you may not answer, but thought I would ask it. On bapineuzumab, is there a consideration that you may file in the non-carriers group even if you miss your primary endpoint, but you see interesting signals in sub groups. Second question is on EM, this plus 14% year-on-year is very impressive and well above your annual guidance. I was looking for a little bit more color on that. Do you recommend we extrapolate that forward or should we keep kind of long-term growth rates little lower than that. Third on tofa, any more color on what the FDA has asked for and can you get the ORAL Start data in the FDA’s hands before they write the label and I ask specifically around structural progression. And finally a really quick one. I know you guys have said in the past you plan on breaking out, sorry, you said you are considering breaking out the value business versus the growth business for reporting purposes in the Ks and Qs next year. I am just wondering where that decision stands. Thanks a lot.

Thank you Mark, well, you are quite right, we really can't comment on the bapi situations. We haven't seen the results of the trial yet, it's still blinded to us. So when we do have those results, we will think about all the things you asked the questions on. On breaking at the value and growth curve, you know once we get through the potential separation for Animal Health and the separation nutritional, we will step back and look at the business and see what is the best way to ensure that the analyst have transparency on to what we see as the core drivers of the business. So we want to be transparent there. With that, I would also perhaps if Olivier can give a little bit more context from an emerging markets, the growths in different market places and on tofa, Geno, you may want to make some comments on tofa for us?

So in emerging, we continue to be optimistic and which is track the opportunities across emerging markets, and all of that of course related to increased population and wealth. We’re seeing reduced Pfizer's [nations] as a low amount which is currently spent on healthcare of course. So as you have seen, we have posted 14% operational growth for Q2 and it's driven by very good performance in BRIC-MT. You have seen the results for BRIC-MT's about 20% operationally, but it's 24% in term of volume growth and there was an impact of 4%. So we will continue we know that to expect and to see quarter to quarter volatility in emerging markets and it's more appropriate probably to look at the results on a 12-months basis and our goal for this year and future years is to grow our emerging market business by high single-digit over time.

Okay, so with regard to tofa, we see the review progressing very nicely. We filed the NDA at the end of last year. We had a very quick advisory committee meeting in May, a very positive outcome. In fact, the only thing material that the advisory committee would have liked to have seen more of is more structured data and now we have the additional structure data. So we see that as a positive development. With regard to analysis that the FDA is requested, it’s basically a routine analysis. It’s a very large NDA, we have five Phase III pivotal trials, 5,000 patients and they have asked for some additional analysis. This is very common to request additional analysis and even to do their own analysis and we are busy putting that together and we plan to have it to them certainly ahead of the action date, so that they can determine their next step. So with regard to 1069 structure data, the FDA is aware that we have the top line results and we will find the most appropriate way to get the data to them for consideration in future labeling.

Your next question comes from Tim Anderson from Sanford Bernstein.

Two questions on Prevnar 13 and then a couple others. Can you get any real commercial traction in adults ahead of CAPiTA or does it all really depend on that? Also have you done an interim look at those results I believe almost built under the protocol? On tofacitinib, do you expect to get both the five and the 10 milligram doses approved? And then last question in terms of the next round of pipeline products beyond the ones like tofacitinib and Eliquis, what are the two or three products that excite you the most?

Thank you, Tim. So I will ask Geno to discuss the adult indication opportunity in Prevnar 13 and the third question on dose and then I will ask Mikael Dolsten to comment a little bit on the next wave of products. Thank you.

So I mean with Prevnar 13 adult, look what we know is that there is a huge disease burden out there and I think I have quoted these statistics many times before in the US. We know there is 300,000 hospitalizations a year for pneumococcal pneumonia and 20,000 deaths associated with pneumococcal pneumonia. So we believe there is an opportunity to build the business on the basis of just a need for the vaccine alone. But you know having said, it's true that it is -- historically in the vaccine business, it's CDC recommendations that are the real drivers and the CDC recommendation is likely to be most influenced by the CAPiTA trial. So we are going to do the best we can to build this business from the ground up, from now until we have those CAPiTA results and certainly the CAPiTA results will be a major driver and hopefully that gives you a sense for what our thinking is. In terms of the interim work on the CAPiTA trail, the interim look I believe was only to give a sense for how many events had occurred and we don’t have any insight into the number of events that occurred in the placebo group versus the vaccinated group. So we don’t have any insight into early read on effectiveness. As you know this is an event driven trial and we will have a final result when there are accumulation of enough events to determine the outcome. With regard to tofa, 5 mg and 10 mg, I think the question was do we expect both? We certainly believe that we have demonstrated through the 5 pivotal trials that we have done are very consistent and robust effect, both the 5mg and 10 mg had a certainly acceptable safety profile. So the advisory committee had a review of the two doses and we know that they were supportive of both doses. We know rheumatologists would like to have both doses available and we believe that our NDA supports both doses. So that's our feeling on the two doses. And I don't know if the next round of innovative products, Mikael.

Mikael will comment on that.

Yeah, for thank you for showing interest in our rich portfolio beyond tofacitinib and Eliquis. So let's give you a couple of example in four of our therapeutic areas. In vaccines, you will see really a rich pipeline evolving. We have agreed with regulators in major regions about [Manage B] study design and we are starting with Phase 3 now. We also have a very exciting Staph aureus program where we are industry leading and we have completed a first Phase 2 and are heading into the second Phase 2. Oncology as Ian alluded to, is really a growing exciting area for us. We have tofacitinib as the leading antibody drug conjugates for hematological malignancies and also best in class documented need for lung cancer based again on precision medicine and you may not have seen our CDK drug that's go into breast cancer also based on precision medicine. Finally, immunology inflammation is not our life cycle management of tofacitinib going to inflammatory bowel disease psoriasis but also our really best in class 6 antibody for both lupus and the inflammatory bowels disease opportunity. And also beyond Eliquis in cardio metabolic you know, you should keep an eye on programs such as pancreatic glucokinase activator and also PCS canine field.

Your next question comes from Chris Schott from JPMorgan.

I just had a few here. First on the gross margin trends looking at your second half I think I hit the midpoint of your range does imply a fairly substantial drop in margins, just elaborate a little bit more on that. I know its some currency benefit first half but it does seem like quite a big step down. The second question was on the established product division and I think we had a new leadership there since our last call, I mean is there in change in focus or priorities for that division? And then finally one that I don’t know if you'll comment on but as you think about the value versus established versus growth [core] here. When we get out to 2014 or 2015, you had more time to evolve the strategy and if we’re not getting the value for those businesses in your share price, would you be open to splitting those franchises apart or do you see meaningful structural issues that would not allow you to do that given the shared resources, is that even something I guess on the table as we look out a few years. Thank you.

Okay, so, you know, on the established I will ask Frank to answer the gross margin question on our established products and emerging markets Olivier Brandicourt has taken over the leadership over of those two areas. He has a long experience in pharmaceuticals both in emerging markets and developed markets. So I would ask him to make a brief comment on what he sees these of established products. But before he does that, on the question of value and growth co, we're focused at Pfizer on shareholder value and ensuring shareholder values. So we’ll evaluate those questions you posed and we’ll take the decision that will best drive shareholder value at that time. I think that’s the best way really to answer that question and one that we continue to show that we're focused on ensuring shareholder value is optimized.

On established product, I must say I am very optimistic and I see very attractive opportunities with this business which is very new to me. So we have a strategy, which looks at both segments of the LOE market, brand and generics. For the brands, we're trying to leverage in our leadership not only in quality but also in reliability of supply which has been a problem as you know in many countries, and also in the enhancement of product value. For the generics themselves, we focused our investment in different, what we call profitable pockets of the market and most specifically is the sterile injectable and all solids once they’re very much differentiated. So we posted about 18% operational growth during Q2 and of course that was very much driven by the fact that we had inherited in this division a few LOE products and Lipitor being the largest one, both into the US and Japan.

Thank you Olivier. And then on the second half cogs relative to the first half, what I am going to do is I am going to bump it up a level and not just about cogs but about earnings as well, in terms of second half of the year versus the first half of the year. We got a couple of factors that will impact all the second half of the year or a portion of the second half of the year that didn’t impact the first half at all or impacted only partially. These are called the negative factors. So for example, in the US with Lipitor, Lipitor began facing multi sourced generic competition in the US on May 30. So you know, not an impact for the entire first half of the year but that will be an impact for the second half of the year. That will obviously adversely affect the cost of goods sold and also adversely affect the EPS. Same thing Lipitor in Europe, where once again began facing multi sourced generic competition in March and May. So you get a full year effect of that. At least in the second half you get the full impact of that. Now same thing with Geodon which in the US began facing multi sourced generic competition in March of this year. And then if you go out for the remainder of the year we have anticipated LOEs for Detrol in the US and Europe and REVATIO in the US in September which reversely affect earnings and that has an impact on our overall (inaudible) things like cost of goods sold as well. So if those kinds of factors that we are factor into our guidance that will impact the second half of the year that didn’t have as much of an impact in the first half of the year.

Thanks Frank and operator if we can please move to the next questioner.

Your next question comes from Steve Scala from Cowen.

Thank you, three questions. Many of the pressure points Frank you just identified will linger into 2013, would you be able to provide any perspective on 2013 relative to the trend versus 2012 can we anticipate an up year or flat year or what? Secondly on Spiriva what markets has Pfizer already given back to BI and what significant markets are to be given back in the second half of the year? And then thirdly did you formerly drop your follow on CETP inhibitor and if so was it because the agent was an optimal or do you feel the areas too speculative? Thank you so much, bye.

Okay. So Frank if you could handle the impact into 2013 and then we would ask John, if he could take question on Spiriva and finally Mikael on the CETP. Frank D'Amelio: Sure. So in terms of what I said on the previous question relative to the second half of the year and then how that impacts 2013. Let me just start with, we haven’t provided guidance yet on 2013 and something we will do obviously later on. But in terms of just I will call it positive items and negative items. I went through some of the negative items. Some of the positive items that will have a positive rhythm going into 2013 include the things like the strength in some of our inline products for example this past quarter Lyrica, Enbrel, Prevnar 13, Celebrex all have very strong operational growth. Lyrica globally 18%, Enbrel, 15%, Prevnar 13 14%, Celebrex 7% and internationally even a stronger growth rates. For example Prevnar 13 internationally grew 33%, these are all year-over-year operationally. So certain key products in the inline portfolio had been growing very nicely. We expect those to continue to grow nicely going into 2013. Our new products things like XALKORI, Inlyta and those are products that we expect and obviously the products that we talked in there before like Eliquis for example. Then geographic expansion, so we had emerging market growth this past quarter of 14% and 15% of volume. BRIC-MT markets grew 20% operationally, 24% on volume. We expect to continue to see growth in those areas as well. And then obviously we'll continue to try to allocate our capital in ways that will in a enabler of growth on a going forward basis. So those are some of the kind of the positive rhythms and the negative ones that will impact 2013 and we will provide guidance on '13 like we always do when we close it out this year and provide guidance for after 2013.

Thank you Frank. John could you make some comments on Spiriva?

Sure so thanks for your question Steve. So based on our 10 year contract with Boehringer Ingelheim termination date differs country by country and it's calculated from the launch date of the product in each country. So EU countries will begin contract exit in 2012, 2013 period, US, Japan in 2014 and the last country is finishing in 2016 aligned with our contracts.

Yeah, as you know we are not as well originally interested in CTP inhibitors as a mean to help regulate good cholesterol and reverse cholesterol transport. Our view currently is that that field has uncertainty and we have not been keen in progressing on the field. There is more science that understands the potential role of these mechanisms as a way of exchange risk factors in cardiovascular disease. Instead, we think further focus on lowering and also anti-inflammatory mechanism has to be in the main focus now.

Your next question comes from Catherine Arnold from Crédit Suisse.

First of all on tofa, I wondered your comments about the starch study and achieving your primary endpoint on all doses, both very positively, obviously with the Advisory Committee there were some debate regarding the radiographic changes and the implications of those with Pfizer coming out with one dose having a positive effect and the FDA coming out with a different answer based on a different analytical method. So I guess I just wondered could you express sort of your confidence that there won't be this difference of opinion in terms of the radiographic effect of both doses? And then on Bapi, I wondered if you could comment if you will address any pulled data findings in press releases prior to the meeting in Sweden? And then I know you’ll love this last question so I can't help myself, but its in regard to your definition of topline and what you are putting in the press release, should we assume that when your report Study 301 that that definition will continue to be nothing below the primary endpoint on efficacy; meaning if there are any trends positive or negative in the sub-populations we won't know that till Sweden? And then I would assume the topline definition and I was just going into a conversation with Chuck in regards to the side effects with an instance of greater than 1%? Thanks.

Thank you Catherine. I didn't quite understand the question on pulled on bapi. Could you just expand on that, what are we trying to get at. You can't come back, okay. Well, then we will go to tofa where Geno will try and answer your bapi question and we’ll also go to the topline question you have here for John.

Hi Catherine, just to comment on the structure data. The data as you know that was presented to the Advisory Committee and discussed during the Advisory Committee was from 1044 and in that study we had a different population. These were patients who had experienced methotrexate for the most part and one of the design challenges for that trial was that the patients were on placebo for a very short period of time and then their structural progression was extrapolated. And I think it was acknowledged by the Advisory Committee that this is a very difficult study design to demonstrate a difference in structural progression between the active group and the placebo group. What we found in that study was that neither the placebo group nor the tofa group progressed very much and the separation was significant at the 10 milligram, but not at the five milligram on the primary analysis; other secondary analysis did demonstrate significance of both five and 10. So there was a lot of discussion around the study design and why the results were what they were and the sensitivity analysis and I think it was acknowledged that it was a difficult way to demonstrate the difference in structure. Now on the other hand the 1059 study is a different study in a different patient population. These are patients who hadn't been exposed to methotrexate. They were progressing more rapidly in their disease and the separation between methotrexate and tofacitinib is much more pronounced and clearly there were significance of both the 5 milligram and 10 milligram doses. And I think that this absolutely establishes the disease modifying capability of the drug and that’s what the FDA you know should be basing their decision on. So we feel pretty good about these results.

Yeah, the only thing I would add to that is of course there is a timing issue. The FDA hasn’t formally got the 1059 and so, you know, we’ll have to see how we best incorporate that into the eventual label of tofacitinib; I’ll leave it to John to the bapi question and understood them?

Hopefully Catherine we’ll continue to answer to your question. Just as a status update, so we have announced last week of course since we were to core primary endpoint results and we believe that was the right decision to make not only to inform regulatory authorities, but also it’s a wise decision (inaudible) because patients needed to be re-consented in the overall program, into the entire program. The second decision we made was as an alliance was to extradite the interim analysis on the ongoing 3001 in the international cardio study. The results will help us, it forms a risk benefit profile of the assay and we know that we have enough patients who have completed the study to do a pretty small interim analysis and futility analysis. So the other decision we made was for the extension study. We have discontinued that study because we think the clinical benefit was just not demonstrated. To your question regarding 301; 301 will be reported to you in the format of topline results and only core primary endpoints will be reported and that will happen during the month of August. And finally, all results including secondary endpoints and biomarkers all of that will be reported as you know in early September.

Your next question comes from Seamus Fernandez from Leerink Swann.

Thanks for the question. So first off for Ian, as we kind of look forward at different opportunities in the business, what aspects are you most excited about; are you really more excited about what you are seeing in the innovation portion of the business and if there are products that you would call out that you are particularly excited about given your long history which ones would you call out? And then, and again more on the sort of the near term and longer term pipeline if you would? Second as it relates to tofacitinib, maybe you could just comment on should we think about this data that FDA has requested as sort of the typical major amendment type of situation that normally results in a three month addition; obviously not speaking for the FDA, but more just speaking in your experience? And then lastly, as it relates to bapineuzumab, Mikael, if you could just kind of give us your thoughts on biomarkers that would be important to future development of bapineuzumab as we look at the data; should we really be focusing in on PiB/PET markers or should we be looking at CSF to how as a potential marker going forward? Thanks a lot.

Thank you Seamus. So on the tofacitinib question, I think you expressed it well in the way you described the type of data that the FDA is requesting; not speaking for the FDA we continue to work with them, but we would look at the way you expressed it as being very similar the way we see it and we’ll just have to wait and see what happens with the FDA. On the – what I am excited about frankly is I am excited about the state of the company about the imperatives we have about what we are doing on fixed simulated core and seeing real momentum and enthusiasm both at the ground level with the colleagues who are working in research and R&D and also excited about our opportunities as a global company in emerging markets with our strategies in the BRIC-MT driving our in line brands and also looking to launch our innovative products in those marketplaces. So while emerging markets will be turbulent, we’ll have ups and downs. There is in a way a reversible move to high GDP, high healthcare spend which represents a huge opportunity for an innovative company like Pfizer to be successful in over the short and medium and long term. So emerging markets is a really exciting place for us; for all of our portfolio and you know in the developed world in Japan, the growing strength of innovative core is also hugely promising, both in oncology with Dacomitinib or Inotuzumab, with the CDK program, with XALKORI and the potential for XALKORI in c-Met which is a large opportunity. Our inflammation portfolio and the expansion of tofacitinib into our extensions such as Crohn's and UC. Our vaccine program is extremely strong. We have one of the best vaccine teams in the industry and we have a broad vaccine opportunities. We continue to invest in CV, both PCK9 and the other molecules that Mikael mentioned. So frankly you know I am enthusiastic about the short term and very enthusiastic about what I see coming through in the next, you know from now to the next five years as our pipeline matures with a very strong Phase 1, Phase 2 program. The remaining question was to Mikael on biomarkers.

I think you mentioned some, I think you've really mentioned the ones that are most widely monitored in the field. On one hand the PiB-PET to look the (inaudible) are you lowering (inaudible), that's number one. And are you affecting downstream signs of damage such as (inaudible) level in C6 and I think those will be very important and we will see what we learn from this study and over time you will also see incorporation of more early psychometric sensitive tests as this field moves forward. Olivier, do you want to add your point on top of this?

The only point I can make is refer to what we have in the current program which answers I think partially the question. So we do have PET PiB as a marker of (inaudible) that we in the CSF, we are looking for (inaudible) and we also have volumetric MRI. So that gives you already a sense of what we're doing already.

Your next question comes from Tony Butler from Barclays Capital.

And you didn’t call out Inlyta and XALKORI with respect to overall products and what those revenues maybe and while they may represent precision medicine as you've alluded to, the question is are you putting additional resources behind them and then what lessons have you learned with respect to R&D that may help you win next generation precision medicine. And oncology for example comes out, would it be more to (inaudible) point, more to have biomarkers available at that time and be utilized with those medicines? The second question is around again emerging markets. A tremendous operational growth of 14%, especially when you look at 9% in Q1 and I just am interested in what changed between Q1 and Q2 other than a couple of the tenders that really led to that jump. And then lastly and to be fair, in Q1 in August, I think it was Olivier had made the reference that once the 301 study was available, you would announce the data in tandem for bapineuzumab and I am just curious and I haven’t heard it yet. What actually changed with respect to splitting out 301 and 302?

Okay, so Tony on Inlyta and in XALKORI, probably in oversight given the richness of the number of products I wanted to mentioned we are extremely excited about. Inlyta, it's going well on its first launch. I think this product has a lot of legs to it and a lot of opportunity. It's going to be a product that I think its profile will develop overtime and we're very optimistic about its performance in the market place and with XALKORI, I think the issue on XALKORI is we're changing medical practice. We need to get doctors to have the tests done, to identify the specific needs of XALKORI. It's frankly slower than we expected to achieve the changes given the 3% to 5% of the population that may have the translocation. But we’ll continue to invest in that and as I said, I think XALKORI may have substantial opportunity on the c-Met side as well. Mikael, do you want to comment a little bit on how you see or what we've learnt on the prevision medicine side and strategies we'll use and then I'll ask Olivier to comment further on the reason for the change on what we previously announced on bapineuzumab.

Yeah as Ian said, it is very exciting to be a pioneer in bringing such a transforming product as XALKORI forward. I think the few things on the learning side, currently the diagnostic practice is very much one test, one drug. And I would like to see the change. So you know, it’ll be a panel of tests for a disease like lung cancer that I think will drive the utilization of the first drug and multiple drugs and grow the market place. And also the need to engage all the players that are involved in precision medicine from the treating, medical oncologists to the pathologists and also to the diagnostic labs and the payers. So I think as this swerve of precision medicine stakeholders become more familiarized, I think we'll see an even more significant momentum and the way you develop those relationships, I think we are in a unique position given our learnings here.

Okay. Tony on emerging markets so we have very clear, a very clear set of three or four strategies which we are applying in emerging market for the last two or three years and I believe they are the right strategy, so we are maximizing of course our innovative portfolio and we are building capabilities into behind that portfolio and you heard about the results so very good results we have got with Prevnar, I could have mentioned Sutent, Enbrel did also very, very well during the quarter and Lipitor specially in China. So second one is to participate in more meaningful way in the off-patent segment, as you heard we have made acquisition in Brazil, we signed a partnership with Iceland and China to that matter and we are penetrating that segment very effectively and you have seen the growth of established product in emerging market for this quarter has been 17% which is much larger than what we have seen in the previous quarter. We are also executing a very specific program in term of access supporting governments in emerging market, China and their healthcare agenda around cardiovascular medicine we are very active there. And finally I think we are taking advantage now to our promotional infrastructure and the leadership we have put in place in emerging markets in the last two or three years, so that’s how I would summarize the answer. And then your question on 301.

Why they were separate in the press releases were not together?

All right, so initially we were thinking to put 301 and 302 together because we thought that was best view so resulting in more meaningful in that context. However the clarity of the results we have got on 302 let the alliance to take decision on reporting of top line results.

Thank you, Olivier. I think on emerging markets you know we have always said that you are going to get volatility quarter-to-quarter and you know different markets reacted different times and clearly in this quarter a lot of the BRIC-MT markets were all firing on full cylinders at the same time. I don’t believe we see long-term or medium-term 14% growth rate in the emerging markets and we remain committed to our services, high single digit for a full year growth rate.

Your next question comes from David Risinger from Morgan Stanley

I have I guess three questions. The first is, I am not quite clear on the Eliquis time line from here; can you please clarify that in terms of the FDA process and potential approval? Second with respect to bapineuzumab the FDA and Pfizer and others agreed to two primary end points for Phase 3, could you just discuss why the FDA is interested in seeing both cognition and function and the relative importance of cognition versus function? And then third I was hoping that you could just characterize what the pipeline news flow is to watch in the near term beyond bapineuzumab, so what clinical trial read out should we be focused on in the near term. Thank you.

Okay. Mikael could you take the questions on bapineuzumab and on the pipeline?

Okay. So I think you first asked about the endpoints here on cognition and function. You know over the last few years we have seen from initial more focus on the importance when we show impact on a functional performance of patients whether you use physician scores or patient reported outcome and it was the kind of view of many regulator agencies that you needed to look at the combined impact on condition and function. However I should say as we see this field moving forward there's growing interest in actually cognition as a standalone parameter both in diseases like Alzheimer’s and schizophrenia which I think again opens up opportunities for drug development here.

Thank you. On Eliquis timeline, John.

Thanks [David]. So as you heard from BMS on their call last week we've already, the alliance has already met with the FDA and we have an agreed plan on the requested information and we are working hard to provide that information to the FDA by September and we are really working as expeditiously as we possibly can across the alliance to address the outstanding questions and move obligation forward. As you know the FDA may pick up to six months to review our response to a complete response letter once submitted. But we are already working with the agency and we are hopeful that the review can be a completed within a shorter period of time. The alliance will issue a communication with when the FDA accepts our resubmission and we’ll be able to provide you with more information at that time.

Thank you and Mikael you made some good brief comments on the pipeline flow. I would say that I think you know we have had a very rich year this year and still pending of course Eliquis and tofacitinib and bosutinib news and very, very strong in our Phase II and do you want to comment on some of the more closer to Phase II studies Mikael?

Yeah, so you know its been, I am thrilled about the interest in the pipeline and opportunity, so I will speak a few that we haven't touched so much on this side. In vaccines, I think there is opportunity for a potential transformer with the change when it comes to management of staphylococcus aureus; as you know with tremendous healthcare burden with much resistance and we are in the mid of a Phase II trial with our Staph aureus vaccine here. When it comes to the root class of antibody drug conjugate, I am really thrilled with the strong date that we have previously reported for Inotuzumab. We are expanding now also from lymphoma into leukemia and starting soon Phase III studies. And I should say also there is a drag in our pipeline an IV mTOR 3K inhibitor that I am quite excited about and you will see that in addition to what we have mention about CDK. And finally, one example of an opportunity with risk, but also high reward, the PI3K inhibitors has been around for sometime and we have actually quite exciting study in COPD which could open potentially for overall drug with disease modifying effect. So I think that gave you a mix of things of transforming capacity. That’s all in our pipeline. In addition to what that is that we have had opportunity to discuss.

Yeah, and I think David, just to comment on there, I think you know, we’ve had, we will have this year and potentially in the first quarter of next year or in early next year, we’ll have quite a bolus of really exciting approvals from some you know potentially Eliquis, tofacitinib we’ve had (inaudible) we’ll have Prevnar 13 adults, we’ve had XALKORI, so I think we’ve had a rich bolus of approvals this year and potentially in the beginning of next year and then we need to see us progress; Phase II cohorts, now Phase II and Phase III are really strong differentiated, clinically differentiated products is something to look at.

Your final question comes from Michael Tong from Wells Fargo.

Hi, good morning. Most of my questions have been answered but just a couple. First one for Ian. As you think about a Innovative versus Value Co in several years time, what current synergy exist between the two businesses as they operate now and do they represent necessarily an impediment as you think about further breaking or further separating two businesses? And then secondly, can you provide us with an update as to your biosimilar efforts, you know, where they stand now and how you see that space playing out?

Yes, I think, right now I would say, this one we’re going to time on the synergies. Clearly, we have large primary care products that require substantial infrastructure and that is synergistic to our emerging markets to our brand and products that sell on quality and whether those synergies remain important, really depends on how our portfolio is shaped over the next two to three to four years. So if the portfolio moves more in a direction of specialty products then the potential synergies between a Value Co and an Innovative Co maybe less in the future than they are today. So really depends on how the portfolio develops and that’s why I think this is a matter of looking this as in evolving situation as we look at our options and we look at how to manage those businesses. And the last question was biosimilar to Olivier.

So biosimilar, we want to build on Pfizer experience now in biologic development and manufacturing and of course commercialization. Second, the biosimilar market is expanding and is expected to grow from something around $1.5 billion today to $22 billion in 2020. So we want to build on that and we have successfully obtained IND for rituximab Pfizer product as well as Trastuzumab a biosimilar for Herceptin and we have started clinical trials already.

Thank you.

And thank you everybody.

Thank you for participating in today’s Pfizer second quarter 2012 earnings conference call. This concludes the conference. You may now disconnect.