輝瑞 (PFE) 2002 Q3 法說會逐字稿

Thank you, Dr. McKinnell.

You may begin.

Thank you.

Hello, everyone.

And welcome to Pfizer's third quarter 2002 conference call and webcast.

I'm Hank McKinnell, Chairman and CEO here today in New York with members of Pfizer's leadership team.

It's good to have all you have with us as we discuss another solid quarter for our company.

Many of you will have questions, and we'll get to those shortly, but first I'd like to offer some brief observations on the quarter and then I'll ask Karen Katen, President of the Pfizer Pharmaceuticals Group to discuss the performance of our major products and then David Shedlarz, our Chief Financial Officer, to review our financial results and future expectations.

As the numbers indicate, Pfizer again did well.

During the quarter, we delivered double-digit increases in revenue and in diluted earnings per share from continuing operations.

While doing so, we sustained our investments in product support and R&D.

Investments that are necessary for strong future growth.

The strength, quality and consistency of earnings as well as our strong future prospects continue to differentiate Pfizer from others.

And that performance also positions and empowers us to continue our vital work of finding cures and saving lives worldwide.

To my many Pfizer colleagues, I say congratulations for this quarter's results and thank you for the dedication and hard work they reflect.

I also commend the Pfizer Pharmacia integration teams that have been working on integration planning.

Regulatory reviews of our proposed acquisition of Pharmacia are proceeding well and the transaction remains targeted for completion by year end.

Now to comment on our current and anticipated product portfolio, Karen Katen.

Thank you, Hank.

Good afternoon, everybody.

It was indeed a good quarter with the strong growth of our pharmaceutical business driven by the breadth and depth of of our portfolio and by our performance within and across markets around the world.

Today the Pfizer logo appears on 8 of the world's 30 largest selling medicines, more than any other company. 9 of our products are expected to reach -- to each contribute more than $1 billion dollars in 2002 revenues.

And worldwide in the quarter, 11 products representing 82 percent of the company's human-pharmaceutical revenues grew a combined 17 percent.

Our success is due to the medical value of our products and our ability to both expand markets and gain share through the performance of our medical marketing and sales organizations.

And I'm pleased to note that the quarter saw solid progress on all those fronts.

For example, last week, the independent steering committee of a major clinical trial involving Lipitor announced its decision to stop the Lipitor portion of the trial earlier than expected because initial results showed patients receiving Lipitor had significantly fewer fatal and non-fatal heart attacks as well as stroke.

Celebrex and Bextra, Pfizer and Pharmacia's COX-2 specific inhibitors for arthritis and pain, have extended their lead over competition.

Bextra and Celebrex together accounted for 24.3 percent of audited monthly new prescriptions among the US non-steroidal antiinflammatory drugs during the month of August, and in July Bextra was recommended for approval by the regulatory authorities in Europe.

In August, the FDA approved enhanced labeling, making Zoloft the only selective seratonin reuptake inhibiter indicated for long-term maintenance treatment of the previously indicated anxiety disorders: panic disorder and obsessive-compulsive disorder.

Breva, as you all know, is the first once-a-day inhaled bronco-dilater treatment for chronic obstructive pulmonary disease.

Breva has now been launched in 10 countries including Germany and the UK, and in September an FDA advisory committee recommended US approval.

Breva was discovered and developed by Boehringer Ingleheim and will be co-promoted worldwide by both Boehringer Ingleheim and Pfizer.

Vfend was launched in the United States in August and in 6 European countries in September.

Vfend, as you know, is an important new treatment for acute invasive aspergelosis and other rare but serious fungal infections.

Currently we are in the process of rolling out 6 new products recently approved in the US and/or the European Union.

Vfend, Geodon, Bextra, Spiriva, Relpax and the most recent, Rebif, for multiple sclorosis, which we are co-promoting with Cerrono, the discoverer and developer of this important compound.

In 2002 we anticipate completing regulatory filings for the dual therapy agent combining Lipitor and Norvasc, the world's leading cholesterol lowering antihypertensive medicine and for the use of a darafenacin in treating overactive bladder.

In 2003 we expect to complete regulatory filings for the use of pregabalin in neuropathic pain, epilepsy, and generalized anxiety disorder.

And advanced stage clinical studies are continuing for several agents, including capravirine for HIV/AIDS, lasofoxifene for osteoporosis and other indications, and Exubera, an inhalable form of insulin under co-development, co-manufacturing, and co-marketing with Aventis with the participation of Inhaled Therapeutic Systems.

In sum, these are busy and challenging times.

But for Pfizer, these are also times of significant accomplishment and great opportunities.

And now David Shedlarz.

Thank you, Karen.

The third quarter maintained the momentum that is has distinguished Pfizer.

The total revenues up 12 percent and diluted earnings per share from continuing operations, excluding certain significant items and merger related costs, up 15 percent.

We're especially pleased with the quality of earnings growth given the impact associated with the unusual low level of operating expenses in the third quarter of last year and the negative impact of foreign exchange.

Low changes in foreign currency rates favorably empacted Third Quarter total revenue growth by 2 percent or $133 million, the effect on earnings was unfavorable due principally to its significant negative impact on cost of sales.

Looking forward, we expect strong Fourth Quarter diluted earnings per share of 47 cents up 38 percent from continuing operations, excluding certain significant items and merger related costs.

This growth reflects continuing double-digit revenue growth at current exchange rates as well as a favorable comparison with the unusually high expense level of the fourth quarter of last year.

As a result, for full year 2002, we expect diluted earnings per share from continuing operations excluding the cumulative effect of the change in accounting principle, certain significant items, and merger-related costs, of $1.58 up 21 percent.

Moreover, we anticipate double-digit full-year 2002 revenue growth at current exchange rates, margin improvements, and investments and product support in R&D, which is expected to be about $5.2 billion for the year for research and development.

We also expect that the Pfizer Pharmacia combination will be non-dilutive to adjusted earnings per share in 2003 and 6 cents accretive in 2004.

Of course, I need to remind you that this afternoon's discussion includes forward-looking statements.

Actual results could differ materially from those projected in those forward-looking statements.

Factors that could cause actual results to differ are discussed in our 2001 annual report on Form 10-K and our periodic reports on Form 10-Q and Form 8-K, if any.

Thank you, David.

Let me wrap up our formal comments today by repeating the headline of this morning's release which captures the essence of this quarter: Pfizer announces strong third quarter results, reaffirms positive outlook for full year 2002 and beyond.

And now we are ready to respond to any questions you may have.

Thank you.

If you would like to ask a question, please press Star 1 on your touch-tone phone.

Our first question comes from Tim Anderson.

You may ask your question and please state your company name.

Tim Anderson at Prudential.

Couple of questions.

When can we expect to get -- or I guess can we get an update on the timing and potential outcome of a District Court ruling on Neurontin, which seems like it could come any day as I understand it.

And pregabalin, when might we learn when you guys will file exactly in the US?

I know you said 2003 but I'm wondering when that might be narrowed, and the third question is on Yamanuci, I believe they used to have options on certain Siril pipeline drugs, does that survive the merger with Pharmacia?

On the Neurontin update, you'll learn just as soon as we do, this does depend on the judge taking action.

What we have learned recently is the November hearing, which we had talked about at earlier sessions, has been cancelled.

So that almost certainly will push any development in this case into next year sometime.

We have announced already the pregabalin filing: March in the EU and shortly thereafter in the United States.

And ask Peter Foral to comment on the Yamanuci rights to the Siril pipeline.

It does have rights for some period of time.

I believe it's another year in the discovery early development pipeline but that is restricted to Siril products only, the former Siril potential products.

Thank you.

Thank you, Tim.

Len Yafter, you may ask your question and please state your company name.

Len Yafter, Banc of America Securities.

Could you just review with us, David, the foreign exchange impact in terms of when the dollar was much stronger?

It seems obviously to have a negative impact on revenues.

Was it then positive on cost of goods and actually a contributor to overall earnings, or is there something about a mismatch between inventory and sales this quarter that if the dollar stays weaker like it looks like it will for three quarters you will actually start to receive an earnings benefit in addition to a revenue benefit?

Let me first state that what the impact of foreign exchange is on various parts of the statement of income.

When there was a strengthening of the dollar, that served to reduce the dollar value of revenues that were being generated abroad.

At the same time it served to reduce the expenses that were being generated abroad, as well.

Now that we have a weakening of the dollar, it's benefitting the revenue line, but it's causing expenses to be higher.

The unusual impact of foreign exchange on inventories has to do with the need to revalue the inventories in the international community to reflect the significant change in foreign exchange.

It means in the last quarter and probably in the next quarter we'll have a relatively large negative impact on the performance of the company as we bleed out these inventories and sell them into the trade and then thereafter foreign exchange stays where it is, we will continue to benefit on a net basis.

But I also want to highlight the fact that we have included these impacts in our forecasts for the full year of $1.58 and 21 percent growth in earnings per share.

Len, this is not easy to understand but maybe the easiest way to kind of get a grasp of it is in any month that exchange rates change, revenues are translated at the new rate in that month.

So the impact on revenue is immediate.

The to impact on product costs comes through inventory.

So we are matching the cost of the inventory which is products received over the last 6 months or so on average against those revenues.

So essentially, there is a lag.

There is a beneficial impact on revenue from a weakening of the dollar or strengthening of foreign currency, but the cost impact is still being averaged over the 6-month period.

So there is a little a bit of mismatch.

Great.

Thank you very much.

Mm-hm.

[INAUDIBLE] Marigold, you may ask your question and please state your company name.

Yes.

Thank you.

It's [INAUDIBLE] Marigold with CIBC World Markets.

Two questions.

The first on Bextra and the potential label change.

I'm wondering if you can maybe characterize what you expect will be change within the label and where it might fall, and then a clarification on the Norvasc-Mylan suit.

If I recall, there are other generic manufacturers who have filed who you have responded to.

Can you just correct me on that if I'm wrong?

I'll ask Joe Peshco our head of development and medical to comment on the Bextra label.

Yeah, Pharmacia is on the lead on this and we are working with them and there's negotiations going on with the FDA right now.

That's exactly the discussion that are going on.

And we just submitted some more documentation on epidemiological studies to them.

So we're really in the midst of the label discussions with them. -- and can't comment any further.

And Mylan is claiming that the Norvasc patents are invalid.

But they presented no new information that wasn't reviewed by the patent office when those patents were issued.

So we think that suit is without merit.

Barbara Ryan you may ask your question and please state your company name Barbara Ryan your line is open. (Pause) -- Barbara Ryan, your line is open.

Hello, Barbara... (Pause)

Steven Tyke, you may ask your question and please state your company name.

Actually, this is David Rysinger from Merrill Lynch.

Two questions.

First, could you provide an update on the asbestos litigation?

And second, and this might be for Karen, could you talk about the timeline for inhaled insulin and what we should be expecting over the next few years?

Okay.

On asbestos, our general counsel is on an airplane, unfortunately, we couldn't patch him into this call.

Except for small changes in the number of cases, there is nothing really new there.

We still believe any liability is covered by -- by available insurance.

So we see no real liability there.

On inhaled insulin, maybe Peter would be the best --

Yes.

David, with inhaled insulin, as you know, we sent a press release out earlier this week and going forward, what we are doing is we're in discussions with regulators about what is needed.

There is no issues around the efficacy of this agent.

There is a small 1 to 2 percent change in pulmonary function which we saw only in the Phase 3 trials.

We are doing additional studies which are ongoing if both Type 1 and Type 2 diabetics using very sophisticated approaches to really define whether that 1 or 2 percent change is or is not a major issue.

We don't believe it is.

And the reason we don't believe it is, is that we have interim results from 1-year control data in Type 2 diabetics that shows no progression of the changes.

And actually, with one of the end points, PLCO, it actually looked even slightly better with Exubera treatment for 1 year versus sub q insulin.

So we just want to be sure relative to safety and we'll be discussing and are discussing it now with the regulators about the timing of the submission.

The point we're satisfied we can answer any safety questions or concerns, we'll file.

Great.

Thank you.

Ken Coldure,you may ask your question and please state your company name.

Yes.

Credit Suisse First Boston.

Two product questions.

First, on Zithromax, you are entering a big quarter for that product line.

Do you expect the entry of generic Augmentum to have any impact on relative sales uptake moving through '03?

And the second product question was just on Norvasc.

Could you review the European patent situation for that drug?

Thanks a lot.

Zithromax, Karen

It's doing extremely well.

It appears that flu season has begun, and we don't anticipate too much of an impact with Augmentum, with the generic because Zithromax has faced generic competition for years and done well.

And we launched the try packs last month and that's having good market acceptance.

And on Norvasc in Europe, there are two sold, one patent of which is beginning to expire this year or next year, further patent expireees by '04.

The salt we are marketing however is patented well into the end of this decade.

Now, whether the expiree of a salt that we're not marketing allows generics to come on the market is an open issue.

As of yet, there are no generics in Europe.

Thanks.

Barbara Ryan, you may ask your question and please state your company name.

Deutsche Banc.

Good afternoon.

My question has is really for Karen.

If we look at the statin market, it appears that from a new prescription perspective, the numbers look much flatter than we would expect to see at this point in time.

Actually, Lipitor is certainly outpacing the rest of the group.

And I wonder if you could just talk to us a little bit about what you're hearing in the context of that market, if there is increasing amounts of that, that are not captured by the audits, just to give us some perspective on what you see happening.

That's for the purpose of those who may not know the numbers just review the numbers, through September the market is up 10 percent, Lipitor is up 13 percent in the month.

Market is up 12 percent, Lipitor up 13 percent.

It is less than we would expect.

We would fully expect it to be more.

It will begin to take off again, especially driven by some of the new data that's coming out from Ascott.

That obviously changes the -- vastly increases the market potential for statins and for Lipitor specifically.

Those who should be treated in the United States only a third are actually treated.

So there is lots of opportunity for market expansion here.

We, too, would expect it to be higher.

Thank you.

CJ Sylvester, you may ask your question and please state your company name.

UBS Warburg.

Couple of questions.

With the comments on darifenacin, is it fair to say FTC is not concerned with any issues [INAUDIBLE]?

And secondly, David, everybody in this space or I guess everybody in the market has underfunded pensions.

Is there anything you are doing specifically that's having an impact on the P&L this year for the pensions going forward?

Darifenacin is still under review by the Federal Trade Commission.

They haven't yet come to a conclusion but obviously looking at the market share of Detrol and the pending entry of darifenacin which we expect to file by the end of this year, we do expect further discussions on a potential overlap there.

And there's been no determination yet by the FTC whether that will require divestment or not.

David, on pensions?

Yeah.

Your observation is correct right across the board.

The pension funds have been hit pretty hard as most of us have been as individuals in terms of what's transpired in the equity marketplace.

That's been the experience over the course of the last couple of years.

On the other hand, you have to be careful to isolate the qualified plans as well as the pension assets and in that regard, there is a pretty good match between our accumulated benefit obligation and the accumulated benefit -- and the pension asset value itself.

Having said that we might take a look at putting additional funds into the pension plan.

We are not required to do so.

Some other companies are.

That would be fully discretionary on the part of the company.

But we may choose to do that.

Thanks.

David Moskowitz, you may ask your question and please state your company name.

Yes.

Thank you.

It's Friedman Billings Ramsey.

First question is, could you give us a sense of the timeline for a launch of Bextra in the EU?

And in addition, could you talk about the further toxicity data that we are looking for on pregabalin with the FDA, thank you.

Bextra will be launched after we have approval and we don't forecast approval dates.

So that will depend on final approval and Peter, with respect to pregabalin?

Yes.

In terms of the basic studies, again, these are not clinical studies.

The basic studies to evaluate the mechanism, further evaluate the mechanism of the emangio sarcomas which occurred in the first mouse studies.

They want to understand the mechanisms more thoroughly, and we expect to have that data done and completed within the next few months.

Thanks very much.

David Buck, you may ask your question and please state your company name.

Yes.

It's Buckingham Research.

Thank you.

Just on Norvasc, we notice that there was a docket filed at FDA related to the NDA filed by Dr. Readies from lodopine or Norvasc.

Can you give an update on that litigation where that stands and that was it.

Thank you.

Dr. Readies' claim for those of how haven't followed the litigation is that when under Hatch-Waxman the patent was extended, it did not apply to the product and its salt.

Unfortunately for Dr. Readies, the legislation says the patent extension will apply to the product and all its salts.

We believe his claim is absolutely without merit and will go nowhere.

And just if I could get a roundup of how many generic filings you have including Mylan and Dr. Readies'?

This is a game the generic companies are playing.

There are probably 2 or 3.

I don't have the list in front of me but there's probably a couple of people taking a shot at us hoping they get lucky.

Okay, thank you.

Sam Sabar, you may ask your question and please state your company name.

Your line is open.

Hi, this is actually Simon Ultches at KBC.

Just two quick questions for you.

Regarding the status of the safety reevaluation of Celebrex in France, could you comment on where that reevaluation is at at this time?

I think actually France has requested a European medecines agency review of Celebrex, at around the same time the agency provided an approval for Bextra.

So Joe, maybe you can comment on where that is?

That's just an ongoing review of Celebrex and all the COX-2s in Europe actually, and we have submitted data that's under review right now so it's a process to look at various labeling across the COX-2 --

We don't really know what that review is focused on.

We can't imagine that Celebrex, where the growing database is continuing to confirm efficacy and safety.

Okay.

Great.

And second question is also a status check.

Can you comment on where the Aniston-Alabama-PCB litigation is at?

General counsel isn't here.

So I don't think we can really comment beyond what's already in the public record.

Okay.

That's covered in our latest 10-Q and will be covered again in the coming 10-Q.

I don't know of any change, actually.

Okay.

Great.

Now, I assume you don't envision either of these having any impact on the timing of your merger with Pharmacia?

No.

It will not.

Great.

Thank you.

Keith Maher, you may ask your question and please state your company name.

Yeah.

Keith Maher, WPG Farber Fund.

Just two questions.

Just follow-up on that, the question regarding the Bextra label.

What was that for, is that for the due doctrine letter that went out about Steven Johnson Syndrome?

Yes, it is, that is correct.

And then do you regarding that point, do you think that's going to have an impact from a marketing standpoint at all or how are you looking that?

And that's the first question.

The second one is really regarding the Cerrano agreement to sell Rebif in the US.

Are you seeing any results to date and then what are your expectations for sales into 2003?

The Bextra label, Joe?

Well, the marketing -- we don't know what the label is going to show you.

So it really depends on what we finally negotiate.

That's going, you know, we're in discussions with the agency right now.

We have submitted some more information to them.

So we are not sure really what the final label is.

Until we get that, it's hard to say what kind of impact it might have.

And Pat Kelly, Rebif?

Well, as you are away, I hope, we are -- our involvement with Rebif with our colleagues from Cerrano began in earnest earlier this month.

So it's a little early for us to be able to tell what impact we have had.

All I would note is that the product itself as a result of not only the great benefits it provides but the great efforts that Cerrano has put into it already is off to an excellent start in the US market.

And we hope to only be able to accelerate the great progress already being made.

And Rebif scripts in September were up to 8.9 percent and we are looking eventually for market leadership here.

Great, thank you.

Brad Wilde, you may ask your question and please state your company name.

Yes.

Citigroup.

Hi.

The other day, Johnson & Johnson spoke about a program for steps that they have been implementing to smooth out inventories at wholesalers to maintain what they consider normal inventory levels of approximately 3 to 4 weeks.

And I was wondering, has Pfizer implemented any changes with the way they deal with wholesalers and if so, what would those changes entail?

You look at inventory levels across the various companies in the industry, there is quite a wide range.

We have consistently for many years been at the bottom of that range.

We have not changed our practices.

We have always managed wholesaler inventories to a normal level of -- I wouldn't even say 3 to 4.

It's in the kind of 2 to 3 range in our case.

And we've not made any changes.

So we're I think on the bottom end of the range here.

Great, thank you.

Larry Smith, you may ask your question and please state your company name.

Yes.

Larry Smith, Gerard Klauer.

The generic drug companies seem to be challenging the patents of many products which we felt have had strong patent protection.

This applies not only to Neurontin and Norvasc but also other products.

You noted in your press release today that Mylan in challenging Norvasc didn't cite any prior art.

And you alluded to the Dr. Ready challenge as being somewhat spurious.

I'm wondering what's at work here?

Is it just the sheer amount of money that they have?

Is it possibly the fact that because patent expirations are dropping sharply in 2003 and 2004 that they are playing to investors with these challenges?

But to what extent should we think that the intellectual property of the industry is more challenged today than it might have been -- than we might have thought 2 or 3 years ago?

That's a really good question, larry.

And to be honest, I don't really not answer to that question.

Clearly, there are more challenges from the generic industry.

We don't believe, based on our own knowledge of our patent history and the claims being made, that these cases have any value.

And in fact, in the cases that have been adjudicated, the judges don't find any value to these claims.

So I don't know what's motivating them.

But hopefully their lack of success in several instances here, and hopefully a few more in the future, will discourage them.

Now, the facts are these are kind of free shots.

They get to take a chance.

If they get lucky and some judge rules in their favor, they get a big payday.

And if they lose, there is no consequences except for a modest amount of legal fees.

So this is -- this is a slight perversion of our legal system and there is no consequences to losing.

So I'm hoping there will be enough positive outcomes for the research-based industry that the generic industry will conclude this is a fool's errand.

Okay.

Thank you.

Don Lusik, you may ask your question and please state your company name.

Yeah.

Hi, Don Lusik, Boston Private Value Investors.

It's an R&D question.

It looks like like the R&D budget is slowing down year-over-year.

Just wanted to see if you can make a comment on that.

And give us an idea of what it might look like with Pharmacia in that -- and then do you expect the trend to continue?

Yeah.

We expect our full year R&D spending this year to be $5.2 billion with Pharmacia.

I think that I number would be 7.2.

I think it's 7.2.

There are some quarter to quarter fluctuations almost always due to some strange things that happened last year, so I wouldn't look too carefully at year-to-year growth rate.

That's one of the reasons we have given you a full- year number.

The number going forward is going to be a function of our review of both development candidates in the 2 companies' pipelines and we haven't yet looked at the earlier stage pipelines.

There will be some savings from the total, but we don't yet know what that number is.

All right, thank you.

Stavros Alfons, you may ask your question and state your company name.

It's Sand's Point Partners.

Just a quick one.

Given the new product introduction of lexipro (phonetic) into the antidepressant market have you seen, you know, the franchise cutting into your Zoloft market share?

And if so, can you just highlight what you plan to do combat that entrant into the market and continue to maintain and even gain Zoloft share in the antidepressant market?

Pat Kelly who heads our US business?

Well, the short answer is that it is indeed true that lexipro, a not much different version of selexa (phonetic) has marched on to the US market but the answer to whether it's affecting Zoloft is no.

Which I think the script data as well as the revenues that we're reporting on Zoloft in the US demonstrate is that we continue to see strong growth of Zoloft which is the most prescribed SSRI in the US marketplace, and we have high expectations that with the increasing expansion of the utility of the product, as noted in the release, by unique long-term data, by the addition of other and further claims and uses for the product, we think we continue to extend a lead over the marketplace in both effectiveness as well as usefulness that will offset any potential challenge from lexipro or anyone else.

So the SSRI market is certainly an important market to Pfizer still and one that you guys plan on continuing to market in very agressively.

Absolutely.

The answer is yes.

And to put this in context, in September, lexipro generated 70,000 new prescriptions. 70,000.

Zoloft was just short of a million.

So it's in a different league altogether and Zoloft continues to gain share both in the month and year-to-date.

Great, guys.

Congratulations, and good job there.

Thanks.

Thank you.

Jamie Rubin, you may ask your questions and please state your company name.

Thank you.

Morgan Stanley.

This is a question for Peter.

I was wondering if you could provide us the status update on avasomibe [phonetic], and secondly on the CETP inhibitor, which continue to be in Phase 2 studies, when you plan to move into Phase 3, and what type of studies are being contemplated.

Your first question related to avasomibe (phonetic).

As you know, we indicated that there was a study using positron emission tomography to look at flow.

And did not show a particularly robust outcome.

However, patients with coronary artery disease treated for -- with avasomibe at the original protocol was for two years.

They are now being evaluated at 12 months, some patients are at 12 months.

Some are at 18 months.

Some are at 2 years using intravascular ultrasound.

Those studies should complete later this quarter, the first part of '03.

The CETP inhibitor, it's proceeding very well, and the Phase 2 studies are continuing.

We want to make sure we get the dose right, the end points.

We would be moving to -- probably into Phase 3, and again we'll make that decision based on our discussions with the regulators at end of Phase 2.

Expectations are that that would be next year.

Are you developing it a fixed combination dose with Lipitor as well as a monotherapy?

This will be a fixed dose only.

Fixed dose only.

Okay.

It's almost unethical to do the studies separately.

Okay, thanks.

For those of you who don't follow our pipeline all that closely, the CETP inhibitor is a whole new approach to raising the level of HDL or good cholesterol, which we believe has a more profound impact on cardiovascular risk than reduction of LDL even, and the 2 together should mean a very significant impact on cardiovascular risk.

Burt Handler, you may ask your question and please state your company name.

Thank you, SunTrust Robinson Humphrey.

Regarding Zyrtec, we saw somewhat modest growth this quarter.

Are you experiencing any inventory destocking or do you anticipate it in the wake of OTC or generic Claritin?

Second, were there any price increases for the quarter, and is the tax rate guidance still 23.5 percent for the full year?

And under the excluded items, you took a charge regarding various litigation matters of about $25 million.

Can you give us any additional clarity on what those charges represent and whether you expect any additional ones in the future?

Thanks.

The tax rate is the rate for the year of 23.5.

Correct.

Yeah, it 23.5 percent and that will be for the year.

I don't quite understand your Zyrtec question.

In the month we are up 28 percent and the market growing 8 percent year-to-date up 26 percent in a market growing 4.

Zyrtec looks pretty good to me.

Didn't say it was bad.

We are just trying it find out whether or not you are expecting anything in the near future.

Well, in OTC impact I guess -- There is a patent expiration for Claritin, veratidine (phonetic), that's expected by the end of the year, and there are previously announced plans of everybody including Schering-Plough bringing out OTC loradines (phonetic), but those have not yet occurred, and we strongly believe that Zyrtec will be able to withstand any impact on that.

Again, because as we have seen in other markets, the expiration of competitive patents and the introduction of competitive OTCs does not have the impact on our own brands that it has obviously on the parent brands of the company involved.

Okay.

And now for our final question....

Our final question comes from Mario Corso.

Please state your company name.

[INAUDIBLE] Terms of Neurontin, with the case of the pushout until January, can you comment, is that a scheduling issue or is that more of a response to a motion, and then in the quarter, on the alliance revenue line Rebif and Spiriva are now alluded too.

Was there an actual financial impact from either of those in that line in the quarter?

Thanks.

On Neurontin, I don't really know why the November hearing was cancelled.

We do know, however, that the generics submitted another 5 or 6 motions for summary judgment.

We have until sometime next year to respond to those.

So as expected, things are taking their time in the courts.

In the quarter, David, Rebif and Spiriva?

Yes.

There was an impact on alliance revenue.

It was very modest, though.

This would be the very early launches and the first month of Rebif, I guess.

So it would be very small.

With that question, we conclude today's conference call.

Thank you all for being with us.