Wyeth Q1 2009 Earnings Call Transcript

Wyeth (WYE)

Q1 2009 Earnings Call

April 29, 2009 8:15 am ET

Executives

Justin Victoria - Vice President Investor Relations

Bernard Poussot - Chairman, President and Chief Executive Officer

Greg Norden - Chief Financial Officer

Joe Mahady – President, Wyeth Pharmaceuticals

Cavan Redmond – President, Wyeth Consumer Healthcare

Analysts

[Doug Subleman] - Sanford Bernstein

Jami Rubin – Goldman Sachs

Roopesh Patel – UBS

Steve Scala – Cowen

David Risinger – Morgan Stanley

John Boris – Citi

Chris Schott – J.P. Morgan

Barbara Ryan – Deutsche Bank

David Moskowitz - Caris & Company

Presentation

Operator

(Operator Instructions) Welcome to the Wyeth First Quarter Earnings Conference Call. At this time I will turn the call over to your host, Vice President of Investor Relations with Wyeth, Mr. Justin Victoria.

Justin Victoria

We are here to review Wyeth 2009 First Quarter performance and comment on the status of our integration planning with Pfizer. On the call with me today are Bernard Poussot, Chairman, President and Chief Executive Officer of Wyeth, Greg Norden, Chief Financial Officer of Wyeth, and Joe Mahady, President of Wyeth Pharmaceuticals and Cavan Redmond, President of Wyeth Consumer Healthcare.

As a reminder, certain statements that are made today that are not historical facts are by their nature forward looking and involve risks and uncertainties. Actual results may differ materially from such forward looking information. This has been more fully disclosed in our press release and in our periodic SEC reports, including quarterly reports on Form 10-Q and the annual report on Form 10-K including under the caption risk factors.

Now let me turn the call over to Bernard Poussot.

Bernard Poussot

This morning, in addition to commenting on the quarter I would like to share some observations on the progress of our planned merger with Pfizer.

Let me start with the performance of the business. Despite the challenges of the current economic environment Wyeth delivered solid results in the first quarter, continuing our pattern of quality performance. This quarter we delivered diluted earnings per share excluding certain significant items of $0.95 slightly better then last year.

We met out goals for the quarter and are on track for our plan for the rest of the year. We showed excellent financial discipline in controlling our costs in the quarter to allow us to offset significant foreign exchange impact on the top line and to deliver sound bottom line performance.

Our growth is led by three key engines; Enbrel internationally, Prevnar and Nutritionals, continuing to provide strong double digit constant dollar revenue growth. In addition to these core franchises a series of new products Tygacil, Torisel, Pristiq and Zulvac are helping to offset the expected declines of products with emerging competition like Effexor and Zosyn.

Our solid first quarter results confirm that our long term strategy to build one of the most diversified global biopharmaceutical companies is the right course. Our strategy is focused on diversity by product line, business, by technology platform and by geography. As a result, and consistent with our 2008 performance, 52% of the revenue in the first quarter was generated outside the United States and 60% of our revenue was derived from non-traditional pharmaceutical businesses. That includes $2 billion in revenue from biopharmaceutical and vaccine products.

Strong performance in biologicals and vaccines has positioned Wyeth as the fourth largest biotechnology company in the world based on full year 2008 results.

We continue to push through innovation in our research and development to add to our existing commercial strength and to open new avenues of growth. We recently secured European approval for Conbriza or Bazedoxifene in osteoporosis and an FDA approval for a new use for Tygacil in community acquired bacterial pneumonia. We completed our US filing for Prevnar 13 infants this quarter and expect to file for approval for Prevnar 13 for adults next year.

We recently began a phase three program with Neratinib or HKI272 a compound that we believe has the potential to advance the standard of care for breast cancer treatment. Our plan at Wyeth is to become the best biopharmaceutical company in the world, seeking to address the most critical diseases of our times such as Alzheimer’s disease and cancer, using our multiple technology platforms and talented teams.

Our ability to execute successfully on our diversified strategy caused others in our industry including Pfizer to take notice. By combining with Pfizer we see opportunity for the company to enhance Wyeth’s bold strategy while adding to Pfizer’s own scale and strength. We are creating the world’s premier biopharmaceutical company, an industry leader in human, consumer, and animal healthcare in both disease prevention and treatment. We’re building an organization that will expand our mission to bring innovative medical solutions to patients around the world.

As you heard from the Pfizer team yesterday, the integration planning process is well underway and we at Wyeth are very engaged in the process. We were pleased with the recent announcement that eight members of Wyeth senior management will assume significant leadership roles in R&D and commercial operations in the combined organization post closing.

I will continue working with Jeff Kindler and our respective leadership teams to help build the management team of the combined company. As you heard, we continue to anticipate closing at the end of the third quarter or in the fourth quarter of this year.

Our main purpose today is to report on and provide our perspective on the performance of our business. Let me turn the call over to Greg Norden so that he can review the financial results of the quarter with some more depth.

Greg Norden

Turning to our financial review, diluted earnings per share excluding certain significant items for the 2009 first quarter was $0.95 slightly above last year. I’ll refer you to our press release for detail regarding these adjustments. As usual, my comments will refer to the as adjusted P&L included at the end of our press release.

We achieved solid results in the quarter despite considerable challenges. Some specific to Wyeth such as affects of dosage and generic competition and others of a more macro economic nature. Currency had a significant unfavorable impact not just on Wyeth but on all US based dollar denominated companies with a global business. Disruption in the worldwide financial markets continues to have wide ranging negative effects on virtually all businesses.

Overall, Wyeth’s worldwide net revenue for the quarter was $5.4 billion a decrease of 6% versus the 2008 first quarter. However, excluding currency changes revenue actually increased by 2%. Wyeth has a hedging program in place for certain currencies but this only partially offsets the unfavorable year to year negative impact of foreign exchange on our bottom line. I’ll note here that income or costs from our hedging program are recorded in other income which I will address in a minute.

Looking at our Pharmaceutical business, revenue for the quarter decreased 6% but increased 2% excluding the effect of foreign exchange. Joe will provide more depth on the Pharma business in just a moment. Consumer healthcare revenue for the quarter was down 9% but excluding currency changes was down just 1% reflecting some consumer spending softness in developed markets around the world. Revenue for Animal health business was comparable to last year and up 13% excluding currency changes principally reflecting a strong performance from our Bluetongue vaccine Zulvac.

Gross margin for the first quarter was 75.6%. Much of the year over year improvement comes from the effect of changes in foreign exchange rates. The increase in margin also reflects favorable manufacturing variances for the quarter. For the full year we expect gross margin to be approximately 73% to 74% which is comparable to the last year.

SG&A for the first quarter decreased 4% and increased 3% after adjusting for currency. A key component of SG&A expense is pension expense. Our pension plan assets incurred a significant decline in market value in 2008 as the result of global economic conditions. We noted in our 10-K that we expected this change in market value to result in increased pension expense of approximately $250 million for the 2009 full year.

These incremental pension costs are recorded throughout the P&L, in cost of good sold, SG&A, and R&D. Excluding the impact of this increased pension expense and adjusting for currency SG&A spend for the first quarter would have been flat to slightly up. We are expecting this trend for SG&A will continue for the full year. This reflects our continuing efforts to manage costs while at the same time provide the necessary investments behind the businesses and markets that are crucial to our growth.

These results and our projections for the year include the ongoing effects from Project Impact. We launched Project Impact at the beginning of 2008 and noted that we ultimately expect annual savings of approximately $1 to $1.5 billion when the program is fully implemented in several years. Our full year 2009 projections include cost savings from Project Impact of approximately $700 million and these savings are reflected in the various components throughout the P&L.

R&D spending for the quarter decreased 6% and 4% excluding the effects of foreign exchange. We still project R&D will be up slightly on a full year basis. The first quarter results reflect lower operating costs in 2009 following Project Impact related headcount reductions which occurred after the first quarter 2008 as well as the timing of late state clinical trial costs.

Net interest was expense of $65 million in the quarter versus income of $27 million in the same period last year nearly a $100 million swing, primarily reflecting the impact of the declining interest rate environment on our cash balances. We noted in our 10-K that due to the significant decline in interest rates on our investments we expected net interest expense to increase substantially in 2009.

Other income in the quarter was $123 million versus $39 million last year primarily reflecting recording of income related to our foreign exchange hedging program in the 2009 quarter versus corresponding costs in the prior year period.

Finally, our tax rate for the quarter was approximately 28%. As you know, the R&D tax credit was not renewed last year until the fourth quarter. Thus much of the improvement versus last year’s first quarter comes from the effect of the R&D tax credit as well as increased profit from a more tax advantaged jurisdiction. We expect the tax rate for the year to be between 29% and 30%.

In summary, our first quarter results were solid. For the 2009 full year we are reiterating as outlined in our 10-K our pro forma diluted earnings per share guidance of $3.33 to $3.53. Our 2009 estimate anticipates strong growth in constant dollars in our core franchises and new products offset to some degree by generic competition for a few key products. This guidance also reflects the anticipated unfavorable impact of foreign exchange, increased pension expense and decreased interest income.

Although we continue to expect our proposed merger with Pfizer will occur in the second half of 2009 this guidance assumes stand alone operation of our business for the full year. This range also excludes charges connected with productivity initiatives and any transaction costs related to the proposed merger with Pfizer.

With that I’ll turn the call over to Joe Mahady.

Joe Mahady

Results for the worldwide human pharmaceutical business for the first quarter included strong performance from our core franchises, important contributions from new products, increasing international generic competition, and influence from both exchange rate and economic concerns around the world.

Thus while Worldwide Human Pharmaceutical revenue as reported for the 2009 first quarter was off 6% the rate adjusted for performance was up 2%. By actively managing the middle of the P&L we were able to deliver year over year profit performance that is better then the corresponding revenue performance and our Pharmaceutical IBT is nicely up in both absolute and constant dollar terms.

Our biotech and vaccine franchises continue to grow. Revenue from the biopharmaceutical products and vaccines in the first quarter was $2 billion, constituting 43% of total Human Pharmaceutical business revenue. Our growth drivers reflected diversity of our business. With Enbrel, a biotech product, Prevnar, a vaccine, and Nutritional businesses collectively generating more than $2 billion in revenue for Wyeth in the quarter with strong growth of 12% in constant dollar terms versus last year’s first quarter.

Enbrel is the world’s largest selling biotech brand. Enbrel sales worldwide in the quarter were $1.4 billion. As you know, last week Amgen comment on the slowing in the domestic rheumatology and dermatology markets in response to current economic conditions. In sharp contrast the revenue growth for Enbrel in the Wyeth exclusive market outside North America remained strong. We reported Enbrel International revenue of $627 million up 3% but up a full 23% over last year in constant dollars. Enbrel retains its position as the number one TNF inhibitor for RA and Psoriasis.

Prevnar is the world’s top selling vaccine. We achieved a strong first quarter with revenue of $755 million up 7% and that’s 19% in constant dollar terms. We’ve expanded now to 35 national immunization programs with a total birth cohort of about 15 million infants involved. We’ve added new NIPs for significant market such as Turkey and Saudi Arabia in the 2009 first quarter with more NIPs on the near term horizon.

Key to the future growth with Prevnar is the fact that we have our next generation product. Prevnar 13 which, if approved, will provide the broadest coverage available for global protection of children against pneumococcal disease. Prevnar 13 is now under active review by the FDA and regulatory authorities in more then 40 other countries worldwide. We’re also developing Prevnar 13 for adult vaccinations. A large and new commercial opportunity with global filings there planned for 2010.

Our Nutritional business also continues its strong pace with global revenue of $415 million in the quarter up 1% that’s 12% in constant dollar terms. Our plan to expand manufacturing capacity for our Nutritional products, including the expansion of existing facilities in the Philippines and Singapore and the construction of a major new facility in China will increase our supply of infant nutritionals by 60% to 70% over the next several years.

We reminded you in our 2009 outlook published in our 10-K filing early this year that Effexor and Zosyn would be subject to increased generic competition in 2009. That’s reflected in the first quarter results. Effexor is down 20% in the quarter, primarily due to international generic competition, a performance that is in line with our projections.

Zosyn was down 9% in worldwide revenue reflecting its decline in international markets. While generic competition for Zosyn in the US could occur at any time our 2009 guidance assumes, for financial modeling purposes, that we will see generics for Zosyn in the US beginning in the third quarter. At this time there continues to be no generic competition for Zosyn in the US but we do continue to monitor this situation closely.

We’re beginning to see measurable contributions now from our new product portfolio; Tygacil, Torisel, Pristiq and Relistor. Tygacil is gaining recognition as a versatile and important injectable antibiotic with strong sales growth. Its pace is ahead of what was achieved by Zosyn at a comparable stage in its lifecycle. The profile of Tygacil is also being expanded with recent FDA approval of a new indication for community acquired bacterial pneumonia. With the filing for diabetic foot infection planned for later this year and more results coming in abdominal infections.

Torisel provides a valuable option on oncology for renal cell carcinoma in patients with poor prognosis. Torisel generated sales of $36 million in the quarter. Pristiq continues to show steady progress in product usage. Patient and physician acceptance and formula coverage as an antidepressant in the US market. We’re also adding important launches in key market such as Canada, Australia, Mexico and Brazil.

We remain committed to developing Pristiq for menopausal symptom relief to enable it to reach its full potential. Mexico and Thailand recently granted approval for Pristiq to treat menopausal symptoms, the first two approvals for this indication. We’ve also completed enrollment in the Pristiq one year confirmatory safety study in women with vassal motor symptoms. We plan to submit the data from this study to the FDA in support of our regulatory filing for the VMS indication in 2010.

Relistor sales continue to be modest as we work to build awareness of a futility and addressing opioid-induced constipation and palliative care and in developing it for use in additional settings. Collectively these new products delivered more than $150 million in 2009 first quarter revenue and are on pace to deliver full year revenue in excess of $750 million.

It continues to be a very active year on the R&D front. I already mentioned some of our approvals and our pending regulatory filings for Prevnar 13 in infants and our planned filings for adults in 2010. In 2009 we also receive European approval for Effexor AF for hemophilia and Conbriza our Bazedoxifene product for osteoporosis in Europe.

As we reported several weeks ago, we have adjusted the phase three APOE for non-carrier studies with Bapineuzumab to discontinue the highest two milligram per kg dose. Since I last spoke with you about our discussions with international regulatory bodies on Bapineuzumab we’ve completed a comprehensive series of meetings to provide the background information requested by those authorities. We are now actively enrolling subjects in our phase three Bapineuzumab trials in most of our international sights.

We believe our first quarter results demonstrate our strategy at work with a diversity of products in many different markets enabling global growth even against the backdrop of new generic challenges and a very tough economic environment. We continue to advance or R&D portfolio across multiple technology platforms while managing the middle of the P&L in a manner that is reflective of our changing pharmaceutical marketplace and that generates profit performance better then that seen with revenues.

Now let me turn the call back to Justin so we might take your questions.

Justin Victoria

We’ve covered a good deal of information this morning pretty quickly and we anticipate you may have some questions. Given the short timeframe we have remaining today I’d like to ask that you limit yourself to one or two questions at most. Operator let’s open the line for questions please.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from [Doug Subleman] - Sanford Bernstein

[Doug Subleman] - Sanford Bernstein

Can we get an update on when we might see the Prevnar 13 data in adults for the Phase three program, and is that likely to occur before the end of the year?

Justin Victoria

The Phase three program for Prevnar 13 in adults is ongoing. Frankly we do not expect to present the data at a medical conference in 2009. It will probably be in 2010 before we are in a position to be able to disclose the full data from that program. As Joe and Bernard both mentioned we’ll be filing for Prevnar 13 for adult registration in global filings in 2010.

Operator

Your next question comes from Jami Rubin – Goldman Sachs

Jami Rubin – Goldman Sachs

A follow up on Prevnar 13 for children, a couple questions, how much room do you think you have on price relative to Prevnar and are you doing studies to show benefits of revaccination of older kids of Prevnar 13, and how should we think about the commercial opportunity of Prevnar 13 in the US? I’m assuming this is just a replacement of the older formulation with the upside being the price premium but if you could elaborate on that.

Secondly, if you could talk about the opportunity overseas and the competitive dynamics with Glaxo competing pneumococcal vaccine, the vaccine.

Joe Mahady

The pricing we believe Prevnar 13 is a product that offers an improved profile over a product that’s already turned in some pretty significant performances worldwide. We’d be looking for a price premium where we can attain it and certainly that would be something we’d expect to see in the US and depending on competitive conditions worldwide something we will be pursuing in both NIP and private markets worldwide.

We do have work done to try and pursue catch up with the Prevnar 13 that would be with all the children. Again, that’s going to be dependant upon how the regulatory authorities view the registration package. The big question I think you’ve asked is how we see Prevnar stacking up in the infant and children indications worldwide given the presence of the Synflorix vaccine.

We view Prevnar 13 really as the most comprehensive protection against invasive pneumococcal disease that will be available to the worldwide markets. We think at the end of the day that’s what people have really pushed for NIPs for is for protection against serious invasive pneumococcal disease. We think Prevnar 13 will have the most comprehensive package for that.

The good news is we think it will be available in line with what our original expectations were granted we need get it both through the US and European approvals but that process is active right now and our expectations from our regulatory people and clinical people is that we should keep to the timelines we had expected for year end approvals.

Operator

Your next question comes from Roopesh Patel – UBS

Roopesh Patel – UBS

I also have a couple questions on Prevnar 13. Has the FDA confirmed acceptance of the filing and designated whether or not it’s on a six or a 10 month clock? Secondly, when should we expect to see results from the second Phase three study in children to be presented here in the US? Lastly, when might we see some data with regard to a booster dose in children that have already been given Prevnar 7?

Justin Victoria

As Joe indicated, we already have an active regulatory review ongoing for Prevnar 13 in Europe and with FDA. We are still within the window for FDA to make the final determination of filing and assignment of priority versus standard review. We’ll probably have that very soon but we don’t have that in hand at this point in time.

Availability of the data from the second pivotal Prevnar 13 study will probably come in the fall either in the form of a medical conference or in terms of FDA reviews potentially any discussion at an advisory committee if there be one scheduled for Prevnar 13 then the briefing materials from FDA and Wyeth will include the full data package including the second US based pivotal clinical study.

Joe gave information about booster doses. There will be some in the initial package but additional data are being developed.

Joe Mahady

We have to reiterate here this is a massive filing and we are moving with incredible, but I think appropriate speed from completion of study to filing to what we project as potential approval. In that situation it’s conceivable that a lot of the publications may follow the actual filings and approvals.

Operator

Your next question comes from Steve Scala – Cowen

Steve Scala – Cowen

In the EU, apparently Wyeth is doing a study to assess less frequent dosing of Enbrel or the current regiment at lower doses even half the current dose. What is the timing of this study and what are the revenue implications if the study is successful?

Justin Victoria

I will follow up with you subsequently on that. We have a number of studies ongoing with Enbrel and we’ve looked at issues including lowering loading doses in psoriasis, lower frequency dosing from bi-weekly and there’s always studies ongoing about extending dosage. I’m not familiar with the specific study you’re referencing so perhaps we can follow up with that offline. Happy to deal with you later on that if I can.

Operator

Your next question comes from David Risinger – Morgan Stanley

David Risinger – Morgan Stanley

Could you run through your perspective on US Zosyn assuming that generics do enter the market? Can you just characterize from your perspective how much protection you’ll have from generic competition given the percentage of the business that’s in frozen bags? Specifically what percentage of the US businesses is in frozen bags today and would that business likely convert back to the original formulation or not?

Second, beyond Prevnar 13 could you please discuss the top three late stage pipeline candidates that you’re most excited about?

Joe Mahady

We watch very carefully what’s going on in Zosyn. The impact that would be present on the presumption of an approval would be somewhat mitigated as you say by the presence of the Zosyn frozen bag formulation. That’s about half the business in the US. The second big factor of course will be the ability of any generic company or companies to fully supply the market. That should not be taken as something that’s automatic.

The third factor of course would be what, if any type of formulation is approved and whether or it carries with it any significant kind of constraints regarding the use or interchangeability of Zosyn. Let me reiterate from our perspective what we’ve got is that mid-year date that we put into financial modeling and we really at this point in time can’t update you on any better view of that. We continue to be ready to supply full Zosyn to the US market for the foreseeable future and hope that we get to do that.

Justin Victoria

Joe, maybe you could also comment about some of the most advanced and most interesting and exciting opportunities in our R&D portfolio.

Joe Mahady

Everybody may have their favorites. The ones that are overwhelming the most significant at the top of everyone’s list is Bapineuzumab and the Alzheimer’s products. Clearly those ongoing studies should they show significant benefit and change in course of Alzheimer’s progression in patients would be very, very significant.

A second product that really has emerged and grown much more significant in our view is Neratinib or HKI an oncology product which is being explored by us, developed by us now in a broad set of breast cancer indications, shows very significant efficacy in some very challenging models and we think this will certainly be probably one of the premier products in the current clinical portfolio.

Aprela which as you know is kind of having some challenges in getting that final formulation resolved but the clinical data really pretty much in which demonstrates that it has potential to be an incredibly useful product in treating women with menopausal symptoms.

Operator

Your next question comes from John Boris – Citi

John Boris – Citi

In ex-US markets can you just remind us at least on the contracting on Prevnar 7 what percent of those contracts run through ’09? In other words, might not be subjected to tendering by a competitor. On the other income of $123 million can you give a little bit more granularity on what percent of that’s coming from hedging, product divestitures and royalties.

Joe Mahady

We don’t see significant exposure to tenders in ’09 with Prevnar. There will be a couple that we’re aware of relatively modest ones. We don’t expect that the tender market will be a very significantly challenged market in ’09. I don’t have a precise number for you but I think that’s the extent of our view on simple RX and Prevnar tendering markets issue.

Greg Norden

In other income there’s about a swing of around $80 million, $120 million versus the $40 million last year. Essentially this year there’s about $75 million of income from our hedging program versus about $25 million worth of costs last year so that’s $100 million swing, then there’s about $20 million less in royalty income so when you net those down that’s essentially the $80 million difference.

Operator

Your next question comes from Chris Schott – J.P. Morgan

Chris Schott – J.P. Morgan

Another Prevnar question, can you just elaborate for Prevnar 7 just a little bit on the growth outlook for 2009, specifically just the size of the boat you’re targeting these additional national immunization programs for the remainder of the year? In the current economic environment are you seeing any of the economic weakness translating into delays for countries considering starting a national Prevnar vaccination program?

Joe Mahady

When we get to launch and NIP program it really brings together convergence of both the ministries of health and economy in these individual countries. Quite frankly the good news is they have been remaining rather committed to the importance of prevention of pneumococcal disease and we have not had any major surprises or changes in plans. We don’t like to go out ahead and talk about the added NIPs; usually these things are quite sensitive with the countries who do not like us to speak out ahead of their announcing NIPs in their country.

We see good growth in ’09 for Prevnar. For the most part coming from additional NIPs, some that we’ve added where we’re seeing the benefit already in the first quarter. We do have several NIPs that we expect to bring on later in the year.

Justin Victoria

Joe mentioned during the course of his comments that the NIPs in place right now represent a birth cohort of 15 million infants born every year. When you look at the global birth cohort which exceeds 120 million it gives you an idea that we’ve got significant opportunity for growth yet ahead with Prevnar and Prevnar 13. The infant market still has a lot of room to grow and as Joe says, we’ve got a number of NIPs lined up in terms of discussions with the government authorities until such time as those deals are finalized and the governments are wishing to announce it publicly to their own population we tend to stand down in terms of individual countries.

Joe Mahady

Although we focus a lot on NIPs and they do kind of move the business in large chunks, we have significant opportunities in what we think will be private markets for some time such as China, Japan, Russia, where we don’t expect NIPs at the outset but do see significant population opportunities through private market approaches.

Operator

Your next question comes from Barbara Ryan – Deutsche Bank

Barbara Ryan – Deutsche Bank

I know you specified the hedging activity and you also specified the addition to the pension benefit for the year and I wonder if you could just of that $250 million what was in the quarter. I know it was distributed among a lot of different line but just the total amount.

Greg Norden

The $250 million is pretty ratable throughout the year and then even as you go into the component of the income statement it’s about a quarter of it in cost of goods, a quarter of it in R&D and half of it in SG&A more or less.

Operator

Your next question comes from David Moskowitz - Caris & Company

David Moskowitz - Caris & Company

I want to talk about the yields on Prevnar 13. You guys over the last several quarters talked about optimizing production of Prevnar 13. Can you take us through the history of that a little bit in terms of how that’s evolving? If you can quantify that, that would be great. Also, what is driving the increase in manufacturing efficiencies for the product?

Justin Victoria

Part of the efficiency in the yield improvement comes from increased volume and we put additional facilities into the Prevnar manufacturing supply chain over the course of the past several years we’ve invested close to $1 billion in vaccine manufacturing infrastructure over the course of the past half dozen years.

We’ve moved from the first couple years in which we were releasing eight to 10 million doses up to 55 million doses last year. We’ve projected that with the infrastructure we have in place right now we’ll have manufacturing capacity for Prevnar 13 ultimately on the order of 120 to perhaps as many as 150 million doses.

Joe Mahady

One of the big changes too has been increased performance with respect to cycle time. Our people have taken were really cycle time measurements that were measured in quarters and dramatically changed them. As Justin said, we’ve got almost 60 million out the door this year, looking at maybe getting 90 million out the door next year and then with capacity of our systems go up to 150 million so that helps us both on the cost of goods piece here but also helps us on really being able to take advantage of every market opportunity that we see.

David Moskowitz - Caris & Company

You’re basically talking about capacity improvements but are there any technological improvements that go along with that?

Joe Mahady

The biggest improvement so far have been process improvements not so much changing yield per se but tremendous increases in cycle time which have been very, very significant in our making this system work for us.

Operator

At this time there are no additional questions.

Justin Victoria

We’re right up close to the top of the hour where we wanted to be and so thank you all for joining and before we close Bernard has a few remarks to wrap us up.

Bernard Poussot

I think in summary we have delivered a solid quarter in challenging times and we continue our efforts to deliver sound financial results of the balance of the year. I hope we’ve also been able to show you this morning our commitment and focus to work to carry forward the strategies, the success and the people of Wyeth. As we prepare for the integration with Pfizer to help build together a better world as a premier global biopharmaceutical company. With all this I just would like to thank you for joining us on the call this morning and for your support of Wyeth.

Justin Victoria

Operator if you can give the replay information we’ll close at this time.

Operator

(Operator Instructions) That does conclude your call for today. We do thank you for your participation you may now disconnect.

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