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Pfizer, Inc.
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(Name of Registrant as Specified In Its Charter)
Pharmacia Corporation
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The following is a communication to employees.
2002 August 14
TRANSITION TEAM LEADERS FROM PFIZER AND PHARMACIA GATHER FOR FIRST MEETING
x--------------------------------x Pharmacia CFO Chris Coughlin (standing)
| | participates in a breakout session at the
| | first meeting of transition team leaders.
| |
| | -----------------------
| |
| | From the outset, top leaders from Pfizer
| | and Pharmacia have said that the
| [GRAPHIC] | transition planning process -- which will
| | take place between now and the close of
| Transition team hard at work | the deal -- and the subsequent
| | integration of our two companies, will be
| | largely driven by our businesses and
| | divisions, rather than Corporate. Toward
| | that end, two transition team leaders
| | have been named for each of our major
| | businesses and divisions -- one from
| | Pfizer, one from Pharmacia. These
| | colleagues are responsible for the
| | day-to-day transition planning process
| | and for ensuring that their
| | business/division is ready for Day One.
| | They met as a group for the first time
| | Tuesday, August 13, at the Millennium
x--------------------------------x Broadway Hotel in New York.
Pfizer's Chief Financial Officer David Shedlarz, who is leading the transition
process for Pfizer, opened the meeting by thanking the transition team leaders
for their participation and saying that he was "very favorably impressed with
how well the two companies were working together" since before the deal was even
announced.
"You have an awesome responsibility," Shedlarz told the transition team leaders.
"You are on the front lines of bringing together two large, complex, and
fast-growing companies."
Shedlarz shared a number of guiding principles for the transition: moving with
clarity and speed; adhering to the values and behaviors of both companies,
especially Respect for People; and ensuring alignment across both organizations,
and within each individual company.
Shedlarz expressed his concern that most colleagues currently view the
acquisition as being primarily driven by cost cutting opportunities. While the
deal will, indeed, yield significant synergies, Shedlarz emphasized a host of
other reasons why this is the right move for Pfizer:
o An unequaled pharmaceutical product portfolio
o A broader and deeper R&D pipeline
o Stronger animal health and consumer healthcare businesses
o Greater, more balanced geographic presence
o Enhanced scale, with less reliance on any one product
o Greater operating flexibility and ability to manage risk
Chris Coughlin, Pharmacia's CFO and the leader of the transition process for
Pharmacia, said that both companies have a wealth of experience with mergers and
acquisitions. Still, he cautioned, "we can't underestimate the size and
complexity of the task at hand."
Coughlin reminded the attendees to pay particularly close attention to how the
transition planning process is progressing in markets outside the United States,
which often get overlooked because the U.S. market is so large for both
companies.
Coughlin said that Pharmacia is "absolutely committed to ensuring the smoothest
and best transition possible." He stated clearly that all major decisions during
the transition planning process and beyond will ultimately be made by the Pfizer
Leadership Team, with input from Pharmacia. He added that Pfizer systems will be
used in the combined company, unless there is a clear and compelling reason to
do otherwise.
Like Shedlarz, Coughlin noted that the relationships between Pfizer and
Pharmacia colleagues have been excellent thus far, even through some "difficult
and intense times."
Coughlin also echoed Shedlarz's view that the transition team leaders are
shouldering a very significant responsibility. "You're going to have access to
sensitive information that no one else knows," he said. "And you're going to
have to keep it that way until final decisions have been made and communicated."
Coughlin emphasized that, while the overall goal is to complete the acquisition
as soon as possible, "different transition teams will move at different speeds."
In general, though, he said it is "OK to go a little too fast."
LESSONS LEARNED, CULTURES SHARED
Joe Bonito, vice president, Worldwide Organizational Effectiveness, PPG [Pfizer
Pharmaceuticals Group], and a member of the Program Office that has been
established as a central resource for the transition teams to call upon, shared
lessons learned from the Pfizer/Warner-Lambert combination, completed just over
two years ago. These include the need to focus on speed, to communicate rapidly,
to drive decisions through the line, and to ensure consistency between what
Pfizer says it is going to do and what it actually does. Many Pharmacia
participants shared lessons learned from their previous mergers and acquisitions
experiences. Shedlarz made it clear that Pfizer would take all of these lessons
learned into account during this current process and that Pfizer would place a
great premium on candor in all of its communications.
Bonito also noted the many similarities between the two companies' cultures. For
example, Pfizer's eight core values (Performance, Customer Focus, Integrity,
Teamwork, Respect for People, Community, Leadership, and Innovation) are similar
in spirit to Pharmacia's "4 C's" (Commitment, Competence, Consistency, and
Compassion). Likewise, Pfizer's leader behaviors -- such as "encouraging open
discussion and debate" and "developing people" -- match up quite well with many
of Pharmacia's best-managed behaviors, including "shared accountability and
transparency," "ongoing listening and learning," and "coaching and developing
other colleagues."
In addition to a strong cultural fit, the two companies also share nearly
identical corporate governance structures, which should prove quite helpful as
the transition planning process moves forward. Both companies, for example, have
top-level leadership teams consisting of a handful of senior executives -- the
Pfizer Leadership Team and the Pharmacia Management Committee -- and both have
management councils one level below these teams that include about 20 additional
leaders -- the Pfizer Management Council and the Pharmacia Operations Committee.
Here are some other topics that were discussed at the meeting:
DAY ONE
Shedlarz told the group that the acquisition was likely to close sometime
between November 15 and the end of 2002. He listed several expectations for Day
One:
o That one face will be presented to our customers, patients, business
partners, and colleagues, with no disruptions.
o That all colleagues in both companies will know their role and to whom
they report, even if that reporting relationship may ultimately
change.
o That integration plans are in place to guide activities going forward.
COST SYNERGIES
Pfizer has committed to investors to delivering $2.5 billion in
acquisition-related cost savings through 2005. Meeting this target is extremely
important at a time when investors are severely punishing the stocks of
companies that miss their financial commitments. Shedlarz said that Pfizer
envisions exceeding the $2.5 billion synergy target, noting that any savings
above and beyond that number would be re-invested into areas of the business
that promise to yield the highest payoff. "We see many opportunities for growth
resulting from this combination," he said. "Lowering our cost structure will
give us the additional investment capital needed to aggressively pursue these
opportunities."
CONSULTANTS
Based on its Warner-Lambert experience, Pfizer is trying to minimize the amount
of work done by consultants on the Pharmacia deal, as well as the number of
different consulting firms involved. The Boston Consulting Group has already
been retained by PPG, PGRD [Pfizer Global Research & Development], and Pfizer
Global Manufacturing, as well as by the Program Office, which should help to
ensure consistency and enhance speed.
COMMUNICATIONS
One theme that emerged throughout the meeting was the need for consistent,
global, and timely communications, both internally and externally. Colleagues
will continue to receive a steady stream of information about the transaction
through existing communication vehicles such as the Pfizer World Cafe and
Pharmacia Today, as well as from managers, who will be armed with communications
tool kits.
A town hall meeting is scheduled for September 6 at Pharmacia headquarters in
Peapack, New Jersey. The meeting is expected to feature Pfizer CEO Hank
McKinnell, Shedlarz, PPG President Karen Katen, and Peter Corr, who heads PGRD.
The meeting will be made available live to as many Pharmacia colleagues as
possible using audio and videoconferencing capabilities. A similar meeting is
being planned for Pfizer colleagues, though no date has been finalized yet.
Monitoring "organizational health" -- colleagues' attitudes, opinions, and
concerns resulting from the transition planning process -- is also a top
priority. It was agreed that focus groups, spot polls, and more comprehensive
surveys would be conducted on a regular and ongoing basis at both companies and
in the combined company after Day One.
TALENT PLANNING
Don Nelson, vice president, Human Resources, PPG, and a Program Office member,
described a two-track talent planning process. The first track involves
identifying those Pharmacia colleagues who are absolutely essential to Pfizer's
ability to operate its business as of Day One -- for example, colleagues who
work in a business or therapeutic area that Pfizer does not currently
participate in.
The second track involves identifying key talent from Pharmacia that Pfizer is
interested in retaining regardless of specific business needs. These colleagues
will be identified through discussions between business/division heads from both
companies and by using data generated by Pharmacia's Talent Planning &
Performance Management Process.
Nelson said that Pfizer was committed to finding jobs for as many Pharmacia
colleagues as possible. In fact, Pfizer has instituted a hiring freeze, except
for those positions deemed absolutely critical to meeting the company's 2002
business objectives. This will give Pharmacia colleagues a chance to apply for
positions within Pfizer, though Nelson emphasized that this posting process
would likely not begin until very close to Day One.
NEXT STEPS
The transition team leaders plan to meet again early in the week of September 9
to finalize a number of deliverables they are responsible for providing to the
Pfizer Management Council, which is meeting on September 12-13.
For more on how the transition planning process is unfolding, see the August 7
message titled "Pfizer and Pharmacia Begin Transition and Integration Planning
Process." It's available on the intranet at:
http://vgn-prod-live.uskzo.am.pnu.com/intranet/us/pa/cda/news/pa-cdanewsdetail/
0,1490,2840%257E4%257E,00.html
SAFE HARBOR STATEMENT
Certain statements contained in this document are "forward-looking statements"
provided under the "safe harbor" protection of the Private Securities Litigation
Reform Act of 1995. These statements are made to enable a better understanding
of the Company's business, but because these forward-looking statements are
subject to many risks, uncertainties, future developments and changes over time,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Examples of forward-looking statements are
statements about anticipated financial or operating results, financial
projections, business prospects, future product performance, future research and
development results, anticipated regulatory filings and approvals, and other
matters that are not historical facts. Such statements often include words such
as: "believes", "expects", "anticipates", "intends", "plans", "estimates", or
similar expressions.
These forward-looking statements are based on the information that was currently
available to the Company, and the expectations and assumptions that were deemed
reasonable by the Company, at the time when the statements were made. The
Company does not undertake any obligation to update any forward-looking
statements in any communications of the Company, whether as a result of new
information, future events, changed assumptions or otherwise, and all such
forward-looking statements should be read as of the time when the statements
were made, and with the recognition that these forward-looking statements may
not be complete or accurate at a later date.
Many factors may cause or contribute to actual results or events being
materially different from those expressed or implied by such forward-looking
statements. Although it is not possible to predict or identify all such factors,
they may include the following: competition for our products; pharmaceutical
pricing, price constraints and other restrictions on the marketing of products
imposed by governmental agencies or by managed care groups, institutions and
other purchasing agencies; product discovery and approval; product recalls or
withdrawals; manufacturing quality issues with respect to our products;
compliance with Current Good Manufacturing Practices and other quality assurance
guidelines; the company's ability to secure and defend its intellectual property
rights; product liability claims, antitrust litigation, environmental concerns,
and commercial disputes; social, legal, political and governmental developments;
changes in foreign currency exchange rates or in general economic or business
conditions including inflation and interest rates; acquisitions, divestitures,
mergers, restructurings or strategic initiatives that change the Company's
structure; business combinations among the Company's competitors and major
customers; changes to accounting standards or GAAP.
Readers are also urged to carefully review and consider the disclosures in
Pharmacia's various SEC filings, including but not limited to Pharmacia's Annual
Report on Form 10-K for the year ended December 31, 2001, and Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2002.
This release may be deemed to be solicitation material in respect of Pfizer's
proposed merger with Pharmacia. Pfizer will be filing a registration statement
on Form S-4, containing a joint proxy statement/prospectus for Pfizer and
Pharmacia, and other documents with the Securities and Exchange Commission
("SEC"). INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE REGISTRATION
STATEMENT CONTAINING THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and securityholders
will be able to receive the registration statement containing the joint proxy
statement/prospectus and other documents free of charge at the SEC's web site,
www.sec.gov or from Pharmacia Investor Relations at 100 Route 206 North,
Peapack, New Jersey 07977. Pharmacia and its directors and executive officers
and other members of management and employees may be deemed to be participants
in the solicitation of proxies in respect of the proposed transaction.
Information regarding the interests of Pharmacia's directors and executive
officers in the proposed merger will be included in the final joint proxy
statement/prospectus.