<b>The Compass</b>: Pfizer - Controlling costs

Pfizer reported lacklustre results for the quarter ended August 31, 2007,
with segment revenues in its core pharmaceuticals division declining 3.5
per cent y-o-y. Senior company management once again highlighted that this was mainly due to sluggish sales in its consumer healthcare business in the last quarter on a y-o-y basis, due to uncertainties in the marketing
network, as this division is expected to be divested shortly. To the
company's credit, it has kept its operational costs under check in the
August 2007 quarter.

As a result, its operating profit (including service income) declined 0.9
per cent y-o-y to Rs 47.36 crore in the previous quarter, while its total
operational income declined 3 per cent to Rs 180 crore. Its operating
profit margin expanded 60 basis points y-o-y to 26.3 per cent in the August 2007 quarter. The results were declared after the close of trading on Monday and on Tuesday, the stock was trading 2 per cent higher in the
afternoon.  Although not strictly comparable, but in the quarter ended May
31, 2007, its operating profit margin had declined 60 basis points y-o-y to
24.1 per cent.

The US parent had earlier announced that it had sold its worldwide consumer healthcare business to Johnson & Johnson and Pfizer India is also expected to exit from this business soon. For the Indian arm, analysts say this business was contributing 22 per cent of the company's total revenues in the year ended November 2006. Without considering the transfer of the consumer healthcare business and its Chandigarh property sale, the Pfizer India stock trades at about 17 times estimated November 2007 earnings.