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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





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FORM 10-Q



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(Mark One)

|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2007



or





| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  
   to

Commission file number 1-1225



Wyeth

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 13-2526821                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|Five Giralda Farms, Madison, N.J.                              |  | 07940                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



Registrants telephone number,
including area code: (973) 660-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                    |  |                       
|-------------------------- |  | ------------------ |  | ----------------------
|Large accelerated filer  x |  | Accelerated filer ̈ |  | Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).Yes ̈No  x

The number of shares of Wyeths Common Stock outstanding as of the close of business on April 30, 2007:



|                                |  |                            
|------------------------------- |  | ---------------------------
|Class                           |  | Number ofShares Outstanding
|Common Stock, $0.331/3par value |  | 1,345,160,352              





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WYETH

INDEX



|                                         |  |          |  |                                                                                                                |  |         
|---------------------------------------- |  | -------- |  | -------------------------------------------------------------------------------------------------------------- |  | --------
|                                         |  |          |  |                                                                                                                |  | Page No.
|                                         | 
|Part IFinancial Information (Unaudited) |  | 2       
|                                         |  |          | 
|                                         |  | Item 1.  |  | Consolidated Condensed Financial Statements:                                                                   |  |         
|                                         |  |          | 
|                                         |  |          |  | Consolidated Condensed Balance SheetsMarch 31, 2007 and December 31, 2006                                     |  | 3       
|                                         |  |          | 
|                                         |  |          |  | Consolidated Condensed Statements of OperationsThree Months Ended March 31, 2007 and 2006                     |  | 4       
|                                         |  |          | 
|                                         |  |          |  | Consolidated Condensed Statements of Changes in StockholdersEquityThree Months Ended March 31, 2007 and 2006 |  | 5       
|                                         |  |          | 
|                                         |  |          |  | Consolidated Condensed Statements of Cash FlowsThree Months Ended March 31, 2007 and 2006                     |  | 6       
|                                         |  |          | 
|                                         |  |          |  | Notes to Consolidated Condensed Financial Statements                                                           |  | 7-16    
|                                         |  |          | 
|                                         |  | Item 2.  |  | Managements Discussion and Analysis ofFinancial Condition and Results of Operations                           |  | 17-41   
|                                         |  |          | 
|                                         |  | Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                     |  | 42      
|                                         |  |          | 
|                                         |  | Item 4.  |  | Controls and Procedures                                                                                        |  | 43      
|                                         | 
|Part IIOther Information                |  | 44      
|                                         |  |          | 
|                                         |  | Item 1.  |  | Legal Proceedings                                                                                              |  | 44      
|                                         |  |          | 
|                                         |  | Item 1A. |  | Risk Factors                                                                                                   |  | 44      
|                                         |  |          | 
|                                         |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                    |  | 44      
|                                         |  |          | 
|                                         |  | Item 6.  |  | Exhibits                                                                                                       |  | 45      
|                                         |  |          | 
|Signature                                |  |          |  |                                                                                                                |  | 46      
|                                         |  |          | 
|Exhibit Index                            |  |          |  |                                                                                                                |  | EX-1    

Items other than those listed above have been omitted because they are not applicable.



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##### Table of Contents

Part IFinancial Information

WYETH

The consolidated condensed financial statements included herein have been prepared by Wyeth (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations; however,
the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the consolidated condensed financial statements reflect all adjustments, including those that are normal and
recurring, considered necessary to present fairly the financial position of the Company as of March 31, 2007 and December 31, 2006, the results of its operations for the three months ended March 31, 2007 and 2006, and changes in
stockholders equity and cash flows for the three months ended March 31, 2007 and 2006. It is suggested that these consolidated condensed financial statements and Managements Discussion and Analysis of Financial Condition and Results
of Operations be read in conjunction with the Companys consolidated financial statements and the notes thereto included in the Companys 2006 Financial Report as incorporated in the Companys 2006 Annual Report on Form 10-K and
information contained in Current Reports on Form 8-K filed since the filing of the 2006 Form 10-K.

We make available through our Company Internet Web
site, free of charge, our Company filings with the SEC as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The reports we make available include Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K, proxy statements, registration statements and any amendments to those documents. The Companys Internet Web site address is www.wyeth.com.



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WYETH

CONSOLIDATED CONDENSED BALANCE SHEETS

(In Thousands Except Per Share Amounts)

(Unaudited)



|                                                               |  |               |   |  |                  |  
|-------------------------------------------------------------- |  | ------------- | - |  | ---------------- | -
|                                                               |  | March 31,2007 |   |  | December 31,2006 |  
|ASSETS                                                         |  |               |   |  |                  |  
|Cash and cash equivalents                                      |  | $8,578,939    |   |  | $6,778,311       |  
|Marketable securities                                          |  | 2,788,808     |   |  | 1,948,931        |  
|Accounts receivable less allowances                            |  | 3,414,987     |   |  | 3,383,341        |  
|Inventories:                                                   |  |               |   |  |                  |  
|Finished goods                                                 |  | 885,578       |   |  | 732,532          |  
|Work in progress                                               |  | 1,323,888     |   |  | 1,312,925        |  
|Materials and supplies                                         |  | 481,051       |   |  | 435,002          |  
|                                                               |  |               |   |  |                  |  
|                                                               |  | 2,690,517     |   |  | 2,480,459        |  
|Other current assets including deferred taxes                  |  | 2,942,521     |   |  | 2,923,199        |  
|                                                               |  |               |   |  |                  |  
|Total Current Assets                                           |  | 20,415,772    |   |  | 17,514,241       |  
|                                                               |  |              
|Property, plant and equipment                                  |  | 14,730,450    |   |  | 14,483,494       |  
|Less accumulated depreciation                                  |  | 4,526,832     |   |  | 4,337,235        |  
|                                                               |  |               |   |  |                  |  
|                                                               |  | 10,203,618    |   |  | 10,146,259       |  
|Goodwill                                                       |  | 3,929,941     |   |  | 3,925,738        |  
|Other intangibles, net of accumulated amortization             |  |               |   |  |                  |  
|(March 31, 2007-$251,484 and December 31, 2006-$236,363)       |  | 343,367       |   |  | 356,692          |  
|Other assets including deferred taxes                          |  | 4,748,386     |   |  | 4,535,785        |  
|                                                               |  |               |   |  |                  |  
|Total Assets                                                   |  | $39,641,084   |   |  | $36,478,715      |  
|                                                               |  |               |   |  |                  |  
|                                                               |  |              
|LIABILITIES                                                    |  |               |   |  |                  |  
|Loans payable                                                  |  | $418,491      |   |  | $124,225         |  
|Trade accounts payable                                         |  | 1,076,586     |   |  | 1,116,754        |  
|Accrued expenses                                               |  | 5,175,451     |   |  | 5,679,141        |  
|Accrued taxes                                                  |  | 688,278       |   |  | 301,728          |  
|                                                               |  |               |   |  |                  |  
|Total Current Liabilities                                      |  | 7,358,806     |   |  | 7,221,848        |  
|                                                               |  |              
|Long-term debt                                                 |  | 11,319,736    |   |  | 9,096,743        |  
|Pension liabilities                                            |  | 823,231       |   |  | 806,413          |  
|Accrued postretirement benefit obligations other than pensions |  | 1,612,258     |   |  | 1,600,751        |  
|Other noncurrent liabilities                                   |  | 3,510,049     |   |  | 3,100,205        |  
|                                                               |  |               |   |  |                  |  
|Total Liabilities                                              |  | 24,624,080    |   |  | 21,825,960       |  
|                                                               |  |               |   |  |                  |  
|Contingencies and commitments (Note 8)                         |  |               |   |  |                  |  
|                                                               |  |              
|STOCKHOLDERS EQUITY                                           |  |               |   |  |                  |  
|$2.00 convertible preferred stock, par value $2.50 per share   |  | 27            |   |  | 28               |  
|Common stock, par value $0.331/3per share                      |  | 446,307       |   |  | 448,417          |  
|Additional paid-in capital                                     |  | 6,280,163     |   |  | 6,142,277        |  
|Retained earnings                                              |  | 8,855,550     |   |  | 8,734,699        |  
|Accumulated other comprehensive loss                           |  | (565,043      | ) |  | (672,666         | )
|                                                               |  |               |   |  |                  |  
|Total Stockholders Equity                                     |  | 15,017,004    |   |  | 14,652,755       |  
|                                                               |  |               |   |  |                  |  
|Total Liabilities and Stockholders Equity                     |  | $39,641,084   |   |  | $36,478,715      |  
|                                                               |  |               |   |  |                  |  

The accompanying notes are an integral part of these consolidated condensed
financial statements.



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WYETH

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Amounts)

(Unaudited)



|                                             |  |                              |   |  |            |  
|-------------------------------------------- |  | ---------------------------- | - |  | ---------- | -
|                                             |  | Three Months Ended March 31, |  
|                                             |  | 2007                         |   |  | 2006       |  
|Net revenue                                  |  | $5,368,686                   |   |  | $4,837,937 |  
|                                             |  |                              |   |  |            |  
|Cost of goods sold                           |  | 1,474,511                    |   |  | 1,337,118  |  
|Selling, general and administrative expenses |  | 1,512,539                    |   |  | 1,464,596  |  
|Research and development expenses            |  | 750,732                      |   |  | 684,670    |  
|Interest (income) expense, net               |  | (14,800                      | ) |  | 5,513      |  
|Other income, net                            |  | (99,636                      | ) |  | (114,575   | )
|                                             |  |                              |   |  |            |  
|Income before income taxes                   |  | 1,745,340                    |   |  | 1,460,615  |  
|Provision for income taxes                   |  | 491,236                      |   |  | 341,032    |  
|                                             |  |                              |   |  |            |  
|                                             |  |                             
|Net income                                   |  | $1,254,104                   |   |  | $1,119,583 |  
|                                             |  |                              |   |  |            |  
|Basic earnings per share                     |  | $0.93                        |   |  | $0.83      |  
|                                             |  |                              |   |  |            |  
|Diluted earnings per share                   |  | $0.92                        |   |  | $0.82      |  
|                                             |  |                              |   |  |            |  
|Dividends paid per share of common stock     |  | $0.26                        |   |  | $0.25      |  
|                                             |  |                              |   |  |            |  

The accompanying notes are an integral part of these consolidated condensed
financial statements.



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WYETH

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(In Thousands Except Per Share
Amounts)

(Unaudited)

Three
Months Ended March 31, 2007:



|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|---------------------------------------------------- |  | ------------------------------ | - |  | ----------- | - |  | ------------------------ | - |  | ---------------- | - |  | ------------------------------------------ | - |  | ------------------------ | -
|                                                     |  | $2.00ConvertiblePreferredStock |   |  | CommonStock |   |  | AdditionalPaid-inCapital |   |  | RetainedEarnings |   |  | AccumulatedOtherComprehensiveIncome (Loss) |   |  | TotalStockholdersEquity |  
|Balance at January 1, 2007                           |  | $28                            |   |  | $448,417    |   |  | $6,142,277               |   |  | $8,734,699       |   |  | $(672,666                                  | ) |  | $14,652,755              |  
|Net income                                           |  |                                |   |  |             |   |  |                          |   |  | 1,254,104        |   |  |                                            |   |  | 1,254,104                |  
|Currency translation adjustments                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | 82,724                                     |   |  | 82,724                   |  
|Unrealized gains on derivative contracts, net        |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | 2,561                                      |   |  | 2,561                    |  
|Unrealized gains on marketablesecurities, net        |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | 1,935                                      |   |  | 1,935                    |  
|Pension and postretirement benefitadjustments        |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | 20,403                                     |   |  | 20,403                   |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  | 1,361,727                |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|Adoption of FIN 48                                   |  |                                |   |  |             |   |  |                          |   |  | (295,370         | ) |  |                                            |   |  | (295,370                 | )
|Cash dividends declared(1)                           |  |                                |   |  |             |   |  |                          |   |  | (349,385         | ) |  |                                            |   |  | (349,385                 | )
|Common stock acquired for treasury                   |  |                                |   |  | (3,543      | ) |  | (35,752                  | ) |  | (488,498         | ) |  |                                            |   |  | (527,793                 | )
|Common stock issued for stock options                |  |                                |   |  | 765         |   |  | 87,515                   |   |  |                  |   |  |                                            |   |  | 88,280                   |  
|Stock-based compensation expense                     |  |                                |   |  |             |   |  | 76,460                   |   |  |                  |   |  |                                            |   |  | 76,460                   |  
|Issuance of restricted stock awards                  |  |                                |   |  | 658         |   |  | 982                      |   |  |                  |   |  |                                            |   |  | 1,640                    |  
|Tax benefit from exercises of stockoptions           |  |                                |   |  |             |   |  | 8,684                    |   |  |                  |   |  |                                            |   |  | 8,684                    |  
|Other exchanges                                      |  | (1                             | ) |  | 10          |   |  | (3                       | ) |  |                  |   |  |                                            |   |  | 6                        |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|Balance at March 31, 2007                            |  | $27                            |   |  | $446,307    |   |  | $6,280,163               |   |  | $8,855,550       |   |  | $(565,043                                  | ) |  | $15,017,004              |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|                                                     |  |                                |   |  |            
|Three Months Ended March 31, 2006:                   |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   | 
|                                                     |  |                                |   |  |             |  
|                                                     |  | $2.00ConvertiblePreferredStock |   |  | CommonStock |   |  | AdditionalPaid-inCapital |   |  | RetainedEarnings |   |  | AccumulatedOtherComprehensiveIncome (Loss) |   |  | TotalStockholdersEquity |  
|Balance at January 1, 2006                           |  | $37                            |   |  | $447,783    |   |  | $5,097,228               |   |  | $6,514,046       |   |  | $(64,725                                   | ) |  | $11,994,369              |  
|Net income                                           |  |                                |   |  |             |   |  |                          |   |  | 1,119,583        |   |  |                                            |   |  | 1,119,583                |  
|Currency translation adjustments                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | 96,934                                     |   |  | 96,934                   |  
|Unrealized gains on derivative contracts, net        |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | (4,135                                     | ) |  | (4,135                   | )
|Unrealized losses on marketablesecurities, net       |  |                                |   |  |             |   |  |                          |   |  |                  |   |  | (67                                        | ) |  | (67                      | )
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|Comprehensive income, net of tax                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  | 1,212,315                |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|Cash dividends declared(2)                           |  |                                |   |  |             |   |  |                          |   |  | (335,994         | ) |  |                                            |   |  | (335,994                 | )
|Common stock acquired for treasury                   |  |                                |   |  | (981        | ) |  | (9,207                   | ) |  | (132,697         | ) |  |                                            |   |  | (142,885                 | )
|Common stock issued for stock options                |  |                                |   |  | 1,047       |   |  | 111,390                  |   |  |                  |   |  |                                            |   |  | 112,437                  |  
|Stock-based compensation expense                     |  |                                |   |  |             |   |  | 75,174                   |   |  |                  |   |  |                                            |   |  | 75,174                   |  
|Issuance of restricted stock awards                  |  |                                |   |  | 631         |   |  | 86,165                   |   |  |                  |   |  |                                            |   |  | 86,796                   |  
|Transfer of restricted stock awardaccruals to equity |  |                                |   |  |             |   |  | 63,171                   |   |  |                  |   |  |                                            |   |  | 63,171                   |  
|Tax benefit from exercises of stockoptions           |  |                                |   |  |             |   |  | 13,009                   |   |  |                  |   |  |                                            |   |  | 13,009                   |  
|Other exchanges                                      |  | (2                             | ) |  | 8           |   |  | (672                     | ) |  | (524             | ) |  |                                            |   |  | (1,190                   | )
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  
|Balance at March 31, 2006                            |  | $35                            |   |  | $448,488    |   |  | $5,436,258               |   |  | $7,164,414       |   |  | $28,007                                    |   |  | $13,077,202              |  
|                                                     |  |                                |   |  |             |   |  |                          |   |  |                  |   |  |                                            |   |  |                          |  



|(1) | Included in cash dividends declared were preferred stock cash dividends of $0.50 per share ($5 in the aggregate) declared on January 25, 2007 and paid on March 13, 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Included in cash dividends declared were preferred stock cash dividends of $0.50 per share ($7 in the aggregate) declared on January 27, 2006 and paid on April 3, 2006.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated condensed financial statements.



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##### Table of Contents

WYETH

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)



|                                                                                  |  |                              |   |  |            |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | - |  | ---------- | -
|                                                                                  |  | Three Months Ended March 31, |  
|                                                                                  |  | 2007                         |   |  | 2006       |  
|Operating Activities                                                              |  |                              |   |  |            |  
|Net income                                                                        |  | $1,254,104                   |   |  | $1,119,583 |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |   |  |            |  
|Net gains on sales and dispositions of assets                                     |  | (16,313                      | ) |  | (15,802    | )
|Depreciation and amortization                                                     |  | 212,781                      |   |  | 184,043    |  
|Stock-based compensation                                                          |  | 76,460                       |   |  | 75,174     |  
|Change in deferred income taxes                                                   |  | 20,344                       |   |  | 196,667    |  
|Diet drug litigation payments                                                     |  | (78,480                      | ) |  | (465,063   | )
|Changes in working capital, net                                                   |  | (332,354                     | ) |  | (928,860   | )
|Other items, net                                                                  |  | (29,488                      | ) |  | 68,218     |  
|                                                                                  |  |                              |   |  |            |  
|Net cash provided by operating activities                                         |  | 1,107,054                    |   |  | 233,960    |  
|                                                                                  |  |                              |   |  |            |  
|Investing Activities                                                              |  |                              |   |  |            |  
|Purchases of intangibles, property, plant and equipment                           |  | (210,268                     | ) |  | (225,759   | )
|Proceeds from sales of assets                                                     |  | 20,588                       |   |  | 22,997     |  
|Proceeds from sales and maturities of marketable securities                       |  | 333,711                      |   |  | 52,181     |  
|Purchases of marketable securities                                                |  | (1,171,130                   | ) |  | (186,907   | )
|                                                                                  |  |                              |   |  |            |  
|Net cash used for investing activities                                            |  | (1,027,099                   | ) |  | (337,488   | )
|                                                                                  |  |                              |   |  |            |  
|Financing Activities                                                              |  |                              |   |  |            |  
|Proceeds from issuance of long-term debt                                          |  | 2,500,000                    |   |  |           |  
|Other borrowing transactions, net                                                 |  | (1,981                       | ) |  | (392       | )
|Dividends paid                                                                    |  | (349,385                     | ) |  | (335,987   | )
|Purchases of common stock for treasury                                            |  | (527,793                     | ) |  | (142,885   | )
|Exercises of stock options                                                        |  | 94,602                       |   |  | 119,401    |  
|                                                                                  |  |                              |   |  |            |  
|Net cash provided by (used for) financing activities                              |  | 1,715,443                    |   |  | (359,863   | )
|                                                                                  |  |                              |   |  |            |  
|Effect of exchange rate changes on cash and cash equivalents                      |  | 5,230                        |   |  | 6,640      |  
|                                                                                  |  |                              |   |  |            |  
|Increase (decrease) in cash and cash equivalents                                  |  | 1,800,628                    |   |  | (456,751   | )
|Cash and cash equivalents, beginning of period                                    |  | 6,778,311                    |   |  | 7,615,891  |  
|                                                                                  |  |                              |   |  |            |  
|Cash and cash equivalents, end of period                                          |  | $8,578,939                   |   |  | $7,159,140 |  
|                                                                                  |  |                              |   |  |            |  

The accompanying notes are an integral part of these consolidated condensed
financial statements.



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##### Table of Contents

WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



|Note 1. | Summary of Significant Accounting Policies
|------- | ------------------------------------------

Recently Issued Accounting Standards: The Financial Accounting Standards Board (FASB) recently issued the Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements (SFAS No. 157). SFAS
No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007. The Company currently is assessing the impact this provision may have on its consolidated financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS
No. 159). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. If adopted, unrealized gains and losses on items for which the fair value option has been elected are reported in
earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company currently is assessing the impact this provision may have on its consolidated financial position or results of operations.

Reclassifications:Certain reclassifications have been made to the March 31, 2006 consolidated condensed financial statements and
accompanying notes to conform with the March 31, 2007 presentation.



7



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



|Note 2. | Earnings per Share
|------- | ------------------

The following table
sets forth the computations of basic earnings per share and diluted earnings per share:



Three Months Ended March 31,(In thousands except per share amounts)

2007

2006Numerator:Net income less preferred dividends

$1,254,099

$1,119,576Denominator:Weighted average common shares outstanding

1,342,884

1,344,527Basic earnings per share

$0.93

$0.83Numerator:Net income

$1,254,104

$1,119,583Interest expense on contingently convertible debt

7,872

6,760Net income, as adjusted

$1,261,976

$1,126,343Denominator:Weighted average common shares outstanding

1,342,884

1,344,527Common stock equivalents of outstanding stock options, deferred contingent common stock awards, restricted stock awards and convertible
preferred stock(1)

15,501

11,150Common stock equivalents of assumed conversion of contingently convertible debt

16,890

16,890Total shares(1)

1,375,275

1,372,567Diluted earnings per share(1)

$0.92

$0.82




| | (1) | At March 31, 2007 and 2006, approximately 76,960 and 77,504 of common shares, respectively, related to options outstanding under the Companys Stock Incentive Plans were
excluded from the computation of diluted earnings per share, as the effect would have been antidilutive.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



|Note 3. | Pensions and Other Postretirement Benefits
|------- | ------------------------------------------

Net periodic benefit cost for the Companys defined benefit plans for the three months ended March 31, 2007 and 2006 was as follows:



Pensions


Other Postretirement Benefits(In thousands)

Three Months Ended March 31,


Three Months Ended March 31,Components of Net Periodic Benefit Cost

2007


2006


2007


2006Service cost

$52,774


$48,546


$13,250


$13,335Interest cost

79,156


69,307


26,464


25,033Expected return on plan assets

(97,452
)

(87,400
)




Prior service cost

3,239


2,255


(9,749
)

(9,560
)Transition obligation

118


112





Recognized net actuarial loss

25,592


32,682


11,860


14,439Net periodic benefit cost

$63,427


$65,502


$41,825


$43,247


As of March 31, 2007, contributions of $31.9 million were made to the Companys
defined benefit pension plans, and payments of $27.8 million were made for other postretirement benefits. The Company expects to contribute approximately $217.2 million to its defined benefit pension plans and make payments of approximately $97.3
million for its other postretirement benefits in 2007.



9



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



|Note 4. | Productivity Initiatives
|------- | ------------------------

The Company
continued with its long-term global productivity initiatives, which were launched in 2005, to adapt to the changing pharmaceutical industry environment.

The Company recorded the following charges related to these productivity initiatives for the 2007 and 2006 first quarter:



Three Months Ended March 31,(In thousands except per share amounts)

2007

2006Total productivity initiatives charges(1)

$42,600

$35,100Productivity initiatives charges, after-tax

$29,500

$24,200Decrease in diluted earnings per share

$0.02

$0.02




| | (1) | For the 2007 first quarter, these charges included severance and other related personnel costs of $11,100, accelerated depreciation for certain facilities expected to be closed of
$21,000 and period costs related to the implementation of the initiatives of $10,500. For the 2006 first quarter, these charges included severance and other related personnel costs of $8,400, accelerated depreciation for certain facilities expected
to be closed of $17,500 and period costs related to the implementation of the initiatives of $9,200.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The productivity
initiatives charges were recorded as follows:



Three Months Ended March 31,(In thousands)

2007

2006Cost of goods sold

$29,100

$28,700Selling, general and administrative expenses

13,500

3,200Research and development expenses



3,200$42,600

$35,100


The following table summarizes the total charges, payments made and the reserve balance at
March 31, 2007:



(In thousands) Productivity Initiatives

TotalChargesto Date


Reserve atDecember 31,2006

TotalChargesFirstQuarter

NetPayments/Non-cashCharges


Reserve atMarch 31,2007Personnel costs

$279,400


$173,100

$11,100

$(21,500
)

$162,700Accelerated depreciation

149,000




21,000

(21,000
)

Other closure/exit costs

63,600


400

10,500

(10,600
)

300Asset sales

(40,200
)








$451,800


$173,500

$42,600

$(53,100
)

$163,000




10



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



At March 31, 2007, the reserve balance for personnel costs related primarily to committed
employee severance obligations, which, in accordance with the specific productivity initiatives, are expected to be paid primarily over the next 36 months.

As other strategic decisions are made, the Company expects additional costs, such as asset impairment, accelerated depreciation, personnel costs and other exit costs, as well as certain implementation costs associated
with these initiatives, to continue for several years.



|Note 5. | Stock-Based Compensation
|------- | ------------------------

The following
table summarizes the components and classification of stock-based compensation expense for the 2007 and 2006 first quarter:



Three Months Ended March 31,(In thousands)

2007

2006Stock options

$47,600

$58,000Restricted stock unit awards

19,200

8,100Performance share unit awards

9,700

9,100Total stock-based compensation expense

$76,500

$75,200Cost of goods sold

$7,300

$6,200Selling, general and administrative expenses

46,600

47,800Research and development expenses

22,600

21,200Total stock-based compensation expense

$76,500

$75,200Tax benefit

25,100

21,400Net stock-based compensation expense

$51,400

$53,800




|Note 6. | Debt and Financing Arrangements
|------- | -------------------------------

On
March 27, 2007, the Company issued $2,500.0 million of Notes in a transaction registered with the Securities and Exchange Commission. These Notes consisted of two tranches, which pay interest semiannually on April 1 and October 1, as
follows:



| | · |  | $2,000.0 million 5.95% Notes due 2037
| | - |  | -------------------------------------

| | · |  | $500.0 million 5.45% Notes due 2017
| | - |  | -----------------------------------



11



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



|Note 7. | Income Taxes
|------- | ------------

The Company adopted the
provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48) on January 1, 2007. As a result of the adoption, the Company recognized a $295.4
million increase in the liability for unrecognized tax benefits, interest and penalties, across all jurisdictions, which were accounted for as a charge to retained earnings on January 1, 2007. The Companys unrecognized tax benefits at
January 1, 2007 were $1,174.4 million. If these unrecognized tax benefits were recognized, there would be a favorable impact on the Provision for income taxes of $1,019.6 million. During the first quarter of 2007, there have been no
material changes to the liability for unrecognized tax benefits.

The Company recognizes interest and penalties relating to unrecognized
tax benefits as a component of Provision for income taxes. The Company had $346.6 million and $361.0 million of accrued interest and penalties as of January 1, 2007 and March 31, 2007, respectively.

The Company files tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Companys tax returns for
years prior to 1998 generally are no longer subject to review as such years generally are closed. Taxing authorities in various jurisdictions are in the process of reviewing the Companys tax returns for various post-1997 years, including the
United States Internal Revenue Service (IRS), which currently is examining the 1998 through 2001 tax returns of the Company. It is reasonably possible that this audit will conclude in the next 12 months. The Company will likely make a payment in the
range of $120.0 million to $130.0 million for adjustments that have been currently agreed upon with the IRS; however, it is not possible to estimate the impact of any other adjustments that may result from the audit on our liability for unrecognized
tax benefits. As part of this audit, the IRS is examining the pricing of the Companys cross-border arrangements. While the Company believes that the pricing of these arrangements is appropriate and that its reserves are adequate with respect
to such pricing, it is possible that the IRS will propose adjustments in excess of such reserves and that the conclusion of the audit will result in adjustments in excess of such reserves. An unfavorable resolution for open tax years could have a
material effect on the Companys results of operations or cash flows in the period in which an adjustment is recorded and in future periods. The Company believes that an unfavorable resolution for open tax years would not be material to the
financial position of the Company; however, each year the Company records significant tax benefits with respect to its cross-border arrangements, and the possibility of a resolution that is material to the financial position of the Company cannot be
excluded.



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



|Note 8. | Contingencies and Commitments
|------- | -----------------------------

The
Company is involved in various legal proceedings, including product liability, patent, commercial, environmental and antitrust matters, of a nature considered normal to its business, the most important of which are described below and/or have been
described in the Companys 2006 Financial Report as incorporated in its 2006 Annual Report on Form 10-K and Current Reports on Form 8-K filed since the filing of the 2006 Annual Report on Form 10-K. It is the Companys policy to accrue for
amounts related to these legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable. Additionally, the Company records insurance receivable amounts from third-party insurers when recovery is probable.
The following presents certain recent developments concerning the Companys legal proceedings and should be read in conjunction with the Companys prior reports.

Like all pharmaceutical companies in the current legal environment, the Company is involved in legal proceedings, including product liability and patent
litigation, that are significant to its business, complex in nature and have outcomes that are difficult to predict. Product liability claims, regardless of their merits or their ultimate outcome, are costly, divert management attention, and may
adversely affect the Companys reputation and the demand for its products and may result in significant damages. Patent litigation, if resolved unfavorably, can injure the Companys business by subjecting the Companys products to
earlier than expected generic competition and also can give rise to payment of significant damages or restrictions on the Companys future ability to operate its business.

The Company intends to vigorously defend itself and its products in the litigation described below and in its prior filings and believes its legal
positions are strong. However, in light of the circumstances discussed above, it is not possible to determine the ultimate outcome of the Companys legal proceedings and, therefore, it is possible that the ultimate outcome of these proceedings
could be material to the Companys results of operations, cash flows and financial position.

Product Liability Litigation

Diet Drug Litigation

The litigation against the Company alleging that the Companys former weight loss products, REDUX and/or PONDIMIN, caused certain serious conditions, including valvular heart disease and primary pulmonary hypertension, is
described in detail in the Companys 2006 Financial Report as incorporated in its 2006 Annual Report on Form 10-K. Total diet drug litigation payments were $78.5 million for the 2007 first quarter, of which $29.9 million were made in connection
with the nationwide settlement (including the Seventh Amendment). Payments under the national settlement may continue, if necessary, until 2018. As of March 31, 2007, $590.5 million of the Seventh Amendment security fund was included in
Other current assets including deferred taxes, and $255.0 million was included in Other assets including deferred taxes. The amounts in the security funds are owned by the Company and will earn interest income for the Company while
residing in the security fund. The Company has taken charges in connection with the REDUX and PONDIMIN diet drug matters which to date total $21,100.0 million. The $2,661.4 million reserve balance at March 31, 2007 represents
managements best estimate, within a range of outcomes, of the aggregate amount required to cover diet drug litigation costs. It is possible that additional reserves may be required in the future, although the Company does not believe that the
amount of any such additional reserves is likely to be material.



13



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##### Table of Contents

WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



Hormone Therapy Litigation

As of March 31, 2007, the Company was defending approximately 5,200 actions brought on behalf of approximately 7,900 women in various federal and
state courts throughout the United States (including, in particular, the United States District Court for the Eastern District of Arkansas and the Pennsylvania Court of Common Pleas, Philadelphia County) for personal injuries, including claims for
breast cancer, stroke, ovarian cancer and heart disease, allegedly resulting from their use of PREMPROor PREMARIN.

As
described in the Companys 2006 Financial Report as incorporated in its 2006 Annual Report on Form 10-K, the New York Supreme Court, Onondaga County, had granted summary judgment in favor of the Company, dismissing the claims in Browning, et
al. v. Wyeth, Inc., et al., No. 2003-0261, on the grounds, inter alia, that the labeling and warnings for PREMPROand PREMARINwere adequate as a matter of law. On March 16, 2007 the Appellate Division, Fourth
Department, of the New York Supreme Court unanimously affirmed the summary judgment and dismissal. Trials of additional hormone therapy (HT) cases are scheduled throughout 2007 and into 2008.

As the Company has not determined that it is probable that a liability has been incurred and an amount is reasonably estimable, the Company has not
established any litigation accrual for its HT litigation.

PPA Litigation

With respect to the lawsuits seeking damages for alleged personal injuries from phenylpropanolamine (PPA) described in the Companys 2006 Financial
Report as incorporated in its 2006 Annual Report on Form 10-K, as of March 31, 2007, the Company currently is a named defendant in approximately 55 individual PPA lawsuits on behalf of approximately 105 plaintiffs in federal and state courts
throughout the United States and Canada seeking such damages.

Patent Litigation

ENBRELLitigation

On April 20, 2006, Amgen Inc. (Amgen) filed suit in the United States District Court for the District of Delaware against ARIAD Pharmaceuticals, Inc. (Ariad), seeking a declaratory judgment that ENBREL does not infringe one of
Ariads patents. Wyeth was not named as a party to that suit. Ariad claims that its patent covers methods of treating disease by regulation or inhibition of NF-(kappa)B, a regulatory pathway within many cells. On April 13, 2007, Ariad
amended its counterclaims against Amgen to include Wyeth as a party to the lawsuit.



14



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##### Table of Contents

WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



EFFEXORLitigation

As discussed in the Companys 2006 Financial Report as incorporated in its 2006 Annual Report on Form 10-K, the Company has filed suit against
multiple generic companies that have filed Abbreviated New Drug Applications (ANDA) seeking the U.S. Food and Drug Administration (FDA) approval to market generic 37.5 mg, 75 mg and 150 mg venlafaxine HCl extended release capsules. Venlafaxine HCl
is the active ingredient used in EFFEXOR XR. On March 12, 2007, the Company filed suit in the United States District Court for the District of Maryland against Lupin Ltd. and Lupin Pharmaceuticals, Inc. (collectively, Lupin), alleging
that the filing by Lupin of an ANDA seeking FDA approval to market 37.5 mg, 75 mg and 150 mg venlafaxine HCl extended release capsules infringes the Companys patents relating to methods of using extended release formulations of venlafaxine
HCl. These patents, which expire in 2017, are the same patents that were at issue in the previously settled Teva Pharmaceuticals Industries, Ltd. (Teva) litigation (described in the Companys 2006 Financial Report as incorporated in its 2006
Annual Report on Form 10-K). Under the 30-month stay provision of the Hatch-Waxman Act, any FDA approval of the Lupin ANDA may not be made effective before July 2009 unless there is an earlier court decision holding each of the patents at issue
invalid or not infringed. Because Lupin has not, to date, made any allegations as to the Companys patent covering the compound venlafaxine itself, its ANDA cannot, in any event, be approved until the expiration of that patent, and its
associated pediatric exclusivity period, on June 13, 2008.

On April 20, 2007, the Company filed a lawsuit in the United States
District Court for the Eastern District of North Carolina against Osmotica Pharmaceutical Corp. (Osmotica) alleging that Osmoticas filing of an application with the FDA pursuant to 21 U.S.C. 355(b)(2), commonly known as a 505(b)(2)
application, seeking approval to market 37.5 mg, 75 mg, 150 mg and 225 mg venlafaxine HCl extended release tablets infringes Wyeths patents relating to methods of using extended release formulations of venlafaxine HCl. These patents, which
expire in 2017, are the same patents that were at issue in the previously settled Teva litigation (described in the Companys 2006 Financial Report as incorporated in its 2006 Annual Report on Form 10-K). Under the 30-month stay provision of
the Hatch-Waxman Act, any FDA approval of the Osmotica application may not be made effective before September 2009 unless there is an earlier court decision holding each of the asserted patents invalid or not infringed. Because Osmotica
has not, to date, made any allegations as to the Companys patent covering the compound venlafaxine itself, Osmoticas application cannot, in any event, be approved until the expiration of that patent, and its associated pediatric
exclusivity period, on June 13, 2008.



15



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WYETH

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)



Regulatory Proceedings

EFFEXORProceedings

With respect to the petition filed with the FDA by a consultant on behalf of an unnamed client seeking the FDAs permission to submit an ANDA for venlafaxine extended release tablets utilizing the Companys EFFEXOR XRcapsules as the reference product described in the Companys 2006 Financial Report as incorporated in its 2006 Annual Report on Form 10-K, it is noted that the Company has received notice of the filing of an application under 21 U.S.C.
355(b)(2) for a venlafaxine extended release tablet product (see Patent Litigation EFFEXORLitigation). It is not known whether this application has any relationship to the petition discussed above.



|Note 9. | Company Data by Segment
|------- | -----------------------

The Company has
four reportable segments: Wyeth Pharmaceuticals (Pharmaceuticals), Wyeth Consumer Healthcare (Consumer Healthcare), Fort Dodge Animal Health (Animal Health) and Corporate. The Companys Pharmaceuticals, Consumer Healthcare and Animal Health
reportable segments are strategic business units that offer different products and services. The reportable segments are managed separately because they manufacture, distribute and sell distinct products and provide services that require differing
technologies and marketing strategies. The Companys Corporate segment is responsible for the treasury, tax and legal operations of the Companys businesses and maintains and/or incurs certain assets, liabilities, income, expense, gains
and losses related to the overall management of the Company that are not allocated to the other reportable segments.



Net Revenue

Income (Loss) before Income Taxes(In thousands)

Three Months Ended March 31,

Three Months Ended March 31,Segment

2007

2006

2007


2006Pharmaceuticals

$4,481,408

$4,035,512

$1,629,655


$1,390,214Consumer Healthcare

611,387

554,186

102,974


59,313Animal Health

275,891

248,239

63,542


54,403Corporate(1)





(50,831
)

(43,315
)Total(2)

$5,368,686

$4,837,937

$1,745,340


$1,460,615




| | (1) | Corporate loss before taxes included a net charge of $42,600 and $35,100 for the 2007 and 2006 first quarters, respectively, related to the Companys productivity initiatives.
The initiatives for the 2007 first quarter related to the reportable segments as follows: Pharmaceuticals  $37,300, Consumer Healthcare  $4,300 and Animal Health  $1,000. The 2006 initiatives related solely to the Pharmaceuticals
business.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Income (loss) before income taxes for the 2007 and 2006 first quarters included gains from product divestitures of approximately $16,300 and $17,600, respectively, and pertained
primarily to the Pharmaceuticals segment.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three Months Ended March 31, 2007



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following commentary should be read in conjunction with the consolidated condensed financial statements and notes to consolidated condensed
financial statements on pages 3 to 16 of this report. When reviewing the commentary below, you should keep in mind the substantial risks and uncertainties that characterize our business. In particular, we encourage you to review the risks and
uncertainties described in Item 1A. RISK FACTORS in our 2006 Annual Report on Form 10-K filed with the Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from those
projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business; we encourage you to review
the examples of our forward-looking statements under the heading Cautionary Note Regarding Forward-Looking Statements on pages 39 to 41 of this report. These statements, like all statements in this report, speak only as of their date
(unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments.

Overview

Our Business

Wyeth is one of the worlds largest research-based pharmaceutical and health care products companies and is a leader in the discovery, development, manufacturing and marketing of pharmaceuticals, biotechnology
products, vaccines, non-prescription medicines and animal health products.

Our principal strategy for success is creation of innovative
products through research and development. We strive to produce first-in-class and best-in-class therapies for significant unmet medical needs by leveraging our breadth of knowledge and our resources across three principal scientific development
platforms: small molecules, biopharmaceuticals and vaccines.

We also strive to innovate commercially and change the way we approach our
business in response to the challenging global health care environment. During the 2007 first quarter, we continued with our long-term global productivity initiatives, which were launched in 2005, to adapt to the changing pharmaceutical environment.
These initiatives are aimed at encouraging innovation, improving processes and increasing cost efficiencies. Our ultimate goal is to move beyond specific initiatives and create a culture where we continually look for new ways to become more
productive in everything we do as a company.

In April 2007, we completed the acquisition of the remaining 20% stake in Wyeth K.K., our
joint venture company in Japan, held by Takeda Pharmaceuticals Company Limited, bringing our ownership in Wyeth K.K. to 100%. The purchase price for the remaining 20% was approximately $220.0 million.



17



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



We have three principal operating segments: Pharmaceuticals, Consumer Healthcare and Animal Health,
which we manage separately because they develop, manufacture, distribute and sell distinct products and provide services that require differing technologies and marketing strategies. These segments reflect how senior management reviews the business,
makes investing and resource allocation decisions and assesses operating performance. The following table provides an overview of the business operations of each of these segments:



Pharmaceuticals

Consumer Healthcare

Animal Health% of 2007 first quarter worldwide net revenue

84%

11%

5%% of 2007 first quarter segment net revenue generated outside U.S.

46%

48%

55%Principal business operations

Develops, manufactures, distributes and sells branded human ethical pharmaceuticals, biotechnology products, vaccines and nutrition products

Develops, manufactures, distributes and sells over-the-counter health care products

Develops, manufactures, distributes and sells biological and pharmaceutical products for animalsPrincipal product categories

Neuroscience therapies, cardiovascular products, nutrition products, gastroenterology drugs, anti-infectives, vaccines, oncology therapies, musculoskeletal therapies, hemophilia treatments,
immunological products and womens health care products

Analgesics, cough/cold/allergy remedies, nutritional supplements, and hemorrhoidal, asthma and personal care items

Vaccines, pharmaceuticals, parasite control and growth implants




18



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



We also have a reportable Corporate segment primarily responsible for the treasury, tax and legal
operations of our businesses. The Corporate segment maintains and/or incurs certain assets, liabilities, income, expense, gains and losses related to our overall management that are not allocated to the other reportable segments.

2007 First Quarter Financial Highlights

| | · |  | Worldwide net revenue increased 11% to $5,368.7 million;
| | - |  | --------------------------------------------------------



| | · |  | Pharmaceuticals net revenue increased 11%, reflecting the strong performance of PREVNAR, ENBREL,Nutrition products and ZOSYN,offset, in part,
by lower sales of EFFEXOR, PROTONIX and the PREMARINfamily of products. In addition, ZOTONandINDERAL LAsales decreased due to generic competition;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | Consumer Healthcare net revenue increased 10% resulting from higher sales of DIMETAPP, ROBITUSSINand ADVIL COLD & SINUSproducts,
which were negatively impacted in the 2006 first quarter by retailer actions and federal and state legislation related to pseudoephedrine-containing products. The 2007 first quarter results also reflected sales of ADVIL PM,which was
introduced in the 2006 second quarter; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | Animal Health net revenue increased 11%, reflecting higher sales of companion animal, livestock, equine and poultry products.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------

Our Principal Products

Set forth
below is a summary of net revenue performance of our principal products in the 2007 first quarter:



(Dollars in millions)

2007 FirstQuarterNet Revenue

% Increase/(Decrease) over 2006 First QuarterEFFEXOR

$891.0

(6)%PREVNAR

616.6

43%PROTONIX

474.1

(2)%ENBREL (outside the United States and Canada)(1)

445.2

33%Nutrition

346.7

20%Alliance revenue(2)

304.0

20%ZOSYN/TAZOCIN

281.1

18%PREMARIN family

241.1

(9)%




| | (1) | ENBREL net revenue includes sales of ENBREL outside the United States and Canada, where we have exclusive rights but does not include our share of profits from sales
in the United States and Canada, where the product is co-promoted with Amgen, which we record as alliance revenue.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Alliance revenue is generated from sales of ENBREL (in the United States and Canada), ALTACE and the CYPHER stent. The active ingredient in RAPAMUNE,
sirolimus, coats the CYPHER coronary stent marketed by Johnson & Johnson.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



| | · |  | EFFEXOR is our novel antidepressant for treating adult patients with major depressive disorder, generalized anxiety disorder, social anxiety disorder and
panic disorder. EFFEXOR remains our largest franchise and the number one selling antidepressant globally. See Our Challenging Business Environment beginning on page 24 for a discussion of the settlement agreement with Teva,
pursuant to which Teva has launched generic versions of EFFEXOR(immediate release tablets) in the United States and EFFEXOR XR(extended release capsules) in Canada.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | PREVNAR is our vaccine for preventing invasive pneumococcal disease in infants and children. It is the first and only vaccine product ever to achieve $1
billion in annual net revenue and now is available in 76 countries worldwide and included in 16 national immunization programs (NIP). We anticipate the number of NIPs to increase as a result of the March 23, 2007 announcement by the World Health
Organization recommending the inclusion of PREVNAR in NIPs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | PROTONIX is our proton pump inhibitor (PPI) for gastroesophageal reflux disease. The PPI category is highly competitive, and we have continued to focus on
our strategy of higher value prescriptions within the third-party managed care segment. We also are tailoring our marketing programs to capitalize on unique local market opportunities. PROTONIX continues to have the highest preferred access
with health maintenance organizations among the branded PPIs and is the leader among branded PPIs on Medicare drug plan formularies.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | ENBREL is our treatment for rheumatoid arthritis, psoriasis and other conditions. We have exclusive rights to ENBREL outside the United States and
Canada, and we co-promote ENBREL with Amgen in the United States and Canada. ENBREL maintains its leading U.S. market position in rheumatology and dermatology and is ranked ninth in global sales among all pharmaceutical products.
ENBREL now is approved, launched and reimbursed in Japan, where, until recently, we had been operating under a routine government-required post-marketing safety program. In April 2007, this program was concluded, paving the way for broader
patient access and expanded commercial opportunity for ENBREL in Japan.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | Alliance revenue includes our share of profits from sales of ENBREL in the United States and Canada, where we co-promote the product with Amgen; our share of
profits from sales of ALTACE, which was co-promoted with King Pharmaceuticals, Inc. (King) prior to 2007; and certain revenue earned related to sirolimus, the active ingredient in RAPAMUNE, which coats the CYPHER coronary stent
marketed by Johnson & Johnson. In July 2006, Wyeth and King announced that the companies had entered into an Amended and Restated Co-Promotion Agreement regarding ALTACE. Effective January 1, 2007, King assumed full responsibility for the
selling and marketing of ALTACE. Wyeth will receive a fee in 2007 through 2010, generally based on a percentage of ALTACE net sales and subject to annual payment limits.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | Nutrition includes our infant formula and toddler products NURSOY, PROGRESS, PROMIL and S-26. We continue to expand into new markets,
grow our business in the countries where we compete and shift focus of our business to the more profitable premium sector of the market. Significant manufacturing capacity expansions currently are under way in the Asia/Pacific region to support our
nutrition business strategy.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Three
Months Ended March 31, 2007



| | · |  | OurPREMARIN family of products remains the leading therapy to help women address serious menopausal symptoms. See Our Challenging Business
Environment beginning on page 24 for a discussion of recent publications of analyses of the benefits and risks of hormone therapy.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · |  | ZOSYN (TAZOCIN internationally), our broad-spectrum I.V. antibiotic, is the number one selling injectable antibiotic worldwide. We continue to make
significant progress introducing our new advanced formulation of ZOSYN. The new formulation was launched in the United States in the 2006 first quarter, and we anticipate that the majority of other markets will have access by mid-2007. See
Our Challenging Business Environment beginning on page 24 for a discussion of potential generic competition for ZOSYN.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For a full description of our principal products, the preceding summary should be read in conjunction with our principal product summary in the overview section of Managements Discussion and Analysis of
Financial Condition and Results of Operations in our 2006 Financial Report as incorporated in our 2006 Annual Report on Form 10-K.

Our Product Pipeline

Our continued success depends, in large part, on the discovery and development of new and innovative
pharmaceutical products and additional indications for existing products.

Our New Drug Application (NDA) filings with the FDA for
PRISTIQ(desvenlafaxine succinate), a serotonin/norepinephrine reuptake inhibitor, for the treatment of major depressive disorder in 2005 and vasomotor symptoms associated with menopause in 2006 remain under regulatory review.

With respect to PRISTIQ for the treatment of major depressive disorder, we received an approvable letter from the FDA on January 22, 2007.
According to the approvable letter, FDA approval of PRISTIQ is subject to several conditions, including: a satisfactory FDA inspection of our Guayama, Puerto Rico facility, which is where PRISTIQ will be manufactured; several
post-marketing commitments, including submission of long-term relapse prevention, low-dose and pediatric studies; additional clarity around our product education plan for physicians and patients; and confirmation by the FDA of the acceptability of
the proprietary name, PRISTIQ. See Our Challenging Business Environment beginning on page 24 for a discussion of the recent re-inspection of our Guayama, Puerto Rico facility.

We recently completed additional clinical trials of PRISTIQ in major depressive disorder, which included lower dosage levels. After completing
all required analyses of the data from these clinical trials, we intend to include them in our complete response to the FDA approvable letter, which we anticipate filing with the FDA by the end of August 2007. We anticipate that the FDA will extend
its review of the NDA for PRISTIQfor the treatment of major depressive disorder by six months from the date we submit our complete response, resulting in an anticipated FDA action date during the first quarter of 2008. We also plan to file a
dossier in Europe for PRISTIQfor the depression indication, including the low-dose and all other available data, in the 2007 third quarter.



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Three
Months Ended March 31, 2007



With respect to PRISTIQ as a non-hormonal treatment for vasomotor symptoms associated with
menopause, in April 2007, we submitted to the FDA data from a recently completed study of 100 mg and 150 mg doses that included a 50 mg titration step. We have been advised that the FDA will extend its review cycle for this indication by three
months, to late July 2007, to include these data in its review of the NDA. We also plan to submit these data to the European regulatory authorities to support the ongoing review of our October 2006 marketing authorization application for PRISTIQfor the treatment of vasomotor symptoms in Europe.

On April 23, 2007, we received an approvable letter from the FDA with respect
to our NDA for VIVIANT (bazedoxifene) for prevention of postmenopausal osteoporosis, which we filed with the FDA in the second quarter of 2006. The approvable letter indicated, among other things, that before our NDA can be approved, the FDA
must receive and analyze, as part of its benefit-risk assessment, final safety and efficacy data from our recently completed three-year osteoporosis treatment study and must complete an acceptable establishment evaluation for the manufacturing and
testing facilities for bazedoxifene. We plan to complete our analysis of the three-year treatment data and submit it to the FDA by mid-year 2007 as part of our complete response to the approvable letter for the prevention indication. We
anticipate a six-month review extension, from the date of submission of these data, resulting in a projected year-end 2007 action date from the FDA on our NDA. We also plan to include these data in our anticipated NDA filing for VIVIANTfor
the treatment of osteoporosis with the FDA later in 2007 and in our anticipated filing for VIVIANT in Europe later in 2007.

With
respect to APRELA(bazedoxifene/conjugated estrogens), our tissue selective estrogen complex, we recently completed a Phase 3 clinical trial for the treatment of vasomotor symptoms, and we remain on track for an anticipated NDA filing for
treatment of vasomotor symptoms and prevention of osteoporosis with the FDA at the end of 2007.

As part of the ongoing review of our NDA
filing for TORISEL(temsirolimus) for the treatment of renal cell carcinoma, we recently submitted additional information on tumor evaluation at the request of the FDA. The FDA action date for the NDA has been extended by three months,
to July 2007, to allow the agency time to complete a full review of this information. Our NDA for TORISELfor the treatment of renal cell carcinoma originally was submitted on October 5, 2006 and was granted priority review status in
December 2006. A priority designation can be given to an NDA for a drug that, if approved, would be a significant improvement compared with existing treatments.

An NDA for bifeprunox for the treatment of schizophrenia, which was filed with the FDA in the 2006 third quarter in concert with our partner Solvay Pharmaceuticals (Solvay), remains under regulatory review, with an
FDA action date in August 2007. Additionally, we continue to assess development options for bifeprunox in bipolar disorder, as our first study in this indication demonstrated signs of efficacy but did not show statistically significant separation
from placebo on the primary efficacy endpoint. We and Solvay are analyzing these data to make a full assessment of the results and the determination of next steps for the program.



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Three
Months Ended March 31, 2007



Our 2005 NDA filing with the FDA and our European Union (EU) regulatory filing forLYBREL
(levonorgestrel/ethinyl estradiol), a new low-dose, non-cyclic continuous combination oral contraceptive, remain under regulatory review. In June 2006, we received an approvable letter for LYBREL from the FDA and submitted a complete
response, including additional stability data regarding the LYBREL manufacturing method. We subsequently amended our LYBREL NDA to reflect a change to an improved manufacturing process. The FDA has advised us that it does not plan to
convene an advisory committee meeting to review the clinical aspects of LYBREL, and we expect FDA action on our NDA in May 2007. Initial approval of LYBRELwould be for contraception with the continuous regimen that has the potential
to eliminate menstrual bleeding and would not include relief of cycle-related symptoms.

On March 30, 2007, our collaboration with
Progenics Pharmaceuticals, Inc. resulted in an NDA filing to the FDA for methylnaltrexone (subcutaneous formulation) for the treatment of opioid-induced constipation in patients receiving palliative care. In July 2006, we received fast track status
from the FDA for the intravenous form of methylnaltrexone being investigated for the treatment of postoperative ileus, a serious impairment of gastrointestinal function that delays recovery and can prolong hospitalization. The fast track designation
facilitates development and may expedite regulatory review of drugs that the FDA recognizes to potentially address an unmet medical need for serious or life-threatening conditions. An NDA submission is planned for the intravenous form of
methylnaltrexone in early 2008.

With respect to TYGACIL, our innovative broad-spectrum I.V. antibiotic for serious, hospital-based
infections, we currently are evaluating data received from Phase 3 clinical trials in anticipation of regulatory filings to potentially expand TYGACILs indications to include community-acquired pneumonia and hospital-acquired pneumonia.

In the 2007 first quarter, we enrolled the first group of adult patients in a Phase 3 clinical trial for our 13-valent pneumococcal
conjugate vaccine. Assuming positive results, we plan to make regulatory filings for this vaccine in infants and adults in 2009.



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and Results of Operations

Three
Months Ended March 31, 2007



Certain Product Liability Litigation

Diet Drug Litigation

We continue
to address the challenges of our diet drug litigation, which is described in Note 14 to our consolidated financial statements, Contingencies and Commitments, contained in our 2006 Financial Report and in Note 8 to our consolidated
condensed financial statements, Contingencies and Commitments, contained in this Quarterly Report on Form 10-Q. The $2,661.4 million reserve balance at March 31, 2007 represents our best estimate, within a range of outcomes, of the
aggregate amount required to cover diet drug litigation costs. It is possible that additional reserves may be required in the future, although we do not believe that the amount of any such additional reserves is likely to be material.

Hormone Therapy Litigation

During
2006, we began the first of a number of trials in our hormone therapy litigation, which is discussed in greater detail in Note 14 to our consolidated financial statements, Contingencies and Commitments, contained in our 2006 Financial
Report and in Note 8 to our consolidated condensed financial statements, Contingencies and Commitments, contained in this Quarterly Report on Form 10-Q. As of March 31, 2007, we were defending approximately 5,200 actions brought on
behalf of approximately 7,900 women in various federal and state courts throughout the United States for personal injuries, including primarily claims for breast cancer, as well as claims for (among other conditions) stroke, ovarian cancer and heart
disease, allegedly resulting from their use of PREMPROor PREMARIN. Trials of additional hormone therapy cases beyond those described in our 2006 Financial Report are scheduled throughout 2007 and into 2008. Individual trial results
depend on a variety of factors, including many that are unique to the particular case, and our trial results to date, therefore, may not be predictive of future trial results. As we have not determined that it is probable that a liability has been
incurred and an amount is reasonably estimable, we have not established any litigation accrual for our hormone therapy litigation.

Our
Challenging Business Environment

Generally, we face the same difficult challenges that all research-based pharmaceutical companies
are confronting. Pressure from government agencies, insurers, employers and consumers to lower prices through leveraged purchasing plans, use of formularies, importation, reduced reimbursement for prescription drugs and other means poses significant
challenges for us. Generic products, which Wyeth no longer markets, are growing as a percentage of total prescriptions. Insurers and employers are increasingly demanding that patients start with a generic product before switching to a branded
product if necessary, and our products increasingly compete with generic products. Regulatory burdens and safety concerns are increasing both the cost and time it takes to bring new drugs to market. Post-marketing regulatory and media scrutiny of
product safety also is increasing.



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Three
Months Ended March 31, 2007



On May 9, 2006, we received a Warning Letter from the FDA that raised several specific concerns
about manufacturing at our Guayama, Puerto Rico facility. There are no patient safety concerns associated with the issues raised in the Warning Letter. In response to the Warning Letter, we have taken a number of steps to reinforce compliance at the
Guayama, Puerto Rico site, including improving key standard operating procedures, hiring new personnel, undertaking additional training, expanding the senior leadership presence in Puerto Rico and engaging an independent expert consultant to
supplement our oversight of Good Manufacturing Practices. In late March 2007, the FDA concluded its general re-inspection of the facility, and in April 2007 we responded in writing to the FDAs inspectional observations. In May 2007,
the FDAs San Juan District Office informed us that the re-inspection resulted in a positive re-classification of the Guayama, Puerto Rico site. The new classification means that any issues found by the FDA have either been corrected by us or
do not merit any further regulatory action.

Late in 2005, we reached agreement with Teva on a settlement of the U.S. patent litigation
pertaining to Tevas generic version of our EFFEXOR XR (extended release capsules) antidepressant. Under licenses granted to Teva as part of the settlement, Teva launched a generic version of EFFEXOR (immediate release
tablets) in the United States in August 2006 and will be permitted to launch a generic version of EFFEXOR XR(extended release capsules) in the United States beginning on July 1, 2010, subject to earlier launch based on specified
events. Events that could trigger an earlier U.S. market entry by Teva with generic versions of EFFEXOR XR (extended release capsules) include specific market conditions or developments regarding the applicable Wyeth patents, including
the outcome of other generic challenges to the patents. Three lawsuits concerning such generic challenges currently are pending. We recently commenced a lawsuit against a fourth company that has filed an application pursuant to 21 U.S.C. 355(b)(2)
challenging these same patents and seeking FDA approval to market venlafaxine HCl extended release tablets. Venlafaxine HCl is the active ingredient used in EFFEXOR XR. There can be no assurance that the outcome of these litigations, or the
occurrence of specific market conditions, will not trigger generic entry, by Teva or another generic manufacturer, earlier than July 1, 2010. In connection with the licenses pursuant to the settlement, Teva will pay us specified percentages of gross
profit from sales of each of the Teva generic versions, subject to adjustment or suspension based on market conditions and developments regarding the applicable patent rights. In addition, pursuant to an agreement reached with Teva with respect to a
generic version of EFFEXOR XR (extended release capsules) in Canada, Teva launched a generic version of EFFEXOR XR (extended release capsules) in Canada in December 2006. We estimate that greater than three-fourths of EFFEXOR
(immediate release tablets) prescriptions in the United States have been converted to Tevas generic versions since the August 2006 launch. In addition, Tevas launch of generic versions of EFFEXOR XR (extended release
capsules) in Canada in December 2006 has caused our net revenue in the Canadian market to decrease approximately 60% in the 2007 first quarter compared with the 2006 first quarter, and we anticipate that the decline likely will continue in that
market. While it is possible that Tevas introduction of a generic version of EFFEXOR(immediate release tablets) in the United States could adversely impact our U.S. sales of EFFEXOR XR (extended release capsules), we have
not experienced an impact to date and continue to anticipate that any impact will be modest given the significant differences in product profiles.



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Three
Months Ended March 31, 2007



Additionally, generic versions of EFFEXOR(immediate release tablets) and EFFEXOR XR
(extended release capsules) have been introduced in select markets outside the United States and Canada. The impact on our 2007 first quarter results was limited, and we expect the impact on our results for the remainder of 2007 to be modest and
slow to accrue over time given that these markets outside the United States and Canada represent a small portion of worldwide sales.

In
December 2006, the Psychopharmacologic Drugs Advisory Committee met to discuss findings from the FDAs meta-analysis of clinical trial data from placebo-controlled antidepressant trials submitted by pharmaceutical manufacturers of
antidepressants. The purpose of the FDAs analysis was to examine the occurrence of suicidality in the course of treating adult patients with various antidepressants. In contrast with the FDAs prior review of pediatric antidepressant
studies, the pooled analysis of the overall adult population found no treatment effect on suicidality. The FDA analyzed the pooled data across the 12 antidepressants by age and observed an elevated risk for suicidal behavior (not suicidal ideation)
in adults younger than 25 years of age. Recently, the FDA has proposed labeling changes for all antidepressants reflecting this new information that we will implement as soon as practicable.

Our sales of ZOSYN could be significantly affected if the product faces generic competition in the United States and other major markets in the
future. The compound patent claiming one of the active ingredients of ZOSYNexpired in the United States in February 2007. Additional process and manufacturing patents extend beyond that expiration. Our new formulation of
ZOSYN was approved by the FDA in 2005 and has additional patent protection extending to 2023. While our best estimate is that generic competition for ZOSYN in the United States will not occur until at least late 2007, it is
possible that we will face generic competition as early as the 2007 second quarter, depending upon the FDAs response to the petitions filed by Wyeth and third parties regarding ZOSYN, which are discussed in greater detail in Note 14 to
our consolidated financial statements, Contingencies and Commitments, in our 2006 Financial Report incorporated by reference into our 2006 Annual Report on Form 10-K and other factors. The compound patent claiming one of the active
ingredients in ZOSYN will expire in most major countries outside the United States in the 2007 third quarter. Thus, we may face generic competition in these countries as early as the 2007 third quarter.

In December 2006, we received a request from the European Medicines Agency (EMEA) to change the currently authorized dosage recommendations for
PREVENAR in Europe from a three-dose primary series plus one booster dose (3+1) to a two-dose primary series plus one booster dose (2+1). The 2+1 dosing schedule already is used in some EU Member States. During meetings in
February 2007, we informed the scientific assessors for PREVENAR that we do not believe that the available scientific data provide an adequate basis to support such a change. Some change to the PREVENAR labeling to include an update of
the data already included on the 2+1 schedule, as well as additional surveillance data, remains under consideration. Following discussions with the scientific assessors, we agreed that our formal, written response to the European Medicines
Agency would be made in August 2007. The labeling outcome and its commercial impact, if any, are uncertain.



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In recent months, additional analyses of the benefits and risks of hormone therapy in the treatment
of menopausal symptoms have been published, including additional analyses of data from the Womens Health Initiative. Wyeth continues to believe that hormone therapy remains a good health care choice for the appropriate woman seeking the relief
of moderate to severe menopausal symptoms, including hot flashes, night sweats and vaginal atrophy, and the prevention of postmenopausal osteoporosis, and that its product label appropriately reflects the products profile. Nevertheless, it is
uncertain what impact, if any, the publicity about risks discussed in these publications will have on our net sales of PREMARINand PREMPRO and our hormone therapy litigation.

We are in discussions with the FDA, the EMEA and other boards of health regarding the appropriate regulatory handling of certain minor process
modifications introduced by our active ingredient supplier into the manufacturing process for the active ingredient of TYGACIL. These modifications do not affect the safety or efficacy of the product. At this time, we do not expect this issue
to affect product supply, but there is a possibility of temporary supply shortages in some markets in the near term.

Generic versions of
our product INDERAL LA, which had not been subject to generic competition for many years, entered the U.S. market in early 2007. As a result, net sales of this product in the United States, which totaled approximately $198 million for the
2006 full year, declined approximately 45% in the 2007 first quarter as compared with the 2006 first quarter.

We are planning a number of
new product launches over the next few years in anticipation of which we have made and will continue to make significant investments in assets, including inventory, plant and equipment. Our ability to realize value on these investments is contingent
on, among other things, regulatory approval and market acceptance of these new products. In addition, we have several products that are nearing the end of their patent terms. If we are unable to find alternative uses for the assets supporting these
products or if we have excess inventory as a result of earlier than anticipated generic entry or otherwise, these assets may need to be evaluated for impairment.

Our Productivity Initiatives

We are continuing with our long-term global productivity initiatives,
collectively called Project Springboard, which we launched in 2005, to adapt to the challenging pharmaceutical industry environment. Since inception of our productivity initiatives, total net pre-tax charges of $451.8 million have been recorded with
respect to these initiatives. Additional costs associated with the productivity initiatives are expected to continue for several years as further strategic decisions are made; costs are projected to total approximately $750.0 million to $1,000.0
million, on a pre-tax basis. Throughout 2007 and in future years, we will continue with our long-term productivity initiatives with the objective of making Wyeth more efficient and more effective so that we may continue to thrive in this
increasingly challenging industry environment.



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Months Ended March 31, 2007



Critical Accounting Policies and Estimates

Our critical accounting policies are detailed in our 2006 Financial Report as incorporated in our Annual Report on Form 10-K for the year ended
December 31, 2006. Other than the adoption of FIN 48 as discussed in Note 7 to our consolidated condensed financial statements, Income Taxes, contained in this quarterly report on Form 10-Q, there were no changes in our critical
accounting policies from the year ended December 31, 2006.

Results of Operations

Net Revenue

Worldwide Net
revenue increased 11% for the 2007 first quarter compared with the 2006 first quarter. The increase in worldwide Net revenue in the 2007 first quarter was due to increases in the Pharmaceuticals, Consumer Healthcare and Animal Health
segments. Excluding the favorable impact of foreign exchange, worldwide Net revenue increased 9% for the 2007 first quarter.

The
following table sets forth worldwide Net revenue results by reportable segment together with the percentage changes from the comparable period in the prior year:



Net Revenue(Dollars in millions)

Three MonthsEnded March 31,Segment

2007

2006

% IncreasePharmaceuticals

$4,481.4

$4,035.5

11%Consumer Healthcare

611.4

554.2

10%Animal Health

275.9

248.2

11%Total

$5,368.7

$4,837.9

11%




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The following table sets forth the percentage changes in worldwide Net revenueby reportable
segment and geographic area from the comparable period in the prior year, including the effect volume, price and foreign exchange had on these percentage changes:



% Increase (Decrease) Three Months Ended March 31, 2007Volume

Price

ForeignExchange

TotalNet RevenuePharmaceuticalsUnited States

3%

4%



7%International

13%

(2)%

5%

16%Total

8%

1%

2%

11%Consumer HealthcareUnited States

9%

(1)%



8%International

7%

2%

4%

13%Total

8%



2%

10%Animal HealthUnited States

(2)%

8%



6%International

8%

2%

6%

16%Total

4%

4%

3%

11%TotalUnited States

3%

4%



7%International

12%

(1)%

5%

16%Total

8%

1%

2%

11%




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Pharmaceuticals

Worldwide Pharmaceuticals net revenue increased 11% for the 2007 first quarter due primarily to higher sales of PREVNAR, ENBREL (outside the
United States and Canada), Nutrition products and ZOSYN, offset, in part, by lower sales of EFFEXOR, PROTONIXand the PREMARIN family of products. In addition, ZOTONand INDERAL LA sales decreased due to generic
competition. The increase in PREVNAR net revenue in the United States was primarily due to improvement in compliance rates in the United States and the addition of 250,000 doses to the Centers for Disease Control and Prevention vaccine
stockpile, as well as price increases in the United States. Internationally, PREVNAR net revenue increased 83% largely due to the positive impact of the NIPs that began in late 2006 in Germany, Mexico and the United Kingdom. ZOSYN
sales increased due to the recovery from manufacturing supply limitations that impacted the 2006 first quarter. The decrease in EFFEXOR sales reflected year-over-year wholesaler inventory changes and the impact of Tevas launch of a
generic version of EFFEXOR (immediate release tablets) in the United States, as well as the introduction of Tevas generic version of EFFEXOR XR (extended release capsules) in Canada. The PREMARIN family of products net
revenue decrease was due to lower volume and lower wholesaler inventory levels in the 2007 vs. 2006 first quarter offset, in part, by price increases. Additionally, alliance revenue increased 20% to $304.0 million for the 2007 first quarter
primarily as a result of higher sales of ENBRELin the United States and Canada. Excluding the favorable impact of foreign exchange, worldwide Pharmaceuticals net revenue increased 9% for the 2007 first quarter.

Consumer Healthcare

Worldwide
Consumer Healthcare net revenue increased 10% for the 2007 first quarter. The increase in the 2007 first quarter was due primarily to an increase in sales of ADVIL COLD & SINUS, DIMETAPP and ROBITUSSIN,which were
negatively impacted in 2006 as a result of retailer actions and federal and state legislation related to pseudoephedrine-containing products. The 2007 first quarter also reflected sales of ADVIL PM,which was introduced in the 2006 second
quarter. Excluding the favorable impact of foreign exchange, worldwide Consumer Healthcare net revenue increased 8% for the 2007 first quarter.

Animal Health

Worldwide Animal Health net revenue increased 11% for the 2007 first quarter due primarily to higher sales
of companion animal, livestock, equine and poultry products. Excluding the favorable impact of foreign exchange, worldwide Animal Health net revenue increased 8% for the 2007 first quarter.



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The following tables set forth the significant worldwide Pharmaceuticals, Consumer Healthcare and
Animal Health net revenue by product for the three months ended March 31, 2007 compared with the same period in the prior year:



PharmaceuticalsThree Months Ended March 31,(In millions)

2007

2006EFFEXOR

$891.0

$944.6PREVNAR

616.6

431.6PROTONIX

474.1

481.6ENBREL(1)

445.2

335.4Nutrition

346.7

288.5ZOSYN/TAZOCIN

281.1

238.4PREMARINfamily

241.1

265.6Oral contraceptives

110.1

127.1BENEFIX

98.1

89.7rhBMP-2

97.0

65.3RAPAMUNE

83.4

75.8REFACTO

78.5

67.3TYGACIL

25.6

10.2ZOTON

18.8

40.5Alliance revenue(1,2)

304.0

254.1Other

370.1

319.8Total Pharmaceuticals

$4,481.4

$4,035.5




| | (1) | ENBREL net revenue includes sales of ENBREL outside the United States and Canada, where we have exclusive rights but does not include our share of profits from sales
in the United States and Canada, where the product is co-promoted with Amgen, which we record as alliance revenue.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Alliance revenue is generated from sales of ENBREL (in the United States and Canada), ALTACE and the CYPHER stent. The active ingredient in RAPAMUNE,
sirolimus, coats the CYPHER coronary stent marketed by Johnson & Johnson.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Consumer
HealthcareThree MonthsEnded March 31,(In millions)

2007

2006CENTRUM

$159.1

$157.6ADVIL

158.4

142.5ROBITUSSIN

49.0

32.8CALTRATE

48.0

46.7PREPARATION H

26.4

23.5CHAPSTICK

24.4

21.8ADVIL COLD & SINUS

17.9

10.6ALAVERT

17.0

12.7DIMETAPP

14.8

6.2Other

96.4

99.8Total Consumer Healthcare

$611.4

$554.2Animal
HealthThree MonthsEnded March 31,(In millions)

2007

2006Livestock products

$113.2

$105.6Companion animal products

86.2

71.9Equine products

45.8

42.2Poultry products

30.7

28.5Total Animal Health

$275.9

$248.2


Sales Deductions

We deduct certain items from gross revenue, which primarily consist of provisions for product returns, cash discounts, chargebacks/rebates, customer
allowances and consumer sales incentives. The provision for chargebacks/rebates relates primarily to U.S. sales of pharmaceutical products provided to wholesalers and managed care organizations under contractual agreements or to certain governmental
agencies that administer benefit programs, such as Medicaid. While different programs and methods are utilized to determine the chargeback or rebate provided to the customer, we consider both to be a form of price reduction. Chargebacks/rebates are
the only deductions from gross revenue that we consider significant and approximated $672.7 million for the 2007 first quarter compared with $553.7 million for the 2006 first quarter. The increase in chargebacks/rebates is primarily due to increased
sales of PROTONIX to hospitals prior to the expiration of nominal pricing, as well as the overall increase in sales.

Except for
chargebacks/rebates, provisions for each of the other components of sales deductions, including product returns, are individually less than 2% of gross sales.



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Operating Expenses

Cost of goods sold, as a percentage of Net revenue, decreased 0.1 percentage point to 27.5% for the 2007 first quarter compared with 27.6%
for the 2006 first quarter. Pharmaceuticals cost of goods sold, as a percentage of net revenue, increased 0.4 percentage point to 25.0% for the 2007 first quarter compared with 24.6% for the 2006 first quarter. The increase resulted from higher cost
of sales associated with FDA-related compliance activities at our Guayama, Puerto Rico manufacturing facility and slightly higher royalty costs associated with higher ENBREL and PREVNAR sales. A less favorable product mix resulting
from lower sales of higher margin EFFEXOR and higher sales of lower margin Nutrition products also negatively impacted Pharmaceuticals cost of goods sold. This increase was offset partially by an increase in alliance revenue, which has no
associated cost of goods sold. In addition, offsetting the increase in Pharmaceuticals cost of goods sold was a 2.5 percentage point decrease, as a percentage of net revenue, in Consumer Healthcare cost of goods sold due to inventory adjustments and
reserves recorded in the 2006 first quarter associated with pseudoephedrine-containing products.

Selling, general and administrative
expenses, as a percentage of Net revenue, decreased 2.1 percentage points for the 2007 first quarter compared with the 2006 first quarter. The 2007 first quarter decrease was primarily due to lower general and administrative expenses as a
percentage of net revenue in the Corporate and Animal Health segments as a result of lower legal and consulting expenses. Selling expenses were lower as a percentage of net revenue in the Consumer Healthcare segment primarily due to the 2006 first
quarter accrual for loss on returns, which was recorded in connection with retailer actions and federal and state legislation related to pseudoephedrine-containing products and in the Pharmaceutical segment due to sales force restructuring.

Research and development expenses increased 10% for the 2007 first quarter as compared with the 2006 first quarter. The 2007 first
quarter increase is primarily due to higher spending on various clinical programs, including methylnaltrexone, 13-valent pneumococcal conjugate vaccine and various neuroscience new drug candidates, as well as higher compensation-related expenses.



33



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



Interest (Income) Expense and Other Income

Interest (income) expense, net for the three months ended March 31, 2007 and 2006 consisted of the following:



Three MonthsEnded March 31,(In millions)

2007


2006Interest expense

$143.9


$134.2Interest income

(140.6
)

(114.0
)Less: amount capitalized for capital projects

(18.1
)

(14.7
)Total interest (income) expense, net

$(14.8
)

$5.5


Interest income, net for the 2007 first quarter was $14.8 million as compared with
Interest expense, net of $5.5 million for the 2006 first quarter. The change was due to higher interest income and higher capitalized interest offset partially by higher interest expense. Weighted average debt outstanding during the 2007
first quarter was $9,365.6 million compared with $9,198.3 million in the 2006 first quarter. The impact of higher weighted average debt outstanding on interest expense was offset by increased interest income earned on higher cash balances in the
2007 vs. 2006 first quarter. The Companys higher average debt balance resulted from the March 27, 2007 issuance of $2,500.0 million of Notes in an offering registered with the Securities and Exchange Commission. The higher capitalized
interest resulted from increased spending for long-term capital projects in process.

Other income, net decreased by approximately
$14.9 million for the 2007 first quarter due primarily to lower miscellaneous income offset, in part, by higher payments from Teva pursuant to our settlement agreement allowing Teva to sell generic versions of EFFEXOR. Pre-tax gains primarily
from the divestiture of certain Pharmaceuticals products were approximately $16.3 million for the 2007 first quarter compared with $17.6 million for the 2006 first quarter.



34



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



Income (Loss) before Income Taxes

The following table sets forth worldwide income (loss) before income taxes by reportable segment together with the percentage changes from the comparable
period in the prior year:



Income (Loss) before Income TaxesThree Months Ended March 31,(Dollars in millions) Segment

2007


2006


% Increase/ (Decrease)Pharmaceuticals(1)

$1,629.6


$1,390.2


17%Consumer Healthcare(1)

103.0


59.3


74%Animal Health

63.5


54.4


17%Corporate(2)

(50.8
)

(43.3
)

(17%
)Total

$1,745.3


$1,460.6


19%




| | (1) | Income (loss) before income taxes for the 2007 and 2006 first quarters included gains from product divestitures of approximately $16.3 and $17.6, respectively, and pertained
primarily to the Pharmaceuticals segment.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Corporate included a net charge of $42.6 for the 2007 first quarter and $35.1 for the 2006 first quarter related to the Companys productivity initiatives. For the 2007 first
quarter, the activities related to the reportable segments as follows: Pharmaceuticals  $37.3, Consumer Healthcare  $4.3 and Animal Health  $1.0. For the 2006 first quarter, productivity initiatives activities related solely to the
Pharmaceuticals business.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Worldwide Pharmaceuticals income before income taxes for the 2007 first quarter increased 17% due
primarily to higher net revenue and lower selling and general expenses, as a percentage of net revenue, offset by slightly lower gross margins earned on worldwide sales of Pharmaceuticals products and higher research and development expenses.

Worldwide Consumer Healthcare income before income taxes increased 74% for the 2007 first quarter due primarily to higher net revenue,
higher gross profit margins earned on worldwide sales of Consumer Healthcare products, and lower selling and general expenses, as a percentage of net revenue. The 2006 first quarter net revenue was negatively impacted by retailer actions and federal
and state legislation related to pseudoephedrine-containing products. Research and development expenses also were lower between periods.

Worldwide Animal Health income before income taxes for the 2007 first quarter increased approximately 17% due primarily to higher net revenue and lower selling and general expenses, as a percentage of net revenue, and lower research and
development expenses. Cost of goods sold, as a percentage of net revenue, was comparable between the 2007 and 2006 first quarters.



35



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



Corporate expenses, net for the 2007 first quarter increased to $50.8 million from $43.3 million for
the 2006 first quarter as a result of higher productivity initiatives charges and lower other income, net offset, in part, by higher interest income, net.

Income Taxes

The effective tax rate was 28.1% for the 2007 first quarter compared with 23.3% for
the 2006 first quarter. Excluding certain items affecting comparability (as discussed below under Consolidated Net Income and Diluted Earnings per Share Results), the effective tax rate increased to 28.2% for the 2007 first quarter
compared with 23.5% for the prior year. These increases reflected the impact of higher sales of certain Pharmaceuticals products (i.e., ENBREL and PREVNAR) that are manufactured in less favorable tax jurisdictions and increased
expenditures on research and development in non-U.S. locations.

Consolidated Net Income and Diluted Earnings per Share Results

Net income and diluted earnings per share for the 2007 first quarter were $1,254.1 million and $0.92, respectively, compared with net
income and diluted earnings per share of $1,119.6 million and $0.82, respectively, in the 2006 first quarter, both increasing 12%, respectively.

Our management uses various measures to manage and evaluate our performance and believes it is appropriate to specifically identify certain significant items included in net income and diluted earnings per share to assist investors with
analyzing ongoing business performance and trends. In particular, our management believes that comparisons between 2007 and 2006 first quarter results of operations are impacted by the following items that are included in net income and diluted
earnings per share:



| | · |  | 2007 first quarter net charges of $42.6 million ($29.5 million after-tax or $0.02 per share-diluted) related to our productivity initiatives.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | 2006 first quarter net charges of $35.1 million ($24.2 million after-tax or $0.02 per share-diluted) related to our productivity initiatives.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------

The productivity initiatives charges, which include costs associated with the Global Business Operations initiative,
the costs of closing certain manufacturing facilities, certain reorganization expenses and the elimination of certain positions at our facilities have been identified as significant items by our management as these charges are not considered to be
indicative of continuing operating results.



36



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



Excluding the 2007 first quarter productivity initiatives charges, the increases in net income and
diluted earnings per share for the 2007 first quarter were due primarily to higher net revenue and lower cost of goods sold and selling, general and administrative expenses, both as a percentage of net revenue, and higher interest income offset, in
part, by higher research and development spending as well as the impact of a higher effective tax rate compared with the 2006 first quarter.

Liquidity, Financial Condition and Capital Resources

Cash and Cash Equivalents

Our cash and cash equivalents increased $1,800.6 million during the 2007 first quarter. Sources of cash flows during the 2007 first quarter related
primarily to the following items:



| | · |  | Proceeds of $2,500.0 million related to the issuance of long-term debt;
| | - |  | -----------------------------------------------------------------------

| | · |  | Proceeds of $333.7 million related to the sales and maturities of marketable securities;
| | - |  | ----------------------------------------------------------------------------------------

| | · |  | Proceeds of $94.6 million related to the exercise of stock options; and
| | - |  | -----------------------------------------------------------------------

| | · |  | Proceeds of $20.6 million related to sales of assets.
| | - |  | -----------------------------------------------------

These sources of cash were partially offset by the following items:



| | · |  | Payments of $1,171.1 million related to purchases of marketable securities;
| | - |  | ---------------------------------------------------------------------------

| | · |  | Purchases of common stock for treasury totaling $527.8 million;
| | - |  | ---------------------------------------------------------------

| | · |  | Capital expenditures totaling $210.3 million; and
| | - |  | -------------------------------------------------

| | · |  | Payments of $78.5 million related to our diet drug litigation.
| | - |  | --------------------------------------------------------------

The change in working capital, which used $332.4 million of cash as of March 31, 2007, excluding the effects of foreign exchange, is primarily due to a decrease in accounts payable and accrued expenses resulting
from payments made in connection with our performance incentive award program as well as interest payments made on long-term debt. In addition, inventory levels increased to support higher sales demands. The decrease is partially offset by an
increase in accrued taxes.

Total Debt

At March 31, 2007, we had outstanding $11,738.2 million in total debt, which consisted of notes payable and other debt. Maturities of our obligations as of March 31, 2007 are set forth below.



(In millions)

Total

Less than1 Year

1-3 Years

4-5 Years

Over5 YearsTotal debt

$11,738.2

$418.5

$21.3

$1,547.7

$9,750.7




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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



The following represents our credit ratings as of March 31, 2007:



Moodys

S&P

FitchShort-term debt

P-2

A-1

F-2Long-term debt

A3

A

A-Outlook

Positive

Positive

StableLast rating update

March 22, 2007

March 22, 2007

March 22, 2007


Other

We file tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. Our tax returns for years prior to 1998
generally are no longer subject to review as such years generally are closed. Taxing authorities in various jurisdictions are in the process of reviewing our tax returns for various post-1997 years, including the IRS, which currently is examining
the 1998 through 2001 tax returns. It is reasonably possible that this audit will conclude in the next 12 months. We will likely make a payment in the range of $120.0 million to $130.0 million for adjustments that have been currently agreed upon
with the IRS; however, it is not possible to estimate the impact of any other adjustments that may result from the audit on our liability for unrecognized tax benefits. As part of this audit, the IRS is examining the pricing of our cross-border
arrangements. While we believe that the pricing of these arrangements is appropriate and that our reserves are adequate with respect to such pricing, it is possible that the IRS will propose adjustments in excess of such reserves and that the
conclusion of the audit will result in adjustments in excess of such reserves. An unfavorable resolution for open tax years could have a material effect on our results of operations or cash flows in the period in which an adjustment is recorded and
in future periods. We believe that an unfavorable resolution for open tax years would not be material to the financial position; however, each year we record significant tax benefits with respect to our cross-border arrangements, and the possibility
of a resolution that is material to our financial position cannot be excluded.

As more fully described in Note 8 to the consolidated
condensed financial statements and in prior filings, we are involved in various legal proceedings. We intend to vigorously defend ourselves and our products in these litigations and believe our legal positions are strong. However, in light of
the circumstances discussed therein, it is not possible to determine the ultimate outcome of our legal proceedings, and therefore, it is possible that the ultimate outcome of these proceedings could be material to our financial position,
results of operations and/or cash flows.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements. These forward-looking statements generally can be identified by the use of words
such as anticipate, expect, plan, could, may, will, believe, estimate, forecast, project and other words of similar meaning.
These forward-looking statements address various matters, including:



| | · |  | Our anticipated results of operations, financial condition and capital resources;
| | - |  | ---------------------------------------------------------------------------------

| | · |  | Benefits from our business activities and transactions, productivity initiatives and facilities management, such as enhanced efficiency, reduced expenses and
mitigation of supply constraints;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Our expectations, beliefs, plans, strategies, anticipated developments and other matters that are not historical facts, including plans to continue our productivity
initiatives and expectations regarding growth in our business;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Future charges related to implementing our productivity initiatives;
| | - |  | --------------------------------------------------------------------

| | · |  | Our expectations regarding compliance at our manufacturing facilities;
| | - |  | ----------------------------------------------------------------------

| | · |  | Anticipated receipt of, and timing with respect to, regulatory filings and approvals and anticipated product launches;
| | - |  | ----------------------------------------------------------------------------------------------------------------------

| | · |  | Emerging clinical data on our marketed and pipeline products and the impact on regulatory filings, market acceptance and/or product sales;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Anticipated developments relating to product supply, pricing and sales of our key products;
| | - |  | -------------------------------------------------------------------------------------------

| | · |  | Sufficiency of facility capacity for growth;
| | - |  | --------------------------------------------

| | · |  | Changes in our product mix;
| | - |  | ---------------------------

| | · |  | Our ability to succeed in our strategy with certain products of focusing on higher value prescriptions within the third-party managed care segment;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Uses of cash and borrowings;
| | - |  | ----------------------------

| | · |  | Timing and results of research and development activities, including those with collaboration partners;
| | - |  | -------------------------------------------------------------------------------------------------------

| | · |  | Anticipated profile of, and prospects for, our product candidates;
| | - |  | ------------------------------------------------------------------

| | · |  | Estimates and assumptions used in our critical accounting policies;
| | - |  | -------------------------------------------------------------------

| | · |  | Costs related to product liability, patent litigation, environmental matters, government investigations and other legal proceedings;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Projections of our future effective tax rates, the impact of tax planning initiatives and resolution of audits of prior tax years;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

| | · |  | Opinions and projections regarding impact from, and estimates made for purposes of accruals for future liabilities with respect to taxes, product liability claims
and other litigation (including the diet drug litigation and hormone therapy litigation), environmental cleanup and other potential future costs;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Various aspects of the diet drug and hormone therapy litigation;
| | - |  | ----------------------------------------------------------------



39



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



| | · |  | Calculations of projected benefit obligations under pension plans, expected contributions to pension plans and expected returns on pension plan assets;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Assumptions used in calculations of deferred tax assets;
| | - |  | --------------------------------------------------------

| | · |  | Anticipated amounts of future contractual obligations and other commitments;
| | - |  | ----------------------------------------------------------------------------

| | · |  | The financial statement impact of changes in generally accepted accounting principles;
| | - |  | --------------------------------------------------------------------------------------

| | · |  | Plans to vigorously defend various lawsuits;
| | - |  | --------------------------------------------

| | · |  | Our and our collaboration partners ability to protect our intellectual property, including patents;
| | - |  | ----------------------------------------------------------------------------------------------------

| | · |  | Minimum terms for patent protection with respect to various products;
| | - |  | ---------------------------------------------------------------------

| | · |  | Impact of our settlement of patent litigation with Teva regarding EFFEXOR XR and the timing and impact of generic competition for EFFEXORand
EFFEXOR XR;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Timing and impact of generic competition for ZOSYN/TAZOCIN;
| | - |  | -----------------------------------------------------------

| | · |  | Impact of manufacturing process issues at certain manufacturing sites outside the United States;
| | - |  | ------------------------------------------------------------------------------------------------

| | · |  | Impact of minor process modifications relating to manufacture of the active ingredient in TYGACIL;
| | - |  | --------------------------------------------------------------------------------------------------

| | · |  | Impact of legislation or regulation affecting product approval, pricing, reimbursement or patient access, both in the United States and internationally;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · |  | Impact of managed care or health care cost-containment;
| | - |  | -------------------------------------------------------

| | · |  | Impact of competitive products, including generics; and
| | - |  | -------------------------------------------------------

| | · |  | Impact of economic conditions, including interest rate and exchange rate fluctuation.
| | - |  | -------------------------------------------------------------------------------------

Each forward-looking statement contained in this report is subject to risks and uncertainties that could cause actual results to differ materially from
those expressed or implied by such statement. These risks and uncertainties include: the inherent uncertainty of the timing and success of, and expense associated with, research, development, regulatory approval and commercialization of our
products, including with respect to our pipeline products; government cost-containment initiatives; restrictions on third-party payments for our products; substantial competition in our industry, including from branded and generic products; data
generated on our products; the importance of strong performance from our principal products and our anticipated new product introductions; the highly regulated nature of our business; product liability, intellectual property and other litigation
risks and environmental liabilities; uncertainty regarding our intellectual property rights and those of others; difficulties associated with, and regulatory compliance with respect to, manufacturing of our products; risks associated with our
strategic relationships; economic conditions including interest and currency exchange rate fluctuations; changes in generally accepted accounting principles; trade buying patterns; the impact of legislation and regulatory compliance; risks and
uncertainties associated with global operations and sales; and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including our Current Reports on Form
8-K, Quarterly Reports on Form 10-Q and Annual Report on Form 10-K. In particular, we refer you to Item 1A. RISK FACTORS of our 2006 Annual Report on Form 10-K for additional information regarding the risks and uncertainties
discussed above as well as additional risks and uncertainties that may affect our actual results. The forward-looking statements in this report are qualified by these risk factors.



40



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition

and Results of Operations

Three
Months Ended March 31, 2007



We caution investors not to place undue reliance on the forward-looking statements contained in this
report. Each statement speaks only as of the date of this report (or any earlier date indicated in the statement), and we undertake no obligation to update or revise any of these statements, whether as a result of new information, future
developments or otherwise. From time to time, we also may provide oral or written forward-looking statements in other materials, including our earnings press releases. You should consider this cautionary statement and the risk factors identified
under Item 1A. RISK FACTORS of our 2006 Annual Report on Form 10-K when evaluating those statements as well. Our business is subject to substantial risks and uncertainties, including those identified in this report. Investors,
potential investors and others should give careful consideration to these risks and uncertainties.



41



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures about Market Risk
|------- | ----------------------------------------------------------

The market risk disclosures appearing on page 62 of our 2006 Financial Report as incorporated by reference in our 2006 Annual Report on Form 10-K have not materially changed from December 31, 2006. At
March 31, 2007, the fair values of our financial instruments were as follows:



(In millions) Description

Notional/ContractAmount

Assets (Liabilities)CarryingValue


FairValueForward contracts(1)

$2,017.3

$0.2


$0.2Option contracts(1)

1,710.3

(2.0
)

(2.0
)Interest rate swaps

5,300.0

(22.0
)

(22.0
)Outstanding debt(2)

11,760.2

11,738.2


12,038.5




| | (1) | If the U.S. dollar were to strengthen or weaken by 10%, in relation to all hedged foreign currencies, the net payable on the forward contracts and option contracts would
collectively decrease or increase by approximately $121.7.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | If the interest rates were to increase or decrease by one percentage point, the fair value of the outstanding debt would decrease or increase by approximately $885.5.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The estimated fair values approximate amounts at which these financial instruments could be exchanged in a current
transaction between willing parties. Therefore, fair values are based on estimates using present value and other valuation techniques that are significantly affected by the assumptions used concerning the amount and timing of estimated future cash
flows and discount rates that reflect varying degrees of risk. The fair value of forward contracts, currency option contracts and interest rate swaps reflects the present value of the contracts at March 31, 2007 and the fair value of
outstanding debt instruments reflects a current yield valuation based on observed market prices as of March 31, 2007.



42





---

##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------

Disclosure
Controls and Procedures

As of March 31, 2007, we carried out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

During the 2007 first quarter, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended)
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, as part of our productivity initiatives, in the 2007 first quarter, we outsourced certain administrative support
functions to Accenture LLC (Accenture) pursuant to the master services agreement that we entered into in July 2006. As part of these productivity initiatives, we expect to make additional system changes in future quarters that may be significant,
including the transition of certain additional functions to Accenture and the expanded use of SAP as the primary Enterprise Resource Planning system, replacing standalone JD Edwards applications, at most of our major locations over the next several
years.



43





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##### Table of Contents

Part IIOther Information



|Item 1. | Legal Proceedings
|------- | -----------------

The information
set forth in Note 8 to our consolidated condensed financial statements, Contingencies and Commitments, in this report is incorporated herein by reference.



|Item 1A. | Risk Factors
|-------- | ------------

Information regarding risk
factors appears in Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations under the caption Cautionary Note Regarding Forward-Looking Statements in this Quarterly
Report on Form 10-Q and in Item 1A. RISK FACTORS of our 2006 Annual Report on Form 10-K. There have been no material changes from the risk factors previously disclosed in our 2006 Annual Report on Form 10-K.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

The following table provides certain information with respect to our repurchases of shares of our common stock during the 2007 first quarter:



Period

Total Number of Shares Purchased(1)(2)

Average Price Paid per Share(1)(2)

Total Number of Shares Purchased as Part ofPubliclyAnnouncedPlan(1)

Maximum Number of Shares that May Yet Be Purchasedunder thePlans orPrograms(1)January 1, 2007 through January 31, 2007

38,534

$51.45



30,000,000February 1, 2007 through February 28, 2007

6,577,520

50.18

6,219,300

23,780,700March 1, 2007 through March 31, 2007

4,020,528

49.20

3,919,889

19,860,811Total

10,636,582

$49.82

10,139,189




| | (1) | On January 25, 2007, our Board of Directors amended the previously authorized Share Repurchase Program to allow for future purchases of up to 30,000,000 shares, inclusive of
1,983,600 shares remaining under the existing program at December 31, 2006.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | In addition to purchases under the Share Repurchase Program, this column reflects the following transactions during the 2007 first quarter: (i) the surrender to us of 8,605
shares of common stock to pay the exercise price in connection with the exercise of employee stock options; (ii) the deemed surrender to us of 139,621 shares of common stock to satisfy tax withholding obligations in connection with the
distribution of shares held in trust for employees who deferred receipt of such shares; and (iii) the surrender to us of 349,167 shares of common stock to satisfy tax withholding obligations for employees in connection with the issuance of
restricted stock and/or performance share awards.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



44



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|            |  |                                                                                                                                                                                                                                        
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                            
|            | 
|(4.1)       |  | Seventh Supplemental Indenture, dated as of March 27, 2007, between Wyeth and The Bank of New York, as successor trustee is incorporated by reference to Exhibit 4.1 of the Companys
Current Report on Form 8-K, dated March 28, 2007.
|            | 
|(10.1)      |  | Wyeth 2005 Amended and Restated Stock Incentive Plan (including amendments through January 25, 2007).                                                                                                                                  
|            | 
|(12)        |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                     
|            | 
|(31.1)      |  | Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                      
|            | 
|(31.2)      |  | Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                      
|            | 
|(32.1)      |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                
|            | 
|(32.2)      |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                



45



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##### Table of Contents

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.

Wyeth

(Registrant)



|    |  |                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------
|    |  |                                                                                                     
|By: |  | /s/    Paul J. Jones                                                                                
|    |  | Paul J. Jones Vice President and Controller (Duly Authorized Signatory and Chief Accounting Officer)

Date: May 9, 2007



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                                                                                                                        
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                            
|            | 
|(4.1)       |  | Seventh Supplemental Indenture, dated as of March 27, 2007, between Wyeth and The Bank of New York, as successor trustee is incorporated by reference to Exhibit 4.1 of the Companys
Current Report on Form 8-K, dated March 28, 2007.
|            | 
|(10.1)      |  | Wyeth 2005 Amended and Restated Stock Incentive Plan (including amendments through January 25, 2007).                                                                                                                                  
|            | 
|(12)        |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                     
|            | 
|(31.1)      |  | Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                      
|            | 
|(31.2)      |  | Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                      
|            | 
|(32.1)      |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                
|            | 
|(32.2)      |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                



EX-1