---

# UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

# FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2005

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
(State or other jurisdiction of incorporation or organization)Five Giralda Farms, Madison, N.J.
(Address of principal executive offices) |  | 13-2526821
(I.R.S. Employer Identification No.)07940(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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
      Yes   X
     No

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 Common Stock
outstanding as of the close of business on October 31, 2005:

| | Class                             |  | Number of
Shares Outstanding | 
| | --------------------------------- |  | ---------------------------- | 
| | Common Stock, $0.33-1/3 par value |  | 1,342,259,318                | 
| |                                   |  |                              | 
| |                                   |  |                              | 

---

# WYETH

# INDEX

| |                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Page | No.                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ----------------------------------------------------------------------------------
| | Part I      -  
           
           
           
           
           
           
           
           
           
           
           
           
           
           
Part II    -  

           
           
           
Signature  
Exhibit Index | Financial Information (Unaudited)

Item 1.       Consolidated Condensed Financial Statements:
              Consolidated Condensed Balance Sheets -
                 September 30, 2005 and December 31,
2004

              Consolidated Condensed Statements of Operations
-
                 Three and Nine Months Ended
September 30, 2005
and 2004         
              Consolidated Condensed Statements of Changes in
                 Stockholders' Equity - Nine
Months Ended
                 September 30, 2005 and 2004    
              Consolidated Condensed Statements of Cash Flows
-
                 Nine Months Ended September 30, 2005
and 2004

              Notes to Consolidated Condensed Financial
Statements

Item 2.       Management's Discussion and Analysis of
                 Financial Condition and
Results of
Operations             
Item 3.       Quantitative and Qualitative Disclosures About Market Risk   
Item 4.       Controls and Procedures                                      
Other Information                                                        
Item 1.       Legal Proceedings                                            
Item 6.       Exhibits |      | 2
   3
   4
   5
   6
 7 - 23
24 - 48
   49
   49
   50
50 - 58
   59
   60
EX - 1
| |                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |      |                                                                                   
| |                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |      |                                                                                   

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

1

---

# 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 September 30, 2005 and December 31, 2004, the
results of its operations for the three and nine months ended September 30, 2005 and 2004,
and changes in stockholders equity and cash flows for the nine months ended
September 30, 2005 and 2004. 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 financial statements and the notes
thereto included in the Companys 2004 Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005, and information
contained in Current Reports on Form 8-K filed since the filing of the 2004 Form 10-K.

We make available through our Company
Internet website, 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 website address is
www.wyeth.com.

2

---

# WYETH
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands Except Per Share Amounts)
(Unaudited)

|                                                               | September 30,
         2005 | December 31,
        2004
|-------------------------------------------------------------- | --------------------------- | -------------------------
|
|ASSETS                                                         |                             |                          
|Cash and cash equivalents                                      |                             | $  5,282,325             
|Marketable securities                                          |                             | 893,396                  
|Accounts receivable less allowances                            |                             | 3,130,666                
|Inventories:                                                   |                            
|Finished goods                                                 |                             | 787,570                  
|Work in progress                                               |                             | 1,220,304                
|Materials and supplies                                         |                             | 364,544                  
|                                                               |                             |                          
|                                                               |                             | 2,372,418                
|Other current assets including deferred taxes                  |                             | 4,443,420                
|                                                               |                             |                          
|Total Current Assets                                           |                             | 16,122,225               
|Property, plant and equipment                                  |                             | 12,930,470               
|Less accumulated depreciation                                  |                             | 3,689,151                
|                                                               |                             |                          
|                                                               |                             | 9,241,319                
|Goodwill                                                       |                             | 3,839,088                
|Other intangibles, net of accumulated amortization             |                            
|(September 30, 2005-$166,313 and December 31,
2004-$166,827)   |                             | 287,952                  
|Other assets including deferred taxes                          |                             | 4,908,802                
|                                                               |                             |                          
|Total Assets                                                   |                             | $34,399,386              
|                                                               |                             |                          
|LIABILITIES                                                    |                            
|Loans payable                                                  |                             | $         8,523          
|Trade accounts payable                                         |                             | 714,249                  
|Dividends payable                                              |                             | 335,477                  
|Accrued expenses                                               |                             | 8,527,095                
|Accrued taxes                                                  |                             | 609,692                  
|                                                               |                             |                          
|Total Current Liabilities                                      |                             | 10,195,036               
|Long-term debt                                                 |                             | 7,789,136                
|Accrued postretirement benefit obligations other than pensions |                             | 1,083,775                
|Other noncurrent liabilities                                   |                             | 4,006,538                
|                                                               |                             |                          
|Total Liabilities                                              |                             | 23,074,485               
|                                                               |                             |                          
|Contingencies and commitments (Note 6)                         |                            
|STOCKHOLDERS' EQUITY                                           |                            
|$2.00 convertible preferred stock, par value $2.50 per share   |                             | 37                       
|Common stock, par value $0.33-1/3 per share                    |                             | 447,293                  
|Additional paid-in capital                                     |                             | 5,040,639                
|Retained earnings                                              |                             | 5,782,486                
|Accumulated other comprehensive income                         |                             | 54,446                   
|                                                               |                             |                          
|Total Stockholders' Equity                                     |                             | 11,324,901               
|                                                               |                             |                          
|Total Liabilities and
Stockholders' Equity                     |                             | $34,399,386              
|                                                               |                             |                          
|                                                               |                            

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

3

---

# WYETH
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Amounts)
(Unaudited)

|                                             | Three Months
     Ended September 30, | Nine Months
     Ended September 30,
|-------------------------------------------- | ------------------------------------- | ------------------------------------
|
|Net revenue                                  |                                       | $ 4,716,261                         
|                                             |                                       |                                     
|Cost of goods sold                           |                                       | 1,361,040                           
|Selling, general and administrative expenses |                                       | 1,506,654                           
|Research and development expenses            |                                       | 639,998                             
|Interest expense, net                        |                                       | 20,205                              
|Other income, net                            |                                       | (75,746                             
|                                             |                                       |                                     
|Income before income taxes                   |                                       | 1,264,110                           
|Provision (benefit) for income taxes         |                                       | 394,253                             
|                                             |                                       |                                     
|Net income                                   |                                       | $    869,857                        
|                                             |                                       |                                     
|Basic earnings per share                     |                                       | $          0.65                     
|                                             |                                       |                                     
|Diluted earnings per share                   |                                       | $          0.64                     
|                                             |                                       |                                     
|Dividends paid per share of common stock     |                                       | $          0.23                     
|                                             |                                       |                                     
|Dividends declared per share of common stock |                                       | $          0.25                     
|                                             |                                       |                                     
|                                             |                                      

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

4

---

# WYETH
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(In Thousands Except Per Share Amounts)
(Unaudited)

# Nine Months Ended September 30, 2005:

|                                                     | $2.00
Convertible
Preferred
Stock | Common
Stock | Additional
Paid-in
Capital | Retained
Earnings | Accumulated
Other
Comprehensive
Income | Total
Stockholders'
Equity
|---------------------------------------------------- | --------------------------------- | ------------ | -------------------------- | ----------------- | -------------------------------------- | --------------------------
|
|Balance at January 1, 2005                           |                                   | $ 40         |                            | $445,031          |                                        | $4,817,024                
|Net income                                           |                                   |              |                            |                   |                                        |                           
|Currency translation adjustments                     |                                   |              |                            |                   |                                        |                           
|Unrealized gains on derivative
     contracts, net   |                                   |              |                            |                   |                                        |                           
|Unrealized losses on marketable
     securities, net |                                   |              |                            |                   |                                        |                           
|                                                     |                                   |              |                            |                   |                                        |                           
|Comprehensive income, net of tax                     |                                   |              |                            |                   |                                        |                           
|                                                     |                                   |              |                            |                   |                                        |                           
|Cash dividends declared (1)                          |                                   |              |                            |                   |                                        |                           
|Common stock issued for stock options                |                                   |              |                            | 2,165             |                                        | 183,220                   
|Other exchanges                                      |                                   | (3           | )                          | 97                |                                        | 40,395                    
|                                                     |                                   |              |                            |                   |                                        |                           
|Balance at September 30, 2005                        |                                   | $ 37         |                            | $447,293          |                                        | $5,040,639                
|                                                     |                                   |              |                            |                   |                                        |                           

# Nine Months Ended September 30,
2004:

|                                                     | $2.00
Convertible
Preferred
Stock | Common
Stock | Additional
Paid-in
Capital | Retained
Earnings | Accumulated
Other
Comprehensive
Income (Loss) | Total
Stockholders'
Equity
|---------------------------------------------------- | --------------------------------- | ------------ | -------------------------- | ----------------- | --------------------------------------------- | --------------------------
|
|Balance at January 1, 2004                           |                                   | $ 42         |                            | $444,151          |                                               | $4,764,390                
|Net income                                           |                                   |              |                            |                   |                                               |                           
|Currency translation adjustments                     |                                   |              |                            |                   |                                               |                           
|Unrealized gains on derivative
     contracts, net   |                                   |              |                            |                   |                                               |                           
|Unrealized losses on marketable
     securities, net |                                   |              |                            |                   |                                               |                           
|                                                     |                                   |              |                            |                   |                                               |                           
|Comprehensive income, net of tax                     |                                   |              |                            |                   |                                               |                           
|                                                     |                                   |              |                            |                   |                                               |                           
|Cash dividends declared (2)                          |                                   |              |                            |                   |                                               |                           
|Common stock issued for stock options                |                                   |              |                            | 436               |                                               | 32,992                    
|Other exchanges                                      |                                   | (1           | )                          | 98                |                                               | (15,366                   
|                                                     |                                   |              |                            |                   |                                               |                           
|Balance at September 30, 2004                        |                                   | $ 41         |                            | $444,685          |                                               | $4,782,016                
|                                                     |                                   |              |                            |                   |                                               |                           

|(1) | Included
in cash dividends declared were the following dividends payable at September 30, 2005:
|--- | -----------------------------------------------------------------------------------------------

| |  | Common stock cash dividend of $0.25 per share ($335,470 in the aggregate) declared on September
29, 2005 and payable on December 1, 2005; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| |  | Preferred stock cash dividends of $0.50 per share ($7 in the aggregate) declared on June
23, 2005 and paid on October 3, 2005.
| | - | ------------------------------------------------------------------------------------------------------------------------------

|(2) | Included
the cash dividends declared were the following dividends payable at September 30, 2004:
|--- | ------------------------------------------------------------------------------------------------

| |  | Common
stock cash dividend of $0.23 per share ($306,832 in the aggregate) declared on September 30,
2004 and paid on December 1, 2004; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------

| |  | Preferred
stock cash dividends of $0.50 per share ($8 in the aggregate) declared on June 16, 2004
and paid on October 1, 2004.
| | - | ------------------------------------------------------------------------------------------------------------------------------

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

5

---

# WYETH
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

|                                                             | Nine Months
Ended September 30,
|------------------------------------------------------------ | -------------------------------
|
|Operating Activities                                         |                                
|Net income                                                   |                                
|Adjustments to reconcile net income to net cash              |                                
|provided by operating activities:                            |                                
|Tax on repatriation                                          |                                
|Gains on sales of assets                                     |                                
|Depreciation and amortization                                |                                
|Change in deferred income taxes                              |                                
|Seventh Amendment security fund                              |                                
|Income tax adjustment                                        |                                
|Diet drug litigation payments                                |                                
|Changes in working capital, net                              |                                
|Other items, net                                             |                                
|                                                             |                                
|Net cash provided by operating activities                    |                                
|                                                             |                                
|Investing Activities                                         |                                
|Purchases of property, plant and equipment                   |                                
|Proceeds from sales of assets                                |                                
|Purchase of additional equity interest in joint venture      |                                
|Proceeds from sales and maturities of marketable securities  |                                
|Purchases of marketable securities                           |                                
|                                                             |                                
|Net cash provided by (used for) investing activities         |                                
|                                                             |                                
|Financing Activities                                         |                                
|Repayments of long-term debt                                 |                                
|Other borrowing transactions, net                            |                                
|Dividends paid                                               |                                
|Exercises of stock options                                   |                                
|                                                             |                                
|Net cash used for financing activities                       |                                
|                                                             |                                
|Effect of exchange rate changes on cash and cash equivalents |                                
|                                                             |                                
|Increase (decrease) in cash and cash equivalents             |                                
|Cash and cash equivalents, beginning of period               |                                
|                                                             |                                
|Cash and cash equivalents, end of period                     |                                
|                                                             |                                
|Supplemental Information                                     |                                
|Interest payments                                            |                                
|Income tax payments, net of refunds                          |                                

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

6

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

Note 1.       Summary
of Significant Accounting Policies

| | The
following policies are required interim updates to those disclosed in Footnote 1 of the
2004 Annual Report on Form 10-K:
| | ----------------------------------------------------------------------------------------------------------------------------

| | Stock-Based
Compensation: The Company has four Stock Incentive Plans that it accounts for using
the intrinsic value method in accordance with APB Opinion No. 25, Accounting for Stock
Issued to Employees. All options granted under these plans have an exercise price
equal to the market value of the underlying common stock on the date of grant.
Accordingly, no stock-based employee compensation cost is reflected in net income other
than for the Companys performance share and restricted stock awards. The following
table illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting forStock-Based Compensation as
amended by SFAS No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure,Amendment of SFAS No. 123, to stock-based employee compensation:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Three Months
>  Ended September 30,
>      Nine Months
>   Ended September 30,(In thousands except per share amounts)
>      2005
>      2004
>      2005
>      2004Net income, as reported
>      
>      $869,857
>         
>      $1,421,292
>         
>      $2,924,602
>         
>      $2,998,340Add: Stock-based employee compensationexpense included in reported net income,net of tax
>      24,525
>         
>      5,237
>         
>      51,215
>         
>      11,605Deduct: Total stock-based employeecompensation expense determinedunder fair value-based method for allawards, net of tax
>      (74,686
>         )
>      (73,787
>         )
>      (220,333
>         )
>      (235,115
>         )Adjusted net income
>      $819,696
>         
>      $1,352,742
>         
>      $2,755,484
>         
>      $2,774,830Earnings per share:Basic - as reported
>      $0.65
>         
>      $1.07
>         
>      $2.18
>         
>      $2.25Basic - adjusted
>      $0.61
>         
>      $1.01
>         
>      $2.06
>         
>      $2.08Diluted - as reported
>      $0.64
>         
>      $1.05
>         
>      $2.16
>         
>      $2.22Diluted - adjusted
>      $0.60
>         
>      $1.00
>         
>      $2.03
>         
>      $2.05

| | On
December 16, 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123
(revised 2004), Share-BasedPayment(Statement 123R). Statement 123R
replaces SFAS No. 123 and supersedes APB No. 25 and its related implementation guidance.
Statement 123R requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the statement of operations as compensation
expense (based on their fair values) over the vesting period of the awards. On April 14,
2005, the SEC approved a new rule which delays the effective date of
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | Statement 123R for
the Company to January 1, 2006. Currently, the Company discloses the pro forma expense
effect of such grants in the footnotes to the financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Based
on recent accounting interpretations, pro forma stock-based compensation expense should
include amounts related to the accelerated amortization of the fair value of options
granted to retirement-eligible employees. Currently, the Company recognizes pro forma
stock-based compensation expense related to retirement-eligible employees over the awards
contractual vesting period. The impact of accelerated vesting on the pro forma
stock-based compensation expense would have resulted in an expense reduction of $8.4
million and $14.3 million, both net of tax, for the 2005 and 2004 third quarter,
respectively, and a reduction of $11.8 million and $15.5 million, both net of tax, for
the 2005 and 2004 first nine months. The Company will record the impact of accelerated
vesting for options granted to retirement-eligible employees subsequent to January 1,
2006 and continue to provide pro forma disclosure related to those options granted in
prior periods.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the 2005 second quarter, the Company implemented changes in its share-based compensation
programs that included a reduction in the total number of stock options awarded and the
granting of performance share awards and restricted stock unit awards to a broader
employee base. In the past, performance share awards and restricted stock unit awards
were granted only to a limited number of employees, including key executives. The 2005
performance share awards will be converted to shares of common stock based on the
achievement of certain performance criteria related to performance year 2007. The 2005
restricted stock unit awards generally are converted into common stock at the end of
three years.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company plans to adopt Statement 123R effective January 1, 2006 using the modified
prospective method which requires companies (1) to record compensation expense for the
unvested portion of previously issued awards that remain outstanding at the initial date
of adoption and (2) to record compensation expense for any awards issued, modified or
settled after the effective date of the statement. The Company expects the adoption of
Statement 123R will have a material impact on the results of operations and earnings per
share beginning in 2006.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | Goodwill
and Other Intangibles:In accordance with SFAS No. 142, Goodwill and Other
Intangible Assets, the changes in the carrying amount of goodwill by reportable
segment for the three and nine months ended September 30, 2005 are as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> (In thousands)
>      Pharmaceuticals
>      Consumer
>  Healthcare
>      Animal
>       Health
>      TotalBalance at December 31, 2004
>      
>      $ 2,728,565
>         
>      $ 593,606
>         
>      $ 534,239
>         
>      $ 3,856,410Addition
>      23,037
>         
>      
>         
>      
>         
>      23,037Reduction
>      
>         
>      (9,361
>         )
>      
>         
>      (9,361
>         )Currency translation adjustments
>      (28,826
>         )
>      (1,543
>         )
>      (629
>         )
>      (30,998
>         )Balance at September 30, 2005
>      $ 2,722,776
>         
>      $ 582,702
>         
>      $ 533,610
>         
>      $ 3,839,088

| | In
April 2005, the Company increased its ownership in a joint venture (in Japan) with Takeda
Pharmaceutical Company, Limited from 60% to 70%, which, based on a preliminary purchase
price allocation, resulted in additions to Other intangibles, net ofaccumulated
amortization of $38.0 million and Goodwillof $23.0 million.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
goodwill reduction relates to the allocation of goodwill to the Companys SOLGAR product
line, which was sold in the 2005 third quarter for $115.0 million.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Recently
Issued Accounting Standards:SFAS No. 151, Inventory Costs  an amendment of
ARB No. 43, Chapter 4 (SFAS No. 151), amends and clarifies the accounting guidance
for abnormal amounts of idle facility expense, freight, handling costs and wasted
material (spoilage). This Statement requires that these items be recognized as current
period charges regardless of whether they meet the criterion of abnormal as
mentioned in ARB No. 43, Chapter 4, Inventory Pricing. In addition, this Statement
requires that allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities. SFAS No. 151 is effective for
inventory costs incurred during fiscal years beginning after June 15, 2005. The Company
does not anticipate the adoption of SFAS No. 151 will have a material effect on its
consolidated financial position, results of operations or cash flows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
March 2005, the FASB released FASB Interpretation No. 47, Accounting for Conditional
Asset Retirement Obligations. This Interpretation clarifies the termconditional asset
retirement obligation as used in FASB Statement No. 143,Accounting forAsset
Retirement Obligations. This Interpretation is effective no later than the end of
fiscal years ending after December 15, 2005 (December 31, 2005 for calendar-year
enterprises). The Company is assessing the potential impact, if any, the adoption of this
Interpretation may have on its financial position or results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

# WYETHNOTES 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 September 30,
>      Nine Months
> Ended September 30,(In thousands except per share
> amounts)
>      2005
>      2004
>      2005
>      2004Net income less preferred dividends
>      
>      $   869,857
>         
>      $   1,421,292
>         
>      $2,924,579
>         
>      $2,998,316Denominator:Weighted average common shares outstanding
>      1,341,307
>         
>      1,333,866
>         
>      1,338,792
>         
>      1,333,434Basic
> earnings per share
>      $         0.65
>         
>      $         1.07
>         
>      $         2.18
>         
>      $         2.25Numerator:Net income
>      $   869,857
>         
>      $   1,421,292
>         
>      $2,924,602
>         
>      $2,998,340Interest expense on contingently convertible
> debt(1)
>      5,520
>         
>      1,535
>         
>      13,997
>         
>      3,497Net
> income, as adjusted
>      $   875,377
>         
>      $   1,422,827
>         
>      $2,938,599
>         
>      $3,001,837Denominator:Weighted average common shares outstanding
>      1,341,307
>         
>      1,333,866
>         
>      1,338,792
>         
>      1,333,434Common stock equivalents of outstanding stockoptions, deferred contingent common
> stockawards, restricted stock awards andconvertible preferred stock(2)
>      8,568
>         
>      3,082
>         
>      6,250
>         
>      3,848Common stock equivalents of assumed conversionof contingently convertible debt(1)
>      16,890
>         
>      16,890
>         
>      16,890
>         
>      16,890Total
> shares(2)
>      1,366,765
>         
>      1,353,838
>         
>      1,361,932
>         
>      1,354,172Diluted
> earnings per share(1)(2)
>      $         0.64
>         
>      $         1.05
>         
>      $         2.16
>         
>      $         2.22

| | (1) | Diluted
earnings per share reflects the impact of Emerging Issues Task Force Issue No. 04-8 (EITF
No. 04-8), Accounting Issues Related to Certain Features of Contingently Convertible
Debt and the Effect onDiluted Earnings per Share, which requires the
inclusion of the dilutive effect from contingently convertible debt instruments with
market price contingencies in the calculation of diluted earnings per share (EPS).
Accordingly, interest expense on the Companys contingently convertible debt, net of
capitalized interest and taxes, is added back to reported net income, and the additional
common shares (assuming conversion) are included in total shares outstanding for purposes
of calculating diluted EPS. In accordance with EITF No. 04-8, which was effective for all
periods ending after December 15, 2004 with restatement of previously reported diluted
EPS calculations, each of the 2004 third quarter and first nine months diluted EPS have
been restated to reflect a $0.01 and $0.02 dilution, respectively, as a result of the
application of this Issue. The sum of the 2004 first, second and third quarters diluted
EPS do not add to year-to-date EPS due to rounding.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | At
September 30, 2005 and 2004, approximately 79,030 and 124,261 of common
               shares, respectively, related to options outstanding under the Companys
               Stock Incentive Plans were excluded from the computation of diluted EPS,
as the                effect would have been antidilutive.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

Note 3.
       Marketable Securities

| | The
Company has marketable debt and equity securities, which are classified as either
available-for-sale or held-to-maturity, depending on managements investment
intentions at the time of purchase relating to these securities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
cost, gross unrealized gains (losses) and fair value of available-for-sale and
held-to-maturity securities by major security type at September 30, 2005 and December 31,
2004 were as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> (In thousands)
> At September 30, 2005
>      Cost
>      Gross
>  Unrealized     Gains
>      Gross
>  Unrealized    (Losses)
>      Fair
>      ValueAvailable-for-sale:U.S. Treasury securities
> 
>      $     19,705
>         
>      $        
>         
>      $         (323
>         )
>      $     19,382Certificates of deposit
> 
>      1,344
>         
>      
>         
>      
>         
>      1,344Corporate debt securities
> 
>      177,464
>         
>      158
>         
>      (348
>         )
>      177,274Mortgage-backed securities
> 
>      8,864
>         
>      20
>         
>      
>         
>      8,884Equity securities
>      47,889
>         
>      9,651
>         
>      (6,709
>         )
>      50,831Institutional fixed income fund
> 
>      346,042
>         
>      9,831
>         
>      (3,876
>         )
>      351,997Total available-for-sale
>      601,308
>         
>      19,660
>         
>      (11,256
>         )
>      609,712Held-to-maturity:Commercial paper
>      282,686
>         
>      
>         
>      
>         
>      282,686Certificates of deposit
> 
>      998
>         
>      
>         
>      
>         
>      998Total held-to-maturity
> 
>      283,684
>         
>      
>         
>      
>         
>      283,684Total marketable securities
>      $   884,992
>         
>      $ 19,660
>         
>      $     (11,256
>         )
>      $   893,396(In thousands)
> At December 31, 2004
>      Cost
>      Gross
>  Unrealized     Gains
>      Gross
>  Unrealized    (Losses)
>      Fair
>      ValueAvailable-for-sale:U.S. Treasury securities
> 
>      $     60,439
>         
>      $        
>         
>      $         (286
>         )
>      $     60,153Commercial paper
>      32,597
>         
>      
>         
>      
>         
>      32,597Certificates of deposit
> 
>      54,867
>         
>      3
>         
>      (52
>         )
>      54,818Corporate debt securities
> 
>      485,007
>         
>      130
>         
>      (528
>         )
>      484,609Asset-backed securities
> 
>      258,543
>         
>      15
>         
>      (166
>         )
>      258,392Mortgage-backed securities
> 
>      77,983
>         
>      4
>         
>      (67
>         )
>      77,920Other debt securities
> 
>      2,469
>         
>      
>         
>      (12
>         )
>      2,457Equity securities
>      48,264
>         
>      8,998
>         
>      (6,918
>         )
>      50,344Institutional fixed income fund
> 
>      531,929
>         
>      16,713
>         
>      
>         
>      548,642Total available-for-sale
>      1,552,098
>         
>      25,863
>         
>      (8,029
>         )
>      1,569,932Held-to-maturity:Commercial paper
>      175,626
>         
>      
>         
>      
>         
>      175,626Total marketable securities
>      $1,727,724
>         
>      $ 25,863
>         
>      $     (8,029
>         )
>      $1,745,558

11

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | The contractual maturities of debt securities classified as available-for-sale at September
30, 2005 were as follows:
| | ---------------------------------------------------------------------------------------------------------------------

> (In thousands)
>      Cost
>      Fair
>       ValueAvailable-for-sale:Due within one year
> 
>      $75,108
>         
>      $74,918Due after one year through five years
>      115,817
>         
>      115,549Due after five years through 10 years
>      455
>         
>      454Due after 10 years
> 
>      15,997
>         
>      15,963$207,377
>         
>      $206,884

| | All held-to-maturity debt securities are due within one year and had aggregate fair values of
$283.7 million at September 30, 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------

Note 4.
        Pensions and Other Postretirement Benefits

| | Net periodic benefit cost for the Companys defined benefit plans for the three and nine
months ended September 30, 2005 and 2004 (principally for the U.S.) was as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> PensionsThree Months
>    Ended September 30,
>      Nine Months
>    Ended September 30,(In thousands)
> Components of Net Periodic Benefit Cost
>      2005
>      2004
>      2005
>      2004Service cost
>      
>      $ 41,544
>         
>      $ 36,980
>         
>      $  125,116
>         
>      $  110,523Interest cost
>      66,523
>         
>      64,187
>         
>      200,376
>         
>      192,376Expected return on plan assets
>      (84,121
>         )
>      (77,607
>         )
>      (252,936
>         )
>      (232,754
>         )Amortization of prior service cost
>      2,163
>         
>      2,834
>         
>      6,460
>         
>      8,511Amortization of transition obligation
> 
>      266
>         
>      (398
>         )
>      832
>         
>      (1,225
>         )Recognized net actuarial loss
>      26,840
>         
>      25,066
>         
>      80,759
>         
>      75,220Termination benefits
>      4,365
>         
>      
>         
>      4,365
>         
>      Curtailment loss
>      2,466
>         
>      
>         
>      2,466
>         
>      Net periodic benefit cost
>      $ 60,046
>         
>      $ 51,062
>         
>      $ 167,438
>         
>      $ 152,651

> Other Postretirement BenefitsThree Months
>   Ended September 30,
>      Nine Months
>   Ended September 30,(In thousands)
> Components of Net Periodic Benefit Cost
>      2005
>      2004
>      2005
>      2004Service cost
>      
>      $ 12,259
>         
>      $ 8,560
>         
>      $ 36,764
>         
>      $ 30,255Interest cost
>      25,757
>         
>      18,256
>         
>      77,244
>         
>      64,429Amortization of prior service cost
>      (5,231
>         )
>      (3,325
>         )
>      (15,694
>         )
>      (11,512
>         )Recognized net actuarial loss
>      12,040
>         
>      4,144
>         
>      36,110
>         
>      15,755Net periodic benefit cost
>      $ 44,825
>         
>      $ 27,635
>         
>      $ 134,424
>         
>      $ 98,927

12

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | As
of September 30, 2005, $197.8 million and $75.2 million of contributions have been made
in 2005 to the Companys defined benefit pension plans and other postretirement
benefit plans, respectively. The Company presently anticipates total contributions to be
made during 2005 to fund its defined benefit pension and other postretirement benefit
plans will approximate $202.0 million and $110.0 million, respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 5.
       Productivity Initiatives

| | During
2005, the Company launched several long-term productivity initiatives and began a review
of its production network to achieve optimal efficiencies and reduce production costs for
the Companys global core products. As a result, during the 2005 third quarter, the
Company decided to implement a three-year transitional plan to phase out its
pharmaceutical manufacturing site at Rouses Point, New York and also announced the
national phased adoption of a reorganized U.S. primary care Pharmaceuticals sales force.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the 2005 third quarter, the Company recorded pre-tax charges of $136.0 million related to
its long-term productivity initiatives. These charges include severance and other related
personnel costs of $119.2 million, accelerated depreciation for certain facilities
expected to be closed of $6.6 million, and period costs related to the implementation of
the initiatives of $10.2 million. Approximately $2.6 million of the severance and other
related personnel costs have been paid during the third quarter and the remaining amounts
are expected to be paid over the next 36 months. These charges were partially offset
during the quarter by a pre-tax gain of $40.2 million related to the sale of certain
assets. The impact of the charges less the asset sale gain on the quarter was $95.8
million ($63.4 million after tax or $.05 per share-diluted).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company recorded the charges, including personnel and other costs, in accordance with
SFAS No. 146, Accounting for CostsAssociated with Exit or Disposal Activities,
SFAS No. 144,Accounting for the Impairment and Disposal of Long-Lived Assets,
SFAS No. 112, Employers Accounting for Postemployment Benefits  an
amendment of FASB Statements No. 5 and 43 and SFAS No. 88, Employers Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits. The activities are related to the Pharmaceuticals business and were
recorded to recognize the costs of closing certain manufacturing facilities and the
elimination of certain positions at the Companys facilities and within the
Pharmaceuticals sales force. Charges of $69.4 million were recorded within Cost of
Goods Sold, $61.4 million within Selling, General andAdministrative
Expenses and $5.2 million within Research and Development Expenses, offset, in
part, by the asset sale gain of $40.2 million recorded within Other Income, Net.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company expects additional costs as other strategic decisions are made, such as asset
impairments, accelerated depreciation, personnel costs and other exit costs, as well as
certain implementation costs associated with the initiatives, to continue for several
years and are projected to total approximately $750.0 million to $1.0 billion, on a
pre-tax basis.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

Note 6.
        Contingencies and Commitments

| | The Company is involved in various legal proceedings, including product liability and
environmental matters, of a nature considered normal to its business. 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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the opinion of the Company, although the outcome of any legal proceedings cannot be
predicted with certainty, the ultimate liability of the Company in connection with its
legal proceedings (other than the diet drug litigation discussed immediately below) will
not have a material adverse effect on the Companys financial position but could be
material to the results of operations or cash flows in any one accounting period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Diet Drug Litigation
| | --------------------

| | The
Company has been named as a defendant in numerous legal actions relating to the diet
drugs PONDIMIN (which in combination with phentermine, a product that was not
manufactured, distributed or sold by the Company, was commonly referred to as fen-phen)
or REDUX, which the Company estimated were used in the United States, prior to
their 1997 voluntary market withdrawal, by approximately 5.8 million people. These
actions allege, among other things, that the use of REDUX and/or PONDIMIN,
independently or in combination with phentermine, caused certain serious conditions,
including valvular heart disease and primary pulmonary hypertension (PPH). The REDUX and
PONDIMIN litigation is described in additional detail in the Companys Annual
Report on Form 10-K for the year ended December 31, 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
October 7, 1999, the Company announced a nationwide class action settlement (the
settlement) to resolve litigation brought against the Company regarding the use of the
diet drugs REDUX or PONDIMIN. The settlement covered all claims arising out
of the use of REDUX or PONDIMIN, except for PPH claims, and was open to all
REDUX or PONDIMIN users in the United States. As originally designed, the
settlement was administered by an independent Settlement Trust and comprised of two
settlement funds. Fund A (with a value at the time of settlement of $1,000.0 million plus
$200.0 million for legal fees) was created to cover refunds, medical screening costs,
additional medical services and cash payments, education and research costs, and
administration costs. Fund A has been fully funded by contributions by the Company. Fund
B (which was to be funded by the Company on an as-needed basis up to a total of $2,550.0
million) would compensate claimants with significant heart valve disease depending upon
their age and the severity of their condition according to a five-level settlement
matrix. The two funds have now been combined into a single fund. Total diet drug
litigation payments were $340.5 million and $931.6 million for the 2005 third quarter and
first nine months, respectively, of which, $85.1 million and $246.8 million for the 2005
third quarter and first nine months, respectively, were made in connection with the
nationwide settlement (including the proposed Seventh Amendment, as discussed below).
Payments under the national settlement may continue, if necessary, until 2018.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | In 2004, the Company increased its reserves in connection with the REDUX and PONDIMIN diet
drug matters by $4,500.0 million, bringing the total of the charges taken to date to
$21,100.0 million. The $6,234.8 million reserve balance at September 30, 2005 represents
managements best estimate, within a range of outcomes, of the aggregate amount
required to cover diet drug litigation costs, including payments in connection with the
nationwide settlement (as it would be amended by the proposed Seventh Amendment,
discussed below), initial opt outs, PPH claims, downstream opt out cases and the Companys
legal fees related to the diet drug litigation. The current reserve takes into account
the terms of the proposed Seventh Amendment, the Companys settlement discussions
with plaintiffs attorneys representing a number of individuals who have opted out
of the nationwide settlement, its experiences with the downstream opt out cases that have
been litigated or settled to date and its projected expenses in connection with the diet
drug litigation. However, due to the need for final appellate court approval of the
proposed Seventh Amendment, the uncertainty of the Companys ability to consummate
settlements with the downstream opt out plaintiffs, the number and amount of any future
verdicts that may be returned in downstream opt out and PPH litigation, and the inherent
uncertainty surrounding any litigation, it is possible that additional reserves may be
required in the future and the amount of such additional reserves may be significant.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company intends to vigorously defend itself and believes it can marshal significant
resources and legal defenses to limit its ultimate liability in the diet drug litigation.
However, in light of the circumstances discussed above, it is not possible to predict the
ultimate liability of the Company in connection with its diet drug legal proceedings. It
is therefore not possible to predict whether, and if so when, such proceedings will have
a material adverse effect on the Companys financial condition, results of
operations and/or cash flows and whether cash flows from operating activities and
existing and prospective financing resources will be adequate to fund the Companys
operations, pay all liabilities related to the diet drug litigation, pay dividends,
maintain the ongoing programs of capital expenditures, and repay both the principal and
interest on its outstanding obligations without the disposition of significant strategic
core assets and/or reductions in certain cash outflows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Seventh Amendment to the Nationwide Settlement
| | ----------------------------------------------

| | During
2004, the Company, counsel for the plaintiff class in the nationwide settlement and
counsel for certain individual class members negotiated a proposed Seventh Amendment to
the settlement agreement that would create a new claims processing structure, funding
arrangement and payment schedule for claims for compensation based on Levels I and II of
the five-level settlement matrix. These claims are the most numerous, but least serious,
of the claims filed for matrix benefits. The total number of currently filed Level I and
Level II claims posed the risk that the Settlement Trusts funds might be exhausted.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On March 15, 2005, United States District Judge Harvey Bartle III, the federal judge of the
United States District Court for the Eastern District of Pennsylvania overseeing the
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | national class action settlement, approved the proposed Seventh Amendment as fair,
adequate and reasonable. Three appeals from Judge Bartles decision were filed
by April 14, 2005, the deadline for such appeals. Two of those appeals were withdrawn by
the appellants who brought them.  On November 1, 2005, the United States Court of Appeals
for the Third Circuit dismissed the appeal of the remaining appellant and remanded the
appellant's claim to the District Court for the limited purpose of submitting the claim
for re-auditing under the terms of the original settlement agreement. If the appellant
does not seek review from the United States Supreme Court, the proposed Seventh Amendment
would become effective in early 2006. When and if all appeals are finally resolved, the
proposed Seventh Amendment would include the following key terms:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The amendment would create a new Supplemental Fund, to be administered by a Fund
Administrator who will be appointed by the District Court and who will process most
pending Level I and Level II matrix claims;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | After District Court approval, the Company became obligated to make initial payments of up
to $50.0 million (of which $25.0 million has been paid) to facilitate the establishment of
the Supplemental Fund and to enable the Supplemental Fund to begin reviewing claims.
Following the exhaustion of any further appellate review, the
Company would make an initial payment of $400.0 million to enable the Supplemental Fund to
begin paying claims. The timing of additional payments would be dictated by the rate of
review and payment of claims by the Fund Administrator. The Company would ultimately
deposit a total of $1,275.0 million, net of certain credits, into the Supplemental Fund;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | All participating matrix Level I and Level II claimants who qualify under the Seventh
Amendment, who pass the Settlement Funds medical review and who otherwise satisfy
the requirements of the settlement (Category One class members) would receive a pro rata
share of the $1,275.0 million Supplemental Fund, after deduction of certain expenses and
other amounts from the Supplemental Fund. The pro rata amount would vary depending upon
the number of claimants who pass medical review, the nature of their claims, their age and
other factors. A participating Category One class member who does not qualify for a
payment after such medical review would be paid $2,000 from the Supplemental Fund;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Participating class members who might in the future have been eligible to file Level I and
Level II matrix claims (Category Two class members) would be eligible to receive a $2,000
payment from the Trust; such payments would be funded by the Company apart from its other
funding obligations under the nationwide settlement;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | If
the participants in the Seventh Amendment have heart valve surgery or other more serious
medical conditions on Levels III through V of the nationwide settlement matrix by the
earlier of 15 years from the date of their last diet drug ingestion or by December 31,
2011, they would remain eligible to submit claims to the existing Trust and be paid the
current matrix amounts if they qualify for such payments under terms modified by the
Seventh Amendment. In the event
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| |  | the existing
Trust is unable to pay those claims, the Company would guarantee payment; and
| |  | ------------------------------------------------------------------------------------------

| | o | All class members who participate in the Seventh Amendment would give up any further opt
out rights as well as the right to challenge the terms of and the binding effect of the
nationwide settlement. Final approval of the Seventh Amendment also would preclude any
lawsuits by the Trust or the Company to recover any amounts previously paid to class
members by the Trust, as well as terminate the Trusts Claims Integrity Program as to
all claimants who do not opt out of the Seventh Amendment.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 29, 2005, as collateral for the Companys financial obligations under the
Seventh Amendment, the Company established a security fund in the amount of $1,250.0
million. As of September 30, 2005, $1,050.0 million was included in Other current
assets including deferred taxes and $200.0 million was included in Other assets
including deferred taxes. The amounts in the security fund are owned by the Company
and will earn interest income for the Company while residing in the security fund.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There
can be no assurance that the proposed Seventh Amendment will be upheld on appeal. If it
is upheld on appeal, only the claims of those class members who opted out of the Seventh
Amendment will be processed under the terms of the existing settlement agreement and
under the procedures that have been adopted by the Settlement Trust and the District
Court. Less than 5% of the class members who would be affected by the proposed Seventh
Amendment (approximately 1,900 of the Category One class members and approximately 5,100
of the Category Two class members) elected to opt out of the Seventh Amendment and to
remain bound by the current settlement terms. Should the proposed Seventh Amendment not
be upheld on appeal, all of the pending and future matrix claims would be processed under
the terms of the existing settlement agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Nationwide Settlement Matrix Claims Data
| | ----------------------------------------

| | The
settlement agreement grants the Company access to claims data maintained by the
Settlement Trust. Based on its review of that data, the Company understands that, as of
October 12, 2005, the Trust had recorded approximately 121,845 matrix claim forms.
Approximately 33,485 of these forms were so deficient, incomplete or duplicative of other
forms filed by the same claimant that, in the Companys view, it is unlikely that a
significant number of these forms will result in further claims processing.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys understanding of the status of the remaining approximately 88,360 forms,
based on its analysis of data received from the Trust through October 12, 2005, is as
follows. Approximately 32,065 of the matrix claims had been processed to completion, with
those claims either paid (approximately 4,480 payments, totaling $1,585.9 million, had
been made to approximately 4,260 claimants), denied or in show cause proceedings
(approximately 26,010) or withdrawn. Approximately 2,260 claims were in some stage of the
100% audit process ordered in late 2002 by the District Court overseeing the national
settlement. An additional approximately 17,835 claims alleged conditions that, if true,
would entitle the claimant to receive a matrix award; these claims
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | had
not yet entered the audit process. Another approximately 23,800 claims with similar
allegations have been purportedly substantiated by physicians or filed by law firms whose
claims are now subject to the outcome of the Trusts Claims Integrity Program.(1) Approximately
12,365 claim forms did not contain sufficient information even to assert a matrix claim,
although some of those claim forms could be made complete by the submission of additional
information and could therefore become eligible to proceed to audit in the future. The
remaining approximately 35 claims were in the data entry process and could not be
assessed.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Challenges to the Nationwide Settlement
| | ---------------------------------------

| | Counsel
representing approximately 8,600 class members have filed a motion with the District
Court seeking a ruling that the nationwide settlement agreement is void. The motion
asserts that there was inadequate representation of the class when the settlement
agreement was negotiated, that the parties and their experts made mutual mistakes in
projecting the amount of money that would be needed to pay all valid claims, that the
original notice to the class was inadequate and that the Court had lacked subject matter
jurisdiction over some of the class members claims. The motion seeks an opportunity
for all class members to decide a second time whether or not to be included in the class
and therefore bound by the settlement agreement. The District Court had stayed briefing
and consideration of the motion pending its decision on approval of the proposed Seventh
Amendment, which as discussed above would preclude such claims on behalf of class members
who participate. Briefing on the motion has now been completed but no date has been set
for argument of the motion and it is not known when it will be decided.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Certain
class members also have filed a number of other motions and lawsuits attacking both the
binding effect of the settlement and the administration of the Trust, some of which have
been decided against class members and are currently on appeal. The Company cannot
predict the outcome of any of these motions or lawsuits.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Downstream Opt Out Cases
| | ------------------------

| | As
of September 30, 2005, approximately 58,500 individuals who had filed Intermediate or
Back-End opt out forms had pending lawsuits against the Company. The claims of
approximately 51% of the plaintiffs in the Intermediate and Back-End opt out cases served
on the Company are pending in Federal Court, with approximately 38% pending in State
Courts. The claims of approximately 11% of the Intermediate and Back-End opt out
plaintiffs have been removed from State Courts to Federal Court but are still subject to
a possible remand to State Court. In addition, a large number of plaintiffs have asked
the United States Court of Appeals for the Third Circuit to review and reverse orders entered by
the Federal Court overseeing the settlement which had denied the plaintiffs motions
to remand their cases to State Court. Another group of plaintiffs with cases in Federal
Court has filed a mandamus petition with the Third Circuit seeking an order compelling
the MDL court to transfer their cases back to the federal courts in the jurisdictions in
which the cases were originally filed. As of September 30, 2005, approximately 6,500
Intermediate or Back-End opt out plaintiffs have had their lawsuits dismissed for
procedural or medical deficiencies or for various other reasons.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | The
claims of 27 class members who had taken advantage of the Intermediate and Back-End opt
out rights created in the nationwide settlement went to verdict from January 1 through
November 3, 2005. In six separate trials bifurcated to consider medical causation and
damages in the first phase and liability in the second phase, verdicts were returned in
favor of a total of eight plaintiffs, in the aggregate amount of approximately $930,000,
at the close of the initial stage of each trial. One of those cases, in which the
plaintiff was awarded $88,000, will be appealed; the remainder of those cases have since
been settled. Fifteen of the verdicts were defense verdicts in favor of the Company at the
close of the initial phase in similarly bifurcated trials. Two verdicts involved cases in
which the jury initially found in favor of the plaintiffs for $5.0 million and $500,000
respectively, but subsequently found for the Company during the liability phase, thereby
negating the earlier damage finding. Verdicts of $100.0 million each were returned in
favor of the remaining two plaintiffs at the close of the first phase of a similarly
bifurcated trial. The Company moved for a mistrial following the return of the $100.0
million verdicts and the second phase was postponed until October 3, 2005. On September
30, 2005, pursuant to the agreement of the parties,
the court granted the Companys motion, vacated the verdicts and ordered a
new trial and the cases were settled. Also during this period, the Philadelphia
Court of Common Pleas set aside an earlier verdict against the Company and in favor of
three plaintiffs in the aggregate amount of $1.355 million. The court ordered a new trial
of the second, or liability, phase of that case after determining that the testimony of
plaintiffs only liability expert witness was inadequate and in violation of the
Pennsylvania Rules of Evidence. A number of additional cases were settled, dismissed or
adjourned during the first nine months of 2005. Additional Intermediate and Back-End opt
out trials are scheduled throughout 2005 and 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 18, 2005, the Company and counsel representing certain downstream opt out
plaintiffs filed a motion with the District Court advising the Court that those parties
had developed a proposed process by which large numbers of the downstream opt out cases
(as well as the PPH and initial opt out cases handled by plaintiffs counsel
participating in the process) might be negotiated and settled. The proposed process
provides a methodology for valuing different categories of claims and also provides a
structure for individualized negotiations between Wyeth and lawyers representing diet
drug claimants. Counsel for greater than 90% of the plaintiffs with pending Intermediate
and Back-End opt out lawsuits have agreed to participate in the process or are otherwise
engaged in settlement discussions with the Company. As a result of the discussions to
date, the Company has reached agreements, or agreements in principle,
with a significant number of these law firms to
settle the claims of approximately 22,000 diet drug recipients (primarily downstream opt
outs, but also including PPH and initial opt out claimants), approximately 2,500 of whom
have received settlement payments following the dismissal of their cases. The
Company cannot predict the total number of cases that might be settled as a result of
this process.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | PPH Cases
| | ---------

| | On
April 27, 2004, a jury in Beaumont, Texas hearing the case of Coffey, et al. v. Wyeth,
et al., No. E-167,334, 172nd Judicial District Court, Jefferson Cty., TX, returned a
verdict in favor of the plaintiffs for $113.4 million in compensatory damages and $900.0
million in punitive damages for the wrongful death of the plaintiffs decedent,
allegedly as a result of PPH caused by her use of PONDIMIN. On May 17, 2004, the
Trial Court entered judgment on behalf of the plaintiffs for the full amount of the jurys
verdict, as well as $4.2 million in pre-judgment interest and $188,737 in guardian ad
litem fees. On July 26, 2004, the Trial Court denied in their entirety the Companys
motions for a new trial or for judgment notwithstanding the verdict, including the Companys
request for application of Texass statutory cap on punitive damage awards. The
Company has filed an appeal from the judgment entered by the Trial Court and believes
that it has strong arguments for reversal or reduction of the awards on appeal due to the
significant number of legal errors made during trial and in the charge to the jury and
due to a lack of evidence to support aspects of the verdict. In connection with its
appeal, the Company was required by Texas law to post a bond in the amount of $25.0
million. The Company filed its brief in support of the appeal on April 14, 2005.
Plaintiffs have not yet filed their brief and oral argument is not expected until
sometime in 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As of September 30, 2005, the Company was a defendant in approximately 170 pending lawsuits
(excluding those lawsuits that have been settled in principle pursuant to the settlement
process described above) in which the plaintiff alleges a claim of PPH, alone or with
other alleged injuries. In approximately 55 additional lawsuits pleaded as valvular
regurgitation cases, plaintiffs attorneys participating in the settlement process
described above have now advised the Company that the plaintiffs will allege a claim of
PPH. Almost all of these claimants must meet the definition of PPH set forth in the
national settlement agreement in order to pursue their claims outside of the national
settlement (payment of such claims, by settlement or judgment, would be made by the
Company and not by the Trust). Approximately 45 of these 225 cases appear to be eligible
to pursue a PPH lawsuit under the terms of the national settlement. In approximately 60
of these 225 cases, the Company has filed or expects to file motions under the terms of
the national settlement to preclude plaintiffs from proceeding with their PPH claims. For
the balance of these cases, the Company currently has insufficient medical information to
assess whether or not the plaintiffs meet the definition of PPH under the national
settlement. The Company is aware of approximately 5 additional claims which are not
currently the subject of a lawsuit but which appear to meet the settlements PPH
definition. During the course of settlement discussions, certain plaintiffsattorneys
have informed the Company that they represent additional individuals who claim to have
PPH, but the Company is unable to evaluate whether any such additional purported cases of
PPH would meet the national settlement agreements definition of PPH. The Company
continues to work toward resolving the claims of individuals who allege that they have
developed PPH as a result of their use of the diet drugs and intends to vigorously defend
those PPH cases that cannot be resolved prior to trial.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| | (1) | Pursuant
to its Claims Integrity Program, the Settlement Trust has required
               additional information concerning matrix claims purportedly substantiated
by 18                identified physicians or filed by two law firms in order to
determine whether to                permit those claims to proceed to the 100% audit
process established by the                District Court. Based upon data obtained from
the Trust, the Company believes                that approximately 23,800 matrix claims
were purportedly substantiated by the 18                physicians and/or filed by the
two law firms covered by the Claims Integrity                Program as of October 12,
2005. It is the Companys understanding that                additional claims
substantiated by additional physicians or filed by additional                law firms
might be subjected to the same requirements of the Claims Integrity
               Program in the future. The ultimate disposition of any or all claims that
are                subject to the Claims Integrity Program is at this time uncertain.
Counsel for                certain claimants affected by the program have challenged the
Trusts                authority to implement the Claims Integrity Program and to
require completion of                the questionnaire before determining whether to
permit those claims to proceed                to audit. While that motion was denied by
the Court, additional challenges to                the Claims Integrity Program and to
the Trusts matrix claim processing                have been filed. As indicated
above, following final judicial approval of the                Seventh Amendment, the
Claims Integrity Program will be terminated as to all                claimants who have
not opted out of the Seventh Amendment. The Trust has also                instituted
civil litigation alleging fraud on the part of two physicians who
               substantiated matrix claims. If the proposed Seventh Amendment receives
final                approval, those lawsuits will be dismissed.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

Note 7.
       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 which are not allocated to the
other reportable segments.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Net RevenueThree Months
>                   Ended September 30,
>      Nine Months
>                   Ended September 30,(In thousands)
> Segment
>      2005
>      2004
>      2005
>      2004Pharmaceuticals
>      
>      $3,872,319
>         
>      $3,622,263
>         
>      $11,458,810
>         
>      $10,222,826Consumer Healthcare
>      636,195
>         
>      651,100
>         
>      1,853,035
>         
>      1,830,853Animal Health
>      207,747
>         
>      198,473
>         
>      697,249
>         
>      656,151Total
>      $4,716,261
>         
>      $4,471,836
>         
>      $14,009,094
>         
>      $12,709,830

> Income (Loss) Before Income TaxesThree Months
>                   Ended September 30,
>      Nine Months
>                   Ended September 30,(In thousands)
> Segment
>      2005
>      2004
>      2005
>      2004Pharmaceuticals(1)
>      
>      $ 1,248,384
>         
>      $    1,252,897
>         
>      $ 3,671,986
>         
>      $ 3,090,850Consumer Healthcare
>      184,884
>         
>      175,740
>         
>      403,698
>         
>      389,833Animal Health
>      29,265
>         
>      32,651
>         
>      142,047
>         
>      120,686Corporate(2)
>      (198,423
>         )
>      (134,339
>         )
>      (336,112
>         )
>      (267,451
>         )Total(3)
>      $ 1,264,110
>         
>      $ 1,326,949
>         
>      $ 3,881,619
>         
>      $ 3,333,918

| | (1) | Pharmaceuticals for the 2004 first nine months included a first quarter charge
                    of $145,500 within Research and development expenses related to
                    the upfront payment to Solvay Pharmaceuticals in connection with the
                    co-development and co-commercialization of four neuroscience compounds, most
                    notably, bifeprunox, a late stage compound in Phase 3 development for
                    schizophrenia and other possible uses.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Corporate included a net charge of $95,800 for the 2005 third quarter and first
                    nine months related to the Companys productivity initiatives. The
                    activities related to the Pharmaceuticals business.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Income
before income taxes included approximately $37,000 and $180,000 for the
                    2005 third quarter
| | --- | ---------------------------------------------------------------------------------------------------------------------

22

---

# WYETHNOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS(Unaudited)

| |  | and first
nine months, respectively, and $11,000 and $165,000                     for the 2004
third quarter and first nine months, respectively, related to gains
                    from the divestiture of certain Pharmaceuticals and Consumer
Healthcare                     products. The 2005 divestitures included product rights to
SYNVISC, EPOCLER (in Brazil) and the SOLGAR line of products. The
2004                     divestitures included product rights to indiplon, DIAMOX (in
Japan), and                     the Companys nutritionals products in France.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 8.
        Credit Facilities

| | In
August 2005, the Company replaced its $1,350.0 million three-year facility scheduled to
mature in March 2006, with a new $1,350.0 million five-year facility, which matures in
August 2010. The new facility contains substantially the same financial and other
covenants, representations, warranties, conditions and default provisions as the replaced
facility.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition, in conjunction with the new facility, the Company amended its existing $1,747.5
million five-year facility which matures in February 2009 to conform to the terms and
conditions (other than maturity) of the new facility.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 9.
        Income Taxes

| | In
the 2005 third quarter, the Company recorded an income tax charge of $170.0 million
($0.12 per share-diluted) within the Provision (benefit) for income taxes resulting
from the decision to repatriate approximately $3.1 billion of foreign earnings in
accordance with the American Jobs Creation Act of 2004, which provides a temporary
incentive for U.S. multinational companies to repatriate foreign earnings.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

Item 2.
       Results of Operations

| | Overview
| | --------

| | 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, vaccines, biotechnology products, non-prescription medicines and animal
health care. The Company has four reportable segments: Wyeth Pharmaceuticals
(Pharmaceuticals), Wyeth Consumer Healthcare (Consumer Healthcare), Fort Dodge Animal
Health (Animal Health) and Corporate, which are managed separately because they
manufacture, distribute and sell distinct products and provide services which 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
Pharmaceuticals segment, which provided approximately 82% of our worldwide net revenue
for the first nine months of 2005 and 81% for the first nine months of 2004,
manufactures, distributes and sells branded human ethical pharmaceuticals, biologicals
and nutritionals. Principal products include neuroscience therapies, cardiovascular
products, nutritionals, gastroenterology drugs, anti-infectives, vaccines, oncology
therapies, musculoskeletal therapies, hemophilia treatments, immunology products and womens
health care products. These products are promoted and sold worldwide primarily to
wholesalers, pharmacies, hospitals, physicians, retailers and other human health care
institutions. Approximately 45% of Pharmaceuticals net revenue is generated outside the
U.S.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
Consumer Healthcare segment, which provided approximately 13% of our worldwide net
revenue for the first nine months of 2005 and 14% for the first nine months of 2004,
manufactures, distributes and sells over-the-counter health care products, which include
analgesics, cough/cold/allergy remedies, nutritional supplements, and hemorrhoidal,
asthma and personal care items. These products generally are sold to wholesalers and
retailers and are promoted primarily to consumers worldwide through advertising.
Approximately 42% of Consumer Healthcare net revenue is generated outside the U.S.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
Animal Health segment, which provided approximately 5% of our worldwide net revenue for
the first nine months of 2005 and 5% for the first nine months of 2004, manufactures,
distributes, and sells animal biological and pharmaceutical products, including vaccines,
pharmaceuticals, parasite control and growth implants. These products are sold to
wholesalers, retailers, veterinarians and other animal health care institutions.
Approximately 53% of Animal Health net revenue is generated outside the U.S.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
Corporate segment is responsible for the treasury, tax and legal operations of the Companys
businesses. It maintains and/or incurs certain assets, liabilities, income,
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | expenses, gains and losses related to the overall management of the Company that are not allocated
to the other reportable segments.
| | ------------------------------------------------------------------------------------------------------------------------------------

| | Wyeth
exhibited strong revenue growth for the 2005 first nine months, achieving a 10% increase
in worldwide net revenue compared with the first nine months of 2004.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pharmaceuticals
had net revenue of $11,458.8 million for the 2005 first nine months, representing growth
of 12% over the 2004 first nine months, which was driven by the strong performance of
several key products:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | EFFEXOR (a
neuroscience therapy)  up 5% to $2,617.8 million
| | - | ------------------------------------------------------------

| | o | PROTONIX(a gastroenterology product)  up 8% to $1,268.0 million
| | - | ----------------------------------------------------------------

| | o | PREVNAR (a
vaccine)  up 55% to $1,107.5 million
| | - | ------------------------------------------------

| | o | ENBREL(a musculoskeletal therapy)  up 69% internationally, (where the Company has exclusive
marketing rights) to $785.6 million
| | - | --------------------------------------------------------------------------------------------------------------------------------

| | o | ZOSYN/TAZOCIN(an infectious disease drug)  up 22% to $686.6 million
| | - | --------------------------------------------------------------------

| | o | RAPAMUNE(an immunology product)  up 21% to $220.8 million
| | - | ----------------------------------------------------------

| | Collectively,
sales of these products increased 19% for the first nine months of 2005 compared with the
first nine months of 2004.
| | ----------------------------------------------------------------------------------------------------------------------------------

| | In
September 2004, the U.S. Centers for Disease Control and Prevention (CDC) issued an
updated recommendation for the use of PREVNAR reinstating the full, four-dose
vaccination schedule. In August 2004, the European Medicines Agency (EMEA) and Committee
for Medicinal Products for Human Use (CHMP) announced a return to the normal dosing
schedule for PREVNAR in Europe. Net revenue growth for the 2005 first nine months
for PREVNAR reflected a return to the full dose vaccination schedule, the
resolution of manufacturing issues that limited production in the first half of 2004 and
a catch-up of deferred doses from last year that resulted from supply constraints.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | PROTONIXnet revenue for the first nine months of 2005 of $1,268.0 million increased 8% from
the first nine months of 2004. We have been shifting emphasis of the PROTONIX business
from the more heavily discounted Medicaid segment to the less heavily discounted third
party managed care segment. This strategy, which is expected to continue throughout 2005,
has had a positive impact on net revenue and profitability.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Other
areas of revenue growth for the Pharmaceuticals segment for the 2005 first nine months
included nutritionals, BENEFIXand rhBMP-2, as well as alliance revenue,
predominantly from sales of ENBREL (in North America).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | EFFEXOR revenue
growth is moderating, reflecting several factors, including a slowdown in the overall
antidepressant market, as well as a trend toward increasing use of generics in the
antidepressant category. In addition, negative publicity regarding antidepressants and
increased concern about the use of these products in children and adolescents has had an
impact. In late 2004, the Food and Drug Administration (FDA)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | directed
all manufacturers of antidepressant medications to implement labeling changes regarding
the use of these agents and the risk of suicidality in children and adolescents. In March
2005, we implemented these labeling changes. EFFEXOR has never been recommended
for use in children and continues to be an appropriate and important therapy in treating
adult patients with major depressive disorder, generalized anxiety disorder and social
anxiety disorder. An indication for panic disorder, filed in the U.S., Canada and Europe
in the second half of last year, is now approved in several of the European markets and
remains in active regulatory review in the balance of the submitted countries.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
October 2005, we reached agreement with Teva Pharmaceutical Industries Ltd. (Teva) on a
proposed settlement of the U.S. patent litigation pertaining to Tevas generic
version of our EFFEXOR XRantidepressant pending in the U.S. District
Court for the District of New Jersey. The proposed settlement is subject to a number of
conditions, including review by the Federal Trade Commission (FTC) and approval of the
District Court.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
PREMARIN family of products remains the standard of therapy to help women address
serious menopausal symptoms. In March 2005, we launched a direct-to-consumer advertising
campaign for PREMARIN. We also initiated a public education program in July 2005
to reinforce the importance of talking to a doctor or other health care professional
about menopause. The 2005 third quarter sales of $219.6 million increased 26%, from the
2004 third quarter which was negatively impacted by de-stocking of wholesalers inventory,
and sales have increased to $690.4 million for the 2005 first nine months from $662.8
million for the 2004 first nine months. The introduction of low-dose PREMARINand
PREMPRO in 2003 has contributed to these sales increases.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | TYGACIL,
an innovative broad-spectrum I.V. antibiotic for serious, hospital-based infections,
which received FDA approval in June 2005, was launched in the U.S. in July 2005. Launch
of this first-in-class product comes at a time when the need for new antibiotic options
to combat serious, resistant infections is increasing. Regulatory review is ongoing in
Europe and around the world.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Both
Consumer Healthcare and Animal Health posted increases in net revenue for the 2005 first
nine months over the 2004 first nine months. In August 2005, we sold the assets of the
Companys SOLGAR product line to NBTY, Inc. for $115.0 million. Consumer
Healthcare net revenue increased 1% for the 2005 first nine months, but posted a 2%
decrease for the 2005 third quarter. The results were attributable to a number of factors
including lower sales of SOLGAR products, which were divested in the 2005 third
quarter, offset, in part, by higher sales of CENTRUM. The first nine months also
included growth in ROBITUSSIN, CALTRATE and ADVIL.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Animal
Health net revenue increased 6% for the 2005 first nine months due primarily to higher
sales of livestock and poultry products, as well as higher sales of companion
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | animal
products despite the impact of the voluntary recall of PROHEART 6 in the U.S.
market in September 2004.
| | --------------------------------------------------------------------------------------------------------------

| | In
order for us to sustain the growth of our core group of products, we must continue to
meet the global demand of our customers. Two of our important core products, PREVNAR and
ENBREL, are biological products that are extremely complicated and difficult to
manufacture. We continue to seek to improve manufacturing processes and overcome
production issues. During 2004, upgrades and improvements were made to the Wyeth PREVNAR manufacturing
facilities and additional vial filling capacity became available through a third-party
filler. In 2005, an additional third-party filler, for pre-filled syringes of PREVNAR,
was added to the PREVNAR supply chain. In July 2005, the first doses of pre-filled
syringes were introduced in the European market. In addition, pending regulatory
approval, pre-filled syringes from Wyeth and the third-party filler are expected to be
launched in the U.S. in early 2006. Overall, we expect to meet our 2005 PREVNARproduction
goal of 25  28 million doses.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
July 2005, we received European regulatory approval for the production of ENBREL at
our Grange Castle, Ireland site, which was formally opened in September 2005. This
facility is one of the worlds largest integrated biotechnology facilities and we
expect it will be a major site for global supply of ENBREL and other Wyeth
biotechnology products. In addition, in September 2005, Amgen Inc.s (Amgen) BioNext
facility in Rhode Island received FDA approval for the production of ENBREL. This
expected additional manufacturing capacity should help ENBREL reach its full
commercial potential, although, as is typical for new biological manufacturing
facilities, margins are expected to be affected during at least the initial year of
production. In late March 2005, ENBREL was launched for the treatment of
rheumatoid arthritis in Japan, where it is co-promoted by Wyeth and Takeda Pharmaceutical
Company, Limited (Takeda). Early in April 2005, we increased our ownership from 60% to
70% in our joint venture with Takeda.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
have entered into wholesaler service agreements with many of our full-line pharmaceutical
wholesalers in the U.S., whereby, in return for certain price concessions, the
wholesalers have agreed not to exceed certain targeted inventory levels. As a result, we,
along with our wholesaler partners, are able to manage product flow and inventory levels
in a way that more closely follows trends in prescriptions.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2005, we increased the Companys quarterly dividend (payable December 1,
2005) by 9%.
| | --------------------------------------------------------------------------------------------------

| | Our
principal strategy for future success is based on research and development (R&D)
innovations. We intend to leverage our breadth of knowledge and resources across three
scientific development platforms (traditional pharmaceuticals, biopharmaceuticals and
vaccines) to produce first-in-class and best-in-class therapies for significant unmet
medical needs around the world.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | In
May 2005, we filed a New Drug Application (NDA) with the FDA for an oral contraceptive LYBREL (levonorgestrel/ethinyl estradiol) having a unique continuous dosing regimen. If
approved, this product will be the lowest daily dose, monophasic oral contraceptive
available in the U.S. and will offer a dosing regimen that provides effective
contraception as well as the option for a longer interval between menstrual cycles. We
expect additional major NDA filings over the next 12 to 18 months.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
2005, we launched our long-term productivity initiatives, which we refer to as Project
Springboard, to adapt to the changing pharmaceutical industry environment. The guiding
principles of the initiatives include innovation, cost savings, process excellence and
accountability, with an emphasis on improving productivity. We are reviewing the Companys
production network to achieve optimal efficiencies and reduce production costs for our
global core products. We recently announced the closure of a pharmaceutical manufacturing
site, as well as the national phased adoption of a reorganized U.S. primary care
Pharmaceuticals sales force, resulting in net charges of $95.8 million ($63.4 million
after-tax or $0.05 per share-diluted)in the 2005 third quarter. Additional costs
associated with the productivity initiatives are expected to continue for several years
as additional strategic decisions are made and are projected to total approximately
$750.0 million to $1.0 billion, on a pre-tax basis.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
continue to address the challenges of the Companys diet drug litigation. As
discussed in more detail in Note 6 to our consolidated condensed financial statements, on
March 15, 2005, the proposed Seventh Amendment to the National Diet Drug Settlement was
approved as fair, adequate and reasonable. This is an important milestone not
only for the Seventh Amendment itself but also for the National Diet Drug Settlement in
general. The Seventh Amendment would create a new claims processing structure, funding
arrangement and payment schedule for matrix Level I or II claims, the least serious but
most numerous matrix claims in the Settlement. The amendment would ensure that these
claims are processed on a streamlined basis, while preserving funds in the existing Trust
for more serious claims. Three appeals had been filed challenging the approval of the
Seventh Amendment. Two of those appeals were withdrawn by the appellants who brought them.
On November 1, 2005, the United States Court of Appeals for the Third Circuit dismissed the
appeal of the remaining appellant and remanded the appellant's claim to the District Court
for the limited purpose of submitting the claim for re-auditing under the terms of the
original settlement agreement. If the appellant does not seek review from the United States
Supreme Court, the proposed Seventh Amendment would become effective in early 2006.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2005, we announced that the Company was in discussions with plaintiffsattorneys
representing a number of individuals who have opted out of the National Diet Drug
Settlement on a proposed process for settling downstream opt out cases (as well as the
PPH and initial opt out cases handled by plaintiffs counsel participating in the
process). The proposed process provides a methodology for valuing different categories of
claims and also provides a structure for individualized negotiations between the Company
and lawyers representing diet drug claimants. Counsel for greater than 90% of
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | the plaintiffs with pending Intermediate and Back-End opt out lawsuits have agreed to
participate in the process or are otherwise engaged in settlement discussions with the Company.
As a result of the discussions to date, the Company has reached agreements, or agreements
in principle, with a
significant number of these law firms to settle the claims of approximately 22,000
diet drug recipients (primarily downstream opt outs, but also including PPH and initial
opt out claimants), approximately 2,500 of whom have received settlement payments following
the dismissal of their cases. As we move forward, additional attorneys may agree to
participate in the process and some who have previously agreed to settlement discussions
may decide to withdraw their participation. We will continue to try those cases where
attorneys are not willing to participate in this settlement process. The Company cannot
predict the number of cases that might be settled as a result of this process.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
discussed in Note 1 to our consolidated condensed financial statements, the Financial
Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based
Payment(Statement 123R), which requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the statement of
operations as compensation expense (based on their fair values) over the vesting period
of the awards. In accordance with Statement 123R, which we plan to adopt effective
January 1, 2006, the Company will record compensation expense for the unvested portion of
previously issued awards, as well as compensation expense for any awards issued, modified
or settled after the date of adoption. We expect the adoption of Statement 123R will have
a material impact on our results of operations and earnings per share beginning in 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Generally,
we face the same difficult challenges that all research-based pharmaceutical companies
are confronting. Pressure from government agencies and consumers to lower prices, either
through leveraged purchasing plans, importation or reduced reimbursement for prescription
drugs, poses significant challenges for our Company. Health care providers and the
general public want more information about our products, and they want it delivered
efficiently and effectively. Regulatory burdens are increasing the demands on our
Company, and they increase both the cost and time it takes to bring new drugs to market.
We also are faced with the moderating rate of growth of some of our major products.
Through the remainder of 2005, and in future years, we will continue with our long-term
productivity initiatives to address these changing conditions with the objective of
making Wyeth more efficient, more effective and more profitable so that we may continue
to thrive in this increasingly challenging pharmaceutical environment.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Net Revenue
| | -----------

| | Worldwide
net revenue increased 5% for the 2005 third quarter and 10% for the 2005 first nine
months compared with prior year levels. The increase in worldwide net revenue in the 2005
third quarter was due to increases in the Pharmaceuticals and Animal Health segments,
offset, in part, by a decrease in the Consumer Healthcare segment. The increase in
worldwide net revenue for the 2005 first nine months was due to increases in the
Pharmaceuticals, Consumer Healthcare and Animal Health segments. Excluding the favorable
impact of foreign exchange, worldwide net revenue increased 4% for the 2005 third quarter
and 9% for the 2005 first nine months.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table sets forth worldwide net revenue results by reportable segment together
with the percentage changes from the comparable periods in the prior year:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Net RevenueThree MonthsEnded September 30,(Dollars in millions)
> Segment
>      2005
>      2004
>      % Increase/       (Decrease)Pharmaceuticals
>      
>      $3,872.3
>         
>      $3,622.2
>         
>      7%Consumer Healthcare
>      636.2
>         
>      651.1
>         
>      (2)%Animal Health
>      207.8
>         
>      198.5
>         
>      5%Total
>      $4,716.3
>         
>      $4,471.8
>         
>      5%

> Net RevenueNine MonthsEnded September 30,(Dollars in millions)
> Segment
>      2005
>      2004
>      % IncreasePharmaceuticals
>      
>      $11,458.8
>         
>      $10,222.8
>         
>      12%Consumer Healthcare
>      1,853.0
>         
>      1,830.8
>         
>      1%Animal Health
>      697.3
>         
>      656.2
>         
>      6%Total
>      $14,009.1
>         
>      $12,709.8
>         
>      10%

| | Pharmaceuticals
| | ---------------

| | Worldwide
Pharmaceuticals net revenue increased 7% for the 2005 third quarter and 12% for the 2005
first nine months due primarily to higher sales of PREVNAR, ENBREL (internationally),
ZOSYN/TAZOCIN, and PROTONIXoffset, in part, by lower sales of SYNVISC which
was divested in the 2005 first quarter. Higher sales of PREVNAR reflected a return
to the full dose vaccination schedule, the resolution of manufacturing issues that
limited production in the first half of 2004 and a catch-up of deferred doses from 2004
that resulted from supply constraints. Net revenue for the 2005 third quarter was
impacted by lower sales of EFFEXOR XR reflecting a slowdown in the overall
antidepressant market, as well as a trend toward increasing use of generics in the
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

30

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | antidepressant
category and higher sales of the PREMARIN family of products as compared with the
2004 third quarter, which was adversely impacted by de-stocking of wholesalers inventory.
The 2005 first nine months increase was also attributed to higher sales of EFFEXOR XR.
Worldwide Pharmaceuticals net revenue also reflects higher sales of nutritionals, BENEFIX and
rhBMP-2, as well as higher alliance revenue primarily as a result of higher sales
of ENBREL in North America in both the 2005 third quarter and first nine months.
Excluding the favorable impact of foreign exchange, worldwide Pharmaceuticals net revenue
increased 6% for the 2005 third quarter and 11% for the 2005 first nine months.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table sets forth the significant worldwide Pharmaceuticals net revenue by
product for the three and nine months ended September 30, 2005 compared with the same
periods in the prior year:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Three Months
>         Ended September 30,
>      Nine Months
>         Ended September 30,(In millions)
>      2005
>      2004
>      2005
>      2004EFFEXOR
>      
>      $   860.6
>         
>      $   892.7
>         
>      $  2,617.8
>         
>      $  2,500.2PROTONIX
>      404.7
>         
>      378.2
>         
>      1,268.0
>         
>      1,177.9PREVNAR
>      393.1
>         
>      320.8
>         
>      1,107.5
>         
>      713.3ENBREL
>      276.3
>         
>      173.4
>         
>      785.6
>         
>      464.4Nutritionals
>      264.1
>         
>      247.1
>         
>      784.9
>         
>      691.2PREMARINfamily
>      219.6
>         
>      174.2
>         
>      690.4
>         
>      662.8ZOSYN/ TAZOCIN
>      226.7
>         
>      196.8
>         
>      686.6
>         
>      560.5Oral Contraceptives
>      132.0
>         
>      154.7
>         
>      407.8
>         
>      438.5ZOTON
>      89.8
>         
>      121.0
>         
>      311.9
>         
>      347.7BENEFIX
>      80.2
>         
>      72.6
>         
>      252.2
>         
>      223.6RAPAMUNE
>      77.5
>         
>      68.5
>         
>      220.8
>         
>      182.9REFACTO
>      70.6
>         
>      61.2
>         
>      203.1
>         
>      185.5rhBMP-2
>      67.9
>         
>      41.5
>         
>      177.5
>         
>      118.1Alliance revenue
>      321.0
>         
>      237.9
>         
>      798.0
>         
>      539.3Other
>      388.2
>         
>      481.6
>         
>      1,146.7
>         
>      1,416.9Total Pharmaceuticals
>      $3,872.3
>         
>      $3,622.2
>         
>      $11,458.8
>         
>      $10,222.8

31

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Consumer Healthcare
| | -------------------

| | Worldwide
Consumer Healthcare net revenue decreased 2% for the 2005 third quarter and increased 1%
for the 2005 first nine months. The results were due to a number of factors, including
lower sales of SOLGAR products, which were divested in the 2005 third quarter,
offset, in part, by higher sales of CENTRUMbrands. The 2005 first nine months
also included growth in ROBITUSSIN, CALTRATE brands and ADVIL.
Excluding the favorable impact of foreign exchange, worldwide Consumer Healthcare net
revenue decreased 4% and 1%, respectively, for the 2005 third quarter and first nine
months.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table sets forth significant worldwide Consumer Healthcare net revenue by
product for the three and nine months ended September 30, 2005 compared with the same
periods in the prior year:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Three Months
>          Ended September 30,
>      Nine Months
>         Ended September 30,(In millions)
>      2005
>      2004
>      2005
>      2004CENTRUM
>      
>      $171.1
>         
>      $150.1
>         
>      $   461.1
>         
>      $   444.6ADVIL
>      127.9
>         
>      117.9
>         
>      375.4
>         
>      355.3ROBITUSSIN
>      71.8
>         
>      73.7
>         
>      166.4
>         
>      151.0CALTRATE
>      48.1
>         
>      46.3
>         
>      143.5
>         
>      131.3ADVIL COLD & SINUS
>      25.9
>         
>      37.2
>         
>      80.9
>         
>      88.8CHAPSTICK
>      32.5
>         
>      30.7
>         
>      78.1
>         
>      74.2SOLGAR
>      6.0
>         
>      26.8
>         
>      58.5
>         
>      82.0DIMETAPP
>      20.6
>         
>      26.8
>         
>      54.6
>         
>      61.6ALAVERT
>      11.3
>         
>      15.7
>         
>      44.1
>         
>      49.2Other
>      121.0
>         
>      125.9
>         
>      390.4
>         
>      392.8Total Consumer Healthcare
>      $636.2
>         
>      $651.1
>         
>      $1,853.0
>         
>      $1,830.8

32

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Animal Health
| | -------------

| | Worldwide
Animal Health net revenue increased 5% for the 2005 third quarter and 6% for the 2005
first nine months due primarily to higher sales of livestock and poultry products, as
well as higher sales of companion animal products despite the impact of the voluntary
recall of PROHEART 6 in the U.S. market in September 2004. Excluding the favorable
impact of foreign exchange, worldwide Animal Health net revenue increased 3% for both the
2005 third quarter and for the 2005 first nine months.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table sets forth worldwide Animal Health net revenue by product category for
the three and nine months ended September 30, 2005 compared with the same periods in the
prior year:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Three Months
>          Ended September 30,
>      Nine Months
>        Ended September 30,(In millions)
>      2005
>      2004
>      2005
>      2004Livestock products
>      
>      $  94.1
>         
>      $  89.1
>         
>      $292.0
>         
>      $265.3Companion animal products
>      64.6
>         
>      60.8
>         
>      209.7
>         
>      202.4Equine products
>      23.5
>         
>      25.9
>         
>      115.2
>         
>      117.7Poultry products
>      25.6
>         
>      22.7
>         
>      80.4
>         
>      70.8Total Animal Health
>      $207.8
>         
>      $198.5
>         
>      $697.3
>         
>      $656.2

33

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | The
following table sets forth the percentage changes in worldwide net revenue by reportable
segment and geographic area compared with the prior year, including the effect volume,
price and foreign exchange had on these percentage changes:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> % Increase (Decrease)
>                   
>               Three Months Ended
>                   
>                September 30, 2005
>      % Increase (Decrease)
>                   
>                Nine Months Ended
>                   
>                September 30, 2005Volume
>      Price
>      Foreign
> Exchange
>      Total
>     Net Revenue
>      Volume
>      Price
>      Foreign
> Exchange
>      Total
>     Net RevenuePharmaceuticalsUnited States
>      (1)%
>         
>      4%
>         
>      
>         
>      3%
>         
>      2%
>         
>      5%
>         
>      
>         
>      7%International
>      12%
>         
>      
>         
>      1%
>         
>      13%
>         
>      16%
>         
>      
>         
>      3%
>         
>      19%Total
>      4%
>         
>      2%
>         
>      1%
>         
>      7%
>         
>      8%
>         
>      3%
>         
>      1%
>         
>      12%Consumer HealthcareUnited States
>      (5)%
>         
>      
>         
>      
>         
>      (5)%
>         
>      (4)%
>         
>      1%
>         
>      
>         
>      (3)%International
>      (5)%
>         
>      3%
>         
>      4%
>         
>      2%
>         
>      
>         
>      3%
>         
>      5%
>         
>      8%Total
>      (5)%
>         
>      1%
>         
>      2%
>         
>      (2)%
>         
>      (3)%
>         
>      2%
>         
>      2%
>         
>      1%Animal HealthUnited States
>      (8)%
>         
>      5%
>         
>      
>         
>      (3)%
>         
>      (5)%
>         
>      5%
>         
>      
>         
>      International
>      7%
>         
>      1%
>         
>      4%
>         
>      12%
>         
>      6%
>         
>      2%
>         
>      5%
>         
>      13%Total
>      
>         
>      3%
>         
>      2%
>         
>      5%
>         
>      
>         
>      3%
>         
>      3%
>         
>      6%TotalUnited States
>      (2)%
>         
>      3%
>         
>      
>         
>      1%
>         
>      1%
>         
>      4%
>         
>      
>         
>      5%International
>      9%
>         
>      
>         
>      2%
>         
>      11%
>         
>      13%
>         
>      
>         
>      4%
>         
>      17%Total
>      2%
>         
>      2%
>         
>      1%
>         
>      5%
>         
>      6%
>         
>      3%
>         
>      1%
>         
>      10%

| | The Company deducts 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, the Company
considers both to be a form of price reduction. Chargebacks/rebates are the only
deductions from gross revenue that are considered significant by the Company and
approximated $569.6 million and $1,785.3 million for the 2005 third quarter and first
nine months, respectively, compared with $589.9 million and $1,769.7 million for the 2004
third quarter and first nine months, respectively. The increase in chargebacks/rebates
for the 2005 first nine months was due primarily to higher rebate rates and increased
volumes of PROTONIX in the managed care segment during the 2005 first quarter.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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. The provisions
charged against gross sales for product returns were $39.8 million and $140.1 million for
the 2005 third quarter and first nine months, respectively, compared with
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

34

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | $47.4 million and $145.5 million for the prior year. The 2004 first nine months was impacted by
a $20.0 million reduction in the returns reserve associated with the PREMARIN family
of products.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Operating Expenses
| | ------------------

| | Cost
of goods sold, as a percentage of Net revenue, increased to 28.9% for the 2005
third quarter compared with 27.3% for the 2004 third quarter and increased to 28.9% for
the 2005 first nine months compared with 28.0% for the 2004 first nine months. The
increase was due primarily to the 2005 third quarter charges associated with the Companys
productivity initiatives, which were allocated to Corporate Cost of goods sold.
The increase was also due to higher inventory and manufacturing losses as well as certain
costs related to plant reorganization activity in the Pharmaceuticals and Consumer
Healthcare segments. For the 2005 first nine months, gross margin was impacted by
favorable manufacturing variances, a favorable product mix as a result of higher sales of
higher margin PREVNAR and EFFEXOR XRand an increase in
alliance revenue. The 2005 first nine months was further impacted by higher royalty costs
as a result of higher sales of ENBRELand PREVNAR.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Selling,
general and administrative expenses, as a percentage of Net revenue, remained
flat at 32% for the 2005 third quarter compared with the 2004 third quarter and decreased to
32% for the 2005 first nine months compared with 33% for the 2004 first nine months. The 2005
third quarter and first nine months were impacted by pre-launch spending for TYGACIL,
increased promotional spending for the PREMARIN family of products, and lower
promotional spending for EFFEXOR in the Pharmaceuticals segment, as well as
additional costs associated with the Companys productivity initiatives (included in
the Corporate segment). The 2005 first nine months was also impacted by higher employee
benefit costs, as well as higher selling expenses related to the co-promotion of ENBREL with
Takeda in Japan to support the launch of ENBREL.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Research
and development expenses increased 22% for the 2005 third quarter and 3% for the 2005
first nine months as compared with 2004. The 2005 third quarter and first nine months
increases were primarily due to higher salary-related expenses, higher facility costs
associated with two research and development sites that were not on line during the first
nine months of 2004 and higher other research operating expenses (including higher
chemicals and materials expenses) in the Pharmaceuticals segment. The 2004 first nine
months included the impact of the upfront payment in the 2004 first quarter of $145.5
million made in connection with the agreement entered into between the Company and Solvay
Pharmaceuticals (Solvay) to co-develop and co-commercialize four neuroscience compounds.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

35

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Interest Expense and Other Income
| | ---------------------------------

| | Interest expense, net for the three and nine months ended September 30, 2005 and 2004
consisted of the following:
| | -----------------------------------------------------------------------------------------------------------------

> Three Months
>          Ended September 30,
>      Nine Months
>         Ended September 30,(In millions)
>      2005
>      2004
>      2005
>      2004Interest expense
>      
>      $104.0
>         
>      $ 77.5
>         
>      $ 285.5
>         
>      $223.7Interest income
>      (70.1
>         )
>      (28.4
>         )
>      (186.9
>         )
>      (73.2
>         )Less: amount capitalized forcapital projects
>      (13.7
>         )
>      (22.5
>         )
>      (31.2
>         )
>      (65.1
>         )Total interest expense, net
>      $  20.2
>         
>      $ 26.6
>         
>      $   67.4
>         
>      $  85.4

| | Interest expense, net decreased 24% for the 2005 third quarter and 21% for the 2005 first nine
months due primarily to higher interest income offset, in part, by higher interest
expense and lower capitalized interest. Weighted average debt outstanding during the 2005
third quarter and first nine months was $7,903.7 million and $7,873.3 million,
respectively, compared with prior year levels of $7,999.7 million and $8,283.2 million,
respectively. The impact on interest expense of lower weighted average debt outstanding
was offset by increased interest income earned on higher cash balances in 2005 versus
2004. The lower capitalized interest resulted from reduced spending for long-term capital
projects in process, primarily due to the completion of the Grange Castle facility in
Ireland. Remaining projects in process include the expansion of an existing manufacturing
facility in Puerto Rico.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Other income, net increased $26.0 million for the 2005 third quarter and $58.1 million for
the 2005 first nine months primarily as a result of higher royalty income and lower net
gains on sales of fixed assets. Otherincome, net for the 2005 third
quarter included a $40.2 million pre-tax gain on the sale of the Marietta, Pennsylvania
manufacturing facility, as well as a $54.8 million write-off of certain assets at the
Companys Pearl River, New York manufacturing facility. The 2005 first nine months
increase also resulted from income received in connection with a settlement regarding
certain environmental issues. Other income, net was further impacted by pre-tax
gains from the divestiture of certain Pharmaceuticals and Consumer Healthcare products of
approximately $37.0 million and $180.0 million in the 2005 third quarter and first nine
months, respectively, compared with $11.0 million and $165.0 million in the 2004 third
quarter and first nine months. The 2005 divestitures included product rights to SYNVISC,
EPOCLER(in Brazil) and the sale of the SOLGAR line of products. The 2004
divestitures included product rights to indiplon, DIAMOX (in Japan), and the
Companys nutritionals products in France. The sales, profits and net assets of
these divested products, individually or in the aggregate, were not material to either
business segment or the Companys consolidated financial position or results of
operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

36

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Income Before Income Taxes
| | --------------------------

| | The
following table sets forth worldwide income before income taxes by reportable segment
together with the percentage changes from the comparable periods in the prior year:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Income Before Income TaxesThree Months
>      Ended September 30,
>      Nine Months
>      Ended September 30,(Dollars in millions)
> Segment
>      2005
>      2004
>      % Increase/
> (Decrease)
>      2005
>      2004
>      % Increase/
> (Decrease)Pharmaceuticals(1)
>      
>      $1,248.4
>         
>      $1,252.9
>         
>      
>         
>      $3,672.0
>         
>      $3,090.9
>         
>      19%Consumer Healthcare
>      184.9
>         
>      175.7
>         
>      5%
>         
>      403.7
>         
>      389.8
>         
>      4%Animal Health
>      29.2
>         
>      32.7
>         
>      (11)%
>         
>      142.0
>         
>      120.7
>         
>      18%Corporate(2)
>      (198.4
>         )
>      (134.4
>         )
>      48%
>         
>      (336.1
>         )
>      (267.5
>         )
>      26%Total(3)
>      $1,264.1
>         
>      $1,326.9
>         
>      (5)%
>         
>      $3,881.6
>         
>      $3,333.9
>         
>      16%

| | (1) | Pharmaceuticals for the 2004 first nine months included a first quarter charge
                    of $145.5 within Research and development expenses related to the
                    upfront payment to Solvay in connection with the co-development and
                    co-commercialization of four neuroscience compounds. Excluding the upfront
                    payment from the 2004 first nine months results, but including Pharmaceuticals
                    product divestiture gains discussed in footnote 3 below, Pharmaceuticals income
                    before income taxes increased 13%.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Corporate for the 2005 third quarter and first nine months included a net charge
                    of $95.8 related to the Companys productivity initiatives. The activities
                    related to the Pharmaceuticals business. Excluding this charge, Corporate
                    expenses for the 2005 third quarter and first nine months decreased 24% and 10%,
                    respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Income before income taxes included gains from the divestiture of certain
                    Pharmaceuticals and Consumer Healthcare products of approximately $37.0 and
                    $180.0 for the 2005 third quarter and first nine months, respectively, and $11.0
                    and $165.0 for the 2004 third quarter and first nine months, respectively. The
                    2005 divestitures included product rights to SYNVISC, EPOCLER (in
                    Brazil), as well as the sale of the SOLGAR line of products. The 2004
                    divestitures included product rights to indiplon, DIAMOX (in Japan), and
                    the Companys nutritionals products in France.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Worldwide
Pharmaceuticals income before income taxes was flat for the 2005 third quarter and
increased 19% for the first nine months. The 2005 third quarter was impacted by higher
net revenue and lower selling and general expenses, as a percentage of net revenue,
offset by higher research and development expenses and lower other income, net. The 2005
first nine months increase was due primarily to higher net revenue and lower selling and
general expenses, as a percentage of net revenue, offset in part, by decreased gross
profit margins earned on worldwide sales of Pharmaceuticals products and higher research
and development expenses.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Worldwide
Consumer Healthcare income before income taxes for the 2005 third quarter and first nine
months increased 5% and 4%, respectively, due primarily to higher Other
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

37

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | income,
net as a result of a gain from the divesture of the SOLGAR line of products,
offset, in part, by higher selling and general expenses, as a percentage of net revenue.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Worldwide
Animal Health income before income taxes for the 2005 third quarter decreased
approximately 11% due primarily to decreased gross profit margins earned on worldwide
sales of Animal Health products offset, in part, by lower selling and general expenses,
as a percentage of net revenue. Worldwide Animal Health income before income taxes for
the 2005 first nine months increased 18% due primarily to higher net revenue and lower
selling and general expenses, as a percentage of net revenue.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Corporate
expenses, net for the 2005 third quarter were $198.4 million compared with $134.4 million
for the 2004 third quarter. Corporate expenses, net for the 2005 first nine months were
$336.1 million compared with $267.5 million for the 2004 first nine months. Corporate
expenses, net for the 2005 third quarter and first nine months were impacted by a net
charge of $95.8 million related to the Companys productivity initiatives and by lower
general and administrative expenses. The 2005 first nine months included higher other
income, net related to income received in connection with a settlement regarding certain
environmental issues.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income Taxes
| | ------------

| | The
effective tax rates were 31.2% and 24.7% for the 2005 third quarter and first nine
months, respectively, compared with (7.1)% and 10.1%, respectively, for the prior year.
Excluding certain items affecting comparability (as discussed below under Consolidated
Net Income and Diluted Earnings Per Share Results), the effective tax rate
decreased to 18.9% for the 2005 third quarter compared with 23.6% for the prior year and
decreased to 20.6% for the 2005 first nine months compared with 22.8% for the prior year.
These decreases were due primarily to a 2005 third quarter $71.5 million tax refund
related to prior year tax matters.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Consolidated Net Income and Diluted Earnings Per Share Results
| | --------------------------------------------------------------

| | Net
income and diluted earnings per share for the 2005 third quarter were $869.9 million and
$0.64, respectively, compared with net income and diluted earnings per share of $1,421.3
million and $1.05, respectively, in the prior year, both decreases of 39%. Net income and
diluted earnings per share for the 2005 first nine months were $2,924.6 million and
$2.16, respectively, compared with net income and diluted earnings per share of $2,998.3
million and $2.22, respectively, in the prior year, decreases of 2% and 3%, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys management uses various measures to manage and evaluate the Companys
performance and believes it is appropriate to specifically identify certain significant
items included in net income and diluted earnings per share to assist investors
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

38

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | with analyzing
ongoing business performance and trends. In particular, the Companys management
believes that comparisons between 2005 and 2004 results of operations are influenced by
the impact of the following items that are included in net income and diluted earnings
per share:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 2005
third quarter net charges of $95.8 million ($63.4 million after-tax or $0.05 per
share-diluted) related to                   the Company's productivity initiatives;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 2005 third quarter income tax charge of $170.0 million ($0.12 per share-diluted) recorded
in connection with the Companys decision to repatriate approximately $3.1 billion of
foreign earnings;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 2004 third quarter favorable income tax adjustment of $407.6 million ($0.30 per
share-diluted) related to settlements of audit issues, offset, in part, by a provision
related to developments in the third quarter in connection with a prior year tax matter;
and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 2004
first quarter upfront payment of $145.5 million ($94.6 million after-tax or $0.07 per
share-diluted) to                   Solvay.
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | The
productivity initiatives charges, which include costs of closing certain manufacturing
facilities and the elimination of certain positions, have been identified as significant
items by the Companys management as these charges are not considered to be
indicative of continuing operating results. The 2005 income tax charge, which relates to
the repatriation of foreign earnings in accordance with the American Jobs Creation Act of
2004, and the 2004 income tax adjustment, which relates to certain prior tax years, have
each been identified as significant items by the Companys management due to their
nature and magnitude. The significant upfront payment related to the co-development and
co-commercialization of the four neuroscience compounds being developed with Solvay,
which was immediately expensed and included in Research and development expenses,
has also been identified as a significant item.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Excluding
the items noted above, the increases in net income and diluted earnings per share for the
2005 third quarter and first nine months were due primarily to higher net revenue, lower
selling, general and administrative expenses, as a percentage of net revenue, and lower
interest expense, net, offset, in part, by higher cost of goods sold, as a percentage of
net revenue, and higher research and development spending. The 2005 first nine months was
also impacted by higher other income, net.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Gains
from product divestitures constitute an integral part of the Companys analysis of
divisional performance and are important to understanding changes in our reported net
income. Gains from product divestitures for the 2005 third quarter and first nine months
were $37.0 million ($24.3 million after-tax or $0.02 per share-diluted) and $180.0
million ($117.1 million after-tax or $0.09 per share-diluted), respectively, compared
with $11.0 million ($8.0 million after-tax or $0.01 per share-diluted) and $165.0 million
($109.3 million after-tax or $0.08 per share-diluted), respectively, for the 2004 third
quarter and first nine months.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Liquidity, Financial Condition and Capital Resources
| | ----------------------------------------------------

| | Cash
flows provided by operating activities totaling $1,156.0 million during the 2005 first
nine months were generated primarily by net earnings of $2,924.6 million, offset, in
part, by the establishment of the Seventh Amendment security fund of $1,250.0 million and
payments of $931.6 million related to the diet drug litigation (see Note 6 to the
consolidated condensed financial statements.) The cash flow impact of the change in
working capital, which used $583.8 million of cash as of September 30, 2005, excluding
the effects of foreign exchange, was more than offset by non-cash depreciation and
amortization expense and tax on repatriation included in net earnings. The change in
working capital primarily consisted of an increase in accounts receivable of $334.2
million relating to increased sales, a decrease in accounts payable and accrued expenses
of $239.5 million relating to timing of payments, an increase in accrued taxes of $237.1
million due to timing of payments and an increase of other current assets of $229.0
million resulting from increased receivables for alliance revenue, interest income and
income tax claims. The change in working capital, which used $631.4 million of cash as of
September 30, 2004, excluding the effects of foreign exchange, primarily consisted of a
decrease of accounts payable and accrued expenses of $373.7 million relating to timing of
payments, an increase in accounts receivable of $297.9 million relating to increased
sales and an increase in accrued taxes of $48.9 million due to timing of payments.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the 2005 first nine months, the Company received investment proceeds through the sales
and maturities of marketable securities of $1,480.8 million and the sales of assets
totaling $341.0 million. The proceeds from the sales and maturities of marketable
securities were primarily used to fund the Seventh Amendment security fund. In addition,
the Company used $700.4 million of cash for investments in property, plant and equipment,
$638.1 million of cash for purchases of marketable securities and $92.7 million of cash
for the purchase of an additional equity interest in a joint venture. The capital
expenditures made during the 2005 first nine months were consistent with the Companys
commitment to expand existing manufacturing and research and development facilities
worldwide, and to build new biotechnology facilities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys financing activities in the 2005 first nine months included repayments of
debt totaling $328.2 million and dividend payments of $923.8 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At September 30, 2005, the Company had outstanding $7,797.7 million in total debt, which
consisted of notes payable and other debt. Maturities of the Companys obligations
as of September 30, 2005 are set forth below.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> (In millions)
>      Total
>      Less than
>         1 year
>      1-3 years
>      4-5 years
>      Over
>         5 yearsTotal debt
>      
>      $7,797.7
>         
>      $8.5
>         
>      $391.7
>         
>      $1,593.7
>         
>      $5,803.8

40

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | The following represents the Companys credit ratings as of September 30, 2005:
| | -------------------------------------------------------------------------------

> Moody's
>      S&P
>      FitchShort-term debt   
> Long-term debt    
> Outlook           
> Last rating update
>      P-2 
>             Baa1 
>       Developing 
> February 8, 2005
>      A-1
>                 A
>          Negative
>  December 8, 2003
>      F-2
>               A-
>         Negative
> January 31, 2005

| | In
light of the circumstances discussed in Note 6 to the consolidated condensed financial
statements, including the unknown number of valid matrix claims and the unknown number
and merits of valid downstream opt outs, it is not possible to predict the ultimate
liability of the Company in connection with its diet drug legal proceedings. It is
therefore not possible to predict whether, and if so when, such proceedings will have a
material adverse effect on the Companys financial condition, results of operations
and/or cash flows and whether cash flows from operating activities and existing and
prospective financing resources will be adequate to fund the Companys operations,
pay all liabilities related to the diet drug litigation, pay dividends, maintain the
ongoing programs of capital expenditures, and repay both the principal and interest on
its outstanding obligations without the disposition of significant strategic core assets
and/or reductions in certain cash outflows.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Certain Factors that May Affect Future Results
| | ----------------------------------------------

| | Competition
| | -----------

| | The
Company operates in the highly competitive pharmaceutical and consumer health care
industries. PREMARIN, the Companys principal conjugated estrogens product
manufactured from pregnant mares urine, and related products PREMPROand PREMPHASE(which are single tablet combinations of the conjugated estrogens in PREMARIN and
the progestin medroxyprogesterone acetate) are the leaders in their categories and
contribute significantly to net revenue and results of operations. PREMARINs
natural composition is not subject to patent protection (although PREMPRO has
patent protection). PREMARIN,PREMPRO and PREMPHASEare indicated
for the treatment of certain menopausal symptoms. They also are approved for the
prevention of osteoporosis, a condition involving a loss of bone mass in postmenopausal
women. Their use for that purpose in women without symptoms should be limited to cases
where non-hormonal treatments have been seriously considered and rejected.
Estrogen-containing products manufactured by other companies have been marketed for many
years for the treatment of menopausal symptoms. During the past several years, other
manufacturers have introduced products for the treatment and/or prevention of
osteoporosis. New products containing different estrogens and/or different progestins
from those found in PREMPROand PREMPHASE, utilizing various forms of
delivery and having many forms of the same indications, have been introduced. Some
companies also have attempted to obtain approval for generic versions of PREMARIN.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | These
products, if approved, would be routinely substitutable for PREMARINand related
products under many state laws and third-party insurance payer plans. In May 1997, the
FDA announced that it would not approve certain synthetic estrogen products as generic
equivalents of PREMARIN given known compositional differences between the active
ingredient of these products and PREMARIN. Although the FDA has not approved any
generic equivalent to PREMARIN to date, PREMARIN will continue to be
subject to competition from existing and new competing estrogen and other products for
its approved indications and may be subject to generic competition from either synthetic
or natural conjugated estrogens products in the future. One other company had announced
that it had applied for FDA approval of a generic version of PREMARINderived from
the same natural source, but that company has since announced the withdrawal of its
application. The Company cannot predict the timing or outcome of any other efforts to
seek FDA approval for generic versions of PREMARIN.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Two
of the Companys largest products, EFFEXOR XRand PROTONIX, are
the subject of pending patent litigation involving potential generic competition. In the
case of EFFEXOR XR, the Company has patent protection in the U.S. until at least
June 2008, when the patent covering the active ingredient in EFFEXOR, venlafaxine,
will expire. The pending U.S. patent litigation in the United States District Court for
the District of New Jersey involves the infringement by a potential generic competitor, a
subsidiary of Teva Pharmaceutical Industries Ltd., of the Companys patents relating
to extended-release venlafaxine that expire in 2017. In the event that the Company is not
successful in this action, EFFEXOR XR may face generic competition as early as
June 2008. In October 2005, the Company reached agreement with Teva on a proposed
settlement of this litigation. The proposed settlement is subject to a number of
conditions, including review by the Federal Trade Commission (FTC) and approval of the
District Court. The Company and Teva submitted drafts of the definitive agreements
reflecting the proposed settlement to the FTC and the District Court in early November 2005.
There can be no assurance that the FTC and the District Court will not raise objections
to, or request modifications to, the proposed settlement; that any such modifications
will be acceptable to the Company and Teva; that the proposed settlement will be approved
by the District Court; or that the proposed settlement will become effective on the terms
currently proposed or at all.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In the case of PROTONIX, the Company and its partner Altana AG, have patent
protection until at least July 2010, when the patent covering the active ingredient in PROTONIX,
pantoprazole, will expire. That patent is being asserted against a potential generic
competitor. In the event the Company is not successful in this action, PROTONIX may
face generic competition prior to July 2010.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Although
the Company believes that its patents are valid in both the EFFEXORand the PROTONIX matters,
there can be no assurances as to the outcome of these matters, which could materially
affect future results of operations. These matters are described in more detail in the
Companys 2004 Annual Report on Form 10-K.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

42

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Growth
in overall usage of antidepressants globally appears to be slowing for a variety of
reasons. In addition, the FDA has recommended new class labeling for antidepressants that
will, among other things, more prominently highlight the already labeled risk of suicide
in children and adolescents in a boxed warning. The Company has already implemented the
labeling change for EFFEXOR.The FDA also has requested that all
antidepressant manufacturers re-examine data regarding suicidality from clinical trials
in adults using the same approach developed for evaluating the pediatric data. The
Company will respond to the FDAs request.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In addition, the United Kingdom Committee on the Safety of Medicines (CSM) recently
completed a review of the safety and efficacy of the selective serotonin reuptake
inhibitor class of antidepressants as well as EFFEXOR. As a result of this review,
new class labeling for antidepressants as well as restrictions on the use of EFFEXOR in the United Kingdom have been implemented. The Company initially appealed this
decision to the CSM and has made a further appeal to the United Kingdoms Medicines
Commission, which is pending.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company expects further global regulatory scrutiny of the drugs in this therapeutic area,
including EFFEXOR. The Company cannot predict the level of impact these issues may
have on future global usage of EFFEXOR.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
proton pump inhibitor category is highly competitive. PROTONIX is subject to
discounting demands by managed care and state organizations and price competition from
generic omeprazole and other branded proton pump inhibitor products. This pricing
pressure may have an effect on future net sales. PROTONIX business is shifting its
focus from the more heavily discounted Medicaid segment to the less heavily discounted
third party managed care segment. This trend is expected to continue throughout 2005 and,
despite an anticipated flat to slight decline in the rate of overall prescription volume
growth, it is expected to have a positive impact on profitability.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Product Supply
| | --------------

| | Two of the Company's important core products, PREVNARand ENBREL,
are biological products that are extremely complicated and difficult to manufacture.
In order to sustain the growth of these and other products, the Company must continue to
meet the global demand of our customers.  The Company believes that it has addressed prior
concerns regarding PREVNARand ENBREL supply, but there can be no assurance
that supply constraints will not affect future growth of these and other products.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Supply Chain
| | ------------

| | Management
continually reviews the Companys supply chain structure with respect to utilization
of production capacities as well as manufacturing efficiencies. Changes in product demand
periodically create capacity imbalances within the manufacturing network. When such
imbalances result in overcapacity, which management considers
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

43

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | to be other than temporary,
the network is restructured to gain optimal efficiency and to reduce production costs. As
a result, additional restructuring charges may occur in future periods.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company has been in discussion with various regulatory authorities regarding
manufacturing documentation issues at certain of the Companys European
manufacturing sites. The Company has worked with the authorities to resolve these issues
and believes that any future impact on its consolidated statements of operations will not
be material.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pseudoephedrine Containing Products
| | -----------------------------------

| | In
the U.S. 34 states have enacted legislation requiring that pseudoephedrine
(PSE)-containing products be sold from behind-the-pharmacy-counter (BTPC) in an attempt
to limit access to the product and impede illegal processing of this ingredient into
methamphetamine. Federal legislation is currently pending that would require BTPC
treatment for all PSE-containing products effective January 1, 2007. Similar restrictions
have been placed on PSE-containing products in other markets such as Mexico and
Australia. The Company is working with retailers to comply with the enacted legislation
and ensure appropriate access to the products by consumers. Based on information
currently available, the Company believes the impact from the restrictive access of
PSE-containing products on its consolidated statements of operations will not be
material.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Litigation and Contingent Liabilities
| | -------------------------------------

| | The
Company is involved in various legal proceedings, including product liability and
environmental matters that arise from time to time in the ordinary course of business,
the most significant of which are described in the Companys Annual Report on Form
10-K for the year ended December 31, 2004, the Companys Quarterly Reports on Form
10-Q for the periods ended March 31, 2005 and June 30, 2005, interim Current Reports
filed on Form 8-K, and this Quarterly Report on Form 10-Q. These include allegations of
injuries caused by drugs, vaccines and over-the-counter products, including PONDIMIN(which in combination with phentermine, a product that was not manufactured,
distributed or sold by the Company, was commonly referred to as fen-phen), REDUX,
the prior formulation of DIMETAPP, the prior formulation of ROBITUSSIN,PREMPROand
PREMARIN and EFFEXOR, among others. In addition, the Company has
responsibility for environmental, safety and cleanup obligations under various local,
state and federal laws, including the Comprehensive Environmental Response, Compensation
and Liability Act, commonly known as Superfund.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
estimated costs that the Company expects to pay are accrued when the liability is
considered probable and the amount can be reasonably estimated (see Note 6 to the
consolidated condensed financial statements for a discussion of the costs associated with
theREDUXand PONDIMIN diet drug litigation). In many cases, future
environmental-related expenditures cannot be quantified with a reasonable degree of
accuracy. As
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

44

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | investigations and cleanups proceed, environmental-related liabilities
are reviewed and adjusted as additional information becomes available. Prior to November
2003, the Company was self-insured for product liability risks with excess coverage on a
claims-made basis from various insurance carriers in excess of the self-insured amounts
and subject to certain policy limits. Effective November 2003, the Company became
completely self-insured for product liability risks. In the opinion of the Company,
although the outcome of any legal proceedings cannot be predicted with certainty, the
ultimate liability of the Company in connection with its legal proceedings (other than
the diet drug litigation, the potential effects of which are discussed in Note 6 to the
consolidated condensed financial statements) will not have a material adverse effect on
the Companys financial position but could be material to the results of operations
or cash flows in any one accounting period.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cautionary Statements Regarding Forward-Looking Information
| | -----------------------------------------------------------

| | The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. Forward-looking statements may appear in periodic reports
filed with the Securities and Exchange Commission (including the Companys Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q), in press releases, in the
Companys Annual Report to Stockholders and other reports to stockholders, and in
other communications made by the Company. These forward-looking statements can be
identified by their use of words such as anticipates, expects,is
confident, plans, could, will,believes, estimates, forecasts, projectsand
other words of similar meaning. These forward-looking statements address various matters
including:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Our
anticipated results of operations, liquidity position, financial condition and capital
resources;
| | - | -----------------------------------------------------------------------------------------------------

| | o | The
benefits that we expect will result from our business activities and certain transactions
we announced or completed, such as increased revenues, decreased expenses, and avoided
expenses and expenditures;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Statements
of our expectations, beliefs, future plans and strategies, anticipated developments and
other matters that are not historical facts;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

| | o | The
accuracy of our estimates and assumptions utilized in our critical accounting policies;
| | - | -------------------------------------------------------------------------------------------

| | o | The
timing and successfulness of research and development activities;
| | - | ---------------------------------------------------------------------

| | o | Trade
buying patterns;
| | - | ----------------------

| | o | The
impact of competitive or generic products;
| | - | ----------------------------------------------

| | o | Economic
conditions, including interest rate and foreign currency exchange rate fluctuation;
| | - | --------------------------------------------------------------------------------------------

| | o | Changes
in generally accepted accounting principles;
| | - | ----------------------------------------------------

| | o | Any
changes in political or economic conditions due to the threat of terrorist activity
worldwide and related U.S. military action internationally;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Costs
related to product liability, patent           protection, government investigations and
other legal proceedings;
| | - | -----------------------------------------------------------------------------------------------------------------------

45

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | o | Our
ability           to protect our intellectual property, including patents;
| | - | ------------------------------------------------------------------------------

| | o | The
impact of           legislation or regulation affecting pricing, reimbursement or access,
both in           the United States and internationally;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | o | Increased
focus on privacy issues in countries around the world, including the United States and
the European                   Union;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | o | Governmental
laws and regulations affecting our U.S. and international businesses, including tax
obligations and                   results of tax audits;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Environmental
liabilities;
| | - | --------------------------

| | o | The
future impact of presently known trends, including those with respect to product
performance and competition;
| | - | -----------------------------------------------------------------------------------------------------------------

| | o | Change
in product mix;
| | - | ----------------------

| | o | Anticipated
amounts of future contractual obligations and other commitments, including future minimum
rental payments under non-cancelable operating leases and estimated future pension and
other postretirement benefit payments;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Anticipated developments relating to sales of PREMPRO/PREMARIN family of products,
PROTONIX, EFFEXOR, ENBREL, and PREVNAR and ENBREL
product supply; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Expectations regarding the impact of litigation and potential litigation relating to
PREMPRO, PREMARIN, ROBITUSSIN, DIMETAPPand EFFEXOR, including
the proposed settlement of the U.S. patent litigation pertaining to a generic version of
the Companys EFFEXOR XR; the nationwide class action settlement relating to
REDUXand PONDIMIN; and additional litigation charges related to
REDUXand PONDIMIN.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | All forward-looking statements address matters involving numerous assumptions, risks and
uncertainties, which may cause actual results to differ materially from those expressed
or implied by us in those statements. Accordingly, we caution you not to place undue
reliance on these forward-looking statements, which speak only as of the date on which
they were made. From time to time, we also may provide oral or written forward-looking
statements in other materials we release to the public. Additionally, we undertake no
obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future developments or otherwise. As permitted by the Private
Securities Litigation Reform Act of 1995, the Company is hereby filing the following
cautionary statements identifying important factors, which among others, could cause the
Companys actual results to differ materially from expected and historical results:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Economic
factors over which we have no control such as changes in business and economic
conditions, including, but not limited to, inflation and fluctuations in interest rates,
foreign currency exchange rates and market value of our equity investments and any
impacts of war or terrorist acts;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

46

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | Interruptions
of computer and communication systems, including computer viruses, that could impair the
Companys ability to conduct business and communicate with its customers;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Increasing
pricing pressures, both in and outside the United States, resulting from continued
consolidation among health care providers, rules and practices of managed care groups and
institutional and governmental purchasers, judicial decisions and governmental laws and
regulations relating to Medicare, Medicaid and health care reform, pharmaceutical
reimbursement and pricing in general;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Competitive
factors, such as (i) new products developed by our competitors that have lower prices or
superior performance features or that are otherwise competitive with our current
products; (ii) technological advances and patents attained by our competitors; (iii)
changes in promotional regulations or practices; (iv) development of alternative
therapies; (v) potential generic competition for PREMARIN, EFFEXOR and for
other health care products as such products mature and patents or marketing exclusivity
expire on such products; (vi) problems with licensors, suppliers and distributors; (vii)
business combinations among our competitors and major customers; and (viii) ability to
attract and retain management and other key employees;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Government
laws and regulations affecting U.S. and international operations, including (i) trade,
monetary and fiscal policies and taxes; (ii) price controls, or reimbursement or access
policies; (iii) drug importation legislation; (iv) changes in governments and legal
systems; and (v) regulatory approval processes affecting approvals of products and
licensing, including, without limitation, uncertainties in the FDA approval process that
may delay or prevent the approval of new products and result in lost market opportunity;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Difficulties
and delays inherent in pharmaceutical research, product development, manufacturing and
commercialization, such as, (i) failure of new product candidates to reach market due to
efficacy or safety concerns, inability to obtain necessary regulatory approvals and the
difficulty or excessive cost to manufacture; (ii) the inability to identify viable new
chemical compounds; (iii) difficulties in successfully completing clinical trials; (iv)
difficulties in manufacturing complex products, particularly biological products, on a
commercial scale; (v) difficulty in gaining and maintaining market acceptance of approved
products; (vi) seizure or recall of products; (vii) the failure to obtain, the imposition
of limitations on the use of, or loss of patent and other intellectual property rights;
(viii) failure to comply with current Good Manufacturing Practices and other applicable
regulations and quality assurance guidelines that could lead to temporary manufacturing
shutdowns, product shortages and delays in product manufacturing; and (ix)
other manufacturing or distribution problems, including unexpected adverse events or
developments at any of the manufacturing facilities involved in the production of one or
more of the Companys principal products;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Difficulties
or delays in product manufacturing or marketing, including but not limited to, the
inability to build up production capacity commensurate with demand, the inability of
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

47

---

# Managements
Discussion and Analysis of Financial Conditionand Results of
Operations Three Months and Nine Months Ended September 30, 2005

| | our
suppliers to provide raw material, and the failure to predict market demand for or to
gain market acceptance of approved products;
| | --------------------------------------------------------------------------------------------------------------------------------------

| | Unexpected
safety or efficacy concerns arising with respect to marketed products, whether or not
scientifically justified, leading to product recalls, withdrawals, regulatory action on
the part of the FDA (or foreign counterparts) or declining sales;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Growth
in costs and expenses, changes in product mix, and the impact of any acquisitions or
divestitures, restructuring and other unusual items that could result from evolving
business strategies, evaluation of asset realization and organizational restructuring;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Legal difficulties, any of which can preclude or delay commercialization of products or
adversely affect profitability, such as (i) product liability litigation related to our
products including, without limitation, litigation associated with DIMETAPP, ROBITUSSIN,
PREMPRO, PREMARIN, EFFEXOR, and our former diet drug products, REDUX and
PONDIMIN; (ii) claims asserting violations of antitrust, securities, or other
laws; (iii) tax matters; (iv) intellectual property disputes or changes in intellectual
property legal protections and remedies; (v) environmental matters, including obligations
under the Comprehensive Environmental Response, Compensation and Liability Act, commonly
known as Superfund; and (vi) complying with the consent decree with the FDA and other
commitments to governmental authorities;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Federal
legislation currently pending that would require behind-the-pharmacy-counter treatment
for all pseudoephedrine-containing products effective January 1, 2007;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fluctuations
in buying patterns of major distributors, retail chains and other trade buyers which may
result from seasonality, pricing, wholesaler buying decisions or other factors; and
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes in accounting standards promulgated by the Financial Accounting Standards Board, the
Emerging Issues Task Force, the Securities and Exchange Commission, and the American
Institute of Certified Public Accountants, which may require adjustments to our financial
statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | This list should not be considered an exhaustive statement of all potential risks and
uncertainties.
| | ----------------------------------------------------------------------------------------------------

48

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Item 3.
        Quantitative and Qualitative Disclosures about Market Risk

| | The market risk disclosures appearing on page 79 and 80 of the Companys 2004 Annual
Report as incorporated by reference in the Form 10-K have not materially changed from
December 31, 2004. At September 30, 2005, the fair values of the Companys financial
instruments were as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Carrying
> Value
>      Fair
> Value(In millions)
> Description
>      Notional/
> ContractAmount
>      Assets (Liabilities)Forward contracts (1)
>      
>      $1,420.8
>         
>      $        2.1
>         
>      $        2.1Interest rate swaps
>      5,300.0
>         
>      66.3
>         
>      66.3Outstanding debt (2)
>      7,731.4
>         
>      (7,797.7
>         )
>      (8,176.7
>         )

| | (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 would
                    collectively decrease or increase by approximately $65.8.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (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
                    $646.4.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 and interest rate swaps reflects the present value of the
contracts at September 30, 2005 and the fair value of outstanding debt instruments
reflects a current yield valuation based on observed market prices as of September 30,
2005.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 4.
       Controls and Procedures

| | As
of September 30, 2005, the Company carried out an evaluation, under the supervision and
with the participation of the Companys management, including the Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and operation of
the Companys 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 (the
Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and procedures
are effective. During the 2005 third quarter, the only change of significance in the
Companys internal control over financial reporting related to the replacement of
the Companys North American payroll application. This application was replaced by
two SAP modules, addressing human resources and payroll, which were integrated into the
Companys existing systems environment. This served to improve both processing
efficiency and further enhance internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

49

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# Part II  Other Information

Item 1.
       Legal Proceedings

| | The Company and its subsidiaries are parties to numerous lawsuits and claims arising out of
the conduct of its business, including product liability and other tort claims, the most
significant of which have been described in the Companys Annual Report on Form 10-K
for the year ended December 31, 2004, the Companys Quarterly Report on Form 10-Q
for the quarters ended March 31, 2005 and June 30, 2005, and items filed in Current
Reports on Form 8-K in 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The REDUX and PONDIMIN diet drug litigation is discussed in greater detail in
Note 6 to the consolidated condensed financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------

| | Through September 30, 2005, payments into the REDUX and PONDIMIN national
settlement funds, individual settlement payments, legal fees and other costs totaling
$14,865.2 million were paid and applied against the litigation accrual. At September 30,
2005, $6,234.8 million of the litigation accrual remained.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 15, 2005, United States District Judge Harvey Bartle III, the federal judge of the
United States District Court for the Eastern District of Pennsylvania overseeing the
national class action settlement, approved the proposed Seventh Amendment as fair,
adequate and reasonable. Three appeals from Judge Bartles decision were filed
by April 14, 2005, the deadline for such appeals. Two of those appeals were withdrawn by
the appellants who brought them.  On November 1, 2005, the United States Court of Appeals
for the Third Circuit dismissed the appeal of the remaining appellant and remanded the
appellant's claim to the District Court for the limited purpose of submitting the claim
for re-auditing under the terms of the original settlement agreement. If the appellant
does not seek review from the United States Supreme Court, the proposed Seventh Amendment
would become effective in early 2006. When and if all appeals are finally resolved, the proposed
Seventh Amendment would include the following key terms:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The amendment would create a new Supplemental Fund, to be administered by a Fund
Administrator who will be appointed by the District Court and who will process most
pending Level I and Level II matrix claims;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | After District Court approval, the Company became obligated to make initial payments of up
to $50.0 million (of which $25.0 million has been paid) to facilitate the establishment of
the Supplemental Fund and to enable the Supplemental Fund to begin reviewing claims.
Following the exhaustion of any further appellate review, the
Company would make an initial payment of $400.0 million to enable the Supplemental Fund to
begin paying claims. The timing of additional payments would be dictated by the rate of
review and payment of claims by the Fund Administrator. The Company would ultimately
deposit a total of $1,275.0 million, net of certain credits, into the Supplemental Fund;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | All
participating matrix Level I and Level II claimants who qualify under the Seventh
Amendment, who pass the Settlement Funds medical review and who
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------

50

---

| |  | otherwise satisfy
the requirements of the settlement (Category One class members) would receive a pro rata
share of the $1,275.0 million Supplemental Fund, after
deduction of certain expenses and other amounts from the Supplemental Fund. The pro rata
amount would vary depending upon the number of claimants who pass medical review, the
nature of their claims, their age and other factors. A participating Category One class
member who does not qualify for a payment after such medical review would be paid $2,000
from the Supplemental Fund;
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Participating class members who might in the future have been eligible to file Level I and
Level II matrix claims (Category Two class members) would be eligible to receive a $2,000
payment from the Trust; such payments would be funded by the Company apart from its other
funding obligations under the nationwide settlement;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | If the participants in the Seventh Amendment have heart valve surgery or other more
serious medical conditions on Levels III through V of the nationwide settlement matrix by
the earlier of 15 years from the date of their last diet drug ingestion or by December 31,
2011, they would remain eligible to submit claims to the existing Trust and be paid the
current matrix amounts if they qualify for such payments under terms modified by the
Seventh Amendment. In the event the existing Trust is unable to pay those claims, the
Company would guarantee payment; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | All class members who participate in the Seventh Amendment would give up any further opt
out rights as well as the right to challenge the terms of and the binding effect of the
nationwide settlement. Final approval of the Seventh Amendment also would preclude any
lawsuits by the Trust or the Company to recover any amounts previously paid to class
members by the Trust, as well as terminate the Trusts Claims Integrity Program as to
all claimants who do not opt out of the Seventh Amendment.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 29, 2005, as collateral for the Companys financial obligations under the
Seventh Amendment, the Company established a security fund in the amount of $1,250.0
million. As of September 30, 2005, $1,050.0 million was included in Other current
assets including deferred taxes and $200.0 million was included in Otherassets
including deferred taxes. The amounts in the security fund are owned by the Company
and will earn interest income for the Company while residing in the security fund.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There
can be no assurance that the proposed Seventh Amendment will be upheld on appeal. If it
is upheld on appeal, only the claims of those class members who opted out of the Seventh
Amendment will be processed under the terms of the existing settlement agreement and under
the procedures that have been adopted by the Settlement Trust and the District Court. Less
than 5% of the class members who would be affected by the proposed Seventh Amendment
(approximately 1,900 of the Category One class members and approximately 5,100 of the
Category Two class members) elected to opt out of the Seventh Amendment and to remain
bound by the current settlement terms. Should the proposed Seventh Amendment not be
upheld on appeal, all of the pending and future matrix claims would be processed under
the terms of the existing settlement agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

51

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| | As
of September 30, 2005, approximately 58,500 individuals who had filed Intermediate or
Back-End opt out forms had pending lawsuits against the Company. The claims of
approximately 51% of the plaintiffs in the Intermediate and Back-End opt out cases served
on the Company are pending in Federal Court, with approximately 38% pending in State
Courts. The claims of approximately 11% of the Intermediate and Back-End opt out
plaintiffs have been removed from State Courts to Federal Court but are still subject to
a possible remand to State Court. In addition, a large number of plaintiffs have asked
the U.S. Court of Appeals for the Third Circuit to review and reverse orders entered by
the Federal Court overseeing the settlement which had denied the plaintiffs motions
to remand their cases to State Court. Another group of plaintiffs with cases in Federal
Court has filed a mandamus petition with the Third Circuit seeking an order compelling
the MDL court to transfer their cases back to the federal courts in the jurisdictions in
which the cases were originally filed.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of September 30, 2005, approximately 6,500 Intermediate or Back-End opt out plaintiffs
have had their lawsuits dismissed for procedural or medical deficiencies or for various
other reasons.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
claims of 27 class members who had taken advantage of the Intermediate and Back-End opt
out rights created in the nationwide settlement went to verdict from January 1 through
November 3, 2005. In six separate trials bifurcated to consider medical causation and
damages in the first phase and liability in the second phase, verdicts were returned in
favor of a total of eight plaintiffs, in the aggregate amount of approximately $930,000,
at the close of the initial stage of each trial. One of those cases, in which the
plaintiff was awarded $88,000, will be appealed; the remainder of those cases have since
been settled. Fifteen of the verdicts were defense verdicts in favor of the Company at the
close of the initial phase in similarly bifurcated trials. Two verdicts involved cases in
which the jury initially found in favor of the plaintiffs for $5.0 million and $500,000
respectively, but subsequently found for the Company during the liability phase, thereby
negating the earlier damage finding. Verdicts of $100.0 million each were returned in
favor of the remaining two plaintiffs at the close of the first phase of a similarly
bifurcated trial. The Company moved for a mistrial following the return of the $100.0
million verdicts and the second phase was postponed until October 3, 2005. On September
30, 2005, pursuant to the agreement of the parties,
the court granted the Companys motion, vacated the verdicts and ordered a
new trial and the cases were settled. Also during this period, the Philadelphia
Court of Common Pleas set aside an earlier verdict against the Company and in favor of
three plaintiffs in the aggregate amount of $1.355 million. The court ordered a new trial
of the second, or liability, phase of that case after determining that the testimony of
plaintiffs only liability expert witness was inadequate and in violation of the
Pennsylvania Rules of Evidence. A number of additional cases were settled, dismissed or
adjourned during the first nine months of 2005. Additional Intermediate and Back-End opt
out trials are scheduled throughout 2005 and 2006.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 18, 2005, the Company and counsel representing certain downstream opt out
plaintiffs filed a motion with the District Court advising the Court that those parties
had developed a proposed process by which large numbers of the downstream opt out
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

52

---

| | cases
(as well as the PPH and initial opt out cases handled by plaintiffs counsel
participating in the process) might be negotiated and settled. The proposed process provides a
methodology for valuing different categories of claims and also provides a structure for
individualized negotiations between the Company and lawyers representing diet drug claimants.
Counsel for greater than 90% of the plaintiffs with pending Intermediate and Back-End opt
out lawsuits have agreed to participate in the process or are otherwise engaged in
settlement discussions with the Company. As a result of the discussions to date, the
Company has reached agreements, or agreements in principle,
with a significant number of these law firms to settle the
claims of approximately 22,000 diet drug recipients (primarily downstream opt outs, but
also including PPH and initial opt out claimants), approximately 2,500 of whom have received
settlement payments following the dismissal of their cases. The Company
cannot predict the total number of cases that might be settled as a result of this
process.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On April 27, 2004, a jury in Beaumont, Texas hearing the case of Coffey, et al. v. Wyeth,
et al., No. E-167,334, 172nd Judicial District Court, Jefferson Cty., TX, returned a
verdict in favor of the plaintiffs for $113.4 million in compensatory damages and $900.0
million in punitive damages for the wrongful death of the plaintiffs decedent,
allegedly as a result of PPH caused by her use of PONDIMIN. On May 17, 2004, the
Trial Court entered judgment on behalf of the plaintiffs for the full amount of the jurys
verdict, as well as $4.2 million in pre-judgment interest and $188,737 in guardian ad
litem fees. On July 26, 2004, the Trial Court denied in their entirety the Companys
motions for a new trial or for judgment notwithstanding the verdict, including the Companys
request for application of Texass statutory cap on punitive damage awards. The
Company has filed an appeal from the judgment entered by the Trial Court and believes
that it has strong arguments for reversal or reduction of the awards on appeal due to the
significant number of legal errors made during trial and in the charge to the jury and
due to a lack of evidence to support aspects of the verdict. In connection with its
appeal, the Company was required by Texas law to post a bond in the amount of $25.0
million. The Company filed its brief in support of the appeal on April 14, 2005.
Plaintiffs have not yet filed their brief and oral argument is not expected until
sometime in 2006.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of September 30, 2005, the Company was a defendant in approximately 170 pending lawsuits
(excluding those lawsuits that have been settled in principle pursuant to the settlement
process described above) in which the plaintiff alleges a claim of PPH, alone or with
other alleged injuries. In approximately 55 additional lawsuits pleaded as valvular
regurgitation cases, plaintiffs attorneys participating in the settlement process
described above have now advised the Company that the plaintiffs will allege a claim of
PPH. Almost all of these claimants must meet the definition of PPH set forth in the
national settlement agreement in order to pursue their claims outside of the national
settlement (payment of such claims, by settlement or judgment, would be made by the
Company and not by the Trust). Approximately 45 of these 225 cases appear to be eligible
to pursue a PPH lawsuit under the terms of the national settlement. In approximately 60
of these 225 cases, the Company has filed or expects to file motions under the terms of
the national settlement to preclude plaintiffs from proceeding with their PPH claims. For
the balance of these cases, the Company currently has insufficient medical information to
assess whether or not the plaintiffs meet the definition of PPH
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

53

---

| | under the national
settlement. The Company is aware of approximately 5 additional
claims which are not currently the subject of a lawsuit but which appear to meet the settlements
PPH definition. During the course of settlement discussions, certain plaintiffsattorneys
have informed the Company that they represent additional individuals who claim to have
PPH, but the Company is unable to evaluate whether any such additional purported cases of
PPH would meet the national settlement agreements definition of PPH. The Company
continues to work toward resolving the claims of individuals who allege that they have
developed PPH as a result of their use of the diet drugs and intends to vigorously defend
those PPH cases that cannot be resolved prior to trial.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the product liability litigation involving PREMARIN and PREMPRO, the Companys
estrogen and estrogen/progestin therapies, respectively, a class certification hearing
was held June 1-3, 2005 before United States District Judge William Wilson of the United
States District Court for the Eastern District of Arkansas, who has been assigned to
conduct all coordinated pretrial proceedings in the federal litigation. The MDL
plaintiffs sought to represent PREMPRO users in a class action to recover damages
for purchase price refunds and medical monitoring costs. The Master Class Action
Complaint sought to certify a consumer fraud subclass of PREMPRO users in 29
states; an unfair competition subclass of users in 24 states and a medical monitoring
subclass purportedly covering PREMPRO users in 24 states. The states allegedly
involved were not consistent between each subclass. Following the hearing, Judge Wilson
denied class certification of all the proposed classes. No appeal has been filed.
Plaintiffs have announced their intention to file single state class certification
motions before Judge Wilson seeking statewide medical monitoring classes in West
Virginia, Illinois and California. Also, the Philadelphia Court of Common Pleas has
denied plaintiffs motion for certification of a statewide medical monitoring class
of asymptomatic PREMPRO users in Albertson, et al. v.Wyeth, No.
002944, Ct. Comm. Pleas, Phil. Cty., PA. Plaintiffs have appealed the decision.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition to the pending class actions, the Company is defending approximately 3,935
actions in various courts for personal injuries including claims for breast cancer,
stroke, ovarian cancer and heart disease. Together, these cases assert claims on behalf
of approximately 6,045 women allegedly injured by PREMPRO or PREMARIN.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the product liability litigation involving the Companys cough/cold products that
contained the ingredient phenylpropanolamine (PPA), the Company is currently a named
defendant in approximately 300 lawsuits on behalf of a total of approximately 475
plaintiffs.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company had been served with the following two putative economic loss class actions
relating to pediatric use of cough syrups containing the active ingredient
dextromethorphan: Thompson v. Wyeth, Inc., et al., No. 5 0247, Super. Ct., Essex
Cty., MA; Yescavage v. Wyeth, Inc., et al., No. 05-CA-000736, Circ. Court, Lee
Cty., FL. Both of those cases were voluntarily dismissed with prejudice.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
litigation in which plaintiffs allege that the defendant pharmaceutical companies
artificially inflated the Average Wholesale Price (AWP) of their drugs, the Company
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

54

---

| | has
been named as a defendant in an additional AWP lawsuit pending in state court. In
State of Mississippi v. Abbott Laboratories, Inc., et al., No. C2005-2021, Chancery Ct.,
Hinds Cty., MS, the Mississippi Attorney General has alleged that the defendants provided
false and inflated AWP, Wholesale Acquisition Cost (WAC) and/or Direct Price information
for their drugs to various nationally known drug industry reporting services. The suit
seeks damages and injunctive relief.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has received notifications from Teva Pharmaceuticals USA (Teva), Sandoz, Inc.,
Sun Pharmaceutical Advanced Research Centre Limited (Sun) and Dr. Reddys that
Abbreviated New Drug Applications (ANDA) have been filed with the FDA seeking approval to
market generic pantoprazole sodium 20 mg and 40 mg delayed release tablets. Pantoprazole
sodium is the active ingredient used in PROTONIX. The Orange Book lists two
patents in connection with PROTONIX tablets. The first of these patents covers
pantoprazole and expires in July 2010. The other listed patent is a formulation patent
and expires in December 2016. The Companys licensing partner, Altana Pharma AG
(Altana) is the owner of these patents. In May 2004, Altana and the Company filed a
lawsuit against Teva and Teva Pharmaceutical Industries Ltd. in the United States District Court
for the District of New Jersey, Docket No. 2:04-CV-02355, alleging infringement of the
patent expiring in 2010. On March 4, 2005, the Company received a second notification
from Sun, indicating that Sun has now certified that it believes that the patent expiring
in 2010 is invalid, not infringed, or unenforceable. On April 13, 2005, Altana and the
Company filed a lawsuit against Sun Pharmaceutical Industries Ltd. and Sun Pharmaceutical
Advanced Research Centre Ltd. in the United States District Court for the District of New Jersey,
Docket No. 2:05-CV-05-01966-JLL-RJH, alleging infringement of the patent expiring in
2010. In June 2005, Sun sent a third notification informing the Company and Altana that
Sun had filed an ANDA seeking approval to market generic pantoprazole sodium 40 mg
base/vial I.V. The Orange Book lists two patents in connection with PROTONIX I.V.
The first of these covers pantoprazole and expires in July 2010. The other listed patent
is a formulation patent and expires in November 2021. The Companys licensing
partner, Altana, is the owner of these patents. On August 5, 2005, Altana and the Company
filed a lawsuit against Sun in the United States District Court of the District of New Jersey,
Docket No. 2:05-CV-05-3970-JLL-RJH, alleging infringement of the patent expiring in 2010.
The Company intends, and is informed that Altana intends, to vigorously pursue these
litigations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 14, 2003, Aventis Pharma Deutschland (Aventis) and King Pharmaceuticals, Inc.
(King) filed a patent infringement suit against Cobalt Pharmaceuticals (Cobalt) in the
United States District Court for the District of Massachusetts (Aventis Pharma
Deutschland GmbH and King Pharmaceuticals, Inc. v. Cobalt Pharmaceuticals Inc.,
Docket No. 03-10492JLT, U.S.D.C., D. Mass.) alleging that Cobalt infringes an Aventis
patent for ramipril, which expires in October 2008, by filing an ANDA with the FDA
seeking approval to market generic 1.25 mg, 2.5 mg, 5 mg, and 10 mg ramipril capsules.
The Company co-promotes ALTACE (ramipril) together with King Pharmaceuticals, Inc.
Cobalt has alleged that this patent is invalid. The District Courts September 2005
trial date has been suspended pending settlement negotiations. The parties are to report
the status of these negotiations to the District Court weekly until a new trial date is
established. In June 2005, Lupin, Ltd. (Lupin) notified King and Aventis that it had
filed an ANDA seeking to market generic ramipril prior to expiration of U.S. 5,061,722,
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

55

---

| | which expires in October 2008. The Company has been advised that King and Aventis
have filed a patent infringement suit against Lupin in the United States District Court of the
District of Maryland.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 24, 2003, the Company filed suit in the United States District Court for the
District of New Jersey against Teva Pharmaceuticals, USA (Wyeth v. Teva
Pharmaceuticals USA, Inc., Docket No. 03-CV-1293 (KSH), U.S.D.C., D. N.J.) alleging
that the filing of an ANDA by Teva seeking FDA approval to market 37.5 mg, 75 mg, and 150
mg venlafaxine HCl extended-release capsules infringes certain of the Companys
patent rights. Venlafaxine HCl is the active ingredient used in EFFEXOR XR. The
patent rights involved in the litigation relate to methods of using extended-release
formulations of venlafaxine HCl. These patent rights expire in 2017. Teva has asserted that these
patents are invalid and/or not infringed. Teva has not, to date, challenged
the Companys patent covering the compound, venlafaxine. Accordingly, Tevas
ANDA may not be approved until the expiration of that patent, and its associated
pediatric exclusivity period, on June 13, 2008. In October 2005, the Company reached
agreement with Teva on a proposed settlement of this litigation. The proposed settlement
is subject to a number of conditions, including review by the Federal Trade Commission
(FTC) and approval of the District Court. The Company and Teva submitted drafts of the
definitive agreements reflecting the proposed settlement to the FTC and the District
Court in early November 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
the terms of the proposed settlement, the pending litigation would be dismissed and Teva
would be permitted to launch generic versions of EFFEXOR XR (extended release
capsules) and EFFEXOR (immediate release tablets) in the U.S. pursuant to the
following licenses to be granted by the Company as part of the proposed settlement:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a license (exclusive for a specified period and then non-exclusive) under the
Companys U.S. patent rights permitting Teva to launch an AB
rated, generic version of EFFEXOR XR in the U.S. beginning on July 1, 2010, subject
to earlier launch based on specified market conditions or developments regarding the
applicable patent rights, including the outcome of any future generic challenges to such
patent rights; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | an exclusive license under the Companys U.S. patent rights permitting Teva to launch an AB
rated, generic version of EFFEXORin the U.S. beginning on June 15, 2006, subject to
earlier launch based on specified market conditions.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
connection with each of these licenses, Teva would pay the Company specified percentages
of gross profit from sales of each of the Teva generic versions. These sharing
percentages are subject to adjustment or suspension based on market conditions and
developments regarding the applicable patent rights.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company and Teva also negotiated arrangements with respect to generic versions of EFFEXOR
XRin Canada.
| | ----------------------------------------------------------------------------------------------------------

| | There
can be no assurance that the FTC and the District Court will not raise objections to, or
request modifications to, the proposed settlement; that any such modifications will be
acceptable to the Company and Teva; that the proposed settlement will be approved by
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

56

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| | the District Court; or that the proposed settlement will become effective on the terms
currently proposed or at all.
| | --------------------------------------------------------------------------------------------------------------------

| | In
April 2003, a petition was filed with the FDA by a consultant on behalf of an unnamed
client seeking FDAs permission to submit an ANDA for venlafaxine extended-release
tablets utilizing the Companys EFFEXOR XR capsules as the reference product.
Such permission is required before a generic applicant may submit an ANDA for a product
that differs from the reference product in dosage form or other relevant characteristics.
In August 2003, the Company submitted comments on this petition raising a number of
safety, efficacy, and patient compliance issues that could not be adequately addressed
through standard ANDA bioequivalence studies, and requesting the FDA to deny the petition
on this basis. In March 2005, the FDA granted the petition. In April 2005, the Company
requested that the FDA reconsider its decision to grant the petition and stay any further
agency action. To the Companys knowledge, no such ANDA has been filed and the FDA
has not taken any action on the Companys request for reconsideration.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
litigation alleging that the Company violated the antitrust laws through the use of
exclusive contracts and disguised exclusive contracts with managed care
organizations and pharmacy benefit managers concerning PREMARIN,the Federal
District Court granted the Companys motion for summary judgment in J.B.D.L.
Corp. v.Wyeth-Ayerst Pharmaceuticals, Inc., Civ. A. No. C-1-01-704, U.S.D.C.,
S.D. Oh., and CVS Meridian, Inc. et al. v.Wyeth, Civil A. No. C-1-03-781,
U.S.D.C., S.D. Oh., actions. Plaintiffs in both actions filed notices of appeal to the
United States Court of Appeals for the Sixth Circuit. The Sixth Circuit has consolidated
the appeals and has set a briefing schedule. Various actions brought by indirect
purchasers in both Federal District Court in Ohio and in State Courts in both California
and Vermont remain pending. In the Vermont action, Deyo v. Wyeth, No. 735-12-04
(Vt. Sup. Ct.), the Company has answered the complaint and moved for a stay pending
resolution of the previously-filed class action currently proceeding in Federal Court in
Ohio, Ferrell v. Wyeth-AyerstLaboratories, Inc.,Civ. A. No. C-1-01-447,
U.S.D.C., S.D. Oh.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
litigation alleging that the Company, along with other pharmaceutical manufacturers,
violated federal antitrust statutes and certain state laws by unlawfully agreeing to
engage in conduct to prevent U.S. consumers from purchasing defendants prescription
drugs from Canada, the District Court endorsed and adopted the Magistrate Judges
recommendation to dismiss the federal antitrust claim. In re Canadian Import AntitrustLitigation, Civ. No. 04-2724, U.S.D.C., D. Minn. In addition to dismissing the
federal antitrust claim, the District Court declined to exercise its supplemental
jurisdiction over various state and common law claims and dismissed those claims without
prejudice. Plaintiffs have filed a notice of appeal to the United States Court of Appeals
for the Eighth Circuit. Additionally, in the Clayworth v. Pfizer, et al.,No.
RG04172428, Super. Ct., Alameda Cty., action, the Trial Court overruled defendantsdemurrer
to the Third Amended Complaint and held that plaintiffs conspiracy claims are
adequately alleged. The Trial Court sustained the demurrer with respect to unilateral
price discrimination claims. Defendants answered the Third Amended Complaint on July 15,
2005. Discovery is proceeding.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company intends to continue to vigorously defend all of the foregoing litigation.
| | -------------------------------------------------------------------------------------

57

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| | In
the opinion of the Company, although the outcome of any legal proceedings cannot be
predicted with certainty, the ultimate liability of the Company in connection with
pending litigation (other than the litigation involving REDUXand PONDIMIN,
the potential effects of which are discussed in Note 6 to the consolidated condensed
financial statements) will not have a material adverse effect on the Companys
financial position but could be material to the results of operations or cash flows in
any one accounting period.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

58

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Item 6.
       Exhibits

> Exhibit No.
> (12) 
> (31.1) 
>              
> (31.2) 
>              
> (32.1) 
>              
> (32.2)
> 
> Description
> Computation of Ratio of Earnings to Fixed Charges.
> Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley
> Act of 2002.
> Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley
> Act of 2002.
> Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
> of the Sarbanes-Oxley Act of 2002.
> Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
> of the Sarbanes-Oxley Act of 2002.

59

---

# 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: November 7, 2005

60

---

| | Exhibit Index
| | -------------

> Exhibit No.
>      (12) 
>      (31.1) 
>              
>      (31.2) 
>              
>      (32.1) 
>              
>      (32.2)
> 
> Description
> Computation of Ratio of Earnings to Fixed Charges.
> Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley
> Act of 2002.
> Certification of disclosure as adopted pursuant to Section 302 of the Sarbanes-Oxley
> Act of 2002.
> Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
> of the Sarbanes-Oxley Act of 2002.
> Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
> of the Sarbanes-Oxley Act of 2002.

EX-1