| UNITED STATES  SECURITIES AND EXCHANGE COMMISSION  WASHINGTON, D.C. 20549  FORM 10-Q

   X     QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934

**For the quarterly period ended July 3, 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 1-3619

----

**PFIZER INC.**(Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| DELAWARE  (State of Incorporation)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 13-5315170  (I.R.S. Employer Identification No.) |
| 235 East 42nd  Street, New York, New York  10017  (212) 573-2323  (Registrant's telephone number)

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      

At August 1, 2005, 7,370,501,376 shares of the  issuer's voting common stock were outstanding. |

**FORM 10-Q**

**For the QuarterEndedJuly 3, 2005**

**Tableof Contents**

** **

| **PART I.  FINANCIAL  INFORMATION**                                                                                   | Page       |
|---------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                                 |            |
| Item 1.                                                                                                                         |            |
|                                                                                                                       |            |
| Financial Statements:                                                                                                           |            |
|                                                                                                                       |            |
| Condensed  Consolidated Statement of Income for the three months and six months ended July 3,  2005 and June 27, 2004 | 3          |
|                                                                                                                       |            |
| Condensed  Consolidated Balance Sheet at July 3, 2005 and  December 31, 2004                                     | 4          |
|                                                                                                                       |            |
| Condensed  Consolidated Statement of Cash Flows for the six months ended July 3,  2005 and June 27, 2004              | 5          |
|                                                                                                                       |            |
| Notes to  Condensed Consolidated Financial Statements                                                                           | 6          |
|                                                                                                                       |            |
| Review Report  of Independent Registered Public Accounting Firm                                                                 | 17         |
|                                                                                                                       |            |
| Item 2.                                                                                                                         |            |
|                                                                                                                       |            |
| Management's  Discussion and Analysis of Financial Condition and Results of Operations                                          | 18         |
|                                                                                                                       |            |
| Item 4.                                                                                                                         |            |
|                                                                                                                       |            |
| Controls and  Procedures                                                                                                        | 42         |
| **  **                                                                                                                |            |
| **PART II.  OTHER INFORMATION**                                                                                       | ** ** |
| **  **                                                                                                                |            |
| Item 1.                                                                                                                         |            |
|                                                                                                                       |            |
| Legal  Proceedings                                                                                                              | 42         |
|                                                                                                                       |            |
| Item 2.                                                                                                                         |            |
|                                                                                                                       |            |
| Unregistered  Sales of Equity Securities and Use of Proceeds                                                                    | 44         |
|                                                                                                                       |            |
| Item 6.                                                                                                                         |            |
|                                                                                                                       |            |
| Exhibits                                                                                                                        | 44         |
|                                                                                                                       |            |
| Signature                                                                                                                       | 45         |
|                                                                                                                       |            |
|                                                                                                                       |            |

**PARTI.  FINANCIAL INFORMATION**

Item 1. Financial Statements.

PFIZER INC ANDSUBSIDIARY COMPANIESCONDENSED CONSOLIDATED STATEMENT OF INCOME(UNAUDITED)

|                                                                                                           |   | Three Months Ended             |   | Six Months Ended                |
|-----------------------------------------------------------------------------------------------------------|---|--------------------------------|---|---------------------------------|
| (millions  of dollars, except per common share data)                                                      |   | July 3,   2005  |   | June 27,   2004  |  | July 3,   2005  |  | June 27,   2004  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Revenues                                                                                                  | $ | 12,425                    | $ | 12,274                     | $ | 25,516  | $ | 24,762  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Costs  and expenses:                                                                                      |   |                                |   |                                 |  |  |  |  |
| Cost of sales(a)                                                                                          |   | 2,081                     |   | 1,752                      |  | 4,272  |  | 3,546  |
| Selling, informational and administrative expenses(a)                                                     |   | 4,226                     |   | 4,258                      |  | 8,311  |  | 8,191  |
| Research and development expenses(a)                                                                      |   | 1,875                     |   | 1,819                      |  | 3,639  |  | 3,469  |
| Amortization of intangible assets(a)                                                                      |   | 859                       |   | 830                        |  | 1,741  |  | 1,653  |
| Merger-related in-process research and development  charges                                               |   | 260                       |   | --                         |  | 262  |  | 955  |
| Restructuring charges and merger-related costs                                                            |   | 270                       |   | 289                        |  | 489  |  | 536  |
| Other (income)/deductions - net                                                                 |   | (207)                          |   | (102)                           |  | 831  |  | (145) |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Income from continuing operations before (benefit)/provision  for taxes on income, and minority interests |   | 3,061                     |   | 3,428                      |  | 5,971  |  | 6,557  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| (Benefit)/provision for taxes on income                                                                   |   | (413)                          |   | 582                        |  | 2,222  |  | 1,390  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Minority interests                                                                                        |   | 2                         |   | 2                          |  | 5  |  | 4  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Income from continuing operations                                                                         |   | 3,472                     |   | 2,844                      |  | 3,744  |  | 5,163  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Discontinued operations:                                                                                  |   |                                |   |                                 |  |  |  |  |
| (Loss)/income from discontinued operations - net  of tax                                        |   | (9)                            |   | 17                         |  | (22) |  | 30  |
| Gains on sales of discontinued operations - net  of tax                                         |   | --                        |   | 2                          |  | 41  |  | 2  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Discontinued operations - net of tax                                                            |   | (9)                            |   | 19                         |  | 19  |  | 32  |
|                                                                                                           |   |                                |   |                                 |  |  |  |  |
| Net income                                                                                                | $ | 3,463                     | $ | 2,863                      | $ | 3,763  | $ | 5,195  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Earnings  per common share - Basic:                                                                       |   |                                |   |                                 |  |  |  |  |
| Income from continuing operations                                                                         | $ | .47                       | $ | .38                        | $ | .51  | $ | .69  |
| Discontinued operations - net of tax                                                            |   | --                        |   | --                         |  | --  |  | --  |
| Net income                                                                                                | $ | .47                       | $ | .38                        | $ | .51  | $ | .69  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Earnings  per common share - Diluted:                                                                     |   |                                |   |                                 |  |  |  |  |
| Income from continuing operations                                                                         | $ | .47                       | $ | .38                        | $ | .51  | $ | .68  |
| Discontinued operations - net of tax                                                            |   | --                        |   | --                         |  | --  |  | --  |
| Net income                                                                                                | $ | .47                       | $ | .38                        | $ | .51  | $ | .68  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Weighted-average shares used to calculate earnings per  common share:                                     |   |                                |   |                                 |  |  |  |  |
| Basic                                                                                                     |   | 7,366                     |   | 7,574                      |  | 7,391  |  | 7,580  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Diluted                                                                                                   |   | 7,418                     |   | 7,664                      |  | 7,445  |  | 7,672  |
|                                                                                                 |   |                                |   |                                 |  |  |  |  |
| Cash  dividends paid per common share                                                                     | $ | .19                       | $ | .17                        | $ | .38  | $ | .34  |

  

| (a) | Includes  amortization of intangible assets, as disclosed in Note 9B, *Goodwill  and Other Intangible Assets: Other Intangible Assets.* |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

See accompanyingNotes to Condensed Consolidated Financial Statements.

PFIZER INC AND SUBSIDIARYCOMPANIESCONDENSED CONSOLIDATED BALANCE SHEET(UNAUDITED)

| (millions  of dollars)                                                                                                |   | July 3,   2005* |   | Dec. 31,   2004** |
|-----------------------------------------------------------------------------------------------------------------------|---|---------------------------|---|-----------------------------|
| ASSETS                                                                                                                |   |                           |   |                             |
| Current Assets                                                                                                        |   |                           |   |                             |
| Cash and cash  equivalents                                                                                            | $ | 1,276                | $ | 1,808                  |
| Short-term  investments                                                                                               |   | 13,293               |   | 18,085                 |
| Accounts  receivable, less allowance for doubtful accounts: 2005 - $220;  2004 - $205             |   | 9,316                |   | 9,367                  |
| Short-term  loans                                                                                                     |   | 513                  |   | 653                    |
| Inventories                                                                                                           |   | 6,480                |   | 6,660                  |
| Prepaid  expenses and taxes                                                                                           |   | 2,506                |   | 2,939                  |
| Assets held for  sale                                                                                                 |   | 189                  |   | 182                    |
| Total current assets                                                                                                  |   | 33,573               |   | 39,694                 |
| Long-term  investments and loans                                                                                      |   | 3,247                |   | 3,873                  |
| Property, plant  and equipment, less accumulated depreciation:  2005 - $8,982; 2004 - $8,534      |   | 17,673               |   | 18,385                 |
| Goodwill                                                                                                              |   | 23,627               |   | 23,756                 |
| Identifiable  intangible assets, less accumulated amortization                                                        |   | 29,782               |   | 33,251                 |
| Other assets,  deferred taxes and deferred charges                                                                    |   | 4,425                |   | 4,725                  |
| Total assets                                                                                                          | $ | 112,327              | $ | 123,684                |
|                                                                                                             |   |                           |   |                             |
| LIABILITIES  AND SHAREHOLDERS' EQUITY                                                                                 |   |                           |   |                             |
| Current Liabilities                                                                                                   |   |                           |   |                             |
| Short-term  borrowings, including current portion of long-term debt:   2005 - $2,405; 2004 - $907 | $ | 7,261                | $ | 11,266                 |
| Accounts  payable                                                                                                     |   | 2,100                |   | 2,672                  |
| Dividends payable                                                                                                     |   | 1,406                |   | 1,418                  |
| Income taxes  payable                                                                                                 |   | 4,356                |   | 1,963                  |
| Accrued  compensation and related items                                                                               |   | 1,469                |   | 1,939                  |
| Other current  liabilities                                                                                            |   | 5,934                |   | 7,136                  |
| Liabilities  held for sale                                                                                            |   | 40                   |   | 64                     |
| Total current liabilities                                                                                             |   | 22,566               |   | 26,458                 |
|                                                                                                   |   |                           |   |                             |
| Long-term debt                                                                                                        |   | 5,517                |   | 7,279                  |
| Pension benefit  obligations                                                                                          |   | 2,852                |   | 2,821                  |
| Postretirement  benefit obligations                                                                                   |   | 1,444                |   | 1,450                  |
| Deferred taxes  on income                                                                                             |   | 11,479               |   | 12,632                 |
| Other  noncurrent liabilities                                                                                         |   | 3,141                |   | 4,766                  |
| Total liabilities                                                                                                     |   | 46,999               |   | 55,406                 |
|                                                                                                             |   |                           |   |                             |
| Shareholders' Equity                                                                                                  |   |                           |   |                             |
| Preferred stock                                                                                                       |   | 180                  |   | 193                    |
| Common stock                                                                                                          |   | 439                  |   | 438                    |
| Additional  paid-in capital                                                                                           |   | 67,426               |   | 67,098                 |
| Employee  benefit trust, at fair value                                                                                |   | (1,052)                   |   | (1,229)                     |
| Treasury stock                                                                                                        |   | (39,272)                  |   | (35,992)                    |
| Retained  earnings                                                                                                    |   | 36,446               |   | 35,492                 |
| Accumulated  other comprehensive income                                                                               |   | 1,161                |   | 2,278                  |
|                                                                                                             |   |                           |   |                             |
| Total shareholders' equity                                                                                            |   | 65,328               |   | 68,278                 |
| Total liabilities and shareholders'  equity                                                                           | $ | 112,327              | $ | 123,684                |

*    Unaudited.**  Condensed from auditedfinancial statements.

See accompanyingNotes to Condensed Consolidated Financial Statements.

PFIZER INC ANDSUBSIDIARY COMPANIESCONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)

|                                                                                               |   | Six Months Ended                     |
|-----------------------------------------------------------------------------------------------|---|--------------------------------------|
| (millions  of dollars)                                                                        |   | July 3,    2005  |  | June 27,   2004  |
|                                                                                     |   |                                      |  |  |
| Operating Activities:                                                                         |   |                                      |  |  |
| Net income                                                                                    | $ | 3,763                           | $ | 5,195  |
| Adjustments to reconcile net income to net cash  provided by continuing operating activities: |   |                                      |  |  |
| Discontinued operations - net of tax                                                          |   | (19)                                 |  | (32) |
| Depreciation and amortization                                                                 |   | 2,776                           |  | 2,517  |
| Merger-related in-process research and development  charges                                   |   | 262                             |  | 955  |
| Asset impairment charge and other costs associated  with the suspension of Bextra sales       |   | 1,213                           |  | --  |
| Deferred taxes                                                                                |   | (127)                                |  | (222) |
| Other                                                                                         |   | 49                              |  | 463  |
| Changes in assets and liabilities (net of businesses  acquired and divested)                  |   | (934)                                |  | (3,702) |
|                                                                                |   |                                      |  |  |
| Net  cash provided by continuing operating activities                                         |   | 6,983                           |  | 5,174  |
|                                                                                |   |                                      |  |  |
| Investing  Activities:                                                                        |   |                                      |  |  |
| Purchases of property, plant and equipment                                                    |   | (997)                                |  | (961) |
| Purchases of short-term investments                                                           |   | (7,441)                              |  | (8,655) |
| Proceeds from redemptions of short-term investments                                           |   | 12,570                          |  | 3,242  |
| Purchases of long-term investments                                                            |   | (560)                                |  | (712) |
| Proceeds from sales of long-term investments                                                  |   | 568                             |  | 1,429  |
| Purchases of other assets                                                                     |   | (99)                                 |  | (411) |
| Proceeds from sales of other assets                                                           |   | 6                               |  | 225  |
| Acquisition of businesses, net of cash acquired                                               |   | (255)                                |  | (1,443) |
| Proceeds from the sales of businesses and product  lines                                      |   | 101                             |  | 575  |
| Other investing activities                                                                    |   | 276                             |  | (59) |
|                                                                                |   |                                      |  |  |
| Net  cash provided by/(used in) investing activities                                          |   | 4,169                           |  | (6,770) |
|                                                                                |   |                                      |  |  |
| Financing  Activities:                                                                        |   |                                      |  |  |
| Increase in short-term borrowings, net                                                        |   | 90                              |  | 3,360  |
| Principal payments on short-term borrowings                                                   |   | (5,800)                              |  | (170) |
| Proceeds from issuances of long-term debt                                                     |   | 2                               |  | 1,588  |
| Principal payments on long-term debt                                                          |   | (22)                                 |  | (11) |
| Proceeds from common stock issuances                                                          |   | 33                              |  | 37  |
| Purchases of common stock                                                                     |   | (3,304)                              |  | (2,275) |
| Cash dividends paid                                                                           |   | (2,930)                              |  | (2,562) |
| Stock option transactions and other                                                           |   | 245                             |  | 749  |
|                                                                                |   |                                      |  |  |
| Net cash (used in)/provided by financing activities                                           |   | (11,686)                             |  | 716  |
| Effect of exchange-rate changes on cash and cash  equivalents                                 |   | 2                               |  | 12  |
| Net decrease in cash and cash equivalents                                                     |   | (532)                                |  | (868) |
| Cash and cash equivalents at beginning of period                                              |   | 1,808                           |  | 1,520  |
|                                                                                     |   |                                      |  |  |
| Cash and cash equivalents at end of period                                                    | $ | 1,276                           | $ | 652  |
|                                                                                     |   |                                      |  |  |
| Supplemental Cash Flow Information:                                                           |   |                                      |  |  |
| Cash paid during the period for:                                                              |   |                                      |  |  |
| Income taxes                                                                                  | $ | 1,296                           | $ | 1,853  |
| Interest                                                                                      |   | 329                             |  | 194  |
| Non-cash transaction:                                                                         |   |                                      |  |  |
| Receivable from sale of business (received on  June 28, 2004)                            | $ | --                              | $ | 450  |

** **

See accompanyingNotes to Condensed Consolidated Financial Statements.

PFIZERINC AND SUBSIDIARY COMPANIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1:  Basis of Presentation

*General*

We prepared the condensed consolidated financial statementsfollowing the requirements of the Securities and Exchange Commission (SEC) forinterim reporting. As permitted under those rules, certain footnotes or otherfinancial information that are normally required by accounting principlesgenerally accepted in the United States of America (GAAP) can be condensed oromitted. Balance sheet amounts and operating results for subsidiaries operatingoutside the U.S. are as of and for the three-month and six-month periods ended May 29,2005 and May 23, 2004. The fiscal first quarter and six months of 2005 hadthree additional business days compared to the fiscal first quarter and sixmonths of 2004. 

We made certain reclassifications to the 2004 condensedconsolidated financial statements to conform to the 2005 presentation.

Revenues, expenses, assets and liabilities can vary duringeach quarter of the year. Therefore, the results and trends in these interimfinancial statements may not be representative of those for the full year.

We are responsible for the unaudited financial statementsincluded in this document. The financial statements include all normal andrecurring adjustments that are considered necessary for the fair presentationof our financial position and operating results. 

The information included in this Quarterly Report onForm 10-Q should be read in conjunction with the consolidated financialstatements and accompanying notes included in Pfizer's Annual Report onForm 10-K for the year ended December 31, 2004.

*Share-Based Payments*

In accordance with Statement of Financial AccountingStandards (SFAS) No. 123, *Accounting for Stock-Based Compensation*, weelect to account for our stock-based compensation under Accounting PrinciplesBoard Opinion No. 25, *Accounting for Stock Issued to Employees*. Theexercise price of stock options granted equals the market price on the date ofgrant; therefore, there is no recorded compensation expense related to grantsof stock options.

The weighted-average fair valueper stock option granted was $3.23 and $4.49 for the three months ended July 3,2005 and June 27, 2004 and $5.15 and $6.88 for the six months endedJuly 3, 2005 and June 27, 2004. We estimated the fair values, asrequired under GAAP, using the Black-Scholes option-pricing model, modified fordividends and using the assumptions below. Pro forma compensation expenserelated to stock options subject to accelerated vesting upon retirement isrecognized over the period of employment up to the vesting date of the grant.In the first quarter of 2005, we changed our method of estimating expecteddividend yield from historical patterns of dividend payments to a method thatreflects a constant dividend yield during the expected term of the option.

|                                       | Three Months Ended |                        | Six Months Ended |
|---------------------------------------|--------------------|------------------------|------------------|
|                                       | July 3,  2005 | June 27,  2004    |                  | July 3,  2005 | June 27,  2004 |
|                                       |                    |                        |                  |  |  |
| Expected dividend yield               | 2.72%              | 2.57%                  |                  | 2.90% | 2.90% |
| Risk-free interest rate               | 3.75%              | 2.07%                  |                  | 3.96% | 3.32% |
| Expected stock price volatility       | 16.90%             | 20.43%                 |                  | 21.93% | 22.15% |
| Expected term until exercise  (years) | 2.75     | 3.26    |                  | 5.75    | 5.75    |

The following table shows theeffect on results for the three-month and six-month periods ended July 3,2005 and June 27, 2004 if we had applied the fair-value-based recognitionprovisions of SFAS 123 to measure stock-based compensation expense for theoption grants:

|                                                                                                             |   | Three  Months Ended            |   | Six  Months Ended               |
|-------------------------------------------------------------------------------------------------------------|---|--------------------------------|---|---------------------------------|
| (millions  of dollars, except per common share data)                                                        |   | July 3,   2005  |   | June 27,   2004  |  | July 3,   2005  |  | June 27,   2004  |
|                                                                                                   |   |                                |   |                                 |  |  |  |  |
| Net income  available to common shareholders used in the calculation of basic earnings  per common share:   |   |                                |   |                                 |  |  |  |  |
| As reported  under GAAP*                                                                                    | $ | 3,461                     | $ | 2,862                      | $ | 3,761  | $ | 5,193  |
| Compensation  expense - net of tax                                                                          |   | (104)                          |   | (147)                           |  | (252) |  | (273) |
| Pro forma                                                                                                   | $ | 3,357                     | $ | 2,715                      | $ | 3,509  | $ | 4,920  |
|                                                                                              |   |                                |   |                                 |  |  |  |  |
| Basic earnings  per common share:                                                                           |   |                                |   |                                 |  |  |  |  |
| As reported  under GAAP*                                                                                    | $ | .47                       | $ | .38                        | $ | .51  | $ | .69  |
| Compensation  expense - net of tax                                                                          |   | (.01)                          |   | (.02)                           |  | (.04) |  | (.04) |
| Pro forma                                                                                                   | $ | .46                       | $ | .36                        | $ | .47  | $ | .65  |
|                                                                                                   |   |                                |   |                                 |  |  |  |  |
| Net income  available to common shareholders used in the calculation of diluted earnings  per common share: |   |                                |   |                                 |  |  |  |  |
| As reported  under GAAP*                                                                                    | $ | 3,461                     | $ | 2,862                      | $ | 3,761  | $ | 5,192  |
| Compensation  expense - net of tax                                                                          |   | (104)                          |   | (147)                           |  | (252) |  | (273) |
| Pro forma                                                                                                   | $ | 3,357                     | $ | 2,715                      | $ | 3,509  | $ | 4,919  |
|                                                                                                   |   |                                |   |                                 |  |  |  |  |
| Diluted  earnings per common share:                                                                         |   |                                |   |                                 |  |  |  |  |
| As reported  under GAAP*                                                                                    | $ | .47                       | $ | .38                        | $ | .51  | $ | .68  |
| Compensation  expense - net of tax                                                                          |   | (.02)                          |   | (.02)                           |  | (.04) |  | (.04) |
| Pro forma                                                                                                   | $ | .45                       | $ | .36                        | $ | .47  | $ | .64  |

  

| * | Includes  stock-based compensation expense, net of related tax benefits, of $53 million  for the six months ended July 3, 2005 ($38 million for the three  months ended July 3, 2005) and $40 million for the six months ended  June 27, 2004 ($10 million for the three months ended June 27,  2004). |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Net income available to common shareholders used in thecalculation of basic earnings per common share represents net income reduced bypreferred stock dividends - net of tax. Net income available tocommon shareholders used in the calculation of diluted earnings per common sharerepresents net income reduced by the incremental allocation of shares to theEmployee Stock Ownership Plans (ESOPs) acquired as part of the Pharmaciaacquisition.

Note 2:  Asset Impairment Charge and OtherCosts Associated with the Suspension of Bextra Sales

In the first six months of 2005, we recorded chargestotaling $1.2 billion ($761 million, net of tax) in connection with thedecision to suspend sales and marketing of Bextra. This decision resulted froman April 7, 2005 request from the U.S. Food and Drug Administration (FDA),as part of its safety review of all COX-2 medicines.

The pre-tax charges included$1.1 billion related to the impairment of developed technology rightsassociated with Bextra and $7 million related to the write-off ofmachinery and equipment, both of which are included in *Other(income)/deductions - net.* In addition, in connection with thesuspension, we also recorded $56 million in write-offs of inventory andexit costs, included in *Cost of sales*; $5 million related to thecosts of administering the suspension of sales, included in *Selling,informational and administrative expenses;* and $173 million, for anestimate of customer returns, primarily included against *Revenues.*Substantially all of these charges were recorded in the first quarter of 2005.

Note 3:  Income Taxes

*Income Tax Charge Associated with Repatriation Decision*

In the first six months of 2005, we recorded an income taxcharge of $1.7 billion, included in *(Benefit)/provision fortaxes on income*, in connection with our decision to repatriate about $36.7 billionof foreign earnings in accordance with the *American Jobs Creation Act of2004* (the Jobs Act). In the first quarter of 2005, we recorded an initialestimated income tax charge of $2.2 billion based on the decision torepatriate $28.3 billion of foreign earnings; in the second quarter of2005, we reduced our original estimate of the tax charge by $863 millionand revised the repatriation of foreign earnings to $28.1 billion,principally as a result of guidance issued by the U.S. Treasury in May 2005. Inthe second quarter of 2005, we also recorded an additional tax charge of $373 million,primarily due to our decision to repatriate an additional $8.6 billion offoreign earnings.

As of July 3, 2005, we intend to continue to reinvestthe earnings of our international subsidiaries and, therefore, we have notrecorded a U.S. tax provision on the remaining amount of unremitted earnings.

*Tax Contingencies*

In the second quarter of 2005, we recorded a tax benefit of$586 million primarily related to the resolution of certain tax positions.We believe that the IRS audits of the Pfizer Inc. tax returns for the years1999-2001 and the Warner-Lambert Company tax returns for the years 1999 throughthe date of the merger with Pfizer (June 19, 2000) are substantiallycomplete. In connection with those audits, we are currently in the process ofappealing one matter related to the tax deductibility of a breakup fee paid byWarner-Lambert Company in 2000.

The IRS has commenced the audit of the Pfizer Inc. tax returnsfor the years 2002 and 2003. The 2005 tax year is also currently under audit.

As previously disclosed, with respect to PharmaciaCorporation (formerly known as Monsanto Company), the IRS has completed andclosed its income tax return examinations and appeals through 1999 and hascommenced the audit of the tax returns for the years 2000 through the date ofmerger with Pfizer (April 16, 2003).

We periodically reassess the likelihood of assessmentsresulting from audits of federal, state and foreign income tax filings. Webelieve that our accruals for tax liabilities are adequate for all open years.

Note 4:  Adapting to Scale Initiative

We recently launched a company-wide initiative, calledAdapting to Scale (AtS), which involves a comprehensive review of ourprocesses, organizations, systems and decision making. In the second quarter of2005, in connection with this AtS initiative, we incurred and paid approximately$21 million in restructuring charges, primarily related to employeetermination costs at our manufacturing facilities located in North America. Wealso incurred and paid approximately $33 million in implementation costs,included in *Cost of sales* ($1 million), *Selling, informationaland administrative expenses* ($21 million) and*Research anddevelopment expenses* ($11 million), primarily related to system andprocess standardization and the expansion of shared services.

We now expect the costs associated with this multi-yeareffort to continue through 2008 and to total approximately $4 billion to$5 billion, on a pre-tax basis. These costs will include restructuringcharges, such as asset impairments, exit costs and severance costs (including anyrelated impacts to our benefit plans, such as settlements and curtailments) andassociated implementation costs, such as accelerated depreciation charges,primarily associated with plant network optimization efforts, and expensesassociated with system and process standardization and the expansion of sharedservices. Restructuring charges are included in *Restructuring charges andmerger-related costs*and implementation costs are included in *Cost ofsales*, *Selling, informational and administrative expenses*or*Researchand development expenses*, as appropriate.

Note 5:  Merger-Related Costs

We incurred the followingmerger-related costs primarily in connection with our acquisition of PharmaciaCorporation (Pharmacia), which was completed on April 16, 2003:

|                                        |   | Three  Months Ended            |   | Six  Months Ended   |
|----------------------------------------|---|--------------------------------|---|---------------------|
| (millions  of dollars)                 |   | July 3,   2005  |   | June 27,  2004 |  | July 3,  2005 |  | June 27,  2004 |
|                              |   |                                |   |                     |  |  |  |  |
| Integration costs                      | $ | 191                            | $ | 150                 | $ | 297 | $ | 254 |
| Restructuring costs                    |   | 58                             |   | 139                 |  | 171 |  | 282 |
| Total  merger-related costs - expensed | $ | 249                            | $ | 289                 | $ | 468 | $ | 536 |

In connection with the acquisition of Pharmacia, Pfizermanagement approved plans to restructure and integrate the operations of bothlegacy Pfizer and legacy Pharmacia to combine operations, eliminate duplicativefacilities and reduce costs. The restructuring of our operations as a result ofour acquisition of Pharmacia is expected to continue through 2005 and includesconsulting, systems integrations, severance, costs of vacating duplicativefacilities, contract termination and other exit costs. Total merger-relatedexpenditures expected to be incurred during 2003-2005 to achieve anticipatedsynergies are about $6 billion, on a pre-tax basis, with $5.3 billionincurred through July 3, 2005. The remaining costs expected to be incurredare primarily associated with asset impairments, exit costs and employee terminations.

Through April 15, 2004, werecorded restructuring costs associated with employee terminations and exitingcertain activities of legacy Pharmacia as liabilities assumed in the purchasebusiness combination and recorded an increase to goodwill. Changes to previousestimates of restructuring costs included as part of the purchase allocation ofPharmacia are recorded as a reduction to goodwill or an expense to operations,as appropriate. Restructuring costs incurred for legacy Pfizer and restructuringcosts incurred after April 15, 2004 for legacy Pharmacia are charged tothe results of operations.

The components ofmerger-related restructuring costs associated with legacy Pfizer and legacyPharmacia follow:

| (millions  of dollars)                     |   | Total |   | Utilization  Through  July 3,  2005 | (a) |   | Accrual  at  July 3,  2005 | (b) |
|--------------------------------------------|---|-------|---|------------------------------------------|-----|---|---------------------------------|-----|
|                                  |   |       |   |                                          |     |   |                                 |     |
| Costs capitalized through April 15,  2004: |   |       |   |                                          |     |   |                                 |     |
| Employee  termination costs                | $ | 1,535 | $ | 1,499                                    |     | $ | 36                              |     |
| Other                                      |   | 624   |   | 498                                      |     |   | 126                             |     |
|                                            | $ | 2,159 | $ | 1,997                                    |     | $ | 162                             |     |
| Costs expensed:                            |   |       |   |                                          |     |   |                                 |     |
| Employee termination  costs                | $ | 589   | $ | 482                                      |     | $ | 107                             |     |
| Asset  impairments                         |   | 368   |   | 368                                      |     |   | --                              |     |
| Other                                      |   | 89    |   | 57                                       |     |   | 32                              |     |
|                                  | $ | 1,046 | $ | 907                                      |     | $ | 139                             |     |

  

| (a) | Includes  insignificant adjustments to original amounts established. |
|-----|----------------------------------------------------------------------|
| (b) | Included  in *Other current liabilities.*                            |

During the first six months of 2005, we expensed $72 millionfor *Employee termination costs,*$78 million for *Assetimpairments*and $15 million in *Other.*Through July 3, 2005,*Employee termination costs*represent the approved reduction of thelegacy Pfizer and legacy Pharmacia work force by 17,030 employees, mainlyin corporate, manufacturing, distribution, sales and research. We notifiedaffected individuals and 15,901 employees were terminated as ofJuly 3, 2005. *Employee termination costs*include accrued severancebenefits and costs associated with change-in-control provisions of certainPharmacia employment contracts. *Asset impairments*primarily includecharges to write down property, plant and equipment. *Other* primarilyincludes costs to exit certain activities of legacy Pfizer and legacyPharmacia.

Note 6:  Comprehensive Income/(Expense)

The components of comprehensiveincome/(expense) follow:

|                                                                                                                |   | Three  Months Ended            |   | Six  Months Ended               |
|----------------------------------------------------------------------------------------------------------------|---|--------------------------------|---|---------------------------------|
| (millions  of dollars)                                                                                         |   | July 3,   2005  |   | June 27,   2004  |  | July 3,   2005  |  | June 27,   2004  |
|                                                                                                      |   |                                |   |                                 |  |  |  |  |
| Net income                                                                                                     | $ | 3,463                     | $ | 2,863                      | $ | 3,763  | $ | 5,195  |
| Other  comprehensive income/(expense):                                                                         |   |                                |   |                                 |  |  |  |  |
| Net unrealized gain/(loss)  on available-for-sale securities arising during the period - net of  tax |   | (31)                           |   | 35                         |  | (105) |  | 183  |
| Currency  translation adjustment and other                                                                     |   | (717)                          |   | (1,624)                         |  | (1,012) |  | (238) |
| Total other  comprehensive income/(expense)                                                                    |   | (748)                          |   | (1,589)                         |  | (1,117) |  | (55) |
| Total comprehensive income/(expense)                                                                           | $ | 2,715                     | $ | 1,274                      | $ | 2,646  | $ | 5,140  |

Note 7:  Financial Instruments

*Derivative Financial Instrumentsand Hedging Activities*

During the first six months of2005, we entered into the following incremental or new derivative and hedgingactivities:

| Financial  Instrument      |  | Hedge Type |  | Hedged  Item                                 |  | Notional Amount  (millions of dollars)                                                              |  | Maturity Date |
|----------------------------|--|-----------------|--|----------------------------------------------|--|-----------------------------------------------------------------------------------------------------|--|--------------------|
| Forward-exchange contracts |  | Cash  flow      |  | Euro available-for-sale investments          |  |            $1,917                            |  | Through 2005       |
| Forward-exchange contracts |  | Cash  flow      |  | Swedish krona available-for-sale investments |  |                 706 |  | Through 2005       |
| Forward-exchange contracts |  | Cash  flow      |  | Danish krone available-for-sale investments  |  |                 327 |  | Through 2005       |

There was no materialineffectiveness in any hedging relationship reported in earnings in the firstsix months of 2005.

*Current Portion of Long-Term Debt*

In July 2005, we decided to exercise Pfizer's option tocall, at par-value plus accrued interest, $1 billion of senior unsecuredfloating-rate notes, which are included in *Short-term borrowings* atJuly 3, 2005. Notice to call has been given to the Trustees and the noteswill be redeemed in September 2005.

Note 8:  Inventories

The components of inventoriesfollow:

| (millions of dollars)       |   | July 3,  2005 |   | Dec. 31,  2004 |
|-----------------------------|---|--------------------|---|---------------------|
|                             |   |                    |   |                     |
| Finished goods              | $ | 2,380              | $ | 2,643               |
| Work-in-process             |   | 2,844              |   | 2,703               |
| Raw materials  and supplies |   | 1,256              |   | 1,314               |
| Total  inventories          | $ | 6,480              | $ | 6,660               |

A reclassification was made in 2004 from *Finished goods*to*Work-in-process*to better reflect the stage of completion.

Note 9:  Goodwill andOther Intangible Assets

A.  Goodwill

The changes in the carryingamount of goodwill by segment for the six months ended July 3, 2005 follow:

| (millions  of dollars)           |   | Human  Health |   | Consumer  Healthcare |   | Animal   Health  |   | Other |   | Total   |
|----------------------------------|---|---------------|---|----------------------|---|----------------------------|---|-------|---|--------------|
|                        |   |               |   |                      |   |                            |   |       |   |              |
| Balance,  December 31, 2004 | $ | 20,966   | $ | 2,701                | $ | 79                    | $ | 10    | $ | 23,756  |
| Other(a)                         |   | (159)         |   | 53                   |   | (23)                       |   | --    |   | (129)        |
| Balance, July 3,  2005      | $ | 20,807   | $ | 2,754                | $ | 56                    | $ | 10    | $ | 23,627  |

  

| (a) | Primarily  foreign exchange and reductions to goodwill as a result of adjusting certain  purchase accounting liabilities. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

B.  Other Intangible Assets

The components of identifiableintangible assets, primarily included in our Human Health segment, follow:

|                                                 |   | July 3,  2005                        |   | December 31,  2004               |
|-------------------------------------------------|---|-------------------------------------------|---|---------------------------------------|
| (millions  of dollars)                          |   | Gross   Carrying   Amount  |   | Accumulated   Amortization  |  | Gross   Carrying   Amount  |  | Accumulated   Amortization  |
|                                       |   |                                           |   |                                       |  |  |  |  |
| Finite-lived  intangible assets:                |   |                                           |   |                                       |  |  |  |  |
| Developed  technology rights                    | $ | 31,087                                    | $ | (7,311)                               | $ | 33,137 | $ | (5,967) |
| Brands                                          |   | 1,002                                     |   | (35)                                  |  | 1,037 |  | (14) |
| License  agreements                             |   | 165                                       |   | (25)                                  |  | 158 |  | (17) |
| Trademarks                                      |   | 156                                       |   | (93)                                  |  | 134 |  | (90) |
| Other(a)                                        |   | 470                                       |   | (197)                                 |  | 390 |  | (186) |
| Total amortized  finite-lived intangible assets |   | 32,880                                    |   | (7,661)                               |  | 34,856 |  | (6,274) |
| Indefinite-lived  intangible assets:            |   |                                           |   |                                       |  |  |  |  |
| Brands                                          |   | 3,944                                     |   | --                               |  | 4,012 |  | --  |
| License  agreements                             |   | 326                                       |   | --                               |  | 356 |  | --  |
| Trademarks                                      |   | 231                                       |   | --                               |  | 235 |  | --  |
| Other(b)                                        |   | 62                                        |   | --                               |  | 66 |  | --  |
| Total indefinite-lived  intangible assets       |   | 4,563                                     |   | --                               |  | 4,669 |  | --  |
| Total  identifiable intangible assets           | $ | 37,443                                    | $ | (7,661)                               | $ | 39,525 | $ | (6,274) |

  

| Total  identifiable intangible assets, less accumulated amortization |  | $   | 29,782 |  |  | $   | 33,251 |  |
|----------------------------------------------------------------------|--|---------------|--------|--|--|---------------|--------|--|

  

| (a) | Includes  patents, non-compete agreements, customer contracts and other intangible  assets. |
|-----|---------------------------------------------------------------------------------------------|
| (b) | Includes  pension-related intangible assets.                                                |

In the first six months of 2005, we recorded an impairmentcharge of $1.1 billion related to the developed technology rights forBextra, a COX-2-selective inhibitor (see Note 2, *Asset Impairment Charge andOther Costs Associated with the Suspension of Bextra Sales*) which wasincluded in *Other (income)/deductions - net*.

Amortization expense related to acquired intangible assetsthat contribute to our ability to sell, manufacture, research, market anddistribute our products are included in *Amortization of intangible assets*as they benefit multiple business functions. Amortization expense related toacquired intangible assets that are associated with a single function areincluded in *Cost of sales, Selling, informational and administrative**expenses*or *Research and development expenses*, as appropriate. Totalamortization expense for finite-lived intangible assets was $876 million and$847 million for the three months ended July 3, 2005 andJune 27, 2004 and $1.8 billion and $1.7 billion for the six monthsended July 3, 2005 and June 27, 2004.

The annual amortization expense expected for the fiscal years2005 through 2010 is $3.5 billion in 2005, $3.4 billion in 2006, $3.4 billionin 2007, $2.7 billion in 2008, $2.5 billion in 2009 and $2.4 billionin 2010.

Note 10:  Benefit Plans

The components of net periodicbenefit cost of the U.S. and international pension plans and the postretirementplans for the three months ended July 3, 2005 and June 27, 2004 follow:

|                                              |   | Pension Plans  |   |                                    |
|----------------------------------------------|---|----------------|---|------------------------------------|
|                                              |   | U.S. Qualified |   | U.S. Supplemental  (Non-Qualified) |  | International |  | Postretirement Plans |
| (millions  of dollars)                       |   | 2005      |   | 2004                          |  | 2005 |  | 2004 |  | 2005  |  | 2004  |  | 2005  |  | 2004  |
|                                              |   |                |   |                                    |  |  |  |  |  |  |  |  |  |  |  |  |
| Service cost                                 | $ | 80        | $ | 73                            | $ | 10 | $ | 9 | $ | 76  | $ | 62  | $ | 10  | $ | 10  |
| Interest cost                                |   | 102       |   | 98                            |  | 14 |  | 14 |  | 78  |  | 72  |  | 28  |  | 31  |
| Expected return on plan assets               |   | (149)          |   | (143)                              |  | -- |  | -- |  | (80) |  | (70) |  | (5) |  | (6) |
| Amortization of:                             |   |                |   |                                    |  |  |  |  |  |  |  |  |  |  |  |  |
| Prior service costs/(gains)                  |   | 3         |   | 4                             |  | 1 |  | 1 |  | --  |  | (1) |  | (1) |  | 1  |
| Net transition obligation/(asset)            |   | --        |   | --                            |  | -- |  | -- |  | 1  |  | (1) |  | --  |  | --  |
| Actuarial losses                             |   | 25        |   | 23                            |  | 9 |  | 9 |  | 23  |  | 14  |  | 5  |  | 6  |
| Curtailments and settlements - net |   | --        |   | --                            |  | -- |  | -- |  | 10  |  | (18) |  | --  |  | --  |
| Special termination benefits                 |   | --        |   | --                            |  | -- |  | -- |  | 3  |  | --  |  | --  |  | --  |
| Net periodic benefit costs                   | $ | 61        | $ | 55                            | $ | 34 | $ | 33 | $ | 111  | $ | 58  | $ | 37  | $ | 42  |

The components of net periodicbenefit cost of the U.S. and international pension plans and the postretirementplans for the six months ended July 3, 2005 and June 27, 2004 follow:

|                                              |   | Pension Plans  |   |                                    |
|----------------------------------------------|---|----------------|---|------------------------------------|
|                                              |   | U.S. Qualified |   | U.S. Supplemental  (Non-Qualified) |  | International |  | Postretirement Plans |
| (millions  of dollars)                       |   | 2005      |   | 2004                          |  | 2005 |  | 2004 |  | 2005  |  | 2004  |  | 2005  |  | 2004  |
|                                              |   |                |   |                                    |  |  |  |  |  |  |  |  |  |  |  |  |
| Service cost                                 | $ | 159       | $ | 144                           | $ | 19 | $ | 17 | $ | 153  | $ | 130  | $ | 19  | $ | 20  |
| Interest cost                                |   | 206       |   | 195                           |  | 29 |  | 29 |  | 158  |  | 143  |  | 56  |  | 62  |
| Expected return on plan assets               |   | (297)          |   | (286)                              |  | -- |  | -- |  | (161) |  | (141) |  | (11) |  | (11) |
| Amortization of:                             |   |                |   |                                    |  |  |  |  |  |  |  |  |  |  |  |  |
| Prior service costs/(gains)                  |   | 7         |   | 8                             |  | 1 |  | 1 |  | (1) |  | 4  |  | --  |  | 1  |
| Net transition obligation                    |   | --        |   | --                            |  | -- |  | -- |  | 1  |  | 1  |  | --  |  | --  |
| Actuarial losses                             |   | 51        |   | 49                            |  | 19 |  | 18 |  | 48  |  | 27  |  | 10  |  | 12  |
| Curtailments and settlements - net |   | --        |   | --                            |  | -- |  | -- |  | 10  |  | (19) |  | --  |  | --  |
| Special termination benefits                 |   | --        |   | --                            |  | -- |  | -- |  | 10  |  | --  |  | --  |  | --  |
| Net periodic benefit costs                   | $ | 126       | $ | 110                           | $ | 68 | $ | 65 | $ | 218  | $ | 145  | $ | 74  | $ | 84  |

For the first six months of2005, we contributed from the Company's general assets $2 million to ourU.S. qualified pension plans, $212 million to our international pensionplans, $111 million to our U.S. supplemental (non-qualified) pension plansand $83 million to our postretirement plans. As of July 3, 2005, we expectto contribute, from the Company's general assets during 2005, a total(inclusive of amounts contributed during the first six months of 2005) of $2 millionto our U.S. qualified pension plans, $396 million to our internationalpension plans, $137 million to our U.S. supplemental (non-qualified) pensionplans and $166 million to our postretirement plans.

Note 11:  Earnings Per Common Share

Basic and diluted earnings percommon share (EPS) were computed using the following common share data:

|                                                                                                                                                     |   | Three  Months Ended            |   | Six  Months Ended   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------------|---|---------------------|
| (millions)                                                                                                                                          |   | July 3,   2005  |   | June 27,  2004 |  | July 3,  2005 |  | June 27,  2004 |
|                                                                                                                                           |   |                                |   |                     |  |  |  |  |
| EPS Numerator -  Basic:                                                                                                                             |   |                                |   |                     |  |  |  |  |
| Income from  continuing operations                                                                                                                  | $ | 3,472                     | $ | 2,844               | $ | 3,744 | $ | 5,163 |
| Less:  Preferred  stock dividends - net of tax                                                                                  |   | 2                         |   | 1                   |  | 2 |  | 2 |
| Income  available to common shareholders from continuing operations                                                                                 |   | 3,470                     |   | 2,843               |  | 3,742 |  | 5,161 |
| Discontinued  operations - net of tax                                                                                                     |   | (9)                            |   | 19                  |  | 19 |  | 32 |
| Net income  available to common shareholders                                                                                                        | $ | 3,461                     | $ | 2,862               | $ | 3,761 | $ | 5,193 |
|                                                                                                                                           |   |                                |   |                     |  |  |  |  |
| EPS Denominator  - Basic:                                                                                                                           |   |                                |   |                     |  |  |  |  |
| Weighted-average  number of common shares outstanding                                                                                               |   | 7,366                     |   | 7,574               |  | 7,391 |  | 7,580 |
|                                                                                                                                           |   |                                |   |                     |  |  |  |  |
| EPS Numerator -  Diluted:                                                                                                                           |   |                                |   |                     |  |  |  |  |
| Income from  continuing operations                                                                                                                  | $ | 3,472                     | $ | 2,844               | $ | 3,744 | $ | 5,163 |
| Less:  ESOP  contribution - net of tax                                                                                          |   | 2                         |   | 1                   |  | 2 |  | 3 |
| Income  available to common shareholders from continuing operations                                                                                 |   | 3,470                     |   | 2,843               |  | 3,742 |  | 5,160 |
| Discontinued  operations - net of tax                                                                                                     |   | (9)                            |   | 19                  |  | 19 |  | 32 |
| Net income  available to common shareholders                                                                                                        | $ | 3,461                     | $ | 2,862               | $ | 3,761 | $ | 5,192 |
|                                                                                                                                           |   |                                |   |                     |  |  |  |  |
| EPS Denominator  - Diluted:                                                                                                                         |   |                                |   |                     |  |  |  |  |
| Weighted-average  number of common shares outstanding                                                                                               |   | 7,366                     |   | 7,574               |  | 7,391 |  | 7,580 |
| Common share  equivalents: stock options, restricted stock units, stock issuable under  employee compensation plans and convertible preferred stock |   | 52                        |   | 90                  |  | 54 |  | 92 |
| Weighted-average  number of common shares outstanding and common share equivalents                                                                  |   | 7,418                     |   | 7,664               |  | 7,445 |  | 7,672 |

Outstanding stock options, representing about 513 millionand 519 million shares of common stock during the three-month andsix-month periods ended July 3, 2005, and about 280 million shares ofcommon stock during the three-month and six-month periods ended June 27,2004, had exercise prices greater than the average market price of our commonstock. These options were excluded from the computation of diluted EPS for theseperiods because their inclusion would have had an antidilutive effect.

Also, in the diluted computation, income from continuingoperations and net income are reduced by the incremental contribution to theESOPs, which were acquired as part of our Pharmacia acquisition. Thiscontribution is the after-tax difference between the income that the ESOPswould have received in preferred stock dividends and the dividend on the commonshares assumed to have been outstanding.

Note 12:  Segment Information

We operate in the followingbusiness segments:

| *Human Health* |
|----------------|
|                |    |
| •         | The Human  Health segment, which represents our pharmaceutical business, includes  treatments for cardiovascular and metabolic diseases, central nervous system  disorders, arthritis and pain, infectious and respiratory diseases,  urogenital conditions, cancer, eye disease, endocrine disorders and  allergies. |

   

| *Consumer  Healthcare* |
|------------------------|
|                        |    |
| •                 | The Consumer Healthcare  segment includes self-medications for oral care, upper respiratory health,  tobacco dependence, gastrointestinal health, skin care, eye care and hair  growth. |

   

| *Animal  Health* |
|------------------|
|                  |    |
| •           | The Animal Health  segment includes treatments for diseases in livestock and companion animals. |

Segment profit/(loss) is measured based on income fromcontinuing operations before provision for taxes on income, minority interestsand certain costs, such as significant impacts of purchase accounting foracquisitions and restructuring charges and merger-related costs. Thismethodology is utilized by management to evaluate each business. Certainincome/(expense) items that are excluded from the operating segments'profit/(loss) are considered corporate items and therefore are included in *Corporate/Other*.

Revenues and profit/(loss) bysegment for the three months and six months ended July 3, 2005, and June 27,2004, follow:

|                        |   | Three  Months Ended            |     |   | Six  Months Ended               |     |
|------------------------|---|--------------------------------|-----|---|---------------------------------|-----|
| (millions  of dollars) |   | July 3,   2005  |     |   | June 27,   2004  |     |  | July 3,   2005  |  |  | June 27,   2004  |  |
|              |   |                                |     |   |                                 |     |  |  |  |  |  |  |
| Revenues:              |   |                                |     |   |                                 |     |  |  |  |  |  |  |
| Human Health           | $ | 10,638                    |     | $ | 10,704                     |     | $ | 22,078  |  | $ | 21,745  |  |
| Consumer  Healthcare   |   | 969                       |     |   | 869                        |     |  | 1,914  |  |  | 1,673  |  |
| Animal Health          |   | 578                       |     |   | 484                        |     |  | 1,073  |  |  | 912  |  |
| Corporate/Other(a)     |   | 240                       |     |   | 217                        |     |  | 451  |  |  | 432  |  |
| Total revenues         | $ | 12,425                    |     | $ | 12,274                     |     | $ | 25,516  |  | $ | 24,762  |  |
|         |   |                                |     |   |                                 |     |  |  |  |  |  |  |
| Profit/(loss):         |   |                                |     |   |                                 |     |  |  |  |  |  |  |
| Human Health           | $ | 4,568                     |     | $ | 4,614                      |     | $ | 9,935  |  | $ | 9,937  |  |
| Consumer  Healthcare   |   | 129                       |     |   | 154                        |     |  | 288  |  |  | 313  |  |
| Animal Health          |   | 123                       |     |   | 89                         |     |  | 203  |  |  | 155  |  |
| Corporate/Other(a)     |   | (1,759)                        | (b) |   | (1,429)                         | (c) |  | (4,455) | (b) |  | (3,848) | (c) |
| Total profit/(loss)    | $ | 3,061                     |     | $ | 3,428                      |     | $ | 5,971  |  | $ | 6,557  |  |

  

| (a)          | Includes  certain income/(expense) items that are excluded from the operating segment  profit/(loss) that are considered corporate items and, therefore, are included  in *Corporate/Other*. These items include interest income/(expense),  corporate expenses (e.g., corporate administration costs), other  income/(expense) items, certain equity-based compensation expenses not  allocated to the business segments, significant impacts of purchase accounting  for acquisitions, certain milestone payments, Adapting to Scale restructuring  charges and implementation costs, merger-related costs and intangible asset  impairments.                                                  |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (b)          | For  the three months and six months ended July 3, 2005, *Corporate/Other*  includes (i) significant impacts of purchase accounting for acquisitions of  $1.1 billion and $1.9 billion, including acquired in-process  research and development, incremental intangible asset amortization and other  charges, (ii) merger-related costs of $249 million and $468 million,  (iii) costs associated with the suspension of Bextra's sales and marketing in  the first quarter of 2005 of $1.2 billion and (iv) restructuring charges  and implementation costs associated with the Adapting to Scale initiative in  the second quarter of 2005 of $54 million. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (c)          | For  the three months and six months ended June 27, 2004, *Corporate/Other*  includes (i) significant impacts of purchase accounting for acquisitions of  $820 million and $2.6 billion, including acquired in-process  research and development, incremental intangible asset amortization and other  charges, (ii) merger-related costs of $289 million and $536 million  and (iii) the operating results of a divested legacy Pharmacia research  facility of $32 million and $64 million.                                                                                                                                                                 |

Revenues for each group ofsimilar products follow:

|                                        |   | Three  Months Ended |   | Six  Months Ended   |
|----------------------------------------|---|---------------------|---|---------------------|
| (millions  of dollars)                 |   | July 3,  2005  |   | June 27,  2004 |  | %  Change |  | July 3,  2005 |  | June 27,  2004 | %  Change |
| **  **                       |   |                     |   |                     |  |  |  |  |  |  |  |
| **HUMAN HEALTH**                       |   |                     |   |                     |  |  |  |  |  |  |  |
| Cardiovascular and metabolic  diseases | $ | 4,471               | $ | 3,899               |  | 15% | $ | 9,197 | $ | 8,085 | 14% |
| Central nervous system disorders       |   | 1,537               |   | 2,036               |  | (24)   |  | 3,129 |  | 3,983 | (21)   |
| Arthritis and pain                     |   | 547                 |   | 1,146               |  | (52)   |  | 1,184 |  | 2,322 | (49)   |
| Infectious and respiratory diseases    |   | 1,101               |   | 1,125               |  | (2)   |  | 2,583 |  | 2,360 | 9    |
| Urology                                |   | 626                 |   | 583                 |  | 7    |  | 1,328 |  | 1,218 | 9    |
| Oncology                               |   | 513                 |   | 369                 |  | 39    |  | 992 |  | 680 | 46    |
| Ophthalmology                          |   | 341                 |   | 291                 |  | 17    |  | 674 |  | 570 | 18    |
| Endocrine disorders                    |   | 263                 |   | 223                 |  | 18    |  | 521 |  | 443 | 18    |
| All other                              |   | 991                 |   | 894                 |  | 11    |  | 1,980 |  | 1,801 | 10    |
| Alliance revenue                       |   | 248                 |   | 138                 |  | 79    |  | 490 |  | 283 | 73    |
| Total Human Health                     |   | 10,638              |   | 10,704              |  | (1)   |  | 22,078 |  | 21,745 | 2    |
| **CONSUMER HEALTHCARE**                |   | 969                 |   | 869                 |  | 12    |  | 1,914 |  | 1,673 | 14    |
| **ANIMAL HEALTH**                      |   | 578                 |   | 484                 |  | 19    |  | 1,073 |  | 912 | 18    |
| **OTHER**                              |   | 240                 |   | 217                 |  | 11    |  | 451 |  | 432 | 5    |
| Total revenues                         | $ | 12,425              | $ | 12,274              |  | 1    | $ | 25,516 | $ | 24,762 | 3    |

Note 13:  Discontinued Operations

We evaluate our businesses and product lines periodically forstrategic fit within our operations. In the first quarter of 2004, we decidedto sell a number of businesses and product lines, and the related assets andliabilities were recorded in *Assets held for sale*and *Liabilitiesheld for sale*. As of July 3, 2005, all of these businesses and productlines had been sold, except for one European generics pharmaceutical business,which was sold on July 4, 2005.

The impact of these divested businesses and product lineswas not material to the consolidated operating results of Pfizer Inc in theperiods presented.

REVIEW REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Pfizer Inc:

We have reviewed the condensed consolidated balance sheet ofPfizer Inc and Subsidiary Companies as of July 3, 2005, the relatedcondensed consolidated statements of income for the three-month and six-monthperiods ended July 3, 2005 and June 27, 2004, and the relatedcondensed consolidated statements of cash flows for the six-month periods endedJuly 3, 2005 and June 27, 2004. These condensed consolidatedfinancial statements are the responsibility of the Company's management. 

We conducted our reviews in accordance with the standards ofthe Public Company Accounting Oversight Board (United States). A review ofinterim financial information consists principally of applying analyticalprocedures and making inquiries of persons responsible for financial andaccounting matters. It is substantially less in scope than an audit conductedin accordance with the standards of the Public Company Accounting OversightBoard (United States), the objective of which is the expression of an opinionregarding the financial statements taken as a whole. Accordingly, we do notexpress such an opinion.

Based on our reviews, we are not aware of any materialmodifications that should be made to the condensed consolidated financialstatements referred to above for them to be in conformity with U.S. generallyaccepted accounting principles.

We have previously audited, in accordance with standards ofthe Public Company Accounting Oversight Board (United States), the consolidatedbalance sheet of Pfizer Inc and Subsidiary Companies as of December 31,2004, and the related consolidated statements of income, shareholders' equity,and cash flows for the year then ended (not presented herein); and in ourreport dated February 24, 2005, we expressed an unqualified opinion onthose consolidated financial statements. In our opinion, the information setforth in the accompanying condensed consolidated balance sheet as of December 31,2004, is fairly stated, in all material respects, in relation to theconsolidated balance sheet from which it has been derived.

KPMG LLP

New York, New YorkAugust 8, 2005

Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations.

Components of the CondensedConsolidated Statement of Income follow:

|                                                                                                          |   | Second Quarter |   | First Six Months |
|----------------------------------------------------------------------------------------------------------|---|----------------|---|------------------|
| (millions  of dollars, except per common share data)                                                     |   | 2005      |   |                  | 2004  |  | % Change |  | 2005 |  |  | 2004  |  | % Change |
|                                                                                                          |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Revenues                                                                                                 | $ | 12,425    |   | $                | 12,274  |  | 1% | $ | 25,516 |  | $ | 24,762  |  | 3% |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Cost of sales                                                                                            |   | 2,081     |   |                  | 1,752  |  | 19    |  | 4,272 |  |  | 3,546  |  | 20    |
| % of revenues                                                                                            |   | 16.7      | % |                  | 14.3  | % |  |  | 16.7 | % |  | 14.3  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Selling, informational and administrative expenses                                                       |   | 4,226     |   |                  | 4,258  |  | (1)   |  | 8,311 |  |  | 8,191  |  | 1    |
| % of revenues                                                                                            |   | 34.0      | % |                  | 34.7  | % |  |  | 32.6 | % |  | 33.1  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Research and development expenses                                                                        |   | 1,875     |   |                  | 1,819  |  | 3    |  | 3,639 |  |  | 3,469  |  | 5    |
| % of revenues                                                                                            |   | 15.1      | % |                  | 14.8  | % |  |  | 14.3 | % |  | 14.0  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Amortization of intangible assets                                                                        |   | 859       |   |                  | 830  |  | 3    |  | 1,741 |  |  | 1,653  |  | 5    |
| % of revenues                                                                                            |   | 6.9       | % |                  | 6.8  | % |  |  | 6.8 | % |  | 6.7  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Merger-related in-process research and development  charges                                              |   | 260       |   |                  | --  |  | *    |  | 262 |  |  | 955  |  | (73)   |
| % of revenues                                                                                            |   | 2.1       | % |                  | --  |  |  |  | 1.0 | % |  | 3.9  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Restructuring charges and merger-related costs                                                           |   | 270       |   |                  | 289  |  | (6)   |  | 489 |  |  | 536  |  | (9)   |
| % of revenues                                                                                            |   | 2.2       | % |                  | 2.4  | % |  |  | 1.9 | % |  | 2.2  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Other (income)/deductions - net                                                                |   | (207)          |   |                  | (102) |  | 105    |  | 831 |  |  | (145) |  | *    |
|                                                                                                          |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Income from continuing operations before (benefit)/provision  for taxes on income and minority interests |   | 3,061     |   |                  | 3,428  |  | (11)   |  | 5,971 |  |  | 6,557  |  | (9)   |
| % of revenues                                                                                            |   | 24.6      | % |                  | 27.9  | % |  |  | 23.4 | % |  | 26.5  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| (Benefit)/provision for taxes on income                                                                  |   | (413)          |   |                  | 582  |  | *    |  | 2,222 |  |  | 1,390  |  | 60    |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Effective tax rate                                                                                       |   | (13.5)         | % |                  | 17.0  | % |  |  | 37.2 | % |  | 21.2  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Minority interests                                                                                       |   | 2         |   |                  | 2  |  | 8    |  | 5 |  |  | 4  |  | 20    |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Income from continuing operations                                                                        |   | 3,472     |   |                  | 2,844  |  | 22    |  | 3,744 |  |  | 5,163  |  | (27)   |
| % of revenues                                                                                            |   | 27.9      | % |                  | 23.2  | % |  |  | 14.7 | % |  | 20.9  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Discontinued operations - net of tax                                                           |   | (9)            |   |                  | 19  |  | *    |  | 19 |  |  | 32  |  | (38)   |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Net income                                                                                               | $ | 3,463     |   | $                | 2,863  |  | 21    | $ | 3,763 |  | $ | 5,195  |  | (28)   |
| % of revenues                                                                                            |   | 27.9      | % |                  | 23.3  | % |  |  | 14.7 | % |  | 21.0  | % |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Earnings per common share - Basic:                                                                       |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Income from continuing operations                                                                        | $ | .47       |   | $                | .38  |  | 24    | $ | .51 |  | $ | .69  |  | (26)   |
| Discontinued operations - net of tax                                                           |   | --        |   |                  | --  |  | --    |  | -- |  |  | --  |  | --    |
| Net income                                                                                               | $ | .47       |   | $                | .38  |  | 24    | $ | .51 |  | $ | .69  |  | (26)   |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Earnings per common share - Diluted:                                                                     |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Income from continuing operations                                                                        | $ | .47       |   | $                | .38  |  | 24    | $ | .51 |  | $ | .68  |  | (25)   |
| Discontinued operations - net of tax                                                           |   | --        |   |                  | --  |  | --    |  | -- |  |  | --  |  | --    |
| Net income                                                                                               | $ | .47       |   | $                | .38  |  | 24    | $ | .51 |  | $ | .68  |  | (25)   |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| Cash dividends paid per common share                                                                     | $ | .19       |   | $                | .17  |  |  | $ | .38  |  | $ | .34  |  |  |
|                                                                                                |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |
| *  Calculation not meaningful                                                                  |   |                |   |                  |  |  |  |  |  |  |  |  |  |  |

OVERVIEW OF OUR CONSOLIDATED OPERATING RESULTS

*Our Business*

We are a research-based, globalpharmaceutical company that discovers, develops, manufactures and marketsleading prescription medicines for humans and animals, as well as many of theworld's best known consumer healthcare products. Our longstanding valueproposition has been to prove that our medicines cure or treat disease,including symptoms and suffering, and this remains our core mission. But wehave now expanded our value proposition to also show that our medicines notonly can cure or treat disease but also can markedly improve health systems byreducing overall healthcare costs, improving societies' economic well-being andincreasing effective prevention and treatment of disease. We generate revenuethrough the sale of our products, as well as through alliance agreements bycopromoting products discovered by other companies.

*Our Expectation for 2005*

Results in 2005 have been, andwill continue to be, impacted by loss of U.S. exclusivity of four majorproducts -- Diflucan, Neurontin, and Accupril/Accuretic during 2004 andZithromax in November 2005. In addition, we face the loss of U.S. exclusivityfor Zoloft during 2006 and Norvasc and Zyrtec during 2007. These seven productsrepresented 33% of our Human Health revenues and 29% of our total revenues forthe year ended December 31, 2004. Revenues also have been, and may continue tobe, impacted by publicity and regulatory actions regarding COX-2-selectiveinhibitor products (see further discussion in the section "SelectedProduct Descriptions").

Mitigating these impacts in the first half of 2005 was the strong performance across our broad portfolio of patent-protected medicines. Ourportfolio of medicines includes four of the world's 25 best-selling medicines, with11 medicines that lead their therapeutic areas. Our total revenue growthof 3% in the first half of 2005 compared to the same period in 2004 reflectedtwo underlying forces. First, Pfizer markets the broadest array of in-line andrecently launched products in the industry; and second, Pfizer is a businessgoing through the natural process of reinventing itself. We are addressing theloss of exclusivity of a number of products, a situation that we have longplanned for, by advancing a number of internally developed, in-licensed andcopromoted product candidates.

We believe we have important competitive advantages thatwill serve us well and distinguish us from others in our industry. Our productportfolio and pipeline demonstrate the benefits of Pfizer's scale and our skillat leveraging the opportunities it provides us. Scale also enhances our statusas 'partner of choice' with other companies who have promising productcandidates and technologies, as well as giving us influence as a globalpurchaser of goods and services. In the secondquarter of 2005, we entered into a definitive agreement to acquire VicuronPharmaceuticals, a biopharmaceutical company focused on the development ofnovel anti-infectives, for approximately $1.9 billion in cash. Thetransaction is subject to normal closing conditions.

Ourstrategic and operating flexibility allows usto marshal and focus resources when and where they are needed, to change with achanging environment and to recognize and seize emerging opportunities.

*Adaptingto Scale Productivity Initiative and Merger-Related Synergies*

During the second quarter of2005, Pfizer made progress with our multi-year productivity initiative, calledAdapting to Scale, to increase efficiency and streamline decision making acrossthe Company. The initiative is expected to yield $4 billion in costsavings on an annual basis by 2008, based on a top-to-bottom business reviewcompleted during the first half of 2005.

This initiative, first announcedin April, follows the integration of Warner-Lambert and Pharmacia Corporation(Pharmacia), which resulted in the tripling of Pfizer's revenues over the pastfive years. The integration of those two companies is expected to result in acombined expense reduction of $6 billion in 2005, inclusive of $4.2 billionin Pharmacia-related synergies that are expected to be achieved this year.

During 2005, we anticipate that cost savings from our newinitiative will approximate $400 million. We expect that cost savings willaccelerate over the following three years, with about $2 billion insavings targeted in 2006, about $3.5 billion in 2007 and about $4 billionupon completion in 2008. These total savings of $4 billion are expected tobe realized in procurement, operating expenses and facilities, among othersources. Among other potential uses, we plan to use the cost savings wegenerate to fund key investments, including new product launches and thedevelopment of the many promising new medicines in our pipeline. The Companynow expects that the cost of implementing this initiative through 2008 will beapproximately $4 billion to $5 billion on a pre-tax basis, reflectingthe results of our detailed implementation planning in the second quarter.

Pfizer is reducing costs in purchased goods and services.Purchasing initiatives will focus on rationalizing suppliers, leveraging theapproximately $16 billion of goods and services that Pfizer purchasesannually, improving demand management to optimize levels of outside servicesneeded, and strategic sourcing from lower-cost sources. For example, savingsfrom demand management will be derived in part from reductions in travel,entertainment, consulting and other external service expenses. Facilitiessavings are being found in site rationalization, energy conservation, andrenegotiated service contracts.

While some projects are alreadyunderway, during the second half of 2005 Pfizer will accelerate theimplementation of changes, including:

| • | Reorganizing Pfizer Global Research  & Development (PGRD) to reduce costs, speed decision making, and  concentrate resources on projects that have demonstrated the highest  likelihood of success. Through this initiative, PGRD is moving toward an  operating model focused on therapeutic areas from the earliest stages of research  into development and throughout product life cycles.                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • | Continuing our optimization of Pfizer  Global Manufacturing's plant network to ensure that the Company's  manufacturing facilities are aligned with current and future product supply  needs. Since December 2004, Pfizer has announced the divestiture of  facilities in Augusta, GA; Holland, MI; Angers and Val-de-Reuil, France;  Morpeth, U.K.; and Stockholm, Sweden, as well as several smaller facilities.  In addition, plants in Arecibo, Caguas, and Cruce Davila, Puerto Rico; and  Sandwich, U.K., are being restructured. Since 2003, Pfizer has announced  plans to reduce the number of plants in its global network by more than 25  percent. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • | Increasing productivity by  redesigning the U.S. field force to reflect the new Medicare regions and to  respond to changing market dynamics, while respecting the time demands of  physicians.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • | Reorganizing commercial support  across the European region to increase focus on the needs of emerging  customers and eliminate redundancy and duplicative activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| • | Pursuing savings in information  technology (IT) resulting from significant reductions in application software  (already reduced from about 8,000 at the time of the Pharmacia acquisition in  2003 to about 4,000 today, with considerable further reductions planned) and  data centers (to be reduced from 17 to 4), as well as rationalization of  service providers, while enhancing our ability to invest in innovative IT  opportunities to further propel our growth.                                                                                                                                                                                  |

REVENUES

Total revenues increased 1% in the second quarter and 3% inthe first six months of 2005, as compared to the same periods in 2004. The revenueincreases reflect a number of positive and negative factors. Positive impactsinclude three additional business days in our fiscal calendar in the first quarterand six months of 2005 compared to the same periods in 2004, strongperformances by Lipitor, Zithromax and other product lines, and the weakeningof the U.S. dollar relative to a number of foreign currencies. Such impactswere offset in part by sales declines for Celebrex and Bextra, due to recentregulatory actions, as well as for Neurontin, Diflucan and Accupril/Accuretic,due to recent generic competition in the U.S.

Changes in foreign exchange rates increased revenues in the secondquarter of 2005 by $335 million or 2.7% and increased revenues in thefirst six months of 2005 by $734 million or 3.0% compared to the sameperiods in 2004. The foreign exchange impact on the second quarter and firstsix months of 2005 revenue growth was due to the weakening of the U.S. dollar relativeto many foreign currencies, especially the euro. However, due to the recentstrengthening of the dollar, and in combination with the factors stated above,we now expect 2005 revenues for the full year, at current foreign exchangerates, to evidence a modest decline relative to 2004.

The impact of price changes on revenues was 3.6% in thesecond quarter of 2005 and 2.6% in the first six months of 2005.

The loss of patent protectionwith respect to any of our major products could have a material adverse effecton revenue and net income. We expect a substantial impact from the loss ofexclusivity of certain major products over the next few years. 

Deductions from Revenues

As is typical in the pharmaceutical industry, our grossproduct sales are subject to a variety of deductions, primarily representingrebates and discounts to government agencies, wholesalers and managed careorganizations. These deductions represent estimates of the related liabilitiesand, as such, judgment is required when estimating the impact of these sales deductionson gross sales for a reporting period. Historically, our adjustments to actualhave not been material; on a quarterly basis, they generally have been lessthan 0.5% of Human Health net sales and can result in either a net increase ora net decrease to income.

Rebates under Medicaid and related state programs reducedrevenues by $324 million and $699 million for the three months andsix months ended July 3, 2005 and $323 million and $671 millionfor the three months and six months ended June 27, 2004. Performance-basedcontracts also provide for rebates to several customers. Contract rebatesreduced revenues by $575 million and $1.2 billion for the threemonths and six months ended July 3, 2005 and $530 million and $976 millionfor the three months and six months ended June 27, 2004. These contractsare with managed care customers, including health maintenance organizations andpharmacy benefit managers, who receive rebates based on the achievement ofcontracted performance terms for products. Rebates are product-specific and,therefore, for any given year are impacted by the mix of products sold.Chargebacks (primarily discounts to federal government agencies) reducedrevenues by $298 million and $592 million for the three months andsix months ended July 3, 2005 and $303 million and $574 millionfor the three months and six months ended June 27, 2004.

Our accruals for Medicaid rebates, contract rebates andchargebacks totaled $1.6 billion at July 3, 2005 and $1.7 billionat December 31, 2004.

Revenues by Country

Revenues by country for the secondquarter and first six months of 2005 and the changes from the same periods in2004 follow:

|                        |   | Second  Quarter   |
|------------------------|---|-------------------|
| (millions  of dollars) |   | 2005              |  | % of  Revenues |  |  |  | 2004 |  | % of  Revenues |  | %  Change |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
| United States          | $ | 6,186             |  | 49.8 | % |  | $ | 6,595 |  | 53.7 | % | (6)% |
| Japan                  |   | 901               |  | 7.3 |  |  |  | 821 |  | 6.7 |  | 10     |
| All other              |   | 5,338             |  | 42.9 |  |  |  | 4,858 |  | 39.6 |  | 10     |
| Consolidated           | $ | 12,425            |  | 100.0 | % |  | $ | 12,274 |  | 100.0 | % | 1     |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
|                        |   | First  Six Months |
| (millions  of dollars) |   | 2005              |  | % of  Revenues |  |  |  | 2004 |  | % of  Revenues |  | %  Change |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
| United States          | $ | 13,163            |  | 51.6 | % |  | $ | 13,744 |  | 55.5 | % | (4)% |
| Japan                  |   | 1,783             |  | 7.0 |  |  |  | 1,549 |  | 6.3 |  | 15     |
| All other              |   | 10,570            |  | 41.4 |  |  |  | 9,469 |  | 38.2 |  | 12     |
| Consolidated           | $ | 25,516            |  | 100.0 | % |  | $ | 24,762 |  | 100.0 | % | 3     |

Geographic Revenues by Segment

Geographic revenues by segment forthe second quarter and first six months of 2005 and the changes from the sameperiods in 2004 follow:

|                        |   | Second  Quarter   |
|------------------------|---|-------------------|
|                        |   | Revenues          |  | % Change  in Revenues |
|                        |   | U.S.              |  | International |  | U.S. |  | International |
| (millions  of dollars) |   | 2005              |  | 2004 |  | 2005 |  | 2004 |  | 05/04 |  | 05/04 |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
| Human Health           | $ | 5,387             | $ | 5,886 | $ | 5,251 | $ | 4,818 |  | (8)% |  | 9% |
| Consumer Healthcare    |   | 463               |  | 421 |  | 506 |  | 448 |  | 10     |  | 13    |
| Animal Health          |   | 263               |  | 217 |  | 315 |  | 267 |  | 21     |  | 18    |
| Other                  |   | 73                |  | 71 |  | 167 |  | 146 |  | 3     |  | 14    |
| Total Revenues         | $ | 6,186             | $ | 6,595 | $ | 6,239 | $ | 5,679 |  | (6)    |  | 10    |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
|                        |   | First  Six Months |
|                        |   | Revenues          |  | % Change  in Revenues |
|                        |   | U.S.              |  | International |  | U.S. |  | International |
| (millions  of dollars) |   | 2005              |  | 2004 |  | 2005 |  | 2004 |  | 05/04 |  | 05/04 |
|              |   |                   |  |  |  |  |  |  |  |  |  |  |
| Human Health           | $ | 11,593            | $ | 12,348 | $ | 10,485 | $ | 9,397 |  | (6)% |  | 12% |
| Consumer Healthcare    |   | 946               |  | 838 |  | 968 |  | 835 |  | 13     |  | 16    |
| Animal Health          |   | 482               |  | 416 |  | 591 |  | 496 |  | 16     |  | 19    |
| Other                  |   | 142               |  | 142 |  | 309 |  | 290 |  | (1)    |  | 7    |
| Total Revenues         | $ | 13,163            | $ | 13,744 | $ | 12,353 | $ | 11,018 |  | (4)    |  | 12    |

Revenue information for severalof our major Human Health products, which includes three additional business daysin our fiscal calendar in the first quarter and six months of 2005 compared tothe same periods in 2004, follows:

|                                               |                                                                                                                                                                                                            | Second  Quarter |  | First  Six Months    |
|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|--|----------------------|
| (millions  of dollars)  Product               | Primary  Indications                                                                                                                                                                                       | 2005       |  | % Change  from 2004  |  | 2005  |  | %  Change  from 2004 |
|                                     |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| **Cardiovascular  and  metabolic diseases:**  |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Lipitor                                       | Reduction of  LDL cholesterol                                                                                                                                                                              | $2,858     |  | 21%                  |  | $5,932  |  | 22% |
| Norvasc                                       | Hypertension                                                                                                                                                                                               | 1,156      |  | 12    |  | 2,331  |  | 7    |
| Cardura                                       | Hypertension/Benign  prostatic hyperplasia                                                                                                                                                                 | 155        |  | (4)        |  | 309  |  | --    |
| Accupril/Accuretic                            | Hypertension/Congestive  heart failure                                                                                                                                                                     | 73         |  | (53)       |  | 173  |  | (50)   |
| Caduet                                        | Reduction of  LDL cholesterol and hypertension                                                                                                                                                             | 41         |  | M+         |  | 73  |  | 143    |
| **Central  nervous   system disorders:**      |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Zoloft                                        | Depression and  anxiety disorders                                                                                                                                                                          | 796        |  | 1     |  | 1,641  |  | 3    |
| Neurontin                                     | Epilepsy and  post-herpetic neuralgia                                                                                                                                                                      | 161        |  | (79)       |  | 343  |  | (77)   |
| Geodon                                        | Schizophrenia  and acute manic or mixed episodes associated with bipolar disorder                                                                                                                          | 145        |  | 32    |  | 282  |  | 42    |
| Xanax/Xanax XR                                | Anxiety/Panic  disorders                                                                                                                                                                                   | 104        |  | 21    |  | 206  |  | 20    |
| Aricept**                                     | Alzheimer's  disease                                                                                                                                                                                       | 86         |  | 16    |  | 170  |  | 18    |
| Relpax                                        | Migraine  headaches                                                                                                                                                                                        | 50         |  | 34    |  | 103  |  | 53    |
| Lyrica                                        | Epilepsy,  post-herpetic neuralgia and diabetic peripheral neuropathy                                                                                                                                      | 38         |  | *     |  | 58  |  | *    |
| **Arthritis  and pain:**                      |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Celebrex                                      | Arthritis pain  and inflammation, acute pain                                                                                                                                                               | 401        |  | (45)       |  | 813  |  | (46)   |
| Bextra                                        | Arthritis pain  and inflammation                                                                                                                                                                           | (42)            |  | *     |  | 14  |  | (97)   |
| **Infectious  and  respiratory diseases:**    |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Zithromax                                     | Bacterial  infections                                                                                                                                                                                      | 424        |  | 14    |  | 1,221  |  | 46    |
| Zyvox                                         | Bacterial  infections                                                                                                                                                                                      | 153        |  | 39    |  | 296  |  | 43    |
| Diflucan                                      | Fungal  infections                                                                                                                                                                                         | 129        |  | (55)       |  | 267  |  | (55)   |
| Vfend                                         | Fungal  infections                                                                                                                                                                                         | 91         |  | 28    |  | 179  |  | 33    |
| **Urology:**                                  |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Viagra                                        | Erectile  dysfunction                                                                                                                                                                                      | 391        |  | 1     |  | 829  |  | 3    |
| Detrol/Detrol LA                              | Overactive  bladder                                                                                                                                                                                        | 222        |  | 22    |  | 474  |  | 22    |
| **Oncology:**                                 |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Camptosar                                     | Metastatic  colorectal cancer                                                                                                                                                                              | 233        |  | 58    |  | 445  |  | 87    |
| Ellence                                       | Breast cancer                                                                                                                                                                                              | 96         |  | 10    |  | 186  |  | 11    |
| Aromasin                                      | Advanced breast  cancer                                                                                                                                                                                    | 58         |  | 86    |  | 113  |  | 107    |
| **Ophthalmology:**                            |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Xalatan/Xalacom                               | Glaucoma and  ocular hypertension                                                                                                                                                                          | 341        |  | 17    |  | 673  |  | 18    |
| **Endocrine  disorders:**                     |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Genotropin                                    | Replacement of  human growth hormone                                                                                                                                                                       | 201        |  | 12    |  | 404  |  | 12    |
| **All other:**                                |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Zyrtec/Zyrtec-D                               | Allergies                                                                                                                                                                                                  | 355        |  | 16    |  | 697  |  | 15    |
| **Alliance  revenue:**                        |                                                                                                                                                                                                            |                 |  |                      |  |  |  |  |
| Aricept, Macugen, Mirapex, Rebif  and Spiriva | Alzheimer's  disease (Aricept), neovascular (wet) age-related macular degeneration  (Macugen), Parkinson's disease (Mirapex), multiple sclerosis (Rebif), chronic  obstructive pulmonary disease (Spiriva) | 248        |  | 79    |  | 490  |  | 73    |

  

| *                                                                  | Calculation  not meaningful.                                          |
|--------------------------------------------------------------------|-----------------------------------------------------------------------|
| **                                                                 | Represents  direct sales under license agreement with Eisai Co., Ltd. |
| M+                                                                 | Change  greater than one-thousand percent.                            |
| Certain  amounts and percentages may reflect rounding adjustments. |

Selected ProductDescriptions:

| • | **Lipitor,** for the treatment of elevated cholesterol  levels in the blood, is the most widely used treatment for lowering  cholesterol and the best-selling pharmaceutical product of any kind in the  world. After eight years on the market, it continues to generate double-digit  revenue growth. Year-to-date U.S. new prescriptions for Lipitor grew 10%, in  a strong growth market.****With its ability to bring the vast majority of  patients to target cholesterol goals across the full dosing range, with an  excellent safety profile and proven range of cardiovascular benefits, Lipitor  continues to gain wide physician and patient acceptance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        | There continues to be an  opportunity for further growth of the cholesterol-lowering market. Worldwide,  millions of people with high cholesterol are not diagnosed, are not treated,  or are treated with a dose inadequate to achieve their cholesterol goals.  Evolving treatment guidelines continue to encourage the broad use of statin  therapy.                                                                                                                                                                                                                                                                                                              |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        | In addition, the Australian  Government Pharmaceutical Benefits Advisory Committee recently reviewed  comprehensive data on the clinical and cost-effective benefits of Lipitor  compared to simvastatin and concluded that Lipitor is more effective at lowering  cholesterol. We believe this to be a very positive endorsement of the  benefits of Lipitor for millions of patients around the world by an  independent official government advisory committee. This review of our data  may have significant implications for other governments when considering the  efficacy and cost effectiveness of Lipitor.                                                |

  

| • | **Norvasc** is the world's most-prescribed branded  medicine for treating hypertension. The reduced rate of growth in sales in  the first six months of 2005 compared to same period in 2004 (7% in 2005 as  compared to 9% in 2004) is attributable to patent expirations in several  European Union (E.U.) member countries. Norvasc maintains exclusivity in many  other major markets globally, including the U.S., Japan, Canada and Australia.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • | **Zoloft** is the  most-prescribed antidepressant in the U.S. It is indicated for the treatment  of depression, panic disorder, obsessive-compulsive disorder (OCD) in adults  and children, post-traumatic stress disorder (PTSD), premenstrual dysphoric  disorder (PMDD) and social anxiety disorder (SAD). Zoloft is approved for  acute and long-term use in all of these indications, with the exception of  PMDD, and is the only approved agent for the long-term treatment of PTSD and  SAD, an important differentiating feature as these disorders tend to be  chronic.                                                                                                                                                                                                                                                                                                                     |
|        | **  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        | In the E.U., the Committee for  Human Medicinal Products (CHMP) is conducting a review of 12 antidepressants,  including Zoloft, regarding their use in children and adolescents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        | In the U.S., in February 2005,  Pfizer implemented FDA instructions that require the makers of all currently  marketed antidepressants, including tricyclic agents, monoamine oxidase (MAO)  inhibitors, selective serotonin reuptake inhibitors such as Zoloft, selective  norepinephrine reuptake inhibitors and atypical antidepressants, to include a  black-box warning that antidepressants increased the risk of suicidal  thinking and behavior in children and adolescents in pooled, short-term  studies. In the nine completed clinical trials of Zoloft involving children  and adolescents, which included studies of Zoloft in children diagnosed with  depression, OCD, or both, no suicides occurred. The trials found no  statistically significant differences between Zoloft-treated children and adolescents  and placebo controls in their rates of suicide attempts or ideation. |

  

| • | **Neurontin,** for use in  adjunctive therapy for epilepsy, is also approved in more than 60 markets for  the treatment of a range of neuropathic pain conditions. Neurontin has also  been approved for the management of post-herpetic neuralgia (PHN), a  persistent, painful condition that affects many people in the aftermath of  the viral infection commonly known as shingles. Neurontin was the first oral  medication approved in the U.S. for the treatment of PHN.                                                                                                                                                                                                 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        | In the latter half of 2004, Ivax  Corporation (Ivax), Alpharma Inc. (Alpharma) and Teva Pharmaceuticals  Industries Ltd. (Teva) launched generic versions of Neurontin (gabapentin)  at-risk, despite ongoing patent litigation. We are aggressively pursuing our  claims of patent infringement against Ivax, Alpharma, Teva and other generic  manufacturers. Following those at-risk launches, we launched generic  gabapentin through Greenstone, our U.S. generic pharmaceutical subsidiary.  However, the introduction of generic versions of gabapentin caused a 77%  reduction in the first six months of 2005 Neurontin sales as compared to the  same period in 2004.  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| • | **Geodon**, a psychotropic  agent, is a dopamine and serotonin receptor antagonist indicated for the  treatment of schizophrenia and acute manic or mixed episodes associated with  bipolar disorder. Available in both an oral capsule and rapid-acting  intramuscular formulation, Geodon is now launched in 49 countries, where more  than five million prescriptions have been written for more than one million  patients worldwide. In the U.S., weekly new and total prescription shares for  Geodon continue to grow and Geodon is now the second fastest growing atypical  antipsychotic, achieving a new market share high of 6.5% for new  prescriptions in May 2005. |

  

| •       | **Lyrica**was****approved  by the FDA in June 2005 for adjunctive therapy for adults with partial onset  seizures. This latest indication builds on the earlier FDA approval of Lyrica  for two of the most common forms of neuropathic pain -- diabetic peripheral  neuropathy, a chronic neurologic condition affecting nearly three million  Americans, and postherpetic neuralgia. Lyrica is now approved in 50 countries  outside the U.S. In the U.K., Germany, and Mexico, Lyrica is one of the most  successful epilepsy or neuropathic pain launches ever. A regulatory filing  has been submitted in the E.U. for use of Lyrica in treatment of generalized  anxiety disorder. Pfizer plans to launch Lyrica in the U.S. this fall.                                                                                                                                                                                                                                                   |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| •       | **Celebrex and Bextra**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|              | On April 7, 2005, the FDA announced  a decision to require boxed warnings of potential cardiovascular risk for all  COX-2 pain relievers and all prescription non-steroidal anti-inflammatory  drugs (NSAIDs), including older non-specific drugs such as ibuprofen and  naproxen. On July 29, 2005, Pfizer and the FDA finalized the label  changes for Celebrex. The final label contains a boxed warning of potential  serious cardiovascular and gastrointestinal risks for Celebrex that will be  consistent with warnings for all other prescription NSAIDs. The boxed warning  provides that Celebrex is contraindicated for patients who recently have  undergone coronary artery bypass graft surgery. The label recommends that  Celebrex be prescribed at the lowest effective dose for the shortest duration  consistent with individual patient treatment goals. Pfizer is continuing to  conduct additional clinical studies evaluating the benefits and risks of  Celebrex. |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|              | In the E.U., in June 2005, the CHMP  concluded its COX-2 referral process and recommended that both Celebrex and  Dynastat (parecoxib) remain available to patients. The European Medicines  Evaluation Agency (EMEA) has required new labeling for all COX-2 drugs that  includes a restriction on use for patients with established heart disease or  stroke and additional warnings to physicians regarding use in patients with  cardiovascular risk factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|              | Further, the FDA decided that while  Bextra's cardiovascular risk could not be differentiated from other NSAIDs,  the additional, increased risk of rare but serious skin reactions associated  with Bextra, already described in its label, warranted its withdrawal from  the market. In 2004, we recorded $1.3 billion in revenue for Bextra. We  respectfully disagree with the FDA's position regarding the relative  risk/benefit profile of Bextra. However, in deference to the regulatory  agency's view, we suspended sales of the medicine pending further discussions  with the FDA. In addition, at the request of European and other regulators,  we suspended sales of Bextra in the E.U., Canada and many other markets  around the world.                                                                                                                                                                                                                                 |

  

|  | In connection with the decision to  suspend sales of Bextra in the U.S., E.U., and certain other markets, we  recorded certain charges totaling $1.2 billion ($761 million, net  of tax) in the first six months of 2005. These pre-tax charges included $1.1 billion  related to the impairment of developed technology rights associated with  Bextra and $7 million related to the write-off of machinery and equipment,  both of which are included in *Other (income)/deductions-net*; $56 million  in write-offs of inventory and exit costs, included in *Cost of sales*;  $5 million related to the costs of administering the suspension of  sales, included in *Selling, informational and administrative expenses;*and  $173 million, for an estimate of customer returns, primarily included against  *Revenues.* Substantially all of these charges were recorded in the  first quarter of 2005.                                                   |
|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|  | The market for pain relievers has  shown considerable change since the withdrawal of Vioxx in September 2004.  Sales of Celebrex began to decline in the late 2004. However, following the  FDA and EMEA regulatory reviews of these medicines in February 2005, the  market for prescription pain relievers indicated lower, but stabilizing  levels compared to pre-Vioxx withdrawal levels. We do not expect the  additional labeling information for Celebrex to further impact 2005 revenues.  Revenues from Celebrex in 2005, prior to the FDA's decision in April 2005,  were already expected to be significantly lower than in 2004. In December  2004, we submitted a New Drug Application to the FDA for Dynastat. We plan to  continue the regulatory process for this medicine. On July 29, 2005, the  FDA approved a new indication for Celebrex for the relief of the signs and  symptoms associated with ankylosing spondylitis, a form of arthritis that  affects the spine. |

  

| • | **Zithromax** is the world's  largest selling antibiotic as well as the leading branded product in the U.S.  respiratory-infection market. Zithromax is first-line therapy for a number of  key indications, including acute exacerbations of chronic bronchitis,  community-acquired pneumonia, sinusitis, and otitis media. Zithromax performance was strong in the first six months  of 2005, based on its clear benefits as well as an active flu season in the  first quarter of 2005. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        | Although Zithromax has experienced  patent expirations in certain countries, it retains basic patent protection  in the U.S. until November 2005.                                                                                                                                                                                                                                                                                                                                           |

  

| • | **Diflucan** is a systemic  antifungal. The decrease in sales in the first six months of 2005 compared to  the same period in 2004 is mainly due to loss of exclusivity in the U.S. in  July 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | **Viagra** remains the leading  treatment for erectile dysfunction and one of the world's most recognized  pharmaceutical brands. The increase in sales in the first six months of 2005  compared to the same period in 2004, reflects the stabilization of the market  after the introduction of two competing products. Viagra maintains a strong  leadership position with more than 60% of worldwide sales of  phosphodiesterase-5 inhibitors for the twelve months ending May 2005.                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        | On July 8, 2005, the FDA  approved an update to the Viagra label to reflect rare post-marketing reports  of non-arteritic anterior ischemic optic neuropathy (NAION) in patients  taking PDE5 inhibitor medications. The updated label will note that in rare  instances, men taking PDE5 inhibitors, including Viagra, reported a sudden  decrease or loss of vision in one or both eyes and that it is not possible to  determine whether these events are related directly to these medicines, to  the patient's underlying vascular risk factors, to a combination of these  factors, or other factors. Most of the reported NAION cases occurred in  Viagra users with underlying anatomic or vascular risk factors associated with  the development of NAION. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | **Camptosar** is a semisynthetic  camptothecin derivative that works by inhibiting the topoisomerase 1 enzyme,  which is involved in cancer cell replication. Camptosar is indicated as  first-line therapy for metastatic colorectal cancer in combination with  5-fluorouracil and leucovorin. It is also indicated for patients in whom  colorectal cancer has recurred or progressed despite initial fluorouracil-based  therapy. Camptosar is for intravenous use only. Revenue growth of 87% in the  first six months of 2005 compared to the same period in 2004 was impacted in  part by Pfizer's acquisition of marketing rights to Campto/Camptosar in  Europe and Asia (except Japan) in late 2004.                                                           |

  

| • | **Xalatan/Xalacom,**a  prostaglandin analogue used to lower the intraocular pressure associated with  glaucoma and ocular hypertension, is the most-prescribed branded glaucoma  medicine in the world. Clinical data showing its  advantages in treating intra-ocular pressure compared with beta blockers  should support the continued growth of this important medicine. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

| • | **Zyrtec** provides strong,  rapid and long-lasting relief for seasonal and year-round allergies and hives  with once-daily dosing. Zyrtec continues to be the most-prescribed  antihistamine in the U.S. in a challenging market. The increase in sales in  the first six months of 2005 compared to the same period in 2004 is  attributable to stabilization in the prescription antihistamine market  subsequent to the Rx to OTC switch of loratadine as the majority of the  managed care plans have completed their formulary tier changes in this  category. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Consumer Healthcare

Revenues of our ConsumerHealthcare business, which include three additional business days in our fiscalcalendar in the first quarter and six months of 2005 compared to the sameperiods in 2004, follow:

|                        |   | Second  Quarter |   |      | First  Six Months |
|------------------------|---|-----------------|---|------|-------------------|
| (millions  of dollars) |   | 2005            |   | 2004 | % Change     |  |  | 2005 |  | 2004 | %  Change |
|              |   |                 |   |      |                   |  |  |  |  |  |  |
| Consumer Healthcare    | $ | 969             | $ | 869  | 12%               |  | $ | 1,914 | $ | 1,673 | 14% |

The increase in ConsumerHealthcare revenues in the second quarter and first six months of 2005, as comparedto the same periods in 2004, was attributable to:

| • | the 16% increase in the second  quarter and 18% increase in the first six months of 2005 in sales of  Listerine mouthwash, which benefited from the U.S. launches of Listerine  Advanced in September 2004 and Listerine Whitening in April 2005, as well as  the international roll-out of Listerine Citrus in 2005; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                             |
| • | growth from Sudafed and other  upper-respiratory products, Zantac, and tobacco dependence products;                                                                                                                                                                                                                   |
|        |                                                                                                                                                                                                                                                                                                             |
| • | inclusion of sales from the  recently acquired Purell brand; and                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                             |
| • | the favorable impact of the  weakening of the U.S. dollar relative to many foreign currencies.                                                                                                                                                                                                                        |

Animal Health

Revenues of our Animal Healthbusiness, which include three additional business days in our fiscal calendarin the first quarter and six months of 2005 compared to the same periods in2004, follow:

|                           |   | Second  Quarter |   |      | First  Six Months    |
|---------------------------|---|-----------------|---|------|----------------------|
| (millions  of dollars)    |   | 2005            |   | 2004 | % Change        |  |  | 2005 |  | 2004 | % Change |
|                 |   |                 |   |      |                      |  |  |  |  |  |  |
| Livestock products        | $ | 354             | $ | 288  | 23%                  |  | $ | 657 | $ | 553 | 19% |
| Companion animal products |   | 224             |   | 196  | 14    |  |  | 416 |  | 359 | 16    |
| Total Animal Health       | $ | 578             | $ | 484  | 19    |  | $ | 1,073 | $ | 912 | 18    |

The increase in Animal Healthrevenues in the second quarter and first six months of 2005, as compared to thesame periods in 2004, was attributable to:

| • | in livestock, the continued  performance of Draxxin (for treatment of respiratory disease in cattle and  swine) in Europe and robust results in the U.S., which benefited from  favorable dairy economics, as well as strong sales of Excede (an  antimicrobial aimed at treating respiratory disease in beef, non-lactating  cattle and swine) launched in the U.S. during the third quarter of 2004; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                              |
| • | in companion animal, increased  promotional activities throughout our markets resulted in Rimadyl, Revolution  and Clavamox growing at double-digit rates for the******first six  months of 2005; and                                                                                                                                                                                                  |
|        |                                                                                                                                                                                                                                                                                                                                                                                              |
| • | the favorable impact of the  weakening of the U.S. dollar relative to many foreign currencies.                                                                                                                                                                                                                                                                                                         |

COSTS AND EXPENSES

Cost of Sales

Cost of sales grew 19% in the second quarter of 2005 and 20%for the first six months of 2005, and increased as a percentage of revenues, ascompared with the prior year periods. The primary drivers of these increaseswere adverse changes in geographic, segment and product mix, and productionvolume, which reflect the loss of exclusivity of certain major products in theU.S. and lower year-over-year sales of COX-2 products, and the unfavorableimpact of foreign exchange. In the first quarter of 2005, we also recorded chargesfor write-offs of inventory and exit costs related to the suspension of Bextrasales (see Note 2, *Asset Impairment Charge and Other Costs Associatedwith the Suspension of Bextra Sales*).

Cost of sales as a percentage of revenues will remain underpressure throughout the remainder of 2005.

Selling, Informational and Administrative Expenses

Selling, informational and administrative expenses decreased1% in the second quarter and increased 1% in the first six months of 2005, ascompared to the same periods in 2004, reflecting an increase year-over-year inmerger-related synergies, partially offset by the unfavorable impact of foreignexchange.

Research and Development Expenses

Research and development (R&D) expenses increased 3% inthe second quarter and 5% in the first six months of 2005, as compared to thesame periods in 2004. This was attributable to continued investment to supportlong-term growth, the advancement of our portfolio and the unfavorable impactof foreign exchange.

*Product Developments*

We continue to invest in R&D to provide future sourcesof revenue through the development of new products, as well as throughadditional uses for existing in-line and alliance products. We have a broad anddeep pipeline of medicines in development. However, there are no assurances asto when, or if, we will receive regulatory approval for additional indicationsfor existing products or any of our other products in development.

Certain significant regulatory actions by, and filingspending with, the FDA and other regulatory authorities follow:

Recent FDA Approvals:

| **Product**        | **Indication**                                                                                     | ** ** | **Date Approved** |
|--------------------|----------------------------------------------------------------------------------------------------|------------|-------------------|
|          |                                                                                                    |            |                   |
| Celebrex           | For the relief  of the signs and symptoms associated with ankylosing spondylitis                   |            | July 2005         |
|          |                                                                                                    |            |                   |
| Lyrica             | Add-on therapy  for adult epilepsy patients with partial onset seizures                            |            | June 2005         |
|          |                                                                                                    |            |                   |
| Revatio            | Oral treatment  for adult pulmonary arterial hypertension (PAH)                                    |            | June 2005         |
|          |                                                                                                    |            |                   |
| Zmax               | Single dose  version of Zithromax for acute bacterial sinusitis and community-acquired  pneumonia. |            | June 2005         |
|          |                                                                                                    |            |                   |
| Zyvox              | For the  treatment of bacterial infections in pediatric patients                                   |            | May 2005          |
|          |                                                                                                    |            |                   |
| Depo-SubQ  Provera | Subcutaneous  formulations to treat endometriosis pain                                             |            | March 2005        |
|          |                                                                                                    |            |                   |
| Ellence            | Adjuvant  long-term cancer treatment                                                               |            | March 2005        |

Pending U.S. New Drug Applications (NDAs) andSupplemental Filings:

| **Product**  | **Indication**                                                                                                                                   | ** ** | **Date Submitted** |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|
|    |                                                                                                                                                  |            |                    |
| Genotropin   | Treatment of  short stature and growth problems resulting from Turner's syndrome                                                                 |            | June 2005          |
|    |                                                                                                                                                  |            |                    |
| Vfend        | Pediatric  filing                                                                                                                                |            | June 2005          |
|    |                                                                                                                                                  |            |                    |
| Indiplon     | Modified-release  tablets for treatment of multiple aspects of insomnia                                                                          |            | May 2005           |
|              | Immediate-release  capsules for treatment of multiple aspects of insomnia                                                                        |            | April 2005         |
|    |                                                                                                                                                  |            |                    |
| Exubera      | Inhaled form of  insulin for type 1 and type 2 diabetes                                                                                          |            | February 2005      |
|    |                                                                                                                                                  |            |                    |
| Dynastat     | Injectable  prodrug of valdecoxib for acute pain                                                                                                 |            | December 2004      |
|    |                                                                                                                                                  |            |                    |
| Aromasin     | Treatment for  early breast cancer                                                                                                               |            | December 2004      |
|    |                                                                                                                                                  |            |                    |
| Oporia       | Vaginal atrophy                                                                                                                                  |            | December 2004      |
|              | Selective  estrogen modulator for the prevention of post-menopausal osteoporosis                                                                 |            | August 2004        |
|    |                                                                                                                                                  |            |                    |
| Norvasc      | Reduction of  cardiovascular risk, including risk of coronary heart disease, myocardial  infarction, cardiovascular  procedures and strokes |            | August 2004        |
|    |                                                                                                                                                  |            |                    |
| Fragmin      | Use in oncology  patients to reduce cardiac toxicity associated with chemotherapy                                                                |            | March 2004         |

| **   **                   |                                                                                                                                                                                     |                    |
|------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|
| Other Regulatory Approvals and  Filings: |                                                                                                                                                                                     |                    |
|                                          |                                                                                                                                                                                     |                    |  |
| **Product**                              | **Description  of Event**                                                                                                                                                           | **Date  Approved** |  | **Date Submitted** |
| **  **                         | ** **                                                                                                                                                                          | ** **         |  | ** ** |
| Revatio                                  | Approval in  the E.U. for treating PAH                                                                                                                                              | July 2005          |  | -- |
|                                          |                                                                                                                                                                                     |                    |  |  |
| Lyrica                                   | Approval in  Canada for neuropathic pain                                                                                                                                            | June 2005          |  | -- |
|                                |                                                                                                                                                                                     |                    |  |  |
| Macugen                                  | Approval in  Canada and Brazil for age-related macular degeneration (AMD)                                                                                                           | May 2005           |  | -- |
|                                          | Application  submitted in Switzerland for AMD                                                                                                                                       | --                 |  | January 2005 |
|                                          | Application  submitted in the E.U. and Australia for AMD                                                                                                                            | --                 |  | September 2004 |
|                                |                                                                                                                                                                                     |                    |  |  |
| Fragmin                                  | Approval in  the E.U. for treatment of deep vein thrombosis in cancer patients                                                                                                      | April 2005         |  | -- |
|                                |                                                                                                                                                                                     |                    |  |  |
| Vfend                                    | Approval in  Japan for treatment of aspergillosis                                                                                                                                   | April 2005         |  | -- |
|                                          | Approval  for treatment of serious, invasive, fluconazole-resistant candida infections  and first-line treatment of candidemia in non-neutropenic patients was  granted in the E.U. | January 2005       |  | -- |
|                                |                                                                                                                                                                                     |                    |  |  |
| Geodon                                   | Application  submitted in the E.U. for treating manic bipolar disorder                                                                                                              | --                 |  | December 2004 |
|                                |                                                                                                                                                                                     |                    |  |  |
| Genotropin                               | Application  submitted in Japan for treatment of short stature and growth problems                                                                                                  | --                 |  | July 2004 |
|                                |                                                                                                                                                                                     |                    |  |  |
| Neurontin                                | Application  submitted in Japan for epilepsy                                                                                                                                        | --                 |  | April 2004 |
|                                |                                                                                                                                                                                     |                    |  |  |
| Exubera                                  | Application  submitted in the E.U. as an inhaled form of insulin for type 1 and type 2  diabetes                                                                                    | --                 |  | February 2004 |

** **

** **

Ongoing or planned clinical trials for additional uses anddosage forms for our products include:

| **Product**                    | **Indication**                                                                                           |
|--------------------------------|----------------------------------------------------------------------------------------------------------|
|                      |                                                                                                          |
| Celebrex                       | Sporadic  adenomatous polyposis - a precancerous condition caused by growths (polyps)  in the intestines |
|                                | Cardiovascular  benefits in osteoarthritis patients at high cardiovascular risk                          |
|                      |                                                                                                          |
| Camptosar IV                   | Adjuvant  colorectal cancer in patients with liver metastasis                                            |
|                                | Gastric cancer                                                                                           |
|                      |                                                                                                          |
| Xalatan (new  delivery device) | Ocular  hypertension                                                                                     |

Drugcandidates in late-stage development include Sutent, or SU-11248, anangiogenesis inhibitor for treatment of gastrointestinal stromal tumors andmetastatic renal cell carcinoma; varenicline, a nicotine-receptor partial agonistfor smoking cessation; maraviroc (UK-427,857), a CCR-5 receptor antagonist forHIV; torcetrapib/atorvastatin, a combination CETP inhibitor/statin for heartdisease; asenapine, for schizophrenia and bipolar disorder, underco-development with Akzo Nobel's Organon healthcare unit; andZithromax/chloroquine for treatment of malaria. The Company anticipates filingan NDA with the FDA for Sutent in August 2005. The FDA has granted fast-trackdesignation for maraviroc's clinical development program. Pfizer has enteredinto an agreement to acquire Vicuron Pharmaceuticals, a company with twopromising anti-infectives in regulatory review. The transaction is subject tonormal closing conditions.

**Torcetrapib/atorvastatin**,a fixed combination of the new chemical entity torcetrapib (a CETP inhibitordiscovered by Pfizer that raises HDL-cholesterol) with atorvastatin (Lipitor),is****continuing in global Phase 3 clinical trials. This comprehensive12,000-subject Phase 3 program includes comparative atherosclerotic imagingtrials (coronary intravascular ultrasound and carotid ultrasound), as well as afull range of blood-lipid efficacy studies comparing torcetrapib/atorvastatinto Lipitor, other statins, and fibrates. The development program is alsoenrolling 13,000 patients in a definitive mortality and morbidity trial.

Despite effective treatments,cardiovascular disease remains the number one killer worldwide. The objectiveof the torcetrapib/atorvastatin development program is to provide clearevidence of the cardiovascular benefits of substantially raisingHDL-cholesterol and further lowering of LDL-cholesterol over the establishedclinical benefits of LDL-cholesterol lowering provided by Lipitor alone. Torcetrapibis being initially developed in fixed combination with atorvastatin forscientific, medical, regulatory, business, and ethical reasons. This developmentprogram represents a major commitment by Pfizer to significantly advanceunderstanding of lipids and atherosclerosis to provide an important new toolfor patients and prescribers in preventing and treating the global burden ofcardiovascular disease**.**

The clinical development program for the selective cytotoxicagent edotecarin was terminated in the first quarter of 2005; developmentrights for edotecarin were returned to Banyu Pharmaceuticals, Inc.

Pfizer's participation in the clinical development programsfor capravirine, a non-nucleoside reverse transcriptase inhibitor for HIV, andDaxas, a phosphodiesterase-4 inhibitor for chronic obstructive pulmonarydisease and asthma, was terminated in the second quarter 2005; developmentrights were returned to Shiongi & Co. Ltd and Altana Pharma, Inc.respectively.

Additional product-related programs are in various stages ofdiscovery and development.

Merger-Related In-Process Research and DevelopmentCharges

The estimated value of merger-related in-process researchand development charge*s* (IPR&D) is expensed at acquisition date. In2005, we expensed $262 million of IPR&D, primarily related to ouracquisition of Idun Pharmaceuticals, Inc. on April 12, 2005. In 2004, weexpensed $955 million of IPR&D, primarily related to our acquisitionof Esperion Therapeutics, Inc. on February 10, 2004.

Adapting to Scale Initiative

We recently launched a company-wide initiative, calledAdapting to Scale (AtS), which involves a comprehensive review of ourprocesses, organizations, systems and decision making. In the second quarter of2005, in connection with this AtS initiative, we incurred and paid approximately$21 million in restructuring charges, primarily related to employeetermination costs at our manufacturing facilities located in North America. Wealso incurred and paid approximately $33 million in implementation costs,included in *Cost of sales* ($1 million), *Selling, informationaland administrative expenses* ($21 million) and*Research anddevelopment expenses* ($11 million), primarily related to system andprocess standardization and the expansion of shared services.

We now expect the costsassociated with this multi-year effort to continue through 2008 and to totalapproximately $4 billion to $5 billion, on a pre-tax basis. Thesecosts will include restructuring charges, such as asset impairments, exit costsand severance costs (including any related impacts to our benefit plans,including settlements and curtailments) and associated implementation costs,such as accelerated depreciation charges, primarily associated with plantnetwork optimization efforts, and expenses associated with system and process standardizationand the expansion of shared services. Restructuring charges are included in *Restructuringcharges and merger-related costs*and implementation costs are included in *Costof sales*, *Selling, informational and administrative expenses*or*Researchand development expenses*, as appropriate.

Merger-Related Costs

We incurred the followingmerger-related costs primarily in connection with our acquisition of Pharmacia,which was completed on April 16, 2003:

|                                        |   | Three  Months Ended            |   | Six  Months Ended   |
|----------------------------------------|---|--------------------------------|---|---------------------|
| (millions  of dollars)                 |   | July 3,   2005  |   | June 27,  2004 |  | July 3,  2005 |  | June 27,  2004 |
|                              |   |                                |   |                     |  |  |  |  |
| Integration costs                      | $ | 191                            | $ | 150                 | $ | 297 | $ | 254 |
| Restructuring costs                    |   | 58                             |   | 139                 |  | 171 |  | 282 |
| Total  merger-related costs - expensed | $ | 249                            | $ | 289                 | $ | 468 | $ | 536 |

In connection with the acquisition of Pharmacia, Pfizermanagement approved plans to restructure and integrate the operations of bothlegacy Pfizer and legacy Pharmacia to combine operations, eliminate duplicativefacilities and reduce costs. The restructuring of our operations as a result ofour acquisition of Pharmacia is expected to continue through 2005 and includesconsulting, systems integrations, severance, costs of vacating duplicativefacilities, contract termination and other exit costs. Total merger-relatedexpenditures expected to be incurred during 2003-2005 to achieve anticipatedsynergies are about $6 billion, on a pre-tax basis, with $5.3 billionincurred through July 3, 2005. The remaining costs expected to beincurred are primarily associated with asset impairments, exit costs andemployee terminations. The integration of Warner-Lambert and Pharmacia isexpected to result in a combined expense reduction of $6 billion in 2005,inclusive of $4.2 billion of Pharmacia-related synergies that are expectedto be achieved this year.

Through April 15, 2004, we recorded restructuring costsassociated with employee terminations and exiting certain activities of legacyPharmacia as liabilities assumed in the purchase business combination and recordedan increase to goodwill. Changes to previous estimates of restructuring costsincluded as part of the purchase allocation of Pharmacia are recorded as areduction to goodwill or an expense to operations, as appropriate.Restructuring costs incurred for legacy Pfizer and restructuring costs incurredafter April 15, 2004 for legacy Pharmacia are charged to the results ofoperations.

The components ofmerger-related restructuring costs associated with legacy Pfizer and legacy Pharmaciafollow:

| (millions  of dollars)                     |   | Total |   | Utilization  Through  July 3,  2005 | (a) |   | Accrual  at  July 3,  2005 | (b) |
|--------------------------------------------|---|-------|---|------------------------------------------|-----|---|---------------------------------|-----|
|                                  |   |       |   |                                          |     |   |                                 |     |
| Costs capitalized through April 15,  2004: |   |       |   |                                          |     |   |                                 |     |
| Employee  termination costs                | $ | 1,535 | $ | 1,499                                    |     | $ | 36                              |     |
| Other                                      |   | 624   |   | 498                                      |     |   | 126                             |     |
|                                            | $ | 2,159 | $ | 1,997                                    |     | $ | 162                             |     |
| Costs expensed:                            |   |       |   |                                          |     |   |                                 |     |
| Employee  termination costs                | $ | 589   | $ | 482                                      |     | $ | 107                             |     |
| Asset  impairments                         |   | 368   |   | 368                                      |     |   | --                              |     |
| Other                                      |   | 89    |   | 57                                       |     |   | 32                              |     |
|                                            | $ | 1,046 | $ | 907                                      |     | $ | 139                             |     |

  

| (a) | Includes  insignificant adjustments to original amounts established. |
|-----|----------------------------------------------------------------------|
| (b) | Included  in *Other current liabilities.*                            |

During the first six months of2005, we expensed $72 million for *Employee termination costs,*$78 millionfor *Asset impairments*and $15 million in *Other.*Through July 3,2005, *Employee termination costs*represent the approved reduction of thelegacy Pfizer and legacy Pharmacia work force by 17,030 employees, mainlyin corporate, manufacturing, distribution, sales and research. We notified affectedindividuals and 15,901 employees were terminated as of July 3, 2005. *Employeetermination costs*include accrued severance benefits and costs associatedwith change-in-control provisions of certain Pharmacia employment contracts. *Assetimpairments*primarily include charges to write down property, plant andequipment. *Other* primarily includes costs to exit certain activities oflegacy Pfizer and legacy Pharmacia.

Other (Income)/Deductions - Net

In the first six months of 2005, we recorded impairment chargesof $1.1 billion related to the developed technology rights for Bextra, aCOX-2-selective inhibitor, and $7 million related to the write-off ofmachinery and equipment (see Note 2, *Asset Impairment Charge and OtherCosts Associated with the Suspension of Bextra Sales*), both of which areincluded in *Other (income)/deductions - net*.

In addition, in connectionwith the suspension of Bextra sales, we recorded $56 million in write-offsof inventory and exit costs, included in *Cost of sales*; $5 millionrelated to the costs of administering the suspension of sales, included in *Selling,informational and administrative expenses;* and $173 million, for anestimate of customer returns, primarily included against *Revenues.*Substantially all of these charges were recorded in the first quarter of 2005.

(BENEFIT)/PROVISION FOR TAXES ON INCOME

In the first six months of 2005, we recorded an income taxcharge of $1.7 billion, included in *(Benefit)/provision fortaxes on income*, in connection with our decision to repatriate about $36.7 billionof foreign earnings in accordance with the *American Jobs Creation Act of2004* (the Jobs Act). In the first quarter of 2005, we recorded an initialestimated income tax charge of $2.2 billion based on the decision torepatriate $28.3 billion of foreign earnings. In the second quarter of2005, we reduced our original estimate of the tax charge by $863 millionand revised the repatriation of foreign earnings to $28.1 billion,principally as a result of guidance issued by the U.S. Treasury in May 2005. Inthe second quarter of 2005, we also recorded an additional tax charge of $373 million,primarily due to our decision to repatriate an additional $8.6 billion offoreign earnings.

In the second quarter of 2005, we recorded a tax benefit of$586 million, primarily related to the resolution of certain taxpositions.

Our effective tax rate for continuing operations was 37.2%for the first six months of 2005 compared to 21.2% in the same period in 2004.The increase in the effective tax rate for the first six months of 2005 is dueto the previously mentioned tax charge associated with the repatriation offoreign earnings and a $262 million non-deductible charge for IPR&D, forthe most part relating to our acquisition of Idun Pharmaceuticals Inc.,partially offset by the tax benefit of $586 million primarily related tothe resolution of certain tax positions. Income taxes in the first six monthsof 2004 were impacted by a $955 million non-deductible charge forIPR&D, primarily relating to our acquisition of Esperion.

As of July 3, 2005, we intend to continue to reinvestthe earnings of our international subsidiaries and, therefore, we have notrecorded a U.S. tax provision on the remaining amount of unremitted earnings.

ADJUSTED INCOME

General Description of Adjusted Income Measure

Adjusted income is analternative view of performance used by management and we believe thatinvestors' understanding of our performance is enhanced by disclosing thisperformance measure. The Company reports Adjusted income in order to portraythe results of our major operations--the discovery, development, manufacture,marketing and sale of prescription medicines for humans and animals, as well asour over-the-counter products--prior to considering certain income statementelements. We have defined Adjusted income as Net income before discontinued operations,significant impact of purchase accounting for acquisitions, merger-related costsand certain significant items. The Adjusted income measure is not, and shouldnot be viewed as, a substitute for U.S. GAAP Net income.

TheAdjusted income measure is an important internal measurement for Pfizer. Wemeasure the performance of the overall Company on this basis. The following areexamples of how the Adjusted income measure is utilized. 

| • | Senior management receives a  monthly analysis of the operating results of our Company that is prepared on  an Adjusted income basis;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • | The annual budgets of our Company  are prepared on an Adjusted income basis; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • | Annual and long-term compensation,  including annual cash bonuses, merit-based salary adjustments and stock  options, for various levels of management, is based on financial measures  that include Adjusted income. The Adjusted income measure currently  represents a significant portion of target objectives that are utilized to  determine the annual compensation for various levels of management, although  the actual weighting of the objective may vary by level of management and job  responsibility and may be considered in the determination of certain  long-term compensation plans. The portion of senior management's bonus,  merit-based salary increase and stock option awards based on the Adjusted  income measure ranges from 10% to 30%. |

Despite the importance of thismeasure to management in goal setting and performance measurement, we stressthat Adjusted income is a non-GAAP financial measure that has no standardized meaningprescribed by U.S. GAAP and, therefore, has limits in its usefulness toinvestors. Because of its non-standardized definition, Adjusted income (unlikeU.S. GAAP Net income) may not be comparable with the calculation of similarmeasures for other companies. Adjusted income is presented solely to permitinvestors to more fully understand how management assesses the performance ofour Company.

We also recognize that, as aninternal measure of performance, the Adjusted income measure has limitationsand we do not restrict our performance-management process solely to this metric.A limitation of the Adjusted income measure is that it provides a view of ourCompany's operations without including all events during a period such as theeffects of an acquisition, merger-related costs or amortization of purchasedintangibles and does not provide a comparable view of our performance to othercompanies in the pharmaceutical industry. We also use other specificallytailored tools designed to ensure the highest levels of performance in our Company.For example, our R&D organization has productivity targets, upon which itseffectiveness is measured. In addition, for senior levels of management, aportion of their long-term compensation is based on U.S. GAAP Net income.

Purchase Accounting Adjustments

Adjusted income is calculatedprior to considering significant purchase-accounting impacts, such as thoserelated to our acquisitions of Pharmacia and Esperion as well as net-asset acquisitions.These impacts can include charges for purchased in-process research anddevelopment, the incremental charge to cost of sales from the sale of acquiredinventory that was written up to fair value and the incremental charges relatedto the amortization of finite-lived intangible assets for the increase to fairvalue. Therefore, the Adjusted income measure includes the revenues earned uponthe sale of the acquired products without considering the aforementionedsignificant charges. 

Certain of the purchase-accountingadjustments associated with a business combination, such as the amortization ofintangibles acquired in connection with our acquisition of Pharmacia, can occurfor up to 40 years (these assets have a weighted-average useful life ofapproximately 10 years), but this presentation provides an alternative view ofour performance that is used by management to internally assess business performance.We believe the elimination of amortization attributable to acquired intangible assetsprovides management and investors an alternative view of our business resultsby trying to provide a degree of parity to internally developed intangibleassets for which research and development costs have been previously expensed.

However, a completely accuratecomparison of internally developed intangible assets and acquired intangibleassets cannot be achieved through Adjusted income. This component of Adjusted incomeis derived solely with the impacts of the items listed in the first paragraphof this section. We have not factored in the impacts of any other differencesin experience that might have occurred if Pfizer had discovered and developedthose intangible assets on its own and this approach does not intend to berepresentative of the results that would have occurred in those circumstances.For example, our research and development costs in total, and in the periodspresented, may have been different; our speed to commercialization andresulting sales, if any, may have been different; or our costs to manufacturemay have been different. In addition, our marketing efforts may have beenreceived differently by our customers. As such, in total, there can be no assurancethat our Adjusted income amounts would have been the same as presented hadPfizer discovered and developed the acquired intangible assets.

Merger-Related Costs

Adjusted income is calculatedprior to considering integration and restructuring costs associated withbusiness combinations because these costs are unique to each transaction andrepresent costs that were incurred to restructure and integrate two businessesas a result of the acquisition decision. For additional clarity, only restructuringand integration activities that are associated with a purchase businesscombination or a net-asset acquisition are included in merger-related costs. Wehave not factored in the impacts on synergies that would have resulted hadthese costs not been incurred.

We believe that viewing incomeprior to considering these charges provides investors with a useful additionalperspective because the significant costs incurred in a business combinationresult primarily from the need to eliminate duplicate assets, activities oremployees--a natural result of acquiring a fully integrated set of activities. Forthis reason, we believe that the costs incurred to convert disparate systems,to close duplicative facilities or to eliminate duplicate positions (forexample, in the context of a business combination) can be viewed differentlyfrom those costs incurred in other, more normal business contexts.

The integration andrestructuring costs associated with a business combination may occur overseveral years with the more significant impacts ending within three years ofthe transaction. Because of the need for certain external approvals for some actions,the span of time needed to achieve certain restructuring and integrationactivities can be lengthy. For example, due to the highly regulated nature ofthe pharmaceutical business, the closure of excess facilities can take severalyears as all manufacturing changes are subject to extensive validation and testingand must be approved by the FDA. In other situations, we may be required bylocal laws to obtain approvals prior to terminating certain employees. Thisapproval process can delay the termination action.

Discontinued Operations

Adjusted income is calculatedprior to considering gains or losses on the sale of businesses and productlines included in discontinued operations as well as the related results of operations.We believe that this presentation is meaningful to investors because, while wereview our businesses and product lines on an ongoing basis for strategic fit withour operations, we do not build or run our businesses with an intent to sellthem.

Certain Significant Items

Adjusted income is calculatedprior to considering certain significant items. Certain significant itemsrepresent substantive, unusual items that are evaluated on an individual basis.Such evaluation considers both the quantitative and the qualitative aspect oftheir unusual nature. Unusual, in this context, may represent items that arenot part of our ongoing business; items that, either as a result of theirnature or size, we would not expect to occur as part of our normal business ona regular basis; items that would be non-recurring; or items that relate toproducts we no longer sell. While not all-inclusive, examples of items that couldbe included as certain significant items would be a majornon-acquisition-related restructuring charge and associated implementationcosts for a program which is specific in nature with a defined term, such asthose related to our recently announced Adapting to Scale initiative; costsassociated with a significant recall of one of our products; charges related tosales or disposals of products or facilities that do not qualify asdiscontinued operations as defined by U.S. GAAP; certain intangible assetimpairments; adjustments related to the resolution of certain tax positions; theimpact of adopting certain significant, event-driven tax legislation, such ascharges attributable to the repatriation of foreign earnings in accordance withthe Jobs Act; or possible charges related to legal matters, such as certain ofthose discussed in *Legal Proceedings*in our Form 10-K and in *Part II:Other Information; Legal Proceedings*included in our Form 10-Q filings. Normal,ongoing defense costs of the Company or settlements and accruals on legalmatters made in the normal course of our business would not be considered acertain significant item.

A reconciliation between Netincome, as reported under U.S. GAAP, and Adjusted income follows:

|                                                         |   | Second  Quarter |   |             | First  Six Months     |
|---------------------------------------------------------|---|-----------------|---|-------------|-----------------------|
| (millions of dollars)                                   |   | 2005       |   | 2004   | %  Incr./  (Decr.)    |  |  | 2005  |  | 2004  | %  Incr./  (Decr.) |
|                                               |   |                 |   |             |                       |  |  |  |  |  |  |
| Reported Net  income                                    | $ | 3,463      | $ | 2,863  | 21%                   |  | $ | 3,763  | $ | 5,195  | (28)% |
| Discontinued  operations - net of tax         |   | 9          |   | (19)        | *      |  |  | (19) |  | (32) | (38)    |
| Purchase accounting  adjustments - net of tax |   | 816        |   | 523    | 56     |  |  | 1,438  |  | 2,036  | (29)    |
| Merger-related costs - net  of tax            |   | 178        |   | 224    | (20)        |  |  | 330  |  | 351  | (6)    |
| Certain  significant items - net of tax       |   | (1,042)         |   | 20     | *      |  |  | 1,913  |  | 40  | M+   |
| Adjusted income                                         | $ | 3,424      | $ | 3,611  | (5)    |  | $ | 7,425  | $ | 7,590  | (2)    |

  

| *                                                                  | Calculation  not meaningful.               |
|--------------------------------------------------------------------|--------------------------------------------|
| M+                                                                 | Change  greater than one-thousand percent. |
| Certain  amounts and percentages may reflect rounding adjustments. |

Adjusted income as shown aboveexcludes the following items:

|                                                                                                                                               |   | Second  Quarter  |   |            | First  Six Months |
|-----------------------------------------------------------------------------------------------------------------------------------------------|---|------------------|---|------------|-------------------|
| (millions of dollars)                                                                                                                         |   | 2005   |   | 2004  |                   |  | 2005  |  | 2004  |
|                                                                                                                                     |   |                  |   |            |                   |  |  |  |  |
| *Discontinued  operations, pre-tax:*                                                                                                          |   |                  |   |            |                   |  |  |  |  |
| Loss/(income)  from discontinued operations (a)                                                                                               | $ | 14          | $ | (25)       |                   | $ | 33  | $ | (45) |
| Gains on sales  of discontinued operations(a)                                                                                                 |   | --          |   | (3)        |                   |  | (65) |  | (3) |
| Total  discontinued operations pre-tax                                                                                                        |   | 14          |   | (28)       |                   |  | (32) |  | (48) |
| Income taxes                                                                                                                                  |   | (5)              |   | 9     |                   |  | 13  |  | 16  |
| *Total  discontinued operations - net of tax*                                                                                       |   | 9           |   | (19)       |                   |  | (19) |  | (32) |
| *Purchase  accounting adjustments, pre-tax:*                                                                                                  |   |                  |   |            |                   |  |  |  |  |
| In-process research  and development charges(b)                                                                                               |   | 260         |   | --    |                   |  | 262  |  | 955  |
| Intangible  amortization and other(c)                                                                                                         |   | 828         |   | 820   |                   |  | 1,683  |  | 1,623  |
| Total purchase  accounting adjustments, pre-tax                                                                                               |   | 1,088       |   | 820   |                   |  | 1,945  |  | 2,578  |
| Income taxes                                                                                                                                  |   | (272)            |   | (297)      |                   |  | (507) |  | (542) |
| *Total purchase  accounting adjustments - net of tax*                                                                               |   | 816         |   | 523   |                   |  | 1,438  |  | 2,036  |
| *Merger-related  costs, pre-tax:*                                                                                                             |   |                  |   |            |                   |  |  |  |  |
| Integration  costs(d)                                                                                                                         |   | 191         |   | 150   |                   |  | 297  |  | 254  |
| Restructuring  costs(d)                                                                                                                       |   | 58          |   | 139   |                   |  | 171  |  | 282  |
| Total  merger-related costs, pre-tax                                                                                                          |   | 249         |   | 289   |                   |  | 468  |  | 536  |
| Income taxes                                                                                                                                  |   | (71)             |   | (65)       |                   |  | (138) |  | (185) |
| *Total  merger-related costs - net of tax*                                                                                          |   | 178         |   | 224   |                   |  | 330  |  | 351  |
| *Certain  significant items, pre-tax*                                                                                                         |   |                  |   |            |                   |  |  |  |  |
| Asset  impairment charges and other costs associated with the suspension of selling  Bextra(e)                                                |   | --          |   | --    |                   |  | 1,213  |  | --  |
| Operating  results of divested legacy Pharmacia research facility(f)                                                                          |   | --          |   | 32    |                   |  | --  |  | 64  |
| Restructuring  charges--Adapting to Scale(d)                                                                                                  |   | 21          |   | --    |                   |  | 21  |  | --  |
| Implementation  costs--Adapting to Scale(g)                                                                                                   |   | 33          |   | --    |                   |  | 33  |  | --  |
| Total certain  significant items, pre-tax                                                                                                     |   | 54          |   | 32    |                   |  | 1,267  |  | 64  |
| Income taxes                                                                                                                                  |   | (20)             |   | (12)       |                   |  | (467) |  | (24) |
| Resolution of  certain tax positions(h)                                                                                                       |   | (586)            |   | --    |                   |  | (586) |  | --  |
| Tax impact of  the repatriation of foreign earnings(h)                                                                                        |   | (490)            |   | --    |                   |  | 1,699  |  | --  |
| *Total certain  significant items - net of tax*                                                                                     |   | (1,042)          |   | 20    |                   |  | 1,913  |  | 40  |
| *Total  discontinued operations, purchase accounting adjustments, merger-related costs  and certain significant items - net of tax* | $ | (39)             | $ | 748   |                   | $ | 3,662  | $ | 2,395  |

  

| (a) | Included  in *Discontinued operations - net of tax.*                                                                                                                                   |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Included  in *Merger-related in-process research and development charges.*                                                                                                                       |
| (c) | Included  primarily in *Amortization of intangible assets.*                                                                                                                                      |
| (d) | Included  in *Restructuring charges and merger-related costs.*                                                                                                                                   |
| (e) | Included  in *Cost of sales* ($56 million), *Selling informational and  administrative expenses* ($5 million) and*Other  (income)/deductions - net*($1.2 billion). |
| (f) | Included  in *Research and development expenses.*                                                                                                                                                |
| (g) | Included  in *Cost of sales* ($1 million),*Selling, informational and  administrative expenses* ($21 million), and *Research and  development**expenses* ($11 million).           |
| (h) | Included  in *(Benefit)/provision for taxes on income.*                                                                                                                                          |

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Net Financial Asset Position

Our net financial assetposition follows:

| (millions  of dollars)           |   | July 3,  2005 |   | Dec. 31,  2004 |
|----------------------------------|---|--------------------|---|---------------------|
|                        |   |                    |   |                     |
| Financial  assets:               |   |                    |   |                     |
| Cash and cash  equivalents       | $ | 1,276              | $ | 1,808               |
| Short-term  investments          |   | 13,293             |   | 18,085              |
| Short-term  loans                |   | 513                |   | 653                 |
| Long-term  investments and loans |   | 3,247              |   | 3,873               |
| Total financial  assets          |   | 18,329             |   | 24,419              |
| Debt:                            |   |                    |   |                     |
| Short-term  borrowings           |   | 7,261              |   | 11,266              |
| Long-term debt                   |   | 5,517              |   | 7,279               |
| Total debt                       |   | 12,778             |   | 18,545              |
| Net financial  assets            | $ | 5,551              | $ | 5,874               |

We rely largely on operating cash flow, short-termcommercial paper borrowings and long-term debt to provide for the workingcapital needs of our operations, including our R&D activities. In addition,the proceeds from the repatriation of foreign earnings are being utilized tofinance domestic activities over a multi-year time horizon, thereby reducingour reliance on short-term borrowings. This is expected to result in an overalldecrease in our short-term borrowings by the end of 2005. We believe that wehave the ability to obtain both short-term and long-term debt to meet ourfinancing needs for the foreseeable future.

Expected Impact of Repatriation of Foreign Earnings

Based on our decision to repatriate foreign earningstotaling about $36.7 billion in accordance with the Jobs Act, the use ofproceeds includes domestic expenditures relating to advertising and marketingactivities, research and development activities, capital assets and other assetacquisitions and non-executive compensation in accordance with the provisionsof the Jobs Act (as in effect on July 3, 2005). During the second quarterof 2005, we repatriated approximately $10 billion. At July 3, 2005,our international subsidiaries held cash and cash equivalents and short-terminvestments totaling in excess of $14 billion. Additionally, ourinternational subsidiaries are expected to generate cash flows during 2005,which, together with third-party borrowings as required, will be available tofund the balance of the repatriation. 

Investments

Our short-term and long-term investments consist primarilyof high-quality, liquid investment-grade available-for-sale debt securities.Wherever possible, cash management is centralized and intercompany financing isused to provide working capital to our operations. Where local restrictionsprevent intercompany financing, working capital needs are met through operatingcash flows and/or external borrowings.

Debt Capacity

Our short-term borrowings are rated P-1 by Moody's InvestorsService (Moody's) and A-1+ by Standard & Poor's (S&P). Our long-termdebt is rated Aaa by Moody's and AAA by S&P. Moody's and S&P are majorcorporate debt-rating organizations. In early April 2005, following the marketwithdrawal of Bextra and the FDA's decision requiring new labeling forCelebrex, Moody's placed our Aaa rating under review for possible downgrade. Thereview was completed in June 2005 when Moody's removed Pfizer from reviewstatus and reaffirmed our Aaa rating. However, Moody's maintained our ratingoutlook as negative. S&P has also reaffirmed our AAA rating and maintainsour outlook as stable.

Our superior credit ratings are primarily based on ourdiversified product portfolio, our strong operating cash flow, our substantialfinancial assets, our strong late-stage product pipeline and on our desire tomaintain a prudent financial profile. Our access to financing at favorablerates would be affected by a substantial downgrade in our credit ratings.

We have available lines of credit and revolving-creditagreements with a group of banks and other financial intermediaries. Wemaintain cash balances and short-term investments in excess of our commercialpaper and other short-term borrowings. At July 3, 2005, we had access to$3.3 billion of lines of credit, of which $1.4 billion expire withinone year. Of these lines of credit, $3.0 billion are unused, of which ourlenders have committed to loan us $1.6 billion at our request. $1.5 billionof the unused lines of credit relate to our commercial paper borrowings.

At July 3, 2005, we had the ability to borrowapproximately $2.0 billion by issuing debt securities under our existingdebt shelf registration statement filed in November 2002.

In July 2005, we decided to exercise Pfizer's option tocall, at par-value plus accrued interest, $1 billion of senior unsecuredfloating-rate notes, which are included in *Short-term borrowings* at July3, 2005. Notice to call has been given to the Trustees and the notes will beredeemed in September 2005. 

Goodwill and Other Intangible Assets

At July 3, 2005, goodwilltotaled $23.6 billion (19% of our total assets) and other intangibleassets, net of accumulated amortization, totaled $29.8 billion (25% of ourtotal assets). The largest components of goodwill and other intangible assetswere acquired in connection with our acquisition of Pharmacia. Other intangibleassets included $23.8 billion of developed technology rights and $4.0 billionof indefinite-lived brands.

The developed technology rightsprimarily represent the fair value of the commercialized products that weacquired from Pharmacia. We acquired a well-diversified portfolio of developedtechnology rights across the therapeutic categories displayed in the table of majorHuman Health products in the "Revenues" section of MD&A. Whilethe Arthritis and Pain therapeutic category represents about 27% of the totalvalue of developed technology rights at July 3, 2005, the balance of thevalue is evenly distributed across the following Human Health therapeuticproduct categories: Ophthalmology; Oncology; Urology; Infectious andRespiratory Diseases; Endocrine Disorders categories; and, as a group, theCardiovascular and Metabolic Diseases; Central Nervous System Disorders and AllOther categories. 

SELECTED MEASURES OF LIQUIDITY AND CAPITAL RESOURCES

The following table sets forthcertain relevant measures of our liquidity and capital resources:

|                                                                                       |                                                                                                                                                                                   | July 3,  2005 |   | Dec. 31,  2004 |
|---------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|---|---------------------|
|                                                                             |                                                                                                                                                                                   |                    |   |                     |
| Cash and cash  equivalents and short-term investments and loans (millions of dollars) | $                                                                                                                                                                                 | 15,082             | $ | 20,546              |
|                                                                             |                                                                                                                                                                                   |                    |   |                     |
| Working capital (millions of  dollars)(a)                                             | $                                                                                                                                                                                 | 11,007             | $ | 13,236              |
|                                                                             |                                                                                                                                                                                   |                    |   |                     |
| Current ratio(b)                                                                      |                                                                                                                                                                                   | 1.49:1             |   | 1.50:1              |
|                                                                             |                                                                                                                                                                                   |                    |   |                     |
| Shareholders' equity per common  share(c)                                             | $                                                                                                                                                                                 | 8.91               | $ | 9.19                |
|                                                                             |                                                                                                                                                                                   |                    |   |                     |
| (a)                                                                                   | Working  capital includes assets and liabilities held for sale at July 3, 2005  and December 31, 2004.                                                                  |
| (b)                                                                                   | Current  ratio is the proportion of current assets to current liabilities.                                                                                                        |
| (c)                                                                                   | Represents  total shareholders' equity divided by the actual number of common shares  outstanding (which excludes treasury shares and those held by our employee  benefit trust). |
|                                                                                       |                                                                                                                                                                                   |                    |   |                     |  |

The decrease in working capitalfrom December 31, 2004 to July 3, 2005 primarily reflects:

| • | payment of cash dividends on common  and preferred stock -- $2.9 billion;                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                  |
| • | purchases of our common stock -- $3.3 billion;                                                                                                                        |
|        |                                                                                                                                                                  |
| • | purchases of property, plant and  equipment -- $1.0 billion;                                                                                                          |
|        |                                                                                                                                                                  |
| • | a reclassification of $1 billion  from long-term debt to current portion of long-term debt as a result of our  decision to call the debt; and                         |
|        |                                                                                                                                                                  |
| • | an increase in taxes payable as a  result of the $1.7 billion charge in connection with our decision to  repatriate foreign earnings in accordance with the Jobs Act; |

partially offset by:

| • | cash from current-period operations. |
|--------|--------------------------------------|

Net Cash Provided by Operating Activities

During the first six months of 2005, net cash provided bycontinuing operating activities was $7.0 billion, as compared to $5.2 billionin the same period in 2004. The increase in net cash provided by operatingactivities was primarily driven by the timing of income tax payments andaccounts receivable collections. In the cash flows statement, *Other* includesadjustments for non-cash items such as valuation adjustments. *Changes inassets and liabilities, net of businesses acquired and divested* in 2005 includesan accrual for the $1.7 billion income tax charge (not yet paid)associated with our repatriation of foreign earnings.

Net Cash Provided by/(Used in) Investing Activities

During the first six months of2005, net cash provided by investing activities was $4.2 billion, comparedto net cash used of $6.8 billion in the same period in 2004. The change fromnet cash used in 2004 to net cash provided by investing activities in 2005 wasprimarily attributable to:

| • | net redemptions of  $5.1 billion from investments in 2005 primarily used to provide funds  for the repatriation of foreign earnings in accordance with the Jobs Act  compared to net purchases of $4.7 billion of investments in 2004, and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                            |
| • | net cash used for acquisitions in  2005 of $255 million as compared to cash used for acquisitions in 2004  of $1.4 billion.                                                                                                                |

Net Cash Provided by/(Used in) Financing Activities

During the first six months of2005, net cash used in financing activities was $11.7 billion, as comparedto net cash provided by financing activities of $716 million in the sameperiod in 2004. The increase in net cash used in financing activities in 2005was primarily attributable to:

| • | net repayments of $5.7 billion  on total borrowings in 2005 (funds from the repatriation of foreign earnings  were used to finance domestic activities, thereby reducing our reliance on  short-term borrowings) as compared to total net borrowings of  $4.8 billion in 2004, and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                    |
| • | an increase of $1.0 billion in  purchases of our common stock in 2005 as compared to the same period in 2004.                                                                                                                                                                           |

In October 2004, weannounced a $5 billion share-purchase program. We completed thisshare-purchase program by purchasing approximately $2.4 billion of theCompany's stock in the second quarter of 2005. In June 2005, Pfizer's Board ofDirectors authorized a new $5 billion share-purchase program. No purchaseswere made under the new program as of July 3, 2005.

OFF-BALANCE SHEET ARRANGEMENTS

In the ordinary course of business and in connection withthe sale of assets and businesses, we often indemnify our counterpartiesagainst certain liabilities that may arise in connection with a transaction orrelated to activities prior to a transaction. These indemnifications typicallypertain to environmental, tax, employee and/or product-related matters, andpatent infringement claims. If the indemnified party were to make a successfulclaim pursuant to the terms of the indemnification, we would be required toreimburse the loss. These indemnifications are generally subject to thresholdamounts, specified claim periods and other restrictions and limitations.Historically, we have not generally paid significant amounts under theseprovisions and at July 3, 2005, recorded amounts for the estimated fairvalue of these indemnifications are not material.

Certain of our copromotion agreements include additionalprovisions that give our alliance partners the right to negotiate for, or insome cases to obtain, under certain financial conditions, copromotion rights inspecified countries with respect to certain of our products.

RECENTLY ISSUED ACCOUNTING STANDARDS

*Share-Based Payment*

In December 2004, the Financial Accounting Standards Board(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R,*Share-Based Payment*. SFAS 123R replaces SFAS 123,*Stock-Based Compensation*. SFAS 123R requires that the fair value ofthe grant of employee stock options be reported as an expense. We plan to adoptSFAS 123R, when required, beginning in the first quarter of 2006. (We hadpreviously disclosed an intention to adopt, when required, in mid-2005, but theSEC delayed the required effective date). Determining the impact of SFAS 123Ron our future results of operations requires a number of complex estimatesabout future events. For example, such an assessment would require a predictionabout the number of options to be granted, primarily in February of next year,and a forecast, as of the grant date, of our stock price, the market-basedstock price volatility and the risk-free interest rate, all of which can behighly variable and difficult to predict. As such, currently, we cannotreasonably estimate the impact of SFAS 123R on our results of operationsin 2006.

*Conditional Asset Retirement Obligations*

In March 2005, the FASB issued Interpretation No. 47, *Accountingfor Conditional Asset Retirement Obligations* (FIN 47). FIN 47clarifies that conditional obligations meet the definition of an assetretirement obligation in SFAS 143, *Accounting for Asset RetirementObligations*, and therefore should be recognized if their fair value isreasonably estimable. We plan to adopt FIN 47 in the fourth quarter of 2005.We do not expect the provisions of FIN 47 to have a material impact on ourconsolidated financial statements.

OUTLOOK

Results in 2005 have been,and will continue to be, impacted by the loss of U.S. exclusivity of four majorproducts--Diflucan, Neurontin, and Accupril/Accuretic during 2004 and Zithromaxin November 2005. Revenues also have been, and may continue to be, impacted bypublicity and regulatory actions regarding COX-2-selective inhibitors.Full-year revenues are now expected to evidence a modest decline relative to2004, as growth from other product lines generally offsets these factors, but revenuesat current foreign exchange rates would be negatively impacted in the secondhalf of 2005 by the recent strengthening of the U.S. dollar against majorforeign currencies.

In 2005, we anticipatemerger-related synergies of $6 billion related to Warner-Lambert ($1.8 billion)and Pharmacia ($4.2 billion, an increase of $600 million over 2004synergies). We also expect to achieve approximately $400 million in costsavings during 2005 from our recently announced AtS productivity**initiative.

Given these and other factors,at current exchange rates we expect 2005 Adjusted income of approximately $14.6 billion,adjusted diluted EPS of approximately $1.98 per share, reported Net income ofapproximately $9.1 billion, and reported diluted EPS of approximately$1.24 per share, subject to the "Cautionary Factors That May AffectFuture Results" section below.

A reconciliation of targeted2005 Adjusted income and Adjusted diluted EPS to targeted 2005 reported Netincome and reported diluted EPS follows:

| (billions  of dollars, except per-share amounts)                                        |   | Targeted   Net   Income  |   | Targeted   Diluted   EPS  |
|-----------------------------------------------------------------------------------------|---|-----------------------------------------|---|------------------------------------------|
|                                                                               |   |                                         |   |                                          |
| Targeted Adjusted  income/diluted EPS                                                   | $ | 14.6                               | $ | 1.98                                |
| Intangible  amortization and other                                                      |   | (2.3)                                   |   | (.31)                                    |
| In-process  R&D charges (primarily Idun)                                            |   | (0.3)                                   |   | (.04)                                    |
| Merger-related  costs/productivity initiative costs                                     |   | (1.0)                                   |   | (.14)                                    |
| Asset  impairment charges and other costs associated with suspension of selling  Bextra |   | (0.8)                                   |   | (.10)                                    |
| Tax impact on  repatriation of foreign earnings                                         |   | (1.7)                                   |   | (.23)                                    |
| Resolution of  certain tax positions                                                    |   | 0.6                                |   | .08                                 |
| Targeted  reported Net income/diluted EPS                                               | $ | 9.1                                | $ | 1.24                                |

Pfizer's estimates of 2005reported Net income of $9.1 billion and reported diluted earnings pershare of about $1.24 have been revised from the prior guidance of $7.7 billionand about $1.04. The revision is principally attributable to the resolution ofcertain tax positions (increase to Net income and diluted EPS of $0.6 billionand $0.08), a revised estimate of the cost of repatriating foreign earnings(net reduction in taxes from $2.2 billion and $0.30 EPS impact to$1.7 billion and $0.23) and a revised estimate of merger-relatedcosts/productivity initiative costs (reduction from an after-tax cost of $1.4 billionand $0.18 EPS impact to $1.0 billion and $0.14). These estimates donot reflect the impact of any pending acquisitions, such as VicuronPharmaceuticals.

We expect to spendapproximately $8 billion on research and development in 2005 andapproximately $2.2 billion in capital expenditures for the full year 2005(revised from our initial estimate of $2.7 billion).

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

Our disclosure and analysis inthis report, including but not limited to the information discussed in theOutlook section above, contain forward-looking information about our Company'sfinancial results and estimates, business prospects and products in researchthat involve substantial risks and uncertainties. From time to time, we alsomay provide oral or written forward-looking statements in other materials werelease to the public. Forward-looking statements give our current expectationsor forecasts of future events. You can identify these statements by the fact thatthey do not relate strictly to historic or current facts. They use words suchas "will," "anticipate," "estimate," "expect,""project," "intend," "plan," "believe,""target" and other words and terms of similar meaning in connectionwith any discussion of future operating or financial performance. Inparticular, these include statements relating to future actions, prospectiveproducts or product approvals, future performance or results of current andanticipated products, sales efforts, expenses, interest rates, foreign exchangerates, the outcome of contingencies, such as legal proceedings, and financialresults. Among the factors that could cause actual results to differ materiallyare the following:

| • | the success of research and  development activities;                                                                                                                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | decisions by regulatory authorities  regarding whether and when to approve our drug applications as well as their  decisions regarding labeling and other matters that could affect the  commercial potential of our products;                                                                                                                                                                                   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | the impact of the FDA's decision to  require a boxed warning including expanded risk information and the European  Medicines Evaluation Agency's decision to require expanded risk information  in the Celebrex label;                                                                                                                                                                                           |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | the speed with which regulatory  authorizations, pricing approval and product launches may be achieved;                                                                                                                                                                                                                                                                                                          |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | competitive developments affecting  our current growth products;                                                                                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | the ability to successfully market  both new and existing products domestically and internationally;                                                                                                                                                                                                                                                                                                             |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | difficulties or delays in  manufacturing;                                                                                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | trade buying patterns;                                                                                                                                                                                                                                                                                                                                                                                           |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | the ability to meet generic and  branded competition after the loss of patent protection for our products;                                                                                                                                                                                                                                                                                                       |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | the impact of existing and future  regulatory provisions on product exclusivity;                                                                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | trends toward managed care and  healthcare cost containment;                                                                                                                                                                                                                                                                                                                                                     |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | possible U.S. legislation or  regulatory action affecting, among other things, pharmaceutical pricing and  reimbursement, including under Medicaid and Medicare; the importation of prescription  drugs that are marketed outside the U.S. and sold at prices that are  regulated by governments of various foreign countries; and the involuntary  approval of prescription medicines for over-the-counter use; |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | the potential impact of the Medicare  Prescription Drug Improvement and Modernization Act of 2003;                                                                                                                                                                                                                                                                                                               |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | legislation or regulations in  markets outside the U.S. affecting product pricing, reimbursement or access;                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | contingencies related to actual or  alleged environmental contamination;                                                                                                                                                                                                                                                                                                                                         |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | claims and concerns that may arise  regarding the safety or efficacy of in-line products and product candidates;                                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                        |
| • | legal defense costs, insurance  expenses, settlement costs and the risk of an adverse decision or settlement  related to product liability, patent protection, government investigations,  ongoing efforts to explore various means for resolving asbestos litigation  and other legal proceedings;                                                                                                              |

  

| • | the Company's ability to protect  its patents and other intellectual property both domestically and  internationally; |
|--------|-----------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                             |
| • | interest rate and foreign currency  exchange rate fluctuations;                                                       |
|        |                                                                                                             |
| • | governmental laws and regulations  affecting domestic and foreign operations, including tax obligations;              |
|        |                                                                                                             |
| • | changes in U.S. generally accepted accounting  principles;                                                            |

  

| • | any changes in business, political  and economic conditions due to the threat of future terrorist activity in the  U.S. and other parts of the world, and related U.S. military action overseas;                                                                                                                                                      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                             |
| • | growth in costs and expenses;                                                                                                                                                                                                                                                                                                                         |
|        |                                                                                                                                                                                                                                                                                                                                             |
| • | changes in our product mix; and                                                                                                                                                                                                                                                                                                                       |
|        |                                                                                                                                                                                                                                                                                                                                             |
| • | the impact of acquisitions,  divestitures, restructurings, product withdrawals and other unusual items,  including our ability to integrate and to obtain the anticipated results and  synergies from our acquisition of Pharmacia, and our ability to realize the  projected benefits of our *Adapting to Scale*multi-year productivity  initiative. |

We cannot guarantee that any forward-looking statement willbe realized, although we believe we have been prudent in our plans andassumptions. Achievement of future results is subject to risks, uncertaintiesand inaccurate assumptions. Should known or unknown risks or uncertaintiesmaterialize, or should underlying assumptions prove inaccurate, actual resultscould vary materially from past results and those anticipated, estimated orprojected. Investors should bear this in mind as they consider forward-lookingstatements.

We undertake no obligation to publicly updateforward-looking statements, whether as a result of new information, futureevents or otherwise. You are advised, however, to consult any furtherdisclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reportsto the Securities and Exchange Commission. Our Form 10-K filing for the 2004fiscal year listed various important factors that could cause actual results todiffer materially from expected and historic results. We note these factors forinvestors as permitted by the Private Securities Litigation Reform Act of 1995.Readers can find them in Item 1 of that filing under the heading "CautionaryFactors That May Affect Future Results." We incorporate that section ofthat Form 10-K in this filing and investors should refer to it. You shouldunderstand that it is not possible to predict or identify all such factors.Consequently, you should not consider any such list to be a complete set of allpotential risks or uncertainties.

This report includes discussion of certain clinical studiesrelating to various in-line products and/or product candidates. These studiestypically are part of a larger body of clinical data relating to such productsor product candidates, and the discussion herein should be considered in thecontext of the larger body of data. 

Legal Proceedings and Contingencies

We and certain of our subsidiaries are involved in variouspatent, product liability, consumer, commercial, securities, environmental andtax litigations and claims; government investigations; and other legalproceedings that arise from time to time in the ordinary course of ourbusiness. We do not believe any of them will have a material adverse effect onour financial position.

We record accruals for such contingencies to the extent thatwe conclude their occurrence is probable and the related damages are estimable.If a range of liability is probable and estimable and some amount within therange appears to be a better estimate than any other amount within the range,we accrue that amount. If a range of liability is probable and estimable and noamount within the range appears to be a better estimate than any other amountwithin the range, we accrue the minimum of such probable range. Many claimsinvolve highly complex issues relating to causation, label warnings, scientificevidence, actual damages and other matters. Often these issues are subject tosubstantial uncertainties and, therefore, the probability of loss and anestimation of damages are difficult to ascertain. Consequently, we cannotreasonably estimate the maximum potential exposure or the range of possible lossin excess of amounts accrued for these contingencies. These assessments caninvolve a series of complex judgments about future events and can rely heavilyon estimates and assumptions. Our assessments are based on estimates andassumptions that have been deemed reasonable by management. Litigation isinherently unpredictable, and excessive verdicts do occur. Although we believewe have substantial defenses in these matters, we could in the future incurjudgments or enter into settlements of claims that could have a materialadverse effect on our results of operations in any particular period. 

Patent claims include challenges to the coverage and/orvalidity of our patents on various products or processes. Although we believewe have substantial defenses to these challenges with respect to all ourmaterial patents, there can be no assurance as to the outcome of these matters,and a loss in any of these cases could result in a loss of patent protectionfor the drug at issue, which could lead to a significant loss of sales of thatdrug and could materially affect future results of operations.

Item 4.  Controls and Procedures.

As of the end of the period covered by this report, wecarried out an evaluation, under the supervision and with the participation ofour principal executive officer and principal financial officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation,our principal executive officer and principal financial officer concluded thatour disclosure controls and procedures are effective in alerting them in atimely manner to material information required to be disclosed in our periodicreports filed with the SEC.

During our most recent fiscalquarter, there has not occurred any change in our internal control overfinancial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)under the Exchange Act) that has materially affected, or is reasonably likelyto materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

Certain legal proceedings in which we are involved arediscussed in Note 17 to the consolidated financial statements included in our2004 Financial Report; Part I, Item 3, of our Annual Report on Form10-K for the year ended December 31, 2004; and Part II, Item 1, of ourQuarterly Report on Form 10-Q for the quarter ended April 3, 2005. Thefollowing discussion is limited to recent developments concerning our legalproceedings and should be read in conjunction with those earlier Reports.Unless otherwise indicated, all proceedings discussed in those earlier Reportsremain outstanding. Reference also is made to the Legal Proceedings andContingencies section in Part I, Item 2, of this Form 10-Q.

**Patent Matters**

Neurontin (gabapentin)

As previously reported, Greenstone Ltd., a wholly ownedsubsidiary of Pfizer, launched a generic version of Neurontin in October 2004following the launches of gabapentin products by certain generic manufacturers.In October 2004, one of those generic manufacturers brought an action againstPfizer, Greenstone and the FDA challenging the launch by Greenstone. In June2005, the U.S. Court of Appeals for the District of Columbia Circuit upheldGreenstone's right to sell an "authorized generic" version ofNeurontin.

**Product Liability Matters**

Rezulin

As previously reported, in April 2001, Louisiana HealthService Indemnity Company and Eastern States Health and Welfare Fund filed aconsolidated complaint against Warner-Lambert in the U.S. District Court forthe Southern District of New York purportedly on behalf of a class consistingof all health benefit providers that paid for or reimbursed patients for thepurchase of Rezulin between February 1997 and April 2001. The action seeks torecover amounts paid for Rezulin by the health benefit providers onbehalf of their plan participants during the specified period. In May 2005, anaction was filed in the U.S. District Court for the Eastern District ofLouisiana purportedly on behalf of a nationwide class of third-party payorsthat asserts claims and seeks damages that are substantially similar to thosein the New York action. In July 2005, an action was filed by the AttorneyGeneral of the State of Louisiana in the Civil District Court for OrleansParish, Louisiana, against Warner-Lambert and Pfizer seeking to recover amountspaid by the Louisiana Medicaid program for Rezulin and for medical services totreat persons allegedly injured by Rezulin.

Asbestos - Quigley

As previously reported, in September 2004, Quigley Company,Inc., a wholly owned subsidiary of Pfizer, filed a petition in the U.S.Bankruptcy Court for the Southern District of New York seeking reorganizationunder Chapter 11 of the U.S. bankruptcy code. In March 2005, Quigley filed itsproposed reorganization plan with the Bankruptcy Court. 

**Commercial Matters**

Zoloft

As previously reported, in July 2004, a purportedrepresentative action on behalf of all California residents who have usedZoloft as well as the general public was filed against the Company in LosAngeles Superior Court. The plaintiff alleged that the Company engaged invarious practices relating to Zoloft in violation of California law, includingfalse and misleading advertising and marketing, and sought restitution,disgorgement of profits and injunctive relief. In April 2005, the Company'smotion to dismiss this action was granted without prejudice to the plaintiff'sright to re-file if the plaintiff satisfies applicable standing requirements.

Celebrex and Bextra

As previously reported, the Company is a defendant in anumber of product liability, consumer fraud, securities, fiduciary duty andERISA (Employee Retirement Income Security Act of 1974) actions, includingpurported class and derivative actions, relating to Celebrex and Bextra.Certain current and former officers, directors and employees of Pfizer andPharmacia also are named as defendants in some of those actions. Additional claimsand suits, including purported class and derivative actions, asserting similar allegationsand seeking similar relief have been brought during the first half of 2005. InJune 2005, the federal securities, fiduciary duty and ERISA actions weretransferred to the U.S. District Court for the Southern District of New Yorkfor consolidated pre-trial proceedings. In July 2005, an action was filed bythe Attorney General of the State of Louisiana in the Civil District Court forOrleans Parish, Louisiana, against Pfizer seeking to recover amounts paid bythe Louisiana Medicaid program for Celebrex and Bextra and for medical servicesto treat persons allegedly injured by Celebrex or Bextra; the action also seeksinjunctive relief to prevent the sale of Celebrex and any resumption of thesale of Bextra in Louisiana.

As previously reported, we have received requests forinformation and documents from the U.S. Department of Justice and a group ofstate attorneys general concerning our COX-2 medicines. We also are respondingto a request for similar information and documents from the staff of theSecurities and Exchange Commission.

**Environmental Matters**

As previously reported, in April 2004, we received a letterfrom the Nebraska Department of Environmental Quality (NDEQ) proposing a civilpenalty to settle certain alleged violations of Nebraska's hazardous wasteregulations at our Lincoln, Nebraska manufacturing facility. In July 2005, thismatter was resolved pursuant to a settlement that provides for a $75,000 civilpenalty and the payment of $85,000 to fund several supplemental environmentalprojects in Nebraska. The Notices of Violation, which arose out of a voluntaryself-disclosure that we made to the NDEQ in 2003, relate to the allegedimproper disposal of a small amount of hazardous waste during the period1997-2003. Corrective actions have been implemented. 

In July 2005, the U.S. Environmental Protection Agency (EPA)proposed a civil penalty in the amount of $275,000 to settle certain allegedviolations of the Federal Clean Air Act at our Kalamazoo, Michigan facilitythat were identified by the EPA during an inspection in 2004. We are indiscussions with the EPA to resolve this matter, and we have implementedcorrective actions to address the EPA's concerns.

**Tax Matters**

In the second quarter of 2005, we recorded a tax benefit of$586 million primarily related to the resolution of certain tax positions.In addition, we believe that the IRS audits of the Pfizer Inc. tax returns forthe years 1999-2001 and the Warner-Lambert Company tax returns for the years1999 through the date of the merger with Pfizer (June 19, 2000) aresubstantially complete. In connection with those audits, we are currently inthe process of appealing one matter related to the tax deductibility of abreakup fee paid by Warner-Lambert Company in 2000.

The IRS has commenced the audit of the Pfizer Inc. tax returnsfor the years 2002 and 2003. The 2005 tax year is also currently under audit aswe are voluntary participants in the IRS Compliance Assurance Program, which resultsin real-time tax audits.

As previously disclosed, with respect to PharmaciaCorporation (formerly known as Monsanto Company), the IRS has completed andclosed its income tax return examinations and appeals through 1999 and hascommenced the audit of the tax returns for the years 2000 through the date ofmerger with Pfizer (April 16, 2003).

We periodically reassess the likelihood of assessmentsresulting from audits of federal, state and foreign income tax filings. Webelieve that our accruals for tax liabilities are adequate for all open years.

Item 2.  Unregistered Sales of Equity Securitiesand Use of Proceeds.

This table provides certain information with respect toour purchases of shares of Pfizer's common stock during the fiscal secondquarter of 2005:

| Issuer Purchases of Equity  Securities(a)       |
|-------------------------------------------------|
|                                       |  |
| Period                                          | Total  Number of     Shares Purchased(b) | Average  Price     Paid per Share(b) | Total  Number of    Shares Purchased as    Part of Publicly    Announced Plan(a) | Approximate  Dollar     Value of Shares that     May Yet Be Purchased     Under the Plan(a) |
| April 4, 2005 through April 30,  2005 | 9,071,376    | $26.92    | 9,064,300    | $2,140,228,105(c) |
| May 1, 2005 through May 31,  2005     | 40,259,035    | $27.90    | 40,217,200    | $1,018,268,485(c) |
| June 1, 2005 through  July 3, 2005    | 36,356,261    | $28.06    | 36,287,600    | $5,000,000,000(d) |
| Total                                           | 85,686,672    | $27.86    | 85,569,100    |  |

  

| (a)    | On October 28, 2004, Pfizer announced  that the Board of Directors authorized the purchase of up to $5 billion  of Pfizer's common stock (the "2004 Stock Purchase Plan"). Such  purchases were completed during the second quarter of 2005. On June 23,  2005, Pfizer announced that the Board of Directors authorized a new $5 billion  share-purchase plan (the "2005 Stock Purchase Plan"). No purchases  of stock were made under the 2005 Stock Purchase Plan during the fiscal  second quarter of 2005.                                                                                                                                                                                                                                                                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (b)    | In addition to purchases under the  2004 Stock Purchase Plan, this column reflects the following transactions  during the fiscal second quarter of 2005: (i) the deemed surrender to Pfizer  of 60,757 shares of common stock to pay the exercise price and to  satisfy tax withholding obligations in connection with the exercise of  employee stock options, (ii) the open-market purchase by the  trustee of 52,326 shares of common stock in connection with the  reinvestment of dividends paid on common stock held in trust for employees  who were granted performance-contingent share awards and who deferred receipt  of such awards and (iii) the surrender to Pfizer of 4,489 shares of  common stock to satisfy tax withholding obligations in connection with the  vesting of restricted stock issued to employees. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (c)    | Under the 2004 Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (d)    | Under the 2005 Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|     |                            |
|--------------------|----------------------------|
| Item 6.            | Exhibits.                  |
|                    |                  |  |  |
|                    | 1)  Exhibit 12   | - | Computation of Ratio of Earnings to  Fixed Charges |
|                    |                  |  |  |
|                    | 2)  Exhibit 15   | - | Accountants' Acknowledgment |
|                    |                  |  |  |
|                    | 3)  Exhibit 31.1 | - | Certification by the Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 |
|                    |                  |  |  |
|                    | 4)  Exhibit 31.2 | - | Certification by the Chief  Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 |
|                    |                  |  |  |
|                    | 5)  Exhibit 32.1 | - | Certification by the Chief  Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |
|                    |                  |  |  |
|                    | 6)  Exhibit 32.2 | - | Certification by the Chief  Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 |

PFIZER INC. ANDSUBSIDIARY COMPANIES

SIGNATURE

Under the requirements of theSecurities Exchange Act of 1934, this report was signed on behalf of theRegistrant by the authorized person named below.

|                                        |  | Pfizer  Inc.                                                                                                    |
|----------------------------------------|--|-----------------------------------------------------------------------------------------------------------------|
|                                        |  | (Registrant)                                                                                                    |
|                                        |  |                                                                                                       |
|                                        |  |                                                                                                       |
| Dated:  August 8,  2005 |  | /s/ Loretta  V. Cangialosi                                                                                 |
|                                        |  |                                                                                                       |
|                                        |  | Loretta  V. Cangialosi, Vice President, Controller  (Principal Accounting Officer and  Duly Authorized Officer) |

Exhibit 12

PFIZERINC. AND SUBSIDIARY COMPANIESCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

|                                                                                                                                                                 |   | Six  Months  Ended  July 3, |  |   | Year  Ended December 31, |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|---|----------------------------------|--|---|-------------------------------|
| (in millions, except ratios)                                                                                                                               |   | 2005                             |  |   | 2004                          |  | 2003 |  | 2002 |  | 2001 |  | 2000 |
|                                                                                                                                                       |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Determination  of earnings:                                                                                                                                     |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Income from  continuing operations before (benefit)/provision for taxes on income,  minority interests and cumulative effect of change in accounting principles | $ | 5,971                            |  | $ | 14,007                        | $ | 3,246 | $ | 11,766 | $ | 9,963 | $ | 5,471 |
| Less:                                                                                                                                                           |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Minority  interests                                                                                                                                             |   | 5                                |  |   | 10                            |  | 3 |  | 6 |  | 14 |  | 13 |
| Adjusted income                                                                                                                                                 |   | 5,966                            |  |   | 13,997                        |  | 3,243 |  | 11,760 |  | 9,949 |  | 5,458 |
| Fixed charges                                                                                                                                                   |   | 332                              |  |   | 510                           |  | 442 |  | 322 |  | 305 |  | 444 |
| Total earnings  as defined                                                                                                                                      | $ | 6,298                            |  | $ | 14,507                        | $ | 3,685 | $ | 12,082 | $ | 10,254 | $ | 5,902 |
|                                                                                                                                                       |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Fixed charges:                                                                                                                                                  |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Interest  expense (a)                                                                                                                                           | $ | 249                              |  | $ | 347                           | $ | 270 | $ | 251 | $ | 266 | $ | 381 |
| Preferred stock  dividends (b)                                                                                                                                  |   | 7                                |  |   | 12                            |  | 10 |  | -- |  | -- |  | -- |
| Rents  (c)                                                                                                                                                      |   | 76                               |  |   | 151                           |  | 162 |  | 71 |  | 39 |  | 63 |
| Fixed charges                                                                                                                                                   |   | 332                              |  |   | 510                           |  | 442 |  | 322 |  | 305 |  | 444 |
|                                                                                                                                                       |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Capitalized  interest                                                                                                                                           |   | 7                                |  |   | 12                            |  | 20 |  | 28 |  | 56 |  | 46 |
|                                                                                                                                                       |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Total fixed  charges                                                                                                                                            | $ | 339                              |  | $ | 522                           | $ | 462 | $ | 350 | $ | 361 | $ | 490 |
|                                                                                                                                                       |   |                                  |  |   |                               |  |  |  |  |  |  |  |  |
| Ratio of  earnings to fixed charges                                                                                                                             |   | 18.6                             |  |   | 27.8                          |  | 8.0 |  | 34.5 |  | 28.4 |  | 12.0 |

All financial informationreflects, as applicable, the following businesses and product lines asdiscontinued operations: our in-vitro allergy and autoimmune diagnosticstesting, surgical ophthalmic, certain European generic pharmaceutical, confectionery,shaving and fish-care products businesses, certain non-core consumer healthcareproducts lines (primarily marketed in Europe) and the Estrostep, Loestrin andfemhrt women's health product lines.

Historical ratios of earningsto fixed charges reflect revisions to historical period's rent expense, theimpact of which was not significant to any period.

| (a) | Interest expense includes amortization  of debt premium, discount and expenses.                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                      |
| (b) | Preferred stock dividends are from  our Series A convertible perpetual preferred stock held by an Employee  Stock Ownership Plan assumed in connection with our acquisition of Pharmacia. |
|     |                                                                                                                                                                                      |
| (c) | Rents included in the computation  consist of one-third of rental expense which we believe to be a conservative  estimate of an interest factor in our leases, which are not material.         |

Exhibit 15

ACCOUNTANTS'ACKNOWLEDGMENT

To the Shareholders and Board of Directors of Pfizer Inc:

We hereby acknowledge our awareness of the incorporation byreference of our report dated August 8, 2005, included within theQuarterly Report on Form 10-Q of Pfizer Inc. for the quarter ended July 3,2005, in the following Registration Statements:

- Form S-8 dated October 27, 1983 (File No. 2-87473),

- Form S-8 dated March 22, 1990 (FileNo. 33-34139),

- Form S-8 dated January 24, 1991(File No. 33-38708),

- Form S-8 dated November 18, 1991(File No. 33-44053),

- Form S-8 dated May 27, 1993 (FileNo. 33-49631),

- Form S-8 dated May 19, 1994 (FileNo. 33-53713),

- Form S-8 dated October 5, 1994(File No. 33-55771),

- Form S-8 dated December 20, 1994(File No. 33-56979),

- Form S-8 dated March 29, 1996 (FileNo. 333-02061),

- Form S-8 dated September 25, 1997(File No. 333-36371),

- Form S-8 dated April 24, 1998 (FileNo. 333-50899), 

- Form S-8 dated April 22, 1999 (FileNo. 333-76839), 

- Form S-8 dated June 19, 2000 (FileNo. 333-90975),

- Form S-8 dated June 19, 2000 (FileNo. 333-39606),

- Form S-8 dated June 19, 2000 (FileNo. 333-39610),

- Form S-3 dated October 20, 2000(File No. 333-48382),

- Form S-8 dated April 27, 2001 (FileNo. 333-59660), 

- Form S-8 dated April 27, 2001 (FileNo. 333-59654),

- Form S-3 dated October 30, 2002(File No. 333-100853),

- Form S-3 dated December 16, 2002(File No. 33-56435),

- Form S-8 dated April 16, 2003 (FileNo. 333-104581),

- Form S-8 dated April 16, 2003 (FileNo. 333-104582),

- Form S-8 dated November 18, 2003(File No. 333-110571),

- Form S-8 dated December 18, 2003(File No. 333-111333), 

- Form S-8 dated April 26, 2004 (FileNo.333-114852), and

- Form S-3 dated March 1, 2005 (FileNo. 333-123058).

Pursuant to Rule 436(c) under the Securities Act of 1933,such report is not considered a part of a registration statement prepared orcertified by an accountant or a report prepared or certified by an accountantwithin the meaning of Sections 7 and 11 of that Act.

KPMG LLP

New York, New YorkAugust 8, 2005

**Exhibit 31.1**

**CERTIFICATIONBY THE CHIEF EXECUTIVE OFFICER PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Henry A. McKinnell, certifythat:

| 1. | I have reviewed this report on Form  10-Q of Pfizer Inc.;                                                                                                                                                                                                                                                                                |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                |
| 2. | Based on my knowledge, this report  does not contain any untrue statement of a material fact or omit to state a  material fact necessary to make the statements made, in light of the  circumstances under which such statements were made, not misleading with  respect to the period covered by this report;                           |
|    |                                                                                                                                                                                                                                                                                                                                |
| 3. | Based on my knowledge, the financial  statements, and other financial information included in this report, fairly  present in all material respects the financial condition, results of  operations and cash flows of the registrant as of, and for, the periods  presented in this report;                                              |
|    |                                                                                                                                                                                                                                                                                                                                |
| 4. | The registrant's other certifying  officer and I are responsible for establishing and maintaining disclosure  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and  15d-15(e)) and internal control over financial reporting (as defined in  Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | a)                                                                                                                                                                                                                                                                                                                                       | Designed such disclosure controls  and procedures, or caused such disclosure controls and procedures to be  designed under our supervision, to ensure that material information relating  to the registrant, including its consolidated subsidiaries, is made known to  us by others within those entities, particularly during the period in which  this report is being prepared; |
|    |                                                                                                                                                                                                                                                                                                                                          |    |
|    | b)                                                                                                                                                                                                                                                                                                                                       | Designed such internal control over  financial reporting, or caused such internal control over financial reporting  to be designed under our supervision, to provide reasonable assurance  regarding the reliability of financial reporting and the preparation of  financial statements for external purposes in accordance with generally  accepted accounting principles; |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | c)                                                                                                                                                                                                                                                                                                                                       | Evaluated the effectiveness of the  registrant's disclosure controls and procedures and presented in this report  our conclusions about the effectiveness of the disclosure controls and  procedures, as of the end of the period covered by this report based on such  evaluation; and |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | d)                                                                                                                                                                                                                                                                                                                                       | Disclosed in this report any change  in the registrant's internal control over financial reporting that occurred  during the registrant's most recent fiscal quarter that has materially  affected, or is reasonably likely to materially affect, the registrant's  internal control over financial reporting; and |
|    |                                                                                                                                                                                                                                                                                                                                |
| 5. | The registrant's other certifying  officer and I have disclosed, based on our most recent evaluation of internal  control over financial reporting, to the registrant's auditors and the audit  committee of the registrant's board of directors (or persons performing the  equivalent functions):                                      |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | a)                                                                                                                                                                                                                                                                                                                                       | All significant deficiencies and  material weaknesses in the design or operation of internal control over  financial reporting which are reasonably likely to adversely affect the  registrant's ability to record, process, summarize and report financial  information; and |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | b)                                                                                                                                                                                                                                                                                                                                       | Any fraud, whether or not material,  that involves management or other employees who have a significant role in  the registrant's internal control over financial reporting. |

Date:  August 8, 2005

| /s/ Henry A. McKinnell                                                |
|---------------------------------------------------------------------------------|
| Henry A. McKinnell  Chairman of the Board and Chief Executive Officer |

**Exhibit 31.2**

**CERTIFICATION BYTHE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Alan G. Levin, certify that:

| 1. | I have reviewed this report on Form  10-Q of Pfizer Inc.;                                                                                                                                                                                                                                                                                |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                |
| 2. | Based on my knowledge, this report  does not contain any untrue statement of a material fact or omit to state a  material fact necessary to make the statements made, in light of the  circumstances under which such statements were made, not misleading with  respect to the period covered by this report;                           |
|    |                                                                                                                                                                                                                                                                                                                                |
| 3. | Based on my knowledge, the  financial statements, and other financial information included in this  report, fairly present in all material respects the financial condition,  results of operations and cash flows of the registrant as of, and for, the  periods presented in this report;                                              |
|    |                                                                                                                                                                                                                                                                                                                                |
| 4. | The registrant's other certifying  officer and I are responsible for establishing and maintaining disclosure  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and  15d-15(e)) and internal control over financial reporting (as defined in  Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | a)                                                                                                                                                                                                                                                                                                                                       | Designed such disclosure controls  and procedures, or caused such disclosure controls and procedures to be  designed under our supervision, to ensure that material information relating  to the registrant, including its consolidated subsidiaries, is made known to  us by others within those entities, particularly during the period in which  this report is being prepared; |
|    |                                                                                                                                                                                                                                                                                                                                          |    |
|    | b)                                                                                                                                                                                                                                                                                                                                       | Designed such internal control over  financial reporting, or caused such internal control over financial reporting  to be designed under our supervision, to provide reasonable assurance  regarding the reliability of financial reporting and the preparation of  financial statements for external purposes in accordance with generally  accepted accounting principles; |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | c)                                                                                                                                                                                                                                                                                                                                       | Evaluated the effectiveness of the  registrant's disclosure controls and procedures and presented in this report  our conclusions about the effectiveness of the disclosure controls and  procedures, as of the end of the period covered by this report based on such  evaluation; and |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | d)                                                                                                                                                                                                                                                                                                                                       | Disclosed in this report any change  in the registrant's internal control over financial reporting that occurred  during the registrant's most recent fiscal quarter that has materially  affected, or is reasonably likely to materially affect, the registrant's  internal control over financial reporting; and |
|    |                                                                                                                                                                                                                                                                                                                                |
| 5. | The registrant's other certifying  officer and I have disclosed, based on our most recent evaluation of internal  control over financial reporting, to the registrant's auditors and the audit  committee of the registrant's board of directors (or persons performing the  equivalent functions):                                      |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | a)                                                                                                                                                                                                                                                                                                                                       | All significant deficiencies and material  weaknesses in the design or operation of internal control over financial  reporting which are reasonably likely to adversely affect the registrant's  ability to record, process, summarize and report financial information; and |
|    |                                                                                                                                                                                                                                                                                                                                |
|    | b)                                                                                                                                                                                                                                                                                                                                       | Any fraud, whether or not material,  that involves management or other employees who have a significant role in  the registrant's internal control over financial reporting. |

Date:  August 8, 2005

| /s/ Alan G. Levin                                                |
|------------------------------------------------------------------|
| Alan G. Levin  Senior Vice President and Chief Financial Officer |

**Exhibit 32.1**

**Certification bythe Chief Executive Officer Pursuant to 18 U. S. C. Section 1350, as AdoptedPursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

Pursuant to 18 U. S. C. Section 1350, I, Henry A. McKinnell,hereby certify that, to the best of my knowledge, the Quarterly Report ofPfizer Inc. on Form 10-Q for the quarter ended July 3, 2005 (the "Report")fully complies with the requirements of Section 13(a) or Section 15(d) of theSecurities Exchange Act of 1934, and that the information contained in thatReport fairly presents, in all material respects, the financial condition andresults of operations of Pfizer Inc.

/s/ Henry A.McKinnell             Henry A. McKinnellChairman of the Board and Chief Executive OfficerAugust 8, 2005

This certification accompanies this Report on Form 10-Qpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, exceptto the extent required by such Act, be deemed filed by the Company for purposesof Section 18 of the Securities Exchange Act of 1934, as amended (the "ExchangeAct"). Such certification will not be deemed to be incorporated byreference into any filing under the Securities Act of 1933, as amended, or theExchange Act, except to the extent that the Company specifically incorporatesit by reference.

**Exhibit 32.2**

**Certification bythe Chief Financial Officer Pursuant to 18 U. S. C. Section 1350, as AdoptedPursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

Pursuant to 18 U. S. C. Section 1350, I, Alan G. Levin, herebycertify that, to the best of my knowledge, the Quarterly Report of Pfizer Inc.on Form 10-Q for the quarter ended July 3, 2005 (the "Report") fullycomplies with the requirements of Section 13(a) or Section 15(d) of theSecurities Exchange Act of 1934, and that the information contained in thatReport fairly presents, in all material respects, the financial condition andresults of operations of Pfizer Inc. 

/s/ Alan G. Levin            Alan G. LevinSenior Vice President and Chief Financial OfficerAugust 8, 2005

This certification accompanies this Report on Form 10-Qpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, exceptto the extent required by such Act, be deemed filed by the Company for purposesof Section 18 of the Securities Exchange Act of 1934, as amended (the "ExchangeAct"). Such certification will not be deemed to be incorporated byreference into any filing under the Securities Act of 1933, as amended, or theExchange Act, except to the extent that the Company specifically incorporatesit by reference.