| 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 March 30, 2008**

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       (Address of principal executive offices)   (zip  code)  (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 a large  accelerated filer, an accelerated filer, a non-accelerated filer or a smaller  reporting company. See definitions of "large accelerated filer," "accelerated  filer" and "smaller reporting company" in Rule 12b-2 of the  Exchange Act (Check one):

Large accelerated filer  X           Accelerated  filer            Non-accelerated  filer           Smaller  reporting company

Indicate by check mark whether the registrant is a shell  company (as defined in Rule 12b-2 of the Exchange Act).

YES                    NO     X   

At April 30, 2008, 6,765,196,985 shares of the issuer's  voting common stock were outstanding. |

**FORM 10-Q**

**For the QuarterEndedMarch 30, 2008**

**Tableof Contents**

| **PART I.  FINANCIAL  INFORMATION**                                                                       | Page       |
|---------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                      |            |
| Item 1.                                                                                                             |            |
| Financial Statements                                                                                                |            |
|                                                                                                      |            |
| Condensed  Consolidated Statements of Income for the three months ended March 30, 2008,  and April 1, 2007          | 3          |
|                                                                                                      |            |
| Condensed  Consolidated Balance Sheets as of March 30, 2008, and December 31, 2007                             | 4          |
|                                                                                                      |            |
| Condensed  Consolidated Statements of Cash Flows for the three months ended March 30,  2008, and April 1, 2007 | 5          |
|                                                                                                      |            |
| Notes to  Condensed Consolidated Financial Statements                                                               | 6          |
|                                                                                                      |            |
| Review Report  of Independent Registered Public Accounting Firm                                                     | 16         |
|                                                                                                      |            |
| Item 2.                                                                                                             |            |
| Management's  Discussion and Analysis of Financial Condition and Results of Operations                              | 17         |
|                                                                                                      |            |
| Item 3.                                                                                                             |            |
| Quantitative  and Qualitative Disclosures About Market Risk                                                         | 43         |
|                                                                                                      |            |
| Item 4.                                                                                                             |            |
| Controls and  Procedures                                                                                            | 43         |
| **   **                                                                                              |            |
| **PART II.  OTHER  INFORMATION**                                                                          | ** ** |
| **   **                                                                                              |            |
| Item 1.                                                                                                             |            |
| Legal  Proceedings                                                                                                  | 43         |
|                                                                                                      |            |
| Item 1A.                                                                                                            |            |
| Risk Factors                                                                                                        | 46         |
|                                                                                                      |            |
| Item 2.                                                                                                             |            |
| Unregistered  Sales of Equity Securities and Use of Proceeds                                                        | 47         |
|                                                                                                      |            |
| Item 3.                                                                                                             |            |
| Defaults Upon  Senior Securities                                                                                    | 47         |
|                                                                                                      |            |
| Item 4.                                                                                                             |            |
| Submission of  Matters to a Vote of Security Holders                                                                | 48         |
|                                                                                                      |            |
| Item 5.                                                                                                             |            |
| Other  Information                                                                                                  | 48         |
|                                                                                                      |            |
| Item 6.                                                                                                             |            |
| Exhibits                                                                                                            | 49         |
|                                                                                                      |            |
| Signature                                                                                                           | 50         |

**PARTI - FINANCIAL INFORMATION**

Item 1. Financial Statements.

PFIZER INC AND SUBSIDIARYCOMPANIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)

|                                                                                                 |   | Three  Months Ended             |
|-------------------------------------------------------------------------------------------------|---|---------------------------------|
| (millions, except per common share  data)                                                       |   | Mar. 30,   2008  |  | April 1,   2007  |
|                                                                                  |   |                                 |  |  |
| Revenues                                                                                        | $ | 11,848                     | $ | 12,474  |
|                                                                                       |   |                                 |  |  |
| Costs and expenses:                                                                             |   |                                 |  |  |
| Cost of sales(a)                                                                                |   | 1,986                      |  | 1,887  |
| Selling,  informational and administrative expenses(a)                                          |   | 3,492                      |  | 3,361  |
| Research and  development expenses(a)                                                           |   | 1,791                      |  | 1,665  |
| Amortization of  intangible assets                                                              |   | 779                        |  | 815  |
| Acquisition-related  in-process research and development charges                                |   | 398                        |  | 283  |
| Restructuring  charges and acquisition-related costs                                            |   | 178                        |  | 812  |
| Other  (income)/deductions - net                                                      |   | (333)                           |  | (402) |
|                                                                                       |   |                                 |  |  |
| Income from  continuing operations before provision for taxes on income and minority  interests |   | 3,557                      |  | 4,053  |
|                                                                                       |   |                                 |  |  |
| Provision for  taxes on income                                                                  |   | 763                   |  | 689   |
|                                                                                       |   |                                 |  |  |
| Minority  interests                                                                             |   | 6                          |  | 3  |
|                                                                                       |   |                                 |  |  |
| Income from  continuing operations                                                              |   | 2,788                      |  | 3,361  |
|                                                                                       |   |                                 |  |  |
| Discontinued  operations:                                                                       |   |                                 |  |  |
| Loss from  discontinued operations - net of tax                                       |   | (4)                             |  | --  |
| Gains on sales  of discontinued operations - net of tax                               |   | --                         |  | 31  |
|                                                                                       |   |                                 |  |  |
| Discontinued  operations - net of tax                                                 |   | (4)                             |  | 31  |
|                                                                                  |   |                                 |  |  |
| Net income                                                                                      | $ | 2,784                      | $ | 3,392  |
|                                                                                       |   |                                 |  |  |
| Earnings per common share - basic:                                                              |   |                                 |  |  |
| Income from  continuing operations                                                              | $ | 0.41                       | $ | 0.48  |
| Discontinued  operations - net of tax                                                 |   | --                         |  | --  |
| Net income                                                                                      | $ | 0.41                       | $ | 0.48  |
|                                                                                       |   |                                 |  |  |
| Earnings per common share -  diluted:                                                           |   |                                 |  |  |
| Income from  continuing operations                                                              | $ | 0.41                       | $ | 0.48  |
| Discontinued  operations - net of tax                                                 |   | --                         |  | --  |
| Net income                                                                                      | $ | 0.41                       | $ | 0.48  |
|                                                                                       |   |                                 |  |  |
| Weighted-average  shares used to calculate earnings per common share:                           |   |                                 |  |  |
| Basic                                                                                           |   | 6,739                      |  | 7,051  |
|                                                                                       |   |                                 |  |  |
| Diluted                                                                                         |   | 6,762                      |  | 7,075  |
|                                                                                       |   |                                 |  |  |
| Cash dividends paid per common  share                                                           | $ | 0.32                       | $ | 0.29  |

   

| (a) | Exclusive of amortization of  intangible assets, except as disclosed in *Note 8B. Goodwill and Other  Intangible Assets*:*Other Intangible Assets.* |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

See accompanyingNotes to Condensed Consolidated Financial Statements.

PFIZERINC AND SUBSIDIARY COMPANIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)

| (millions  of dollars)                                              |   | Mar. 30,   2008* |   | Dec. 31,   2007** |
|---------------------------------------------------------------------|---|----------------------------|---|-----------------------------|
| ASSETS                                                              |   |                            |   |                             |
| Cash and cash equivalents                                           | $ | 2,013                 | $ | 3,406                  |
| Short-term investments                                              |   | 26,615                |   | 22,069                 |
| Accounts receivable, less allowance  for doubtful accounts          |   | 10,432                |   | 9,843                  |
| Short-term loans                                                    |   | 777                   |   | 617                    |
| Inventories                                                         |   | 5,148                 |   | 5,302                  |
| Prepaid expenses and taxes                                          |   | 5,939                 |   | 5,498                  |
| Assets held for sale                                                |   | 87                    |   | 114                    |
| Total current assets                                                |   | 51,011                |   | 46,849                 |
| Long-term  investments and loans                                    |   | 4,511                 |   | 4,856                  |
| Property, plant and equipment, less  accumulated depreciation       |   | 15,383                |   | 15,734                 |
| Goodwill                                                            |   | 21,556                |   | 21,382                 |
| Identifiable  intangible assets, less accumulated amortization      |   | 19,896                |   | 20,498                 |
| Other assets,  deferred taxes and deferred charges                  |   | 6,193                 |   | 5,949                  |
| Total assets                                                        | $ | 118,550               | $ | 115,268                |
|                                                      |   |                            |   |                             |
| LIABILITIES  AND SHAREHOLDERS' EQUITY                               |   |                            |   |                             |
| Short-term borrowings, including  current portion of long-term debt | $ | 8,909                 | $ | 5,825                  |
| Accounts payable                                                    |   | 1,909                 |   | 2,270                  |
| Dividends payable                                                   |   | 1                     |   | 2,163                  |
| Income taxes payable                                                |   | 1,221                 |   | 1,380                  |
| Accrued compensation and related  items                             |   | 1,622                 |   | 1,974                  |
| Other current liabilities                                           |   | 8,020                 |   | 8,223                  |
| Total current liabilities                                           |   | 21,682                |   | 21,835                 |
|                                                 |   |                            |   |                             |
| Long-term debt                                                      |   | 8,143                 |   | 7,314                  |
| Pension benefit  obligations                                        |   | 2,550                 |   | 2,599                  |
| Postretirement  benefit obligations                                 |   | 1,703                 |   | 1,708                  |
| Deferred taxes                                                      |   | 7,441                 |   | 7,696                  |
| Other taxes  payable                                                |   | 6,284                 |   | 6,246                  |
| Other  noncurrent liabilities                                       |   | 3,187                 |   | 2,746                  |
| Total liabilities                                                   |   | 50,990                |   | 50,144                 |
|                                                                     |   |                            |   |                             |
| Minority interests                                                  |   | 143                   |   | 114                    |
|                                                      |   |                            |   |                             |
| Preferred stock                                                     |   | 86                    |   | 93                     |
| Common stock                                                        |   | 443                   |   | 442                    |
| Additional  paid-in capital                                         |   | 70,001                |   | 69,913                 |
| Employee  benefit trust, at fair value                              |   | (459)                      |   | (550)                       |
| Treasury stock                                                      |   | (56,883)                   |   | (56,847)                    |
| Retained  earnings                                                  |   | 52,436                |   | 49,660                 |
| Accumulated  other comprehensive income                             |   | 1,793                 |   | 2,299                  |
|                                                      |   |                            |   |                             |
| Total shareholders' equity                                          |   | 67,417                |   | 65,010                 |
| Total liabilities and shareholders'  equity                         | $ | 118,550               | $ | 115,268                |

*    Unaudited.

**  Condensed from auditedfinancial statements.

See accompanyingNotes to Condensed Consolidated Financial Statements.

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

|                                                                                    |   | Three  Months Ended             |
|------------------------------------------------------------------------------------|---|---------------------------------|
| (millions of dollars)                                                              |   | Mar. 30,   2008  |  | April 1,   2007  |
|                                                                     |   |                                 |  |  |
| Operating  Activities:                                                             |   |                                 |  |  |
| Net income                                                                         | $ | 2,784                      | $ | 3,392  |
| Adjustments to  reconcile net income to net cash provided by operating activities: |   |                                 |  |  |
| Depreciation  and amortization                                                     |   | 1,487                      |  | 1,271  |
| Share-based  compensation expense                                                  |   | 101                        |  | 141  |
| Acquisition-related  in-process research and development charges                   |   | 398                        |  | 283  |
| Gains on  disposals                                                                |   | (23)                            |  | (7) |
| Gains on sales  of discontinued operations                                         |   | --                         |  | (40) |
| Deferred taxes  from continuing operations                                         |   | 544                        |  | (268) |
| Other non-cash  adjustments                                                        |   | 242                        |  | 58  |
| Changes in  assets and liabilities (net of businesses acquired and divested)       |   | (2,262)                         |  | (3,587) |
|                                                                     |   |                                 |  |  |
| Net cash provided by operating  activities                                         |   | 3,271                      |  | 1,243  |
|                                                                     |   |                                 |  |  |
| Investing Activities:                                                              |   |                                 |  |  |
| Purchases of  property, plant and equipment                                        |   | (483)                           |  | (329) |
| Purchases of  short-term investments                                               |   | (10,648)                        |  | (5,617) |
| Proceeds from sales  and redemptions of short-term investments                     |   | 6,817                      |  | 11,819  |
| Purchases of long-term  investments                                                |   | (498)                           |  | (1,158) |
| Proceeds from sales  and redemptions of long-term investments                      |   | 42                         |  | 5  |
| Purchases of  other assets                                                         |   | (14)                            |  | (2) |
| Proceeds from  the sales of businesses, products and product lines                 |   | --                         |  | 7  |
| Acquisitions,  net of cash acquired                                                |   | (610)                           |  | (463) |
| Other investing  activities                                                        |   | (90)                            |  | 9  |
|                                                                     |   |                                 |  |  |
| Net cash (used in)/provided by  investing activities                               |   | (5,484)                         |  | 4,271  |
|                                                                     |   |                                 |  |  |
| Financing Activities:                                                              |   |                                 |  |  |
| Increase in  short-term borrowings, net                                            |   | 4,899                      |  | 162  |
| Principal  payments on short-term borrowings                                       |   | (1,955)                         |  | (729) |
| Proceeds from  issuances of long-term debt                                         |   | 602                        |  | 19  |
| Principal  payments on long-term debt                                              |   | (561)                           |  | (58) |
| Purchases of  common stock                                                         |   | --                         |  | (2,500) |
| Cash dividends  paid                                                               |   | (2,138)                         |  | (2,032) |
| Stock option  transactions and other                                               |   | 1                          |  | 290  |
|                                                                     |   |                                 |  |  |
| Net cash provided  by/(used in) financing activities                               |   | 848                        |  | (4,848) |
| Effect of  exchange-rate changes on cash and cash equivalents                      |   | (28)                            |  | (1) |
| Net (decrease)/increase  in cash and cash equivalents                              |   | (1,393)                         |  | 665  |
| Cash and cash  equivalents at beginning of period                                  |   | 3,406                      |  | 1,827  |
|                                                                     |   |                                 |  |  |
| Cash and cash  equivalents at end of period                                        | $ | 2,013                      | $ | 2,492  |
|                                                                     |   |                                 |  |  |
| Supplemental  Cash Flow Information:                                               |   |                                 |  |  |
| Cash paid  during the period for:                                                  |   |                                 |  |  |
| Income taxes                                                                       | $ | 640                        | $ | 2,424  |
| Interest                                                                           |   | 166                        |  | 170  |

See accompanyingNotes to Condensed Consolidated Financial Statements.

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

**Note 1.  Basis ofPresentation**

We prepared the condensedconsolidated financial statements following the requirements of the Securitiesand Exchange Commission (SEC) for interim reporting. As permitted under thoserules, certain footnotes or other financial information that are normallyrequired by accounting principles generally accepted in the United States ofAmerica (U.S. GAAP) can be condensed or omitted. Balance sheet amounts andoperating results for subsidiaries operating outside the U.S. are as of and forthe three-month periods ended February 24, 2008, and February 25, 2007.

Revenues, expenses, assets andliabilities can vary during each quarter of the year. Therefore, the resultsand trends in these interim financial statements may not be representative ofthose for the full year. 

We are responsible for the unauditedfinancial statements included in this document. The financial statementsinclude all normal and recurring adjustments that are considered necessary forthe fair presentation of our financial position and operating results. 

The information included in thisQuarterly Report on Form 10-Q should be read in conjunction with theconsolidated financial statements and accompanying notes included in Pfizer'sAnnual Report on Form 10-K for the year ended December 31, 2007.

**Note 2.  Adoption of NewAccounting Policies**

As of January 1, 2008, we adopted ona prospective basis certain required provisions of Statement of FinancialAccounting Standards (SFAS) No. 157, *Fair Value Measurements*, as amendedby Financial Accounting Standards Board (FASB) Financial Staff Position (FSP) No. 157-2,*Effective Date of FASB Statement No. 157*. Those provisions relate to ourfinancial assets and liabilities carried at fair value and our fair valuedisclosures related to financial assets and liabilities.  SFAS 157 defines fairvalue, expands related disclosure requirements and specifies a hierarchy ofvaluation techniques based on the nature of the inputs used to develop the fairvalue measures.  Fair value is defined as the price that would be received tosell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date.  There are three levels of inputsto fair value measurements - Level 1, meaning the use of quoted prices foridentical instruments in active markets; Level 2, meaning the use of quotedprices for similar instruments in active markets or quoted prices for identicalor similar instruments in markets that are not active or are directly orindirectly observable; and Level 3, meaning the use of unobservable inputs. Observable market data should be used when available.

Many, but not all, of our financialinstruments are carried at fair value. For example,substantially all of our cash equivalents, short-term investments and long-terminvestments are classified as available-for-sale securities and are carried atfair value, with unrealized gains and losses, net of tax, reported in *Othercomprehensive income*.  Derivative financial instruments are carriedat fair value, with changes in fair value reported in various balance sheetcategories (see both *Note 10 D. Financial Instruments: Derivative FinancialInstruments and Hedging Activities*in our 2007 Annual Report, and *Note 6C.Financial Instruments: Derivative Financial Instruments and Hedging Activities*inthis Quarterly Report) and ultimately, in *Other (income)/deductions - net*.Virtually all of our valuation measurements are Level 2 measurements.  Theadoption of SFAS 157 did not have a significant impact on our consolidated financialstatements. We did not elect to adopt SFAS 157 for acquired non-financialassets and assumed non-financial liabilities.

Emerging Issues Task Force (EITF)Issue No. 07-3, *Accounting for Nonrefundable Advance Payments for Goods orServices to Be Used in Future Research and Development Activities,* becameeffective for new contracts entered into on or after January 1, 2008. EITFIssue No. 07-3 requires that non-refundable advance payments for goods andservices that will be used in future research and development (R&D)activities be expensed when the R&D activity has been performed orwhen the R&D goods have been received rather than when the payment is made.The adoption of EITF Issue No. 07-3 did not have a significant impact on our consolidatedfinancial statements. 

**Note 3.  Acquisitions**

During the first quarters of 2008 and2007, we acquired the following:

| **•** | In January 2008, we acquired CovX,  a privately held biotherapeutics company specializing in preclinical oncology  and metabolic research and the developer of a biotherapeutics technology platform  that we expect will enhance our biologic portfolio. Also in January 2008, we  acquired all the outstanding shares of Coley Pharmaceutical Group, Inc., a  biopharmaceutical company specializing in vaccines and drug candidates  designed to fight cancers, allergy and asthma disorders, and autoimmune  diseases, for approximately $230 million. In connection with these and two  smaller acquisitions related to Animal Health, we recorded $398 million in *Acquisition-related  in-process research and development charges*. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **•** | In the first quarter of 2007, we  acquired BioRexis Pharmaceutical Corp., a privately held biopharmaceutical  company with a number of diabetes candidates and a novel technology platform  for developing new protein drug candidates, and Embrex, Inc., an animal  health company that possesses a unique vaccine delivery system known as  Inovoject that improves consistency and reliability by inoculating chicks  while they are still inside the egg. In connection with these and other small  acquisitions, we recorded $283 million in *Acquisition-related  in-process research and development charges*.                                                                                                                  |

   

**Note 4.  Cost-ReductionInitiatives**

We incurred the following costs inconnection with our cost-reduction initiatives.

|                                                        |   | First  Quarter      |
|--------------------------------------------------------|---|---------------------|
| (millions  of dollars)                                 |   | Mar. 30,  2008 |  | April 1,  2007 |
|                                              |   |                     |  |  |
| Implementation  costs(a)                               | $ | 357            | $ | 174  |
| Restructuring  charges(b)                              |   | 177            |  | 795  |
| Total costs  related to our cost-reduction initiatives | $ | 534            | $ | 969  |

   

| (a) | For  the first quarter of 2008, included in *Cost of sales* ($138 million),*Selling, informational and administrative expenses* ($75 million), *Research  and development**expenses* ($146 million), and*Other (income)/deductions-net*  ($2 million income).  For the first quarter of 2007, included in *Cost of  sales* ($94 million),*Selling, informational and administrative  expenses* ($49 million), and *Research and development**expenses*  ($31 million). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Included  in *Restructuring charges and acquisition-related costs.*                                                                                                                                                                                                                                                                                                                                                                                                                                       |

   

Through March 30, 2008, therestructuring charges primarily relate to our plant network optimizationefforts and the restructuring of our U.S. marketing and worldwide research anddevelopment operations, while the implementation costs primarily relate to accelerateddepreciation of certain assets, as well as system and process standardizationand the expansion of shared services.

The components of restructuring chargesassociated with our cost-reduction initiatives follow: 

| (millions  of dollars)      |   | Costs  Incurred  Through  Mar. 30,  2008 |   | Activity  Through  Mar. 30,  2008 | (a) | Accrual  as of  Mar. 30,  2008 | (b) |
|-----------------------------|---|-----------------------------------------------|---|----------------------------------------|-----|--------------------------------|-----|
|                   |   |                                               |   |                                        |     |                                |     |
| Employee  termination costs | $ | 3,272                                         | $ | 2,288                                  | $   | 984                            |     |
| Asset  impairments          |   | 784                                           |   | 784                                    |     | --                        |     |
| Other                       |   | 378                                           |   | 278                                    |     | 100                            |     |
| Total                       | $ | 4,434                                         | $ | 3,350                                  | $   | 1,084                          |     |

  

| (a) | Includes  adjustments for foreign currency translation.                                                            |
|-----|--------------------------------------------------------------------------------------------------------------------|
| (b) | Included  in *Other current liabilities* ($958 million)**and*Other  noncurrent liabilities* ($126 million)*.* |

   

During the first quarter of 2008, weexpensed $126 million for *Employee termination costs*, $34 millionfor *Asset impairments* and $17 million in *Other*. Through March 30,2008, *Employee termination**costs* represent the expected reductionof the workforce by 21,200 employees, mainly in manufacturing, sales andresearch. Approximately 13,700 employees were terminated as of March 30,2008. *Employee termination costs* include accrued severance benefits,pension and postretirement benefits. *Asset impairments* primarily includecharges to write down property, plant and equipment. *Other* primarilyincludes costs to exit certain activities.

**Note 5.  ComprehensiveIncome**

The components of comprehensiveincome/(expense) follow: 

|                                                                    | First  Quarter |
|--------------------------------------------------------------------|----------------|
| (millions of dollars)                                              |                | Mar.  30, 2008 |  | April  1, 2007 |
|                                                                    |                |  |  |  |
| Net income                                                         | $              | 2,784  | $ | 3,392  |
| Other comprehensive  income/(expense):                             |                |  |  |  |
| Currency  translation adjustment and other                         |                | (577) |  | (128) |
| Net unrealized  gains/(losses) on derivative financial instruments |                | 1  |  | 9  |
| Net unrealized  gains/(losses) on available-for-sale securities    |                | (14) |  | (4) |
| Benefit plan  adjustments                                          |                | 84   |  | 81   |
| Total other  comprehensive income/(expense)                        |                | (506) |  | (42) |
| Total comprehensive income                                         | $              | 2,278  | $ | 3,350  |

      

**Note 6.  FinancialInstruments**

A.  FinancialInstruments

As of January 1, 2008, we adopted ona prospective basis certain required provisions of SFAS 157, as amended by FSP157-2. (See *Note 2*. *Adoption of New Accounting Policies).*

Information about certain of ourfinancial assets and liabilities follows:

|                                                                |   |                       |   | Fair  Value(a) |
|----------------------------------------------------------------|---|-----------------------|---|----------------|
| (millions  of dollars)                                         |   | As of  Mar. 30,  2008 |   | Level 1   |  | Level 2 |  | Level 3 |
| Financial assets carried at fair  value:                       |   |                       |   |                |  |  |  |  |
| Trading securities(b)                                          | $ | 213                   | $ | --             | $ | 213 | $ | -- |
| Available-for-sale debt securities(c)                          |   | 27,360                |   | --             |  | 27,360 |  | -- |
| Available-for-sale equity  securities(d)                       |   | 1,665                 |   | 265            |  | 1,400 |  | -- |
| Derivative financial instruments(e)                            |   | 866                   |   | --             |  | 866 |  | -- |
| Total                                                          | $ | 30,104                | $ | 265            | $ | 29,839 | $ | -- |
|                                                 |   |                       |   |                |  |  |  |  |
| Other financial assets:                                        |   |                       |   |                |  |  |  |  |
| Held-to-maturity  debt securities carried at amortized cost(f) |   | 1,528                 |   |                |  |  |  |  |
| Short-term loans carried at cost                               |   | 777                   |   |                |  |  |  |  |
| Long-term loans carried at cost(b)                             |   | 1,528                 |   |                |  |  |  |  |
| Non-traded equity securities  carried at cost(b)               |   | 173                   |   |                |  |  |  |  |
| Total                                                          | $ | 4,006                 |   |                |  |  |  |  |
|                                                 |   |                       |   |                |  |  |  |  |
| Financial liabilities carried at  fair value:                  |   |                       |   |                |  |  |  |  |
| Derivative financial instruments(g)                            |   | 1,537                 |   | --             |  | 1,537 |  | -- |
| Total                                                          | $ | 1,537                 | $ | --             | $ | 1,537 | $ | -- |
| Financial liabilities carried at  historical proceeds:         |   |                       |   |                |  |  |  |  |
| Short-term borrowings                                          |   | 8,909                 |   |                |  |  |  |  |
| Long-term debt                                                 |   | 8,143                 |   |                |  |  |  |  |
| Total                                                          | $ | 17,052                |   |                |  |  |  |  |

   

| (a) | Fair  values are determined based on valuation techniques categorized as follows: Level 1 means  the use of quoted prices for identical instruments in active markets; Level 2  means the use of quoted prices for similar instruments in active markets or  quoted prices for identical or similar instruments in markets that are not  active or are directly or indirectly observable; Level 3 means the use of  unobservable inputs. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Included  in *Long-term investments and loans.*                                                                                                                                                                                                                                                                                                                                                                                          |
| (c) | Included  in *Short-term investments*($25.1 billion) and*Long-term investments  and loans* ($2.3 billion).                                                                                                                                                                                                                                                                                                                               |
| (d) | Included  in *Short-term investments*($1.4 billion, comprised of money market  funds) and*Long-term investments and loans* ($274 million).   Includes gross unrealized gains ($84 million) and gross unrealized losses  ($24 million).                                                                                                                                                                                         |
| (e) | Primarily  included in *Prepaid expenses and taxes*($436 million) and*Other  assets, deferred taxes and deferred charges*($430 million)*.*                                                                                                                                                                                                                                                                                          |
| (f) | Primarily  included in *Cash and cash equivalents.* Amortized cost approximates  fair value as unrealized gains and losses are not significant.                                                                                                                                                                                                                                                                                          |
| (g) | Included  in *Other current liabilities*($1.4 billion) and *Other noncurrent  liabilities* ($99 million).                                                                                                                                                                                                                                                                                                                                |

   

We use a matrix-pricing model for allof our financial instruments carried at fair value, except foravailable-for-sale equity securities, for which we use market quotes.

On an ongoing basis, we evaluate ourinvestments in debt and equity securities to determine if a decline in fairvalue is other-than-temporary.  When a decline in fair value is determined tobe other-than-temporary, an impairment charge is recorded and a new cost basisin the investment is established.  The aggregate cost and related unrealizedlosses related to non-traded equity investments are not significant.

B.  Long-Term Debt andOther Securities

In March 2007, wefiled a securities registration statement with the Securities and ExchangeCommission. This registration statement was filed under the automatic shelfregistration process available to well-known "seasoned" issuers andis effective for three years. We can issue securities of various types underthat registration statement at any time, subject to approval by our Board of Directorsin certain circumstances.

C.  Derivative FinancialInstruments and Hedging Activities 

There was no material ineffectivenessin any hedging relationship reported in earnings in the first quarter of 2008.

*Foreign Exchange Risk*

During the first quarter of 2008, weentered into the following new or incremental hedging or offset activities:

| Instrument(a) | Primary  Balance Sheet  Caption | (b) |    | Hedge  Type | (c) |    | Hedged  or Offset Item                                |   | Notional Amount as of  Mar. 30, 2008  (millions of dollars)                   | Maturity Date |
|---------------|---------------------------------|-----|--------------|-------------|-----|--------------|-------------------------------------------------------|---|-------------------------------------------------------------------------------|--------------------|
| Forward       | OCL                             |     |              | CF          |     |              | U.K. pound available-for-sale investments             | $ | 1,728             | 2008               |
| Forward       | OCL                             |     |              | CF          |     |              | Yen available-for-sale investments                    |   | 1,447             | 2008               |
| Forward       | OCL                             |     |              | --          |     |              | Short-term foreign currency assets and liabilities(d) |   | 1,238             | 2008               |
| Forward       | OCL                             |     |              | CF          |     |              | Euro available-for-sale investments                   |   | 516               |  2008         |

   

| (a) | Forward  = Forward-exchange contracts.                                                                                                                                                                                                                                       |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | The  primary balance sheet caption indicates the financial statement  classification of the amount associated with the financial instrument used to  hedge or offset foreign exchange risk. The abbreviation used is defined as  follows: OCL = *Other current liabilities*. |
| (c) | CF = Cash  flow hedge.                                                                                                                                                                                                                                                       |
| (d) | Forward-exchange  contracts used to offset short-term foreign currency assets and liabilities  are primarily for intercompany transactions in euros, Japanese yen, Swedish  krona, U.K. pounds and Canadian dollars.                                                         |

   

These foreign-exchange instrumentsserve to protect us against the impact of the translation into U.S. dollars ofcertain foreign currency denominated transactions.

D.  Credit Risk

During the first quarter of 2008, wereceived additional cash collateral of $301 million against variouscounterparties.  The collateral primarily supports the approximate fairvalue of our Swedish krona and euro swap contracts. The collateral receivedobligation is reported in *Other current liabilities*.

**Note 7.  Inventories**

The components of inventories follow:

| (millions of dollars)       |   | Mar. 30,  2008 |   | Dec. 31,  2007 |
|-----------------------------|---|---------------------|---|---------------------|
|              |   |                     |   |                     |
| Finished goods              | $ | 2,075               | $ | 2,064               |
| Work-in-process             |   | 2,045               |   | 2,353               |
| Raw materials  and supplies |   | 1,028               |   | 885                 |
| Total  inventories(a)       | $ | 5,148               | $ | 5,302               |

   

| (a) | Certain  amounts of inventories are in excess of one year's supply. There are no  recoverability issues associated with these quantities and the amounts are  not significant. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

    

**Note 8.  Goodwill andOther Intangible Assets**

A.  Goodwill

The changes in the carrying amount ofgoodwill by segment for the quarter ended March 30, 2008, follow:

| (millions  of dollars)           |   | Pharmaceutical  |   | Animal   Health  |   | Other  |   | Total        |
|----------------------------------|---|----------------------|---|----------------------------|---|-------------|---|--------------|
|                   |   |                      |   |                            |   |             |   |              |
| Balance,  December 31, 2007 | $ | 21,256          | $ | 108                   | $ | 18     | $ | 21,382  |
| Additions(a)                     |   | 17              |   | 15                    |   | --     |   | 32      |
| Other(b)                         |   | 129             |   | 12                    |   | 1      |   | 142     |
| Balance, March 30,  2008    | $ | 21,402          | $ | 135                   | $ | 19     | $ | 21,556  |

  

| (a) | Primarily  related to our acquisition of Coley and two acquisitions in Animal Health. |
|-----|---------------------------------------------------------------------------------------|
| (b) | Primarily  the impact of foreign exchange.                                            |

   

B.  Other IntangibleAssets 

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

|                        |  | As of Mar. 30, 2008                  |  |                                       | As of Dec. 31, 2007 |
|------------------------|--|-------------------------------------------|--|---------------------------------------|--------------------------|
| (millions  of dollars) |  | Gross   Carrying   Amount  |  | Accumulated   Amortization  |                          | Identifiable  Intangible  Assets, less  Accumulated  Amortization |  |  | Gross   Carrying   Amount  |  | Accumulated   Amortization  |  | Identifiable  Intangible  Assets, less  Accumulated  Amortization |
|                        |  |                                           |  |                                       |                          |  |  |  |  |  |  |  |  |

| Finite-lived  intangible assets:                |   |              |   |          |   |        |     |   |              |   |          |   |        |     |
|-------------------------------------------------|---|--------------|---|----------|---|--------|-----|---|--------------|---|----------|---|--------|-----|
| Developed  technology rights                    | $ | 32,563  | $ | (16,643) | $ | 15,920 |     | $ | 32,433  | $ | (15,830) | $ | 16,603 |     |
| Brands                                          |   | 1,017   |   | (461)    |   | 556    |     |   | 1,017   |   | (452)    |   | 565    |     |
| License  agreements                             |   | 211     |   | (64)     |   | 147    |     |   | 212     |   | (59)     |   | 153    |     |
| Trademarks                                      |   | 145     |   | (82)     |   | 63     |     |   | 128     |   | (82)     |   | 46     |     |
| Other(a)                                        |   | 547     |   | (275)    |   | 272    |     |   | 459     |   | (264)    |   | 195    |     |
| Total amortized  finite-lived intangible assets |   | 34,483  |   | (17,525) |   | 16,958 |     |   | 34,249  |   | (16,687) |   | 17,562 |     |
| Indefinite-lived  intangible assets:            |   |              |   |          |   |        |     |   |              |   |          |   |        |     |
| Brands                                          |   | 2,865   |   | --  |   | 2,865  |     |   | 2,864   |   | --  |   | 2,864  |     |
| Trademarks                                      |   | 71      |   | --  |   | 71     |     |   | 71      |   | --  |   | 71     |     |
| Other                                           |   | 2       |   | --  |   | 2      |     |   | 1       |   | --  |   | 1      |     |
| Total  indefinite-lived intangible assets       |   | 2,938   |   | --  |   | 2,938  |     |   | 2,936   |   | --  |   | 2,936  |     |
| Total  identifiable intangible assets           | $ | 37,421  | $ | (17,525) | $ | 19,896 | (b) | $ | 37,185  | $ | (16,687) | $ | 20,498 | (b) |

   

| (a) | Includes  patents, non-compete agreements, customer contracts and other intangible  assets. |
|-----|---------------------------------------------------------------------------------------------|
| (b) | Decrease  was primarily related to amortization, partially offset by acquisitions.          |

   

Amortization expense related toacquired intangible assets that contribute to our ability to sell, manufacture,research, market and distribute products, compounds and intellectual propertyare included in *Amortization of intangible assets* as it benefitsmultiple business functions. Amortization expense related to acquiredintangible assets that are associated with a single function is included in *Costof sales*,*Selling, informational and administrative**expenses*and*Research and development expenses*, as appropriate. Total amortizationexpense for finite-lived intangible assets was $808 million for the firstquarter of 2008 and $856 million for the first quarter of 2007. 

The expected annual amortizationexpense is $2.7 billion in 2008; $2.6 billion in each of 2009 and 2010;$2.5 billion in 2011; $2.1 billion in 2012; and $1.6 billion in2013.

**Note 9.  Pension andPostretirement Benefit Plans**

The components of net periodicbenefit costs of the U.S. and international pension plans and thepostretirement plans, which provide medical and life insurance benefits toretirees and their eligible dependents, for the first quarters of 2008 and 2007,follow:

|                                     |   | Pension  Plans  |   |                                     |
|-------------------------------------|---|-----------------|---|-------------------------------------|
|                                     |   | U.S.  Qualified |   | U.S.  Supplemental  (Non-Qualified) |  | International |  | Postretirement  Plans |
| (millions of dollars)               |   | 2008       |   | 2007                           |  | 2008 |  | 2007 |  | 2008  |  | 2007  |  | 2008  |  | 2007  |
|                      |   |                 |   |                                     |  |  |  |  |  |  |  |  |  |  |  |  |
| Service cost                        | $ | 61         | $ | 77                             | $ | 6  | $ | 7  | $ | 63  | $ | 73  | $ | 9  | $ | 11  |
| Interest cost                       |   | 116        |   | 123                            |  | 12  |  | 14  |  | 99  |  | 86  |  | 34  |  | 34  |
| Expected return  on plan assets     |   | (163)           |   | (190)                               |  | --   |  | --   |  | (111) |  | (94) |  | (9) |  | (9) |
| Amortization  of:                   |   |                 |   |                                     |  |  |  |  |  |  |  |  |  |  |  |  |
| Actuarial  losses                   |   | 8          |   | 20                             |  | 9  |  | 12  |  | 11  |  | 24  |  | 6  |  | 12  |
| Prior service  costs/(credits)      |   | 1          |   | 3                              |  | (1) |  | (1) |  | --  |  | --  |  | --  |  | --  |
| Curtailments  and settlements - net |   | 3          |   | 9                              |  | 112  |  | 7  |  | (2) |  | (100) |  | 3  |  | 2  |
| Special  termination benefits       |   | 7          |   | 3                              |  | --  |  | --  |  | 7  |  | 3  |  | 4  |  | 4  |
| Net periodic benefit costs/(credit) | $ | 33         | $ | 45                             | $ | 138  | $ | 39  | $ | 67  | $ | (8) | $ | 47  | $ | 54  |

   

The increase in net periodic benefitcost for our U.S. supplemental (non-qualified) pension plans was largely drivenby settlement charges required to be recognized due to lump sum benefitpayments made to certain of our former executive officers and other formerexecutives.

The international plans' net periodicbenefit credit balance in 2007 was largely driven by a settlement gain at ourJapanese affiliate. Japanese pension regulations permit employers with certainpension obligations to separate the social security benefits portion of thoseobligations and transfer it, along with related plan assets, to the Japanesegovernment. This transfer resulted in a settlement gain of approximately $106 million.

For the first quarter of 2008, wecontributed from our general assets $213 million to our U.S. supplemental(non-qualified) pension plans, $83 million to our international pensionplans and $39 million to our postretirement plans. Contributions to ourU.S. qualified pension plans in the first quarter of 2008 were not significant.

During 2008, we expect to contribute,from our general assets, a total of $254 million to our U.S. supplemental(non-qualified) pension plans, $387 million to our international pensionplans and $165 million to our postretirement plans. We do not expect tomake any significant contributions to our U.S. qualified pension plans during2008, primarily due to the overfunded status of the plans. Contributionsexpected to be made for 2008 are inclusive of amounts contributed during thefirst quarter of 2008. The contributions from our general assets include directemployer benefit payments. 

**Note 10.  EarningsPer Common Share**

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

|                                                                                                                                                     |   | First  Quarter              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|---|-----------------------------|
| (millions)                                                                                                                                          |   | Mar.  30,   2008  |  | April 1,   2007  |
|                                                                                                                                           |   |                             |  |  |
| EPS Numerator -  Basic:                                                                                                                             |   |                             |  |  |
| Income from  continuing operations                                                                                                                  | $ | 2,788                  | $ | 3,361 |
| Less:  Preferred  stock dividends - net of tax                                                                                  |   | --                     |  | 1 |
| Income available  to common shareholders from continuing operations                                                                                 |   | 2,788                  |  | 3,360 |
| Discontinued  operations - net of tax                                                                                                     |   | (4)                         |  | 31 |
| Net income  available to common shareholders                                                                                                        | $ | 2,784                  | $ | 3,391 |
|                                                                                                                                           |   |                             |  |  |
| EPS Denominator  - Basic:                                                                                                                           |   |                             |  |  |
| Weighted-average  number of common shares outstanding                                                                                               |   | 6,739                  |  | 7,051 |
|                                                                                                                                           |   |                             |  |  |
| EPS Numerator -  Diluted:                                                                                                                           |   |                             |  |  |
| Income from  continuing operations                                                                                                                  | $ | 2,788                  | $ | 3,361 |
| Less:  ESOP  contribution - net of tax                                                                                          |   | --                     |  | 1 |
| Income  available to common shareholders from continuing operations                                                                                 |   | 2,788                  |  | 3,360 |
| Discontinued  operations - net of tax                                                                                                     |   | (4)                         |  | 31 |
| Net income  available to common shareholders                                                                                                        | $ | 2,784                  | $ | 3,391 |
|                                                                                                                                           |   |                             |  |  |
| EPS Denominator  - Diluted:                                                                                                                         |   |                             |  |  |
| Weighted-average  number of common shares outstanding                                                                                               |   | 6,739                  |  | 7,051 |
| Common share  equivalents: stock options, restricted stock units, stock issuable under  employee compensation plans and convertible preferred stock |   | 23                     |  | 24 |
| Weighted-average  number of common shares outstanding and common share equivalents                                                                  |   | 6,762                  |  | 7,075 |
|                                                                                                                                      |   |                             |  |  |
| Stock options  that had exercise prices greater than the average market price of our common  stock issuable under employee compensation plans(a)    |   | 551                    |  | 522 |

   

| (a) | These  common stock equivalents were outstanding during the first quarters of 2008  and 2007, but were not included in the computation of diluted EPS for those  periods because their inclusion would have had an anti-dilutive effect. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

   

In the computation of diluted EPS,income from continuing operations and net income are reduced by the incrementalcontribution to the ESOPs, which were acquired as part of our Pharmaciaacquisition. This contribution is the after-tax difference between the incomethat the ESOPs would have received in preferred stock dividends and thedividend on the common shares assumed to have been outstanding.

**Note 11.  SegmentInformation**

We operate in the following businesssegments:

*Pharmaceutical*

| **•** | The  Pharmaceutical segment includes products that prevent and treat  cardiovascular and metabolic diseases, central nervous system disorders,  arthritis and pain, infectious and respiratory diseases, urogenital  conditions, cancer, eye disease and endocrine disorders. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

   

*Animal Health*

| **•** | The Animal  Health segment includes products that prevent and treat diseases in livestock  and companion animals. |
|------------|-------------------------------------------------------------------------------------------------------------------|

   

Segment profit/(loss) is measuredbased on income from continuing operations before provision for taxes on incomeand minority interests. Certain costs, such as significant impacts of purchaseaccounting for acquisitions, acquisition-related costs, costs related to our cost-reductioninitiatives and transition activity associated with our former ConsumerHealthcare business, are included in *Corporate/Other*only. Thismethodology is utilized by management to evaluate our businesses. 

Revenues and profit/(loss) by segmentfor the first quarters of 2008 and 2007 follow:

|                           |   | First  Quarter              |     |
|---------------------------|---|-----------------------------|-----|
| (millions  of dollars)    |   | Mar.  30,   2008  |     |  | April 1,   2007  |    |
|                 |   |                             |     |  |  |  |
| Revenues:                 |   |                             |     |  |  |  |
| Pharmaceutical            | $ | 10,904                 |     | $ | 11,581  |  |
| Animal Health             |   | 619                    |     |  | 586  |  |
| Corporate/Other(a)        |   | 325                    |     |  | 307  |  |
| Total revenues            | $ | 11,848                 |     | $ | 12,474  |  |
|            |   |                             |     |  |  |  |
| Segment  profit/(loss)(b) |   |                             |     |  |  |  |
| Pharmaceutical            | $ | 5,594                  |     | $ | 6,480  |  |
| Animal Health             |   | 145                    |     |  | 137  |  |
| Corporate/Other(a)        |   | (2,182)                     | (c) |  | (2,564) | (d) |
| Total profit/(loss)       | $ | 3,557                  |     | $ | 4,053  |  |

  

| (a)          | *Corporate/Other* includes our gelatin capsules business, our contract  manufacturing business and a bulk pharmaceutical chemicals business, and transition  activity associated with our former Consumer Healthcare business (sold in  December 2006). *Corporate/Other* under *Segment profit/(loss)* also  includes interest income/(expense), corporate expenses (e.g., corporate  administration costs), other income/(expense) (e.g., realized gains and  losses attributable to our investments in debt and equity securities), certain  performance-based and all share-based compensation expenses, significant  impacts of purchase accounting for acquisitions, acquisition-related costs,  intangible asset impairments and costs related to our cost-reduction  initiatives. |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (b)          | *Segment  profit/(loss)* equals *Income from  continuing operations before provision for taxes on income and minority  interests*. Certain costs, such as significant impacts of purchase  accounting for acquisitions, acquisition-related costs, costs related to our cost-reduction  initiatives and transition activity associated with our former Consumer  Healthcare business, are included in *Corporate/Other* only. This  methodology is utilized by management to evaluate our businesses.                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (c)          | For  the first quarter of 2008, *Corporate/Other* includes: (i) significant  impacts of purchase accounting for acquisitions of $1.2 billion;  including acquired in-process research and development, intangible asset  amortization and other charges; (ii) restructuring charges and implementation  costs associated with our cost-reduction initiatives of $534 million; (iii)  all share-based compensation expense; (iv) acquisition-related costs of  $1 million; and (v) transition activity associated with our former  Consumer Healthcare business ($3 million income).                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (d)          | For  the first quarter of 2007, *Corporate/Other* includes: (i) significant  impacts of purchase accounting for acquisitions of $1.1 billion,  including acquired in-process research and development, intangible asset  amortization and other charges; (ii) restructuring charges and implementation  costs associated with our cost-reduction initiatives of $969 million;  (iii) all share-based compensation expense; (iv) transition activity  associated with our former Consumer Healthcare business ($9 million income);  and (v) an acquisition-related credit of $2 million.                                                                                                                                                                               |

     

Revenues for each group of similarproducts follow:

|                                        |   | First  Quarter  |
|----------------------------------------|---|-----------------|
| (millions  of dollars)                 |   | Mar.  30,  2008 |  | April 1,  2007 |    | %   Change  |
| **   **                 |   |                 |  |  |  |  |
| **PHARMACEUTICAL**                     |   |                 |  |  |  |  |
| Cardiovascular and metabolic  diseases | $ | 4,494           | $ | 5,155 |  | (13)% |
| Central nervous system disorders       |   | 1,386           |  | 1,245 |  | 11     |
| Arthritis and pain                     |   | 755             |  | 749 |  | 1     |
| Infectious and respiratory diseases    |   | 931             |  | 913 |  | 2     |
| Urology                                |   | 784             |  | 751 |  | 4     |
| Oncology                               |   | 637             |  | 595 |  | 7     |
| Ophthalmology                          |   | 413             |  | 366 |  | 13     |
| Endocrine disorders                    |   | 258             |  | 245 |  | 6     |
| All other                              |   | 758             |  | 1,164 |  | (35)    |
| Alliance revenues                      |   | 488             |  | 398 |  | 23     |
| Total Pharmaceutical                   |   | 10,904          |  | 11,581 |  | (6)    |
| **ANIMAL HEALTH**                      |   | 619             |  | 586 |  | 6     |
| **OTHER**                              |   | 325             |  | 307 |  | 6     |
| Total revenues                         | $ | 11,848          | $ | 12,474 |  | (5)    |

 

REVIEWREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board ofDirectors of Pfizer Inc:

We have reviewed the condensedconsolidated balance sheet of Pfizer Inc and Subsidiary Companies as of March30, 2008, the related condensed consolidated statements of income for thethree-month periods ended March 30, 2008, and April 1, 2007, and therelated condensed consolidated statements of cash flows for the three-monthperiods ended March 30, 2008, and April 1, 2007. These condensedconsolidated financial statements are the responsibility of the Company'smanagement. 

We conducted our reviews inaccordance with the standards of the Public Company Accounting Oversight Board(United States). A review of interim financial information consists principallyof applying analytical procedures and making inquiries of persons responsiblefor financial and accounting matters. It is substantially less in scope than anaudit conducted in accordance with the standards of the Public CompanyAccounting Oversight Board (United States), the objective of which is theexpression of an opinion regarding the financial statements taken as a whole.Accordingly, we do not express such an opinion.

Based on our reviews, we are not awareof any material modifications that should be made to the condensed consolidatedfinancial statements referred to above for them to be in conformity with U.S.generally accepted accounting principles.

We have previously audited, inaccordance with standards of the Public Company Accounting Oversight Board(United States), the consolidated balance sheet of Pfizer Inc and SubsidiaryCompanies as of December 31, 2007, and the related consolidated statementsof income, shareholders' equity, and cash flows for the year then ended (notpresented herein); and in our report dated February 29, 2008, we expressedan unqualified opinion on those consolidated financial statements. In ouropinion, the information set forth in the accompanying condensed consolidatedbalance sheet as of December 31, 2007, is fairly stated, in all materialrespects, in relation to the consolidated balance sheet from which it has beenderived.

KPMGLLP

New York, New YorkMay 2, 2008

Item 2.  Management'sDiscussion and Analysis of Financial Condition and Results of Operations(MD&A)

*Introduction*

Our MD&A is provided in additionto the accompanying condensed consolidated financial statements and footnotesto assist readers in understanding Pfizer's results of operations, financialcondition and cash flows. The MD&A is organized as follows:

| **•** | *Overview of  Our Performance and Operating Environment*. This section, beginning on  page 19, provides information about the following: our business; our  performance during the first quarter of 2008; our operating environment; our  strategic initiatives, such as acquisitions; and our cost-reduction  initiatives.                                                                                                                                                                                                                                                                                                                                                  |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **•** | *Revenues*.  This section, beginning on page 22, provides an analysis of our products and  revenues for the first quarters of 2008 and 2007, as well as an overview of  important product developments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **•** | *Costs and  Expenses*. This section, beginning on page 31, provides a discussion about  our costs and expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **•** | *Provision  for Taxes on Income*. This section, beginning on page 32, provides a  discussion of items impacting our tax provision for the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **•** | *Adjusted  Income*. This section, beginning on page 33, provides a discussion of an  alternative view of performance used by management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **•** | *Financial  Condition, Liquidity and Capital Resources*. This section, beginning on  page 37, provides an analysis of our balance sheets as of March 30, 2008, and  December 31, 2007, and cash flows for the first quarters of 2008 and 2007, as  well as a discussion of our outstanding debt and commitments that existed as  of March 30, 2008, and December 31, 2007. Included in the discussion of  outstanding debt is a discussion of the amount of financial capacity  available to help fund Pfizer's future activities.                                                                                                                                           |
| ** ** | *   *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **•** | *Outlook*.  This section, beginning on page 40, provides a discussion of our expectations  for full-year 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **•** | *Forward-Looking  Information and Factors That May Affect Future Results*. This section,  beginning on page 41, provides a description of the risks and uncertainties  that could cause actual results to differ materially from those discussed in  forward-looking statements set forth in this MD&A relating to our  financial results, operations and business plans and prospects. Such  forward-looking statements are based on management's current expectations  about future events, which are inherently susceptible to uncertainty and  changes in circumstances. Also included in this section is a discussion of  Legal Proceedings and Contingencies. |

   

Components of the Condensed ConsolidatedStatement of Income follow:

|                                                                                                |   | First Quarter              |
|------------------------------------------------------------------------------------------------|---|----------------------------|
| (millions  of dollars, except per common share data)                                           |   | Mar. 30,   2008  |  |  | April 1,   2007  |  | % Change |
|                                                                                 |   |                            |  |  |  |  |  |
| Revenues                                                                                       | $ | 11,848                |  | $ | 12,474  |  | (5)% |
|                                                                                      |   |                            |  |  |  |  |  |
| Cost of sales                                                                                  |   | 1,986                 |  |  | 1,887  |  | 5     |
| % of revenues                                                                                  |   | 16.8                  | % |  | 15.1  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Selling, informational and administrative expenses                                             |   | 3,492                 |  |  | 3,361  |  | 4     |
| % of revenues                                                                                  |   | 29.5                  | % |  | 26.9  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Research and development expenses                                                              |   | 1,791                 |  |  | 1,665  |  | 8    |
| % of revenues                                                                                  |   | 15.1                  | % |  | 13.3  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Amortization of intangible assets                                                              |   | 779                   |  |  | 815  |  | (4)   |
| % of revenues                                                                                  |   | 6.6                   | % |  | 6.5  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Acquisition-related in-process research and  development charges                               |   | 398                   |  |  | 283  |  | 40    |
| % of revenues                                                                                  |   | 3.4                   | % |  | 2.3  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Restructuring charges and acquisition-related costs                                            |   | 178                   |  |  | 812  |  | (78)   |
| % of revenues                                                                                  |   | 1.5                   | % |  | 6.5  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Other (income)/deductions - net                                                      |   | (333)                      |  |  | (402) |  | (17)   |
|                                                                                 |   |                            |  |  |  |  |  |
| Income from continuing operations before provision  for taxes on income and minority interests |   | 3,557                 |  |  | 4,053  |  | (12)   |
| % of revenues                                                                                  |   | 30.0                  | % |  | 32.5  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Provision for taxes on income                                                                  |   | 763                   |  |  | 689  |  | 11    |
|                                                                                      |   |                            |  |  |  |  |  |
| Effective tax rate                                                                             |   | 21.5                  | % |  | 17.0  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Minority interests                                                                             |   | 6                     |  |  | 3  |  | 89    |
|                                                                                      |   |                            |  |  |  |  |  |
| Income from continuing operations                                                              |   | 2,788                 |  |  | 3,361  |  | (17)   |
| % of revenues                                                                                  |   | 23.5                  | % |  | 26.9  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Discontinued operations - net of tax                                                 |   | (4)                   |  |  | 31  |  | *     |
|                                                                                      |   |                            |  |  |  |  |  |
| Net income                                                                                     | $ | 2,784                 |  | $ | 3,392  |  | (18)   |
| % of revenues                                                                                  |   | 23.5                  | % |  | 27.2  | % |  |
|                                                                                      |   |                            |  |  |  |  |  |
| Earnings per common share - basic:                                                             |   |                            |  |  |  |  |  |
| Income from continuing operations                                                              | $ | 0.41                  |  | $ | 0.48  |  | (15)   |
| Discontinued operations - net of tax                                                 |   | --                    |  |  | --  |  | *     |
| Net income                                                                                     | $ | 0.41                  |  | $ | 0.48  |  | (15)   |
|                                                                                      |   |                            |  |  |  |  |  |
| Earnings per common share - diluted:                                                           |   |                            |  |  |  |  |  |
| Income from continuing operations                                                              | $ | 0.41                  |  | $ | 0.48  |  | (15)   |
| Discontinued operations - net of tax                                                 |   | --                    |  |  | --  |  | *     |
| Net income                                                                                     | $ | 0.41                  |  | $ | 0.48  |  | (15)   |
|                                                                                      |   |                            |  |  |  |  |  |
| Cash dividends paid per common share                                                           | $ | 0.32                  |  | $ | 0.29  |  |  |
|                                                                                      |   |                            |  |  |  |  |  |
| *  Calculation not meaningful.                                                       |   |                            |  |  |  |  |  |

   

OVERVIEW OF OUR PERFORMANCE ANDOPERATING ENVIRONMENT

Our Business

We are a global, research-basedcompany applying innovative science to improve world health. Our efforts insupport of that purpose include the discovery, development, manufacture andmarketing of safe and effective medicines; the exploration of ideas thatadvance the frontiers of science and medicine; and the support of programsdedicated to illness prevention, health and wellness, and increased access toquality healthcare. Our value proposition is to demonstrate that our medicinescan effectively prevent and treat disease, including the associated symptomsand suffering, and can form the basis for an overall improvement in healthcaresystems and their related costs. Our revenues are derived from the sale of our products,as well as through alliance agreements, under which we co-promote productsdiscovered by other companies.

Our First Quarter 2008 Performance

*Revenues* in the first quarterof 2008 decreased 5% to $11.8 billion, compared to the same period in 2007.The significant product and alliance revenue impacts on revenues for the firstquarter of 2008, compared to the same period in 2007, are as follows:

|                       |   | First  Quarter |
|-----------------------|---|----------------|
|                       |   | Increase/      |  |  |
|                       |   | (decrease)     |  | % Change |
| (millions of dollars) |   | 08/07          |    | 08/07 |
|                       |   |                |  |  |
| Norvasc(a)            | $ | (556)          |  | (52) |
| Zyrtec/Zyrtec D(a)    |   | (344)          |  | (75) |
| Lipitor(b)            |   | (221)          |  | (7) |
| Camptosar(a)          |   | (37)           |  | (16) |
| Lyrica                |   | 187       |  | 47  |
| Chantix/Champix(c)    |   | 115       |  | 71  |
| Sutent(c)             |   | 88        |  | 86  |
| Xalatan/Xalacom       |   | 45        |  | 13  |
| Geodon/Zeldox         |   | 25        |  | 12  |
| Alliance  revenues    |   | 90        |  | 23  |

   

| (a) | Norvasc,  Zyrtec/Zyrtec D and Camptosar are products that have lost U.S. exclusivity  since 2007. |
|-----|---------------------------------------------------------------------------------------------------|
| (b) | Lipitor  has been impacted by competitive pressures and other factors.                            |
| (c) | Chantix/Champix  and Sutent are major new products that were launched in the U.S. since 2006.     |

   

*Revenues* benefited fromfavorable foreign exchange impacts of about $570 million. The impact of rebatesin the first quarter of 2008 decreased overall revenues by approximately $900 million,compared to approximately $670 million in the first quarter of 2007. Theincrease in rebates was due primarily to:

| **•**           | the impact of our contracting  strategies with both government and non-government entities in the U.S.; and                                                                                                                                 |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **           |                                                                                                                                                                                                                              |
| **•**           | a favorable adjustment recorded in  the first quarter of 2007 based on the actual claims experienced under the  Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the  Medicare Act), which went into effect in 2006, |
| ** **           |                                                                                                                                                                                                                              |
| partially offset by: |
| ** **           |                                                                                                                                                                                                                                   |
| **•**           | changes in product mix, among other  factors.                                                                                                                                                                                               |

    

(See further discussion in the "Revenues- Pharmaceutical Revenues" section of this MD&A for the first quarterof 2008.)

*Income from continuing operations*for the first quarter of 2008 was $2.8 billion, compared to $3.4 billionin the first quarter of 2007. The decrease was primarily due to:

| **•**           | the increase in *Acquisition-related  in-process research and development charges* in the first quarter of 2008,  compared to the same period in 2007; and |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **           |                                                                                                                                                  |
| **•**           | the decline in certain product  revenues discussed above, including the impact of geographic and business mix  of revenues on *Cost of sales*,             |
| ** **           |                                                                                                                                             |
| partially offset by: |
|       |
| **•**           | lower restructuring costs  associated with our cost-reduction initiatives in the first quarter of 2008,  compared to the same period in 2007;              |
| ** **           |                                                                                                                                             |
| **•**           | the favorable impact of foreign  exchange; and                                                                                                             |
| ** **           |                                                                                                                                                  |
| **•**           | savings related to our  cost-reduction initiatives.                                                                                                        |

   

(See further discussion in the "Costsand Expenses" and "Provision for Taxes on Income" sections ofthis MD&A.) 

In the first quarter of 2008, weacquired CovX and Coley Pharmaceutical Group, Inc. and completed two smalleracquisitions related to Animal Health.  In the first quarter of 2008, we enteredinto an agreement to acquire Serenex, Inc. and we completed that acquisition inApril 2008. In the first quarter of 2008, we also began a tender offer toacquire all the outstanding shares of Encysive Pharmaceuticals Inc., which wascompleted in April 2008. In the first quarter of 2007, we acquired Embrex, Inc.and BioRexis Pharmaceutical Corp. (See further discussion in the "Our StrategicInitiatives - Strategy and Recent Transactions: Acquisitions, Licensing andCollaborations" section of this MD&A.)

We have also made progress with our cost-reductioninitiatives, which comprise a broad-based, company-wide effort to leverage ourscale and strength more robustly and increase our productivity. (See furtherdiscussion in the "Our Cost-Reduction Initiatives" section of thisMD&A.) 

Our Operating Environment

We and our industry continue to facesignificant challenges in a profoundly changing business environment, asexplained more fully in Pfizer's Annual Report on Form 10-K for the yearended December 31, 2007. Industry-wide factors, including pricing and access,intellectual property rights, product competition, the regulatory environment,pipeline productivity and the changing business environment, can significantlyimpact our businesses. In order to meet these challenges and capitalize onopportunities in the marketplace, we are taking steps to change the way we runour businesses. 

Generic competition and patent expirationssignificantly impact our business. We lost U.S. exclusivity for Camptosar inFebruary 2008 and Norvasc in March 2007 and, as expected, significant revenuedeclines followed. Zyrtec/Zyrtec D lost its U.S. exclusivity in January 2008and we ceased marketing the product in late January 2008. Lipitor began to facecompetition in the U.S. from generic pravastatin (Pravachol) in April 2006 andgeneric simvastatin (Zocor) in June 2006, in addition to other competitivepressures. The volume of patients who switch from Lipitor to genericsimvastatin in the U.S. continues to negatively impact prescribing trends,particularly in the managed-care environment. (For more detailed informationabout Lipitor, Norvasc, Zyrtec, Camptosar and other significant products, seefurther discussion in the "Revenues - Pharmaceutical - Selected ProductDescriptions" section of this MD&A.)

We will continue to aggressivelydefend our patent rights against increasingly aggressive infringement wheneverappropriate.

(See Part II, *Other Information*;Item 1, *Legal Proceedings*, of this Form 10-Q for a discussion of certainrecent developments with respect to patent litigation.)

These and other industry-wide factorsthat may affect our businesses should be considered along with the informationpresented in the "Forward-Looking Information and Factors That May AffectFuture Results" section of this MD&A. 

Our Strategic Initiatives - Strategyand Recent Transactions

*Acquisitions, Licensing andCollaborations*

We are committed to capitalizing onnew growth opportunities by advancing our new-product pipeline, and maximizingthe value of our in-line products, as well as through opportunistic licensing, co-promotionagreements and acquisitions. Our business development strategy targets a numberof growth opportunities, including biologics, oncology, diabetes, Alzheimer'sdisease, cardiovascular disease, vaccines and other products and services thatseek to provide valuable healthcare solutions. Some of our most significantbusiness-development transactions during the first quarters of 2008 and 2007are described below.

| **•** | In January 2008, we acquired CovX,  a privately held biotherapeutics company specializing in preclinical oncology  and metabolic research and the developer of a biotherapeutics technology  platform that we expect will enhance our biologic portfolio. Also in January  2008, we acquired all the outstanding shares of Coley Pharmaceutical Group,  Inc. (Coley), a biopharmaceutical company specializing in vaccines and drug  candidates designed to fight cancers, allergy and asthma disorders, and  autoimmune diseases, for approximately $230 million. In connection with these  and two smaller acquisitions related to Animal Health, we recorded $398  million in *Acquisition-related in-process research and development charges*. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **•** | In the first quarter of 2007, we  acquired BioRexis Pharmaceutical Corp. (BioRexis), a privately held  biopharmaceutical company with a number of diabetes candidates and a novel  technology platform for developing new protein drug candidates, and Embrex,  Inc. (Embrex), an animal health company that possesses a unique vaccine  delivery system known as Inovoject that improves consistency and reliability  by inoculating chicks while they are still inside the egg. In connection with  these and other small acquisitions, we recorded $283 million in *Acquisition-related  in-process research and development charges*.                                                                                                      |

   

The following transactions were notcompleted as of March 30, 2008, and are not reflected in our consolidatedfinancial statements as of March 30, 2008:

| **•** | In April 2008, we completed the  acquisition of Serenex, Inc. (Serenex), a privately held biotechnology  company with SNX-5422, an oral Heat Shock Protein 90 (Hsp90) inhibitor currently  in Phase I trials for the potential treatment of solid tumors and  hematological malignancies and an extensive Hsp90 inhibitor compound library,  which has potential uses in treating cancer, inflammatory and  neurodegenerative diseases.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **•** | In April 2008, we completed a  tender offer and acquired approximately 85% of the outstanding shares of  Encysive Pharmaceuticals Inc. (Encysive), a biopharmaceutical company with a  product (Thelin) for the treatment of pulmonary arterial hypertension, which  is commercially available in much of the E.U., is approved in certain other  markets, and is under review by the Food and Drug Administration (FDA), as  well as other pipeline candidates. We will acquire all of the remaining  shares of Encysive by means of a merger. The cost of acquiring Encysive,  through the tender offer and planned merger, will be approximately $200 million,  including transaction costs. Upon completion of the tender offer, we also assumed  Encysive's change of control repurchase obligations under its $130 million  2.5% convertible notes. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **•** | In April 2008, we also entered into  an agreement with a subsidiary of Avant Immunotherapeutics Inc. (Avant) for an  exclusive worldwide license to CDX-110, an experimental therapeutic vaccine in  Phase II development for the treatment of glioblastoma multiforme, and  exclusive rights to the use of EGFRvIII vaccines in other potential  indications. Under the license and development agreement, an up-front payment  of $40 million and a $10 million equity investment are expected to be  recorded in the second quarter of 2008. Additional payments exceeding $390  million could potentially be made to Avant based on the successful  development and commercialization of CDX-110 and additional EGFRvIII vaccine  products. The agreement is subject to antitrust approval.                                                      |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **•** | In April 2008, we announced an  agreement to acquire a number of animal health product lines from  Schering-Plough Corporation for sale in the European Economic Area in the  following categories: swine e.coli vaccines; equine influenza and tetanus  vaccines; ruminant neonatal and clostridia vaccines; rabies vaccines;  companion animal veterinary specialty products; and parasiticides and anti-inflammatories.  The acquisition is subject to certain closing conditions, including  anti-trust approval.                                                                                                                                                                                                                                                                                                                                               |

   

Our Cost-ReductionInitiatives

We have made significant progresswith our multi-year productivity initiatives, which are designed to increaseefficiency and streamline decision-making across the company. 

We are generating cost savingsthrough site rationalization in R&D and manufacturing, reductions in ourglobal sales force, streamlined organizational structures, staff functionreductions, and increased outsourcing and procurement savings. Projects invarious stages of completion include:

| **•** | Reorganization of our Field Force -  Globally, we have reduced our field force by 23%. Additional savings are  being generated from de-layering, eliminating duplicative work and  strategically realigning various functions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **•** | Strategic Outsourcing - We are consolidating  11 third-party providers associated with information technology, thereby reducing  labor costs. We expect to generate considerable annual savings and improve  service quality related to information technology.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **•** | Plant Network Optimization **-**We  are transforming our global manufacturing network to improve efficiency and  reduce overall cost. We have reduced our network of plants from 93 four years  ago to 57 today. The latter also reflects the acquisition of seven plants and  the sites sold in 2006 as part of our Consumer Healthcare business. By the  end of 2009, we plan to reduce our network of manufacturing plants around the  world to 44. The result will be a more focused, streamlined and competitive  manufacturing operation, with less than 50% of our plants and a reduction of more  than 35% of our manufacturing employees compared to 2003. Further, we  currently outsource the manufacture of approximately 17% of our products on a  cost basis and plan to increase this substantially by 2010 and beyond.                                                                                        |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **•** | Enhanced R&D Productivity **-**  To increase efficiency and effectiveness in bringing new therapies to  patients-in-need, in January 2007, Pfizer Global Research and Development (PGRD)  announced a number of actions to transform the research division. Of six  sites that were identified for exit by PGRD, two (Mumbai, India, and Plymouth  Township, Michigan) have been closed. Operations have been scaled back  significantly in the other four sites (Ann Arbor and Kalamazoo, Michigan;  Nagoya, Japan; and Amboise, France). The timing of the end of PGRD's  activities at these sites is subject to business needs and, in the case of  Nagoya and Amboise, to consultation with works councils and local labor law.  The reorganization has resulted in smaller, more agile research units  designed to drive the growth of our bigger pipeline, while maintaining costs,  and generating more products. |

  

By the end of 2008, on a constantcurrency basis (the actual foreign exchange rates in effect during 2006), weexpect to achieve a net reduction of the pre-tax total expense component ofAdjusted income of at least $1.5 billion to $2.0 billion, compared to2006. (For an understanding of Adjusted income, see the "Adjusted Income"section of this MD&A.)

REVENUES

Worldwide revenues by segment andgeographic area for the first quarters of 2008 and 2007 follow:

|                       |   | First  Quarter |   |               | %  Change in Revenues |
|-----------------------|---|----------------|---|---------------|-----------------------|
|                       |   | Worldwide      |   |               | U.S.                  |  |  | International |  |  | World- |  |  |  | Inter- |
|                       |   | Mar.  30,      |   | April 1, |                       |  | Mar.  30, |  | April 1, |  |  | Mar. 30, |  |  | April 1, |  |  | wide |  | U.S. |  | national |
| (millions of dollars) |   | 2008           |   | 2007          |                       |  | 2008 |  | 2007 |  |  | 2008 |  |  | 2007 |  |  | 08/07 |  | 08/07 |  | 08/07 |
|        |   |                |   |               |                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pharmaceutical        | $ | 10,904         | $ | 11,581        |                       | $ | 5,141 | $ | 6,468 |  | $ | 5,763 |  | $ | 5,113 |  |  | (6) |  | (21) |  | 13 |
| Animal Health         |   | 619            |   | 586           |                       |  | 240 |  | 264 |  |  | 379 |  |  | 322 |  |  | 6  |  | (9) |  | 18 |
| Other                 |   | 325            |   | 307           |                       |  | 130 |  | 118 |  |  | 195 |  |  | 189 |  |  | 6  |  | 10  |  | 3 |
| Total Revenues        | $ | 11,848         | $ | 12,474        |                       | $ | 5,511 | $ | 6,850 |  | $ | 6,337 | (a) | $ | 5,624 | (a) |  | (5) |  | (20) |  | 13 |

|     |                                                                                                                                                                            |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Includes  revenues from Japan of $765 million (6.5% of total revenues) for the  first quarter of 2008 and $752 million (6.0% of total revenues) for the first  quarter of 2007. |

   

Pharmaceutical Revenues

 

Worldwide pharmaceutical revenues forthe first quarter of 2008 were $10.9 billion, a decrease of 6%, comparedto the same period in 2007, due primarily to:

 

| **•** | a decrease in revenues for Norvasc  of $556 million in the first quarter of 2008, primarily due to the loss  of U.S. exclusivity in March 2007;                                                                                                                                                                 |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                       |
| **•** | a decrease in  revenues for Zyrtec/Zyrtec D of $344 million in the first quarter of 2008,  primarily due to the loss of U.S. exclusivity and cessation of marketing in  January 2008;                                                                                                                                |
| ** ** |                                                                                                                                                                                                                                                                                                       |
| **•** | an increase in  rebates in the first quarter of 2008, primarily due to a favorable adjustment  recorded in the first quarter of 2007 based on the actual claims experienced  under the Medicare Act, and the impact of our contracting strategies with both  our government and non-government entities in the U.S.; |
| ** ** |                                                                                                                                                                                                                                                                                                       |
| **•** | a decrease in  revenues for Lipitor in the U.S. of $221 million in the first quarter of  2008, primarily resulting from competitive pressures from generics, among  other factors; and                                                                                                                          |
| ** ** |                                                                                                                                                                                                                                                                                                       |
| **•** | a decrease in  revenues for Camptosar of $37 million in the first quarter of 2008,  primarily due to the loss of U.S. exclusivity in February 2008,                                                                                                                                                             |

  

partially offset by:

| **•** | an aggregate  increase in revenues from products launched in the U.S. since 2006,  particularly Sutent and Chantix, of $212 million and from many in-line  products in the first quarter of 2008, including Lyrica, which increased 47%;  and |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                     |
| **•** | the weakening  of the U.S. dollar relative to many foreign currencies, especially the euro  and U.K. pound, which increased Pharmaceutical revenues by approximately $520 million,  or 4%, in the first quarter of 2008.                      |

  

Geographically:

| **•** | in the U.S.,  Pharmaceutical revenues decreased 21% in the first quarter of 2008, compared  to the same period in 2007, primarily due to the effect of the loss of  exclusivity of Norvasc, Zyrtec/Zyrtec D and Camptosar, and higher rebates in  the first quarter of 2008, compared to the same period in 2007, partially  offset by the aggregate increase in revenues from products launched since 2006  and from many in-line products; and |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **•** | in our  international markets, Pharmaceutical revenues increased 13% in the first  quarter of 2008, compared to the same period in 2007, primarily due to the  favorable impact of foreign exchange on international revenues of  approximately $520 million (4%), revenues from our products launched  since 2006, as well as growth of certain in-line products.                                                                          |

   

During the first quarter of 2008,international Pharmaceutical revenues grew to represent 52.9% of totalPharmaceutical revenues, compared to 44.1% in the first quarter of 2007. Thisincrease has been fueled by higher volumes and the favorable impact of foreignexchange, despite pricing pressures in international markets.

Effective May 2, 2008, January 1,2008, July 13, 2007 and January 1, 2007, we increased the published prices forcertain U.S. pharmaceutical products. These price increases had no materialeffect on wholesaler inventory levels in comparison to the prior year.

As is typical in the pharmaceuticalindustry, our gross product sales are subject to a variety of deductions,primarily representing rebates and discounts to government agencies,wholesalers and managed care organizations, with respect to our pharmaceuticalproducts. These deductions represent estimates of the related obligations and,as such, judgment is required when estimating the impact of these salesdeductions on gross sales for a reporting period. Historically, our adjustmentsto actual results have not been material to our overall business. On aquarterly basis, our adjustments to actual results generally have been lessthan 1% of Pharmaceutical net sales and can result in either a net increase ora net decrease in income. Product-specific rebate charges, however, can have asignificant impact on year-over-year individual product growth trends. 

Rebates under Medicaid and relatedstate programs reduced revenues by $178 million in the first quarter of 2008,compared to $165 million in the first quarter of 2007. The increase in rebatesunder Medicaid and related state programs in the first quarter of 2008 was dueprimarily to the impact of a price increase in January 2008, partially offsetby lower sales of Norvasc and Zyrtec/Zyrtec D, both of which lost exclusivityin the U.S.

Rebates under Medicare reducedrevenues by $221 million in the first quarter of 2008, compared to $48 millionin the first quarter of 2007. The increase in Medicare rebates was dueprimarily to the impact of our contracting strategies and a favorableadjustment recorded in the first quarter of 2007 based on the actual claimsexperienced under the Medicare Act.

Performance-based contract rebatesreduced overall revenues by $506 million in the first quarter of 2008,compared to $458 million in the first quarter of 2007. The increase inperformance-based contract rebates was primarily due the impact of ourcontracting strategies, primarily related to Lipitor, and the non-recurrence ofa credit received in the first quarter of 2007, partially offset by lower salesof Lipitor, Norvasc and Zyrtec. These contracts are with managed carecustomers, including health maintenance organizations and pharmacy benefitmanagers, who receive rebates based on the achievement of contractedperformance terms for products. Rebates are product-specific and, therefore,for any given year are impacted by the mix of products sold.

Chargebacks (primarily reimbursementsto wholesalers for honoring contracted prices to third parties) reducedrevenues by $507 million in the first quarter of 2008, compared to $373 millionin the first quarter of 2007. Chargebacks were impacted by the launch ofcertain generic products, including amlodipine besylate after Norvasc lost U.S.exclusivity in March 2007.

Our accruals for Medicaid rebates,Medicare rebates, contract rebates and chargebacks totaled $1.6 billion asof March 30, 2008, an increase from $1.2 billion as ofDecember 31, 2007, due primarily to the impact of our contractingstrategies and increased pricing pressures.

Pharmaceutical--Selected ProductRevenues

   

Revenue information for several ofour major Pharmaceutical products follows: 

|                                                        |                                                                                                                                                                                                                 | First Quarter               |
|--------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
| (millions   of dollars)   Product                      | Primary   Indications                                                                                                                                                                                           | Mar. 30,    2008  |  | %   Change   from   2007 |
| **Cardiovascular  and  metabolic diseases:**           |                                                                                                                                                                                                                 |                             |  |  |
| Lipitor                                                | Reduction of  LDL cholesterol                                                                                                                                                                                   | $3,137                 |  | (7)% |
| Norvasc                                                | Hypertension                                                                                                                                                                                                    | 513                    |  | (52)   |
| Chantix/Champix                                        | An aid to smoking  cessation                                                                                                                                                                                    | 277                    |  | 71    |
| Caduet                                                 | Reduction of  LDL cholesterol and hypertension                                                                                                                                                                  | 147                    |  | 1    |
| Cardura                                                | Hypertension/Benign  prostatic hyperplasia                                                                                                                                                                      | 121                    |  | (10)    |
| **Central  nervous   system disorders:**               |                                                                                                                                                                                                                 |                             |  |  |
| Lyrica                                                 | Epilepsy,  post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia                                                                                                                             | 582                    |  | 47    |
| Geodon/Zeldox                                          | Schizophrenia  and acute manic or mixed episodes associated with bipolar disorder                                                                                                                               | 241                    |  | 12    |
| Zoloft                                                 | Depression and  certain anxiety disorders                                                                                                                                                                       | 122                    |  | (17)   |
| Aricept(a)                                             | Alzheimer's  disease                                                                                                                                                                                            | 104                    |  | 22    |
| Neurontin                                              | Epilepsy and  post-herpetic neuralgia                                                                                                                                                                           | 89                     |  | (19)   |
| Xanax/Xanax XR                                         | Anxiety/Panic  disorders                                                                                                                                                                                        | 86                     |  | 14    |
| Relpax                                                 | Migraine headaches                                                                                                                                                                                              | 77                     |  | (7)   |
| **Arthritis  and pain:**                               |                                                                                                                                                                                                                 |                             |  |  |
| Celebrex                                               | Arthritis pain  and inflammation, acute pain                                                                                                                                                                    | 611                    |  | 2    |
| **Infectious  and  respiratory diseases:**             |                                                                                                                                                                                                                 |                             |  |  |
| Zyvox                                                  | Bacterial  infections                                                                                                                                                                                           | 259                    |  | 1    |
| Vfend                                                  | Fungal  infections                                                                                                                                                                                              | 171                    |  | 15    |
| Zithromax/Zmax                                         | Bacterial infections                                                                                                                                                                                            | 120                    |  | (8)   |
| Diflucan                                               | Fungal  infections                                                                                                                                                                                              | 89                     |  | (19)   |
| **Urology:**                                           |                                                                                                                                                                                                                 |                             |  |  |
| Viagra                                                 | Erectile  dysfunction                                                                                                                                                                                           | 460                    |  | 6    |
| Detrol/Detrol LA                                       | Overactive  bladder                                                                                                                                                                                             | 313                    |  | 3    |
| **Oncology:**                                          |                                                                                                                                                                                                                 |                             |  |  |
| Camptosar                                              | Metastatic  colorectal cancer                                                                                                                                                                                   | 192                    |  | (16)   |
| Sutent                                                 | Advanced and/or  metastatic renal cell carcinoma (mRCC) and refractory gastrointestinal  stromal tumors (GIST)                                                                                                  | 190                    |  | 86    |
| Aromasin                                               | Breast cancer                                                                                                                                                                                                   | 104                    |  | 13    |
| **Ophthalmology:**                                     |                                                                                                                                                                                                                 |                             |  |  |
| Xalatan/Xalacom                                        | Glaucoma and  ocular hypertension                                                                                                                                                                               | 405                    |  | 13    |
| **Endocrine  disorders:**                              |                                                                                                                                                                                                                 |                             |  |  |
| Genotropin                                             | Replacement of  human growth hormone                                                                                                                                                                            | 206                    |  | 3     |
| **All other:**                                         |                                                                                                                                                                                                                 |                             |  |  |
| Zyrtec/Zyrtec D                                        | Allergies                                                                                                                                                                                                       | 117                    |  | (75)   |
| **Alliance  revenues:**                                |                                                                                                                                                                                                                 |                             |  |  |
| Aricept, Macugen, Exforge, Olmetec,  Rebif and Spiriva | Alzheimer's  disease (Aricept), neovascular (wet) age-related macular degeneration  (Macugen), hypertension (Exforge and Olmetec), multiple sclerosis (Rebif),  chronic obstructive pulmonary disease (Spiriva) | 488                    |  | 23    |

     

| (a)                                                                |  Represents  direct sales under license agreement with Eisai Co., Ltd. |
|--------------------------------------------------------------------|-----------------------------------------------------------------------------|
| Certain  amounts and percentages may reflect rounding adjustments. |

 

Pharmaceutical -- Selected ProductDescriptions:

| **•** | **Lipitor**,  for the treatment of elevated LDL-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, with $3.1 billion in worldwide  revenues in the first quarter of 2008, a decrease of 7%, compared to the same  period in 2007, despite the favorable impact of foreign exchange, which  increased revenues by approximately $135 million, or 4%. In the U.S.,  revenues of $1.8 billion in the first quarter of 2008 declined 18%,  compared to the same period in 2007. Internationally, Lipitor revenues in the  first quarter of 2008 increased 13%, compared to the same period in 2007,  with 10% due to the favorable impact of foreign exchange.                                                                                                                                                 |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            | The decline in  Lipitor revenues in the first quarter of 2008, compared to the first quarter  of 2007, is driven by a combination of factors, including the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            | **•**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | the impact of  an intensely competitive statin market with competition from multi-source  generic simvastatin and branded products; and |
|            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |     |
|            | **•**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | increased payer  pressure in the U.S., |
|            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |    |
|            | partially  offset by:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |     |
|            | **•**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | the favorable  impact of foreign exchange; and |
|            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |     |
|            | **•**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | operating  growth internationally. |
|            | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |    |
|            | See Part II, *Other Information*;  Item 1, *Legal Proceedings*, of this Form 10-Q for a discussion of  certain patent litigation relating to Lipitor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Norvasc**,  for treating hypertension, lost exclusivity in the U.S. in March 2007.  Norvasc has also experienced patent expirations in many E.U. countries but  maintains exclusivity in certain other major markets, including Canada (where  the patent for Norvasc will expire in August 2010). Norvasc worldwide revenues  in the first quarter of 2008 decreased 52%, compared to the same period in  2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** ** | **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** ** | See Part II, *Other  Information*; Item 1, *Legal Proceedings*, of this Form 10-Q for a  discussion of certain patent litigation relating to Norvasc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Chantix**/**Champix**,  the first new prescription treatment to aid smoking cessation in nearly a  decade, became available to patients in the U.S. in August 2006 and in select  E.U. markets in December 2006.  Chantix/Champix continues to demonstrate  strong uptake, with more than five million patients globally having been  prescribed Chantix since its launch. On May 8, 2008, Chantix/Champix will be  launched in Japan, which has one of the highest rates of smoking among  developed nations. Chantix/Champix has been approved in more than 60  countries around the world. Chantix/Champix recorded worldwide revenues of  $277 million in the first quarter of 2008, an increase of 71%, compared  to the same period in 2007.                                                                                                                                                                        |
| ** ** | **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|            | In January  2008, we added a warning to Chantix's label in the U.S. that patients who are  attempting to quit smoking by taking Chantix should be observed by a  physician for neuropsychiatric symptoms like changes in behavior, agitation,  depressed mood, suicidal ideation and suicidal behavior. A causal relationship  between Chantix and these reported symptoms has not been established. In some  reports, however, an association could not be excluded. The addition of the  warning to Chantix's label in the U.S. has unfavorably impacted recent U.S.  prescription trends.                                                                                                                                                                                                                                                                                                                                          |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Caduet**,  a single pill therapy combining Norvasc and Lipitor, recorded worldwide  revenues of $147 million, an increase of 1% for the first quarter of  2008, compared to the same period in 2007. This was largely driven by a more  focused message platform and a highly targeted consumer campaign in the U.S.  Since the introduction of generic amlodipine besylate, in addition to  increased competition, growth has begun to slow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            | See Part II, *Other Information*;  Item 1, *Legal Proceedings*, of this Form 10-Q for a discussion of  certain patent litigation relating to Caduet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Lyrica**,  for the treatment of epilepsy, post-herpetic neuralgia and diabetic  peripheral neuropathy, and fibromyalgia, recorded worldwide revenues of $582  million in the first quarter of 2008, an increase of 47% compared to the same  period in 2007. In June 2007, Lyrica was approved in the U.S. for the  management of fibromyalgia, one of the most common chronic, widespread pain  conditions. This approval represents a breakthrough for the more than  six million Americans who suffer from this debilitating condition who  previously had no FDA-approved treatment.                                                                                                                                                                                                                                                                                                                                       |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Geodon**/**Zeldox**,  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. It is available in both an oral  capsule and rapid-acting intramuscular formulation. In the first quarter of  2008, Geodon worldwide revenues grew 12%, compared to the same period in 2007.  Geodon growth was driven by recognition of its efficacy by prescribers as  clinical experience increased, and by a favorable metabolic profile.                                                                                                                                                                                                                                                                                                                                                                        |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Celebrex**,  for the treatment of osteoarthritis and rheumatoid arthritis and acute pain,  experienced a 2% increase in worldwide revenues to $611 million in the first  quarter of 2008. International revenues grew 20% to $147 million, primarily  due to a double-digit increase in demand, as well as the favorable impact of  foreign exchange. U.S. revenues declined 2%, primarily due to increased  generic competition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** | **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** ** | Since December  2007, we have been running an innovative Celebrex direct-to-consumer (DTC)  television advertising campaign in the U.S. about treatment options for  arthritis. The 21⁄2-minute television advertisement opens by addressing  cardiovascular (CV) safety and clarifying misperceptions among arthritis  sufferers about the risks and benefits of Celebrex and other prescription  non-steroidal anti-inflammatory drugs. This DTC ad campaign has helped to  stimulate patient interest and initiate a productive dialogue between  physicians and patients.                                                                                                                                                                                                                                                                                                                                                    |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            | See Part II, *Other Information*;  Item 1, *Legal Proceedings*, of this Form 10-Q for a discussion of  certain patent litigation relating to Celebrex.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Zyvox** is  the world's best-selling branded medicine for serious gram-positive  infections in adults and children, which increasingly are caused by  drug-resistant bacteria in hospitals and, more recently, in the community  setting. Zyvox is an appropriate first-line therapy for patients with serious  complicated skin and skin structure infections or nosocomial pneumonia known  or suspected to be caused by gram-positive pathogens, including  Methicillin-resistant Staphylococcus-aureus (MRSA) infection, with the flexibility  of an intravenous and oral regimen. Zyvox works with a unique mechanism of  action, which minimizes the potential for cross-resistance with other  antibiotic classes and thus has the potential to effectively treat MRSA infection  despite growing resistance to other important antibiotics. Zyvox worldwide  revenues grew 1% to $259 million in the first quarter of 2008. |
| ** ** | **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **•** | **Selzentry/Celsentri**  (maraviroc) is the first in a new class of oral HIV medicines in more than a  decade known as CCR5 antagonists. CCR5 antagonists work by blocking the CCR5  co-receptor, the virus' predominant entry route into T-cells. Selzentry/Celsentri  stops the R5 virus on the outside surface of the cells before it enters,  rather than fighting the virus inside, as do all other classes of oral HIV  medicines. Selzentry/Celsentri was approved in the U.S. in August 2007 and in  Europe in September 2007, and is indicated for combination anti-retroviral  treatment of treatment-experienced adults infected with only CCR5-tropic  HIV-1 detectable, who have evidence of viral replication and have HIV-1  strains resistant to multiple anti-retroviral agents. A diagnostic test  confirms whether a patient is infected with CCR5-tropic HIV-1, which is also  known as "R5-virus."     |
| ** ** | **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **•** | **Viagra**  remains the leading treatment worldwide for erectile dysfunction and one of  the world's most recognized pharmaceutical brands. Viagra revenues grew 6%  worldwide, with a decline in U.S. revenues of 1% and international revenues  increasing 13% in the first quarter of 2008, compared to the same period in  2007. The growth in Viagra international revenues was driven by foreign  exchange, as well as a combination of other factors, including our focus on  strengthening its value proposition to key customers and growth in the  erectile dysfunction market. In 2008, we are celebrating Viagra's 10 year  anniversary with a new, differentiated campaign, Viva Viagra, which aims to  better educate and motivate men with erectile dysfunction to seek treatment  and also to enhance physician and consumer understanding of the benefit-risk  profile of Viagra.                                    |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Detrol**/**Detrol  LA**, a muscarinic receptor antagonist, is the most prescribed medicine  worldwide for overactive bladder, a condition that affects up to  100 million people around the world. Detrol/Detrol LA is an  extended-release formulation taken once daily. Worldwide Detrol/Detrol LA  revenues grew 3% to $313 million in the first quarter of 2008, compared  to the same period in 2007. Detrol/Detrol LA continues to lead the overactive  bladder market and perform well in an increasingly competitive marketplace.  In the U.S., Detrol/Detrol LA's new prescription share declined 4% to a 38.4%  share in the first quarter of 2008, compared to the same period in 2007.                                                                                                                                                                                                                        |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            | See  Part II,*Other Information*; Item 1, *Legal Proceedings,* of  this Form 10-Q for a discussion of certain patient litigation relating to  Detrol LA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Camptosar**,  indicated as first-line therapy for metastatic colorectal cancer in  combination with 5-fluorouracil and leucovorin, lost exclusivity in the U.S.  in February 2008. It is also indicated for patients in whom metastatic  colorectal cancer has recurred or progressed despite following initial  fluorouracil-based therapy. Camptosar is for intravenous use only. Worldwide revenues  in the first quarter of 2008 decreased 16% to $192 million, compared to  the same period in 2007. The National Comprehensive Cancer Network (NCCN), an  alliance of 21 of the world's leading cancer centers, has issued guidelines  recommending Camptosar as an option across all lines of treatment for  advanced colorectal cancer.                                                                                                                                                                                |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Sutent,**  for the treatment of advanced renal cell carcinoma, including metastatic  renal cell carcinoma (mRCC), and gastrointestinal stromal tumors (GIST) after  disease progression on, or intolerance to, imatinib mesylate, recorded  $190 million in worldwide revenues in the first quarter of 2008, an  increase of 86%, compared to the same period in 2007. Sutent was launched in  the U.S. in January 2006 and has now been launched in 61 markets. In  addition, in April 2008, Sutent was approved in Japan for the treatment of  GIST, after failure of imatinib treatment due to resistance, and for renal  cell carcinoma not indicated for curative resection and mRCC. We will  continue to support and drive the success of Sutent through the pursuit of  potential new indications, clinical data releases, strong promotional efforts  and the promotion of access and health care coverage.           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Xalatan/Xalacom**,  a prostaglandin analogue used to lower the intraocular pressure associated  with glaucoma and ocular hypertension, is one of the world's leading branded  glaucoma medicines. Clinical data showing its advantages in treating  intraocular pressure compared with beta blockers should support the continued  growth of this important medicine. Xalacom, the only fixed combination  prostaglandin (Xalatan) and beta blocker, is available primarily in European  markets. Xalatan/Xalacom worldwide revenues grew 13% in the first quarter of  2008, compared to the same period in 2007.                                                                                                                                                                                                                                                                                                                   |
| ** ** | **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **•** | **Genotropin**,  for the treatment of short stature in children with growth hormone  deficiency, Prader-Willi Syndrome, Turner Syndrome, Small for Gestational Age  Syndrome and in adults with growth hormone deficiency, is the world's leading  human growth hormone. Genotropin worldwide revenues grew 3% to  $206 million, driven by its broad platform of innovative injection-delivery  devices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | **Zyrtec/Zyrtec  D**, allergy medicines, experienced a 75% decline in worldwide revenues in  the first quarter of 2008, compared to the first quarter of 2007, following  the loss of U.S. exclusivity in January 2008. Since we sold our rights to  market Zyrtec/Zyrtec D over-the-counter in connection with the sale of our  Consumer Healthcare business, we ceased selling this product in late January  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

   

Animal Health

Revenues of our Animal Healthbusiness follow:

|                           |   | First  Quarter      |
|---------------------------|---|---------------------|
| (millions  of dollars)    |   | Mar. 30,  2008 |  | April 1,  2007 | % Change |
|                 |   |                     |  |  |  |
| Livestock products        | $ | 385                 | $ | 356 | 8% |
| Companion animal products |   | 234                 |  | 230 | 2    |
| Total Animal Health       | $ | 619                 | $ | 586 | 6    |

   

Our Animal Health business is one ofthe largest in the world.

The increase in Animal Healthrevenues in the first quarter of 2008, compared to the same period in 2007, wasdue to the impact of foreign exchange, which increased revenues by 6%.

Our revenue performance was alsoimpacted by the following:

| **•** | for livestock products, the  continued good performance of our cattle biologicals, and intramammaries franchises  in the first quarter of 2008, as well as revenues from Embrex, which we  acquired in the first quarter of 2007; and                                                                                                |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                            |
| **•** | for companion animal products, the good  performances of Revolution (a parasiticide for dogs and cats), and new  product launches, such as Convenia (first-in-class single-dose treatment  antibiotic therapy for dogs and cats), Slentrol (weight management for dogs)  and Cerenia (treatment and prevention of vomiting in dogs). |

   

Product Developments

We continue to invest in R&D toprovide future sources of revenues through the development of new products, aswell as through additional uses for existing in-line and alliance products. Wehave a broad and deep pipeline of medicines in development. However, there areno assurances as to when, or if, we will receive regulatory approval foradditional indications for existing products or any of our other products indevelopment. Below are significant regulatory actions by, and filings pendingwith, the FDA and regulatory authorities in the E.U. and Japan.

*Pending U.S. New DrugApplications (NDAs) and Supplemental Filings:*

| **Product**            | **Indication**                                                                                                                        | ** **         | **Date Submitted** |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|
|         |                                                                                                                                       |                    |                    |
| Fablyn  (lasofoxifene) | Treatment of  osteoporosis                                                                                                            |                    | December 2007      |
|         |                                                                                                                                       |                    |                    |
| Spiriva                | Respimat device  for chronic obstructive pulmonary disease                                                                            |                    | November 2007      |
|         |                                                                                                                                       |                    |                    |
| Zmax                   | Treatment of  bacterial infections--sustained release--Pediatric acute otitis media (AOM)  filing, community acquired pneumonia (CAP) |                    | November 2006      |
|         |                                                                                                                                       |     |                    |
| fesoterodine           | Treatment of  overactive bladder                                                                                                      |                    | March 2006         |
|         |                                                                                                                                       |                    |                    |
| Vfend                  | Treatment of fungal  infections-Pediatric filing                                                                                      |                    | June 2005          |
|         |                                                                                                                                       |                    |                    |
| Thelin                 | Treatment of pulmonary arterial  hypertension (PAH)                                                                                   |                    | May 2005           |
|              |                                                                                                                                       |                    |                    |
| dalbavancin            | Treatment of complicated  skin/skin structure gram-positive bacterial infections                                                      |                    | December 2004      |
|         |                                                                                                                                       |                    |                    |
| Dynastat (parecoxib)   | Treatment of  moderate to severe pain                                                                                                 |                    | September 2000     |

   

We received "not-approvable"letters from the FDA for Fablyn (lasofoxifene) for the prevention ofpost-menopausal osteoporosis in September 2005 and for the treatment of vaginalatrophy in January 2006. We submitted a new NDA for the treatment ofosteoporosis in post-menopausal women in December 2007, including thethree-year interim data from the Postmenopausal Evaluation And Risk-reductionwith Lasofoxifene (PEARL) study in support of the new NDA.

On September 28,2007, we received an "approvable" letter from the FDA for Zmax thatsets forth requirements to obtain approval for the pediatric AOM indicationbased on pharmacokinetic data. On October 19, 2007, a supplemental filing wasmade for Zmax to include pediatric CAP. The FDA has indicated that theapplication is sufficiently complete to permit a substantive review, which we expectwill occur in the second quarter of 2008.

We received an "approvable"letter from the FDA for fesoterodine for the treatment of overactive bladder inJanuary 2007. Regulatory review of fesoterodine is progressing in the U.S. andfesoterodine was approved in the E.U. in April 2007. We are working withSchwarz Pharma, the licensor, to scale up manufacturing and meet launchrequirements at various sites. Launch is planned for the latter half of 2008 inEurope and, subject to FDA approval, early 2009 in the U.S.

In December 2005, we received an "approvable"letter from the FDA for our Vfend pediatric filing, which sets forth theadditional requirements for approval. We have been systematically workingthrough these requirements and addressing the FDA's concerns.

In April 2008, we completed a tenderoffer and acquired approximately 85% of the outstanding shares of Encysive,which owns Thelin. On June 15, 2007, Encysive received a third "approvable"letter from the FDA for Thelin. We plan to commence an additional Phase IIIclinical trial in patients with PAH during the second half of 2008 to addressthe concerns of the FDA regarding efficacy as reflected in that letter.

In December 2007,we received a third "approvable" letter from the FDA for dalbavancin.We and the third-party manufacturer are working with the FDA to respond to therequirements set forth in that letter.

In September2005, we received a "not-approvable" letter for Dynastat (parecoxib),an injectable prodrug for valdecoxib for the treatment of moderate to severe pain.We have had discussions with the FDA regarding this letter, and we areconsidering plans to address the FDA's concerns.

| *Regulatory Approvals and  Filings in the E.U. and Japan:* |  |  |
|------------------------------------------------------------|--|--|

    

| **Product**              | **Description   of Event**                                                                 | **Date   Approved** |    | **Date Submitted** |
|--------------------------|--------------------------------------------------------------------------------------------|---------------------|--------------|--------------------|
| **  **         | ** **                                                                                 | ** **          |              |                    |
| Sutent                   | Approval in  Japan for treatment of mRCC and GIST                                          | April 2008          |              | --                 |
|           |                                                                                            |                     |              |                    |
| Lyrica                   | Application  submitted in the E.U. for the treatment of fibromyalgia                       | --                  |              | March 2008         |
|           |                                                                                            |                     |              |                    |
| maraviroc                | Application  submitted in Japan for HIV in treatment-experienced patients.                 | --                  |              | February 2008      |
|           |                                                                                            |                     |              |                    |
| Xalacom                  | Application  submitted in Japan for the treatment of glaucoma                              | --                  |              | February 2008      |
|           |                                                                                            |                     |              |                    |
| sildenafil               | Approval in  Japan for treatment of PAH                                                    | January 2008        |              | --                 |
|           |                                                                                            |                     |              |                    |
| Zithromac                | Application  submitted in Japan for bacterial infections                                   | --                  |              | January 2008       |
|      |                                                                                            |                     |              |                    |
| Fablyn/(lasofoxifene)    | Application  submitted in the E.U. for the treatment of osteoporosis                       | --                  |              | January 2008       |
|           |                                                                                            |                     |              |                    |
| Chantix/Champix          | Approval in  Japan as an aid to smoking cessation                                          | January 2008        |              | --                 |
|           |                                                                                            |                     |              |                    |
| Caduet                   | Application  submitted in Japan for hypertension                                           | --                  |              | November 2007      |
|           |                                                                                            |                     |              |                    |
| dalbavancin              | Application  submitted in the E.U. for the treatment of skin and skin structure infections | --                  |              | July 2007          |
|           |                                                                                            |                     |              |                    |
| rifabutin                | Application  submitted in Japan for Mycobacterium infection                                | --                  |              | June 2007          |
|      |                                                                                            |                     |              |                    |
| Macugen                  | Application  submitted in Japan for treatment of age-related macular degeneration          | --                  |              | March 2007         |
|           |                                                                                            |                     |              |                    |
| Celebrex                 | Application  submitted in Japan for treatment of lower-back pain                           | --                  |              | February 2007      |

  

*Ongoing or planned clinicaltrials for additional uses and dosage forms for our in-line products include:*

| **Product**               | **Indication**                                                                               |
|---------------------------|----------------------------------------------------------------------------------------------|
|                 |                                                                                              |
| Celebrex                  | Acute gouty arthritis                                                                        |
|            |                                                                                              |
| Eraxis/Vfend  Combination | Aspergillosis fungal infections                                                              |
|            |                                                                                              |
| Geodon/Zeldox             | Bipolar relapse prevention; pediatric  bipolar mania; adjunctive use in bipolar depression   |
|            |                                                                                              |
| Lyrica                    | Epilepsy monotherapy; restless legs  syndrome                                                |
|            |                                                                                              |
| Macugen                   | Diabetic  macular edema                                                                      |
|            |                                                                                              |
| Revatio                   | Pediatric pulmonary arterial  hypertension                                                   |
|            |                                                                                              |
| Selzentry/Celsentri       | HIV in CCR5-tropic treatment-naïve  patients                                            |
|            |                                                                                              |
| Sutent                    | Breast cancer; colorectal cancer;  non-small cell lung cancer; prostate cancer; liver cancer |
|            |                                                                                              |
| Zithromax/chloroquine     | Malaria                                                                                      |

   

New drug candidates in late-stagedevelopment include: CP-945,598, a cannibinoid-1 receptor antagonist for the treatmentof obesity; axitinib, a multi-targeted kinase inhibitor for the treatment ofpancreatic cancer; PD-332334, an alpha2delta ligand compound for the treatmentof generalized anxiety disorder; S.S-reboxetine, for the treatment offibromyalgia; CP-751871, an anti-insulin-like growth factor receptor 1 (IGF1R)human monoclonal antibody for the treatment of non-small cell lung cancer; andapixaban for the prevention and treatment of venous thromboembolism and theprevention of stroke in patients with atrial fibrillation and acute coronarysyndrome, which is being developed in collaboration with Bristol-Myers SquibbCompany.

In April 2008, weannounced the discontinuation of a Phase III clinical trial of single-agenttremelimumab (CP-675,206), an anti-CTLA4 monoclonal antibody, in patients withadvanced melanoma, after the review of interim data showed that the trial wouldnot demonstrate superiority to standard chemotherapy.

Additional product-related programsare in various stages of discovery and development. Also, see our discussion inthe "Our Strategic Initiatives--Strategy and Recent Transactions:Acquisitions, Licensing and Collaborations" section of this MD&A.

COSTS AND EXPENSES

Cost of Sales

Cost of sales increased 5% in the firstquarter of 2008, while revenues decreased 5% in the first quarter of 2008,compared to the same period in 2007. Cost of sales as a percentage of revenuesincreased 1.7 percentage points in the first quarter of 2008, compared to thesame period in 2007. Cost of sales in the first quarter of 2008, compared tothe first quarter of 2007, increased as a result of:

| **•** | the unfavorable impact of foreign  exchange on expenses;                                                                                                                                                                                      |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                |
| **•** | the impact of higher implementation  costs associated with our cost-reduction initiatives of $138 million in the  first quarter of 2008, compared to $94 million in the first quarter of 2007; and                                            |
| ** ** |                                                                                                                                                                                                                                |
| **•** | costs of $48 million for the first  quarter 2008, compared to $35 million in the first quarter of 2007, related  to business transition activities associated with the sale of our Consumer  Healthcare business, completed in December 2006, |

   

partially offset by:

| **•** | savings related to our cost-reduction  initiatives. |
|------------|-----------------------------------------------------|

   

Selling, Informational andAdministrative Expenses

Selling, informational andadministrative (SI&A) expenses increased 4% in the first quarter of 2008,compared to the same period in 2007, which reflects:

| **•** | the unfavorable impact of foreign  exchange on expenses; and                                                                                                                                  |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                |
| **•** | the impact of higher implementation  costs associated with our cost-reduction initiatives of $75 million in the  first quarter of 2008, compared to $49 million in the first quarter of 2007, |

   

partially offset by:

| **•** | savings related to our  cost-reduction initiatives. |
|------------|-----------------------------------------------------|

   

Research and Development Expenses

Research and development (R&D)expenses increased 8% in the first quarter of 2008, compared to the same periodin 2007, which reflects:

| **•** | the impact of higher implementation  costs associated with our cost-reduction initiatives of $146 million in the  first quarter of 2008, compared to $31 million in the first quarter of 2007;  and |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                      |
| **•** | the unfavorable impact of foreign  exchange on expenses,                                                                                                                                            |

   

partially offset by:

| **•** | the non-recurrence of first-quarter  2007 milestone payments; and |
|------------|-------------------------------------------------------------------|
| ** ** |                                                                   |
| **•** | savings related to our cost-reduction  initiatives.               |

   

Acquisition-Related In-ProcessResearch and Development Charges

The estimated fair value of*Acquisition-relatedin-process research and development charges* (IPR&D) is expensed atacquisition date. IPR&D of $398 million was recorded in the first quarterof 2008, primarily related to our acquisitions of CovX and Coley and twosmaller acquisitions related to Animal Health. IPR&D of $283 million wasrecorded in the first quarter of 2007, primarily related to our acquisitions ofBioRexis and Embrex.

Cost-Reduction Initiatives

In connectionwith our cost-reduction initiatives, our management has performed acomprehensive review of our processes, organizations, systems anddecision-making procedures in a company-wide effort to improve performance andefficiency, to meet the challenges of a changing business environment and totake advantage of the diverse opportunities in the marketplace. We aregenerating net cost reductions through site rationalization in R&D andmanufacturing, streamlined organizational structures, sales force and stafffunction reductions, and increased outsourcing and procurement savings.Compared to 2006, we expect to achieve a net reduction of the pre-tax totalexpense component of Adjusted income of at least $1.5 billion to $2.0 billionby the end of 2008 on a constant currency basis (the actual foreign exchangerates in effect in 2006). (For an understanding of Adjusted income, see the "AdjustedIncome" section of this MD&A.)

The actions associated with ourcost-reduction initiatives resulted in restructuring charges, such as assetimpairments, exit costs and severance costs (including any related impacts toour benefit plans, including settlements and curtailments) and associatedimplementation costs, such as accelerated depreciation charges, primarilyassociated with plant network optimization efforts, and expenses associatedwith system and process standardization and the expansion of shared servicesworldwide. (See Notes to Condensed Consolidated Financial Statements-*Note 4.Cost-Reduction Initiatives.*) The strengthening of the euro and othercurrencies relative to the dollar, while favorable on *Revenues*, has hadan adverse impact on our total expenses (*Cost of sales*,*Selling,informational and administrative expenses*,**and *Research anddevelopment expenses*), including the reported impact of thesecost-reduction efforts.

We incurred the following costs inconnection with our cost-reduction initiatives:

|                                                        |   | First  Quarter              |
|--------------------------------------------------------|---|-----------------------------|
| (millions  of dollars)                                 |   | Mar.  30,   2008  |  | April 1,   2007  |
|                                              |   |                             |  |  |
| Implementation costs(a)                                | $ | 357                    | $ | 174  |
| Restructuring charges(b)                               |   | 177                    |  | 795  |
| Total costs  related to our cost-reduction initiatives | $ | 534                    | $ | 969  |

  

| (a) | For  the first quarter of 2008, included in *Cost of sales* ($138 million),*Selling, informational and administrative expenses* ($75 million), *Research  and development**expenses* ($146 million) and *Other  (income)/deductions-net* ($2 million income). For the first quarter of  2007, included in *Cost of sales* ($94 million),*Selling,  informational and administrative expenses* ($49 million) and *Research  and development**expenses* ($31 million). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Included  in *Restructuring charges and acquisition-related costs.*                                                                                                                                                                                                                                                                                                                                                                                                                                |

   

Other (Income)/Deductions-Net

* *

In the firstquarter of 2008, we recorded lower net interest income of $203 million,compared to $248 million in the same period in 2007, due primarily to lower netcash balances and lower interest rates.

   

PROVISION FOR TAXES ON INCOME

Our effective taxrate for continuing operations was 21.5% for the first quarter of 2008, comparedto 17.0% in the same period in 2007. The higher tax rate for the first quarterof 2008 is primarily due to a decrease in and change in the geographic mix ofexpenses incurred to execute our cost-reduction initiatives and highernon-deductible charges for acquisition-related IPR&D.

ADJUSTED INCOME

General Description of AdjustedIncome Measure

Adjusted incomeis an alternative view of performance used by management and we believe thatinvestors' understanding of our performance is enhanced by disclosing thisperformance measure. We report Adjusted income in order to portray the resultsof our major operations--the discovery, development, manufacture, marketing andsale of prescription medicines for humans and animals--prior to considering certainincome statement elements. We have defined Adjusted income as Net income beforethe impact of purchase accounting for acquisitions, acquisition-related costs,discontinued operations and certain significant items. The Adjusted incomemeasure is not, and should not be viewed as, a substitute for U.S. GAAP Netincome.

The Adjustedincome measure is an important internal measurement for Pfizer. We measure theperformance of the overall Company on this basis. The following are examples ofhow the Adjusted income measure is utilized.

| **•** | Senior management receives a  monthly analysis of our operating results that is prepared on an Adjusted  income basis;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **•** | Our annual budgets are prepared on  an Adjusted income basis; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **•** | Annual and long-term compensation,  including annual cash bonuses, merit-based salary adjustments and share-based  payments 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 share-based awards based on the Adjusted  income measure ranges from 15% to 20%. |

   

Despite theimportance of this measure to management in goal setting and performancemeasurement, we stress that Adjusted income is a non-GAAP financial measurethat has no standardized meaning prescribed by U.S. GAAP and, therefore, haslimits in its usefulness to investors. Because of its non-standardizeddefinition, Adjusted income (unlike U.S. GAAP Net income) may not be comparablewith the calculation of similar measures for other companies. Adjusted incomeis presented solely to permit investors to more fully understand how managementassesses our performance. 

We also recognizethat, as an internal measure of performance, the Adjusted income measure haslimitations and we do not restrict our performance-management process solely tothis metric. A limitation of the Adjusted income measure is that it provides aview of our operations without including all events during a period, such asthe effects of an acquisition or amortization of purchased intangibles, anddoes not provide a comparable view of our performance to other companies in thepharmaceutical industry. We also use other specifically tailored tools designedto ensure the highest levels of our performance. For example, our R&Dorganization has productivity targets, upon which its effectiveness ismeasured. In addition, Performance Share Awards grants made in 2006, 2007 andfuture years will be paid based on a non-discretionary formula that measuresour performance using relative total shareholder return. 

Purchase Accounting Adjustments

Adjusted incomeis calculated prior to considering certain significant purchase-accountingimpacts, such as those related to business combinations and net assetacquisitions (see Notes to Condensed Consolidated Financial Statements - *Note 3.Acquisitions*). These impacts can include charges for purchased in-processR&D, 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 thepurchase-accounting adjustments associated with a business combination, such asthe amortization of intangibles acquired in connection with our acquisition ofPharmacia in 2003, can occur for up to 40 years (these assets have aweighted-average useful life of approximately nine years), but thispresentation provides an alternative view of our performance that is used bymanagement to internally assess business performance. We believe theelimination of amortization attributable to acquired intangible assets providesmanagement and investors an alternative view of our business results by trying toprovide a degree of parity to internally developed intangible assets for whichresearch and development costs have been previously expensed.

However, acompletely accurate comparison of internally developed intangible assets andacquired intangible assets cannot be achieved through Adjusted income. Thiscomponent of Adjusted income is derived solely with the impacts of the itemslisted in the first paragraph of this section. We have not factored in theimpacts of any other differences in experience that might have occurred if we haddiscovered and developed those intangible assets on our own, and this approachdoes not intend to be representative of the results that would have occurred inthose circumstances. For example, our research and development costs in total,and in the periods presented, may have been different; our speed tocommercialization and resulting sales, if any, may have been different; or ourcosts to manufacture may have been different. In addition, our marketingefforts may have been received differently by our customers. As such, in total,there can be no assurance that our Adjusted income amounts would have been thesame as presented had we discovered and developed the acquired intangibleassets.

Acquisition-Related Costs

Adjusted incomeis calculated prior to considering integration and restructuring costsassociated with business combinations because these costs are unique to eachtransaction and represent costs that were incurred to restructure and integratetwo businesses as a result of the acquisition decision. For additional clarity,only restructuring and integration activities that are associated with apurchase business combination or a net-asset acquisition are included in acquisition-relatedcosts. We have made no adjustments for the resulting synergies.

We believe thatviewing income prior to considering these charges provides investors with auseful additional perspective because the significant costs incurred in abusiness combination result primarily from the need to eliminate duplicateassets, activities or employees--a natural result of acquiring a fullyintegrated set of activities. For this reason, we believe that the costsincurred to convert disparate systems, to close duplicative facilities or toeliminate duplicate positions (for example, in the context of a businesscombination) can be viewed differently from those costs incurred in other, morenormal business contexts.

The integrationand restructuring 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 someactions, the span of time needed to achieve certain restructuring andintegration activities can be lengthy. For example, due to the highly regulatednature of the pharmaceutical business, the closure of excess facilities cantake several years, as all manufacturing changes are subject to extensivevalidation and testing and must be approved by the FDA.

DiscontinuedOperations

Adjusted incomeis calculated prior to considering the results of operations included indiscontinued operations, as well as any related gains or losses on the sale ofsuch operations. We believe that this presentation is meaningful to investorsbecause, while we review our businesses and product lines periodically forstrategic fit with our operations, we do not build or run our businesses withan intent to sell them. 

CertainSignificant Items

Adjusted incomeis calculated prior to considering certain significant items. Certainsignificant items represent substantive, unusual items that are evaluated on anindividual basis. Such evaluation considers both the quantitative and thequalitative aspect of their unusual nature. Unusual, in this context, mayrepresent items that are not part of our ongoing business; items that, eitheras a result of their nature or size, we would not expect to occur as part ofour normal business on a regular basis; items that would be non-recurring; oritems that relate to products we no longer sell. While not all-inclusive,examples of items that could be included as certain significant items would bea major non-acquisition-related restructuring charge and associatedimplementation costs for a program which is specific in nature with a definedterm, such as those related to our cost-reduction initiatives; charges relatedto sales or disposals of products or facilities that do not qualify asdiscontinued operations as defined by U.S. GAAP; amounts associated withtransition service agreements in support of discontinued operations after sale;certain intangible asset impairments; or possible charges related to legalmatters, such as certain of those discussed in *Legal Proceedings*in ourForm 10-K and in *Part II: Other Information; Item 1, Legal Proceedings,*includedin our Form 10-Q filings. Normal, ongoing defense costs of the Company orsettlements and accruals on legal matters made in the normal course of ourbusiness would not be considered certain significant items.

Reconciliation

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

|                                                         |   | First  Quarter              |
|---------------------------------------------------------|---|-----------------------------|
| (millions of dollars)                                   |   | Mar.  30,   2008  |  | April 1,   2007  | %  Incr./  (Decr.) |
|                                               |   |                             |  |  |  |
| Reported net  income                                    | $ | 2,784                  | $ | 3,392  | (18)% |
| Purchase  accounting adjustments - net of tax |   | 934                    |  | 847  | 10     |
| Acquisition-related  costs - net of tax       |   | 1                      |  | (1) | *     |
| Discontinued  operations - net of tax         |   | 4                      |  | (31)  | *     |
| Certain  significant items - net of tax       |   | 376                    |  | 597  | (36)    |
| Adjusted income                                         | $ | 4,099                  | $ | 4,804  | (15)    |

  

| *  Calculation not meaningful.                                     |
|--------------------------------------------------------------------|
| Certain  amounts and percentages may reflect rounding adjustments. |

   

Adjusted income as shown aboveexcludes the following items:

|                                                                                                                                            |   | First  Quarter              |
|--------------------------------------------------------------------------------------------------------------------------------------------|---|-----------------------------|
| (millions of dollars)                                                                                                                      |   | Mar.  30,   2008  |  | April 1,   2007  |
| *   *                                                                                                                       |   |                             |  |  |
| *Purchase  accounting adjustments*:                                                                                                        |   |                             |  |  |
| Intangible  amortization and other(a)                                                                                                      | $ | 758                    | $ | 825  |
| In-process  research and development charges(b)                                                                                            |   | 398                    |  | 283  |
| Total purchase  accounting adjustments, pre-tax                                                                                            |   | 1,156                  |  | 1,108  |
| Income taxes                                                                                                                               |   | (222)                       |  | (261) |
| *Total  purchase accounting adjustments* - *net of tax*                                                                                    |   | 934                    |  | 847  |
| *Acquisition-related  costs*:                                                                                                              |   |                             |  |  |
| Integration  costs(c)                                                                                                                      |   | --                     |  | 4  |
| Restructuring  charges(c)                                                                                                                  |   | 1                      |  | (6) |
| Total  acquisition-related costs, pre-tax                                                                                                  |   | 1                      |  | (2) |
| Income taxes                                                                                                                               |   | --                     |  | 1  |
| *Total  acquisition-related costs* - *net of tax*                                                                                          |   | 1                      |  | (1) |
| *Discontinued  operations*:                                                                                                                |   |                             |  |  |
| Loss from  discontinued operations                                                                                                         |   | 6                      |  | --   |
| Gains on sales  of discontinued operations                                                                                                 |   | --                     |  | (40) |
| Total  discontinued operations, pre-tax                                                                                                    |   | 6                      |  | (40) |
| Income taxes                                                                                                                               |   | (2)                         |  | 9  |
| *Total  discontinued operations* - *net of tax*                                                                                            |   | 4                      |  | (31) |
| *Certain  significant items*:                                                                                                              |   |                             |  |  |
| Restructuring  charges - cost-reduction initiatives(c)                                                                                     |   | 177                    |  | 795  |
| Implementation  costs - cost-reduction initiatives(d)                                                                                      |   | 357                    |  | 174  |
| Consumer  Healthcare business transition activity(e)                                                                                       |   | (3)                         |  | (9) |
| Other                                                                                                                                      |   | 10                     |  | 19  |
| Total certain  significant items, pre-tax                                                                                                  |   | 541                    |  | 979  |
| Income taxes                                                                                                                               |   | (165)                       |  | (382) |
| *Total  certain significant items* - *net of tax*                                                                                          |   | 376                    |  | 597  |
| *Total  purchase accounting adjustments, acquisition-related costs, discontinued  operations and certain significant items* - *net of tax* | $ | 1,315                  | $ | 1,412  |

  

| (a) | Included  primarily in *Amortization of intangible assets.*                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Included  in *Acquisition-related in-process research and development charges,*primarily  related to our acquisitions of CovX and Coley and two smaller acquisitions related  to Animal Health in the first quarter of 2008 and BioRexis and Embrex in the  first quarter of 2007.                                                                                                                                                                                                               |
| (c) | Included  in *Restructuring charges and acquisition-related costs.*                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (d) | Included  in *Cost of sales* ($138 million),*Selling, informational and  administrative expenses* ($75 million), *Research and development**expenses* ($146 million) and *Other (income)/deductions-net ($2  million income)* for the first quarter of 2008. Included in *Cost of  sales* ($94 million),*Selling, informational and administrative  expenses* ($49 million) and *Research and development**expenses*  ($31 million) for the first quarter of 2007. |
| (e) | Included  in *Revenues* ($52 million), *Cost of sales* ($48 million)  and *Selling, informational and administrative expenses* ($1 million)  for the first quarter of 2008. Included in *Revenues* ($43 million),  *Cost of sales* ($35 million), *Selling, informational and  administrative expenses* ($2 million) and *Other  (income)/deduction-net* ($3 million income) for the first quarter of  2007.                                                  |

   

FINANCIAL CONDITION, LIQUIDITY ANDCAPITAL RESOURCES

Net Financial Assets

Our net financial asset positionfollows:

| (millions  of dollars)                                              |   | Mar.  30,  2008 |   | Dec. 31,  2007 |
|---------------------------------------------------------------------|---|-----------------|---|---------------------|
|                                                      |   |                 |   |                     |
| Financial  assets:                                                  |   |                 |   |                     |
| Cash and cash  equivalents                                          | $ | 2,013           | $ | 3,406               |
| Short-term  investments                                             |   | 26,615          |   | 22,069              |
| Short-term  loans                                                   |   | 777             |   | 617                 |
| Long-term  investments and loans                                    |   | 4,511           |   | 4,856               |
| Total financial  assets                                             |   | 33,916          |   | 30,948              |
| Debt:                                                               |   |                 |   |                     |
| Short-term  borrowings, including current portion of long-term debt |   | 8,909           |   | 5,825               |
| Long-term debt                                                      |   | 8,143           |   | 7,314               |
| Total debt                                                          |   | 17,052          |   | 13,139              |
| Net financial  assets                                               | $ | 16,864          | $ | 17,809              |

   

We rely largely on operating cashflow, short-term investments, long-term debt and short-term commercial paperborrowings to provide for the working capital needs of our operations,including our R&D activities. We believe that we have the ability to obtainboth short-term and long-term debt to meet our financing needs for theforeseeable future.

Investments

Our short-termand long-term investments consist primarily of high-quality, investment-gradeavailable-for-sale debt securities. Wherever possible, cash management iscentralized and intercompany financing is used to provide working capital toour operations. Where local restrictions prevent intercompany financing,working capital needs are met through operating cash flows and/or externalborrowings. Our portfolio of short-term investments increased in the firstquarter of 2008 as a result of strong operating cash flow.

Credit Ratings

Two majorcorporate debt-rating organizations, Moody's Investors Service (Moody's) andStandard & Poor's (S&P), assign ratings to our short-term and long-termdebt. The following chart reflects the current ratings assigned to our senior unsecurednon-credit enhanced long-term debt and commercial paper issued directly by us byeach of these agencies:

|                        |                   |              | Long-Term-Debt | Date  of |
|------------------------|-------------------|--------------|----------------|----------|
| Name of Rating  Agency | Commercial  Paper |    | Rating         | Outlook  | Last  Action |
|         |                   |              |                |          |  |
| Moody's                | P-1               |              | Aa1            | Negative | October  2007 |
| S&P                | A1+               |              | AAA            | Negative | December  2006 |

   

Our access to financing at favorablerates would be affected by a substantial downgrade in our credit ratings.

Debt Capacity

We have available lines of credit andrevolving-credit agreements with a group of banks and other financialintermediaries. We maintain cash and cash equivalent balances and short-terminvestments in excess of our commercial paper and other short-term borrowings.As of March 30, 2008, we had access to $7.7 billion of lines of credit, ofwhich $5.4 billion expire within one year. Of these lines of credit, $7.6 billionare unused, of which our lenders have committed to loan us $6.3 billion atour request. $6.0 billion of the unused lines of credit, of which$4.0 billion expire in 2009 and $2.0 billion expire in 2013, may beused to support our commercial paper borrowings.

In March 2007, wefiled a securities registration statement with the Securities and ExchangeCommission. This registration statement was filed under the automatic shelf registrationprocess available to well-known "seasoned" issuers and is effectivefor three years. We can issue securities of various types under thatregistration statement at any time, subject to approval by our Board of Directorsin certain circumstances.

Goodwill and Other IntangibleAssets

As of March 30, 2008, *Goodwill*totaled $21.6 billion (18% of our total assets) and other identifiable intangibleassets, net of accumulated amortization, totaled $19.9 billion (17% of ourtotal assets). Finite-lived intangible assets, net, include $15.9 billionrelated to developed technology rights and $556 million related to brands.Indefinite-lived intangible assets include $2.9 billion related to brands.

The developed technology rightsprimarily represent the amortized value of the commercialized products includedin our Pharmaceutical segment that we acquired in connection with our Pharmaciaacquisition in 2003. We acquired a well-diversified portfolio of developedtechnology rights across the therapeutic categories displayed in the table ofmajor Pharmaceutical products in the "Revenues" section of this MD&A.While the Arthritis and Pain therapeutic category represents about 30% of thetotal value of developed technology rights at March 30, 2008, the balance of thevalue is evenly distributed across the following Pharmaceutical 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 ANDCAPITAL RESOURCES

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

| (millions  of dollars, except ratios and per common share data) |   | Mar.  30, 2008 |   | Dec. 31,  2007 |
|-----------------------------------------------------------------|---|----------------|---|---------------------|
|                                                       |   |                |   |                     |
| Cash and cash  equivalents and short-term investments and loans | $ | 29,405         | $ | 26,092              |
|                                                       |   |                |   |                     |
| Working capital(a)                                              | $ | 29,329         | $ | 25,014              |
|                                                       |   |                |   |                     |
| Ratio of current assets to current  liabilities                 |   | 2.35:1         |   | 2.15:1              |
|                                                       |   |                |   |                     |
| Shareholders' equity per common  share(b)                       | $ | 10.00          | $ | 9.65                |

    

| (a) | Working  capital includes assets held for sale of $87 million as of March 30,  2008, and $114 million as of December 31, 2007.                                          |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | 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 increases in working capital andthe ratio of current assets to current liabilities, as of March 30, 2008, comparedto December 31, 2007, were primarily due to: 

| **•** | a net increase in cash and  short-term investments as a result of strong operating cash flow; and                                                                                                                                                                                                                     |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                        |
| **•** | an increase in accounts receivable  of about $590 million, which reflects recurring business trends that  impact the timing of revenues within the first quarter compared to the prior  year's fourth quarter, due to customer purchasing patterns and price  increases that occur in the beginning of the year. |

   

Net Cash Provided by OperatingActivities

During the first quarter of 2008, netcash provided by operating activities was $3.3 billion, compared to $1.2 billionin the same period of 2007. The increase in net cash provided by operatingactivities was primarily attributable to: 

| **•** | lower tax payments ($1.8 billion)  in the first quarter of 2008, primarily due to the taxes paid in the first  quarter of 2007 related to the gain on the sale of our Consumer Healthcare  business in December 2006; and |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                 |
| **•** | the timing of other receipts and  payments in the ordinary course of business.                                                                                                                                                 |

   

The cash flow line item called *Changesin assets and liabilities (net of businesses acquired and divested)* in thefirst quarter of 2008, compared to the same period in 2007, primarily reflects lowertaxes paid, as described above.

Net Cash Provided by InvestingActivities

During the first quarter of 2008, netcash used in investing activities was $5.5 billion, compared to $4.3 billionprovided by investing activities in the same period in 2007. The decrease innet cash provided by investing activities was primarily attributable to:

| **•** | net purchases of investments of  $4.3 billion in the first quarter of 2008, compared to net sales and  redemptions of investments of $5.0 billion. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

   

Net Cash Used in FinancingActivities

During the first quarter of 2008, netcash provided by financing activities was $848 million, compared to $4.8 billionused in financing activities in the same period in 2007. The decrease in netcash used in financing activities was primarily attributable to:

| **•** | net borrowings of $3.0 billion  in the first quarter of 2008, compared to net repayments of $606 million  on total borrowings in the first quarter of 2007; and |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                            |
| **•** | no purchases of common stock in the  first quarter of 2008, compared to $2.5 billion in the first quarter of  2007.                                                  |

   

In June 2005, we announced a $5 billionshare-purchase program, which is primarily being funded by operating cash flowsand a portion of the proceeds from the sale of our Consumer Healthcare business.In June 2006, the Board of Directors increased that share-purchaseauthorization from $5 billion to $18 billion. In January 2008, weannounced a new $5 billion share-purchase program, which will be funded byoperating cash flows as circumstances and prices warrant. 

OFF-BALANCE SHEET ARRANGEMENTS

In the ordinary course of businessand in connection with the sale of assets and businesses, we often indemnifyour counterparties against certain liabilities that may arise in connectionwith a transaction or that are related to activities prior to a transaction.These indemnifications typically pertain to environmental, tax, employee and/orproduct-related matters, and patent infringement claims. If the indemnifiedparty were to make a successful claim pursuant to the terms of theindemnification, we would be required to reimburse the loss. Theseindemnifications are generally subject to threshold amounts, specified claimperiods and other restrictions and limitations. Historically, we have not paidsignificant amounts under these provisions and, as of March 30, 2008,recorded amounts for the estimated fair value of these indemnifications are notsignificant.

Certain of our co-promotion orlicense agreements give our licensors or partners the rights to negotiate for,or in some cases to obtain, under certain financial conditions, co-promotion orother rights in specified countries with respect to certain of our products.   

NEW ACCOUNTING STANDARDS

Recently Adopted AccountingStandards

As of January 1, 2008, we adopted ona prospective basis certain required provisions of Statement of FinancialAccounting Standards (SFAS) No. 157, *Fair Value Measurements*, as amendedby Financial Accounting Standards Board (FASB) Financial Staff Position (FSP) No.157-2, *Effective Date of FASB Statement No. 157*. Those provisions relateto our financial assets and liabilities carried at fair value and our fairvalue disclosures related to financial assets and liabilities. SFAS 157 definesfair value, expands related disclosure requirements and specifies a hierarchyof valuation techniques based on the nature of the inputs used to develop thefair value measures. The adoption of SFAS 157 did not have a significant impacton our consolidated financial statements. 

Emerging Issues Task Force (EITF)Issue No. 07-3, *Accounting for Nonrefundable Advance Payments for Goods orServices to Be Used in Future Research and Development Activities,* becameeffective for new contracts entered into on or after January 1, 2008. EITFIssue No. 07-3 requires that non-refundable advance payments for goods andservices that will be used in future R&D activities be expensed when theR&D activity has been performed or when the R&D goods have beenreceived rather than when the payment is made. The adoption of EITF Issue No.07-3 did not have a significant impact on our consolidated financialstatements. 

Recently Issued AccountingStandards, Not Adopted as of March 30, 2008

As discussed above, in September 2006, the FASB issued SFAS 157, *FairValue Measurements*, and in February 2008, issued FSP 157-2, *EffectiveDate of FASB Statement No. 157*. Under the terms of FSP 157-2, the adoptionof SFAS 157 with respect to nonfinancial assets and nonfinancial liabilities,except for those that are recognized or disclosed at fair value in thefinancial statements on a recurring basis, will be required in 2009. We are inthe process of evaluating the potential impact of the provisions to be adoptedin 2009.

In December 2007, the FASB issuedSFAS No. 141(R), *Business Combinations*. (SFAS 141(R) replaced SFAS No.141, *Business Combinations*, originally issued in June 2001.) SFAS 141(R)retains the purchase method of accounting for acquisitions, but requires anumber of changes, including changes in the way assets and liabilities arerecognized in purchase accounting. It also changes the recognition of assetsacquired and liabilities assumed arising from contingencies, requires thecapitalization of in-process research and development at fair value andrequires the expensing of acquisition-related costs as incurred. Generally,SFAS 141(R) is effective on a prospective basis for all business combinationscompleted on or after January 1, 2009. We are currently in the process ofevaluating the extent of those potential impacts.

In December 2007, the FASB issuedSFAS No. 160, *Noncontrolling Interests in Consolidated Financial Statements*,an amendment of Accounting Research Bulletin No. 51, *ConsolidatedFinancial Statements*. SFAS 160 provides guidance for the accounting,reporting and disclosure of noncontrolling interests, also called minorityinterest. A minority interest represents the portion of equity (net assets) ina subsidiary not attributable, directly or indirectly, to a parent. Theprovisions of SFAS 160 will be adopted in 2009. The provisions of SFAS 160 willimpact our current accounting for minority interests, which are notsignificant, and will impact our accounting for future acquisitions, if any,where we do not acquire 100% of the entity. We are currently in the process ofevaluating the extent of those potential impacts.

In December 2007, the EITF issuedEITF Issue No. 07-1, *Accounting for Collaborative Arrangements*. EITF07-1 provides guidance concerning: determining whether an arrangementconstitutes a collaborative arrangement within the scope of the Issue; howcosts incurred and revenue generated on sales to third parties should bereported in the income statement; how an entity should characterize payments onthe income statement; and what participants should disclose in the notes to thefinancial statements about a collaborative arrangement. The provisions of EITF07-1 will be adopted in 2009. We are in the process of evaluating the potentialimpact of adopting EITF 07-1 on our financial statements.

OUTLOOK

While our revenues and income willcontinue to be tempered in the near term due to patent expirations and otherfactors, we remain confident that we have the organizational strength andresilience, as well as the strategies, financial depth and flexibility, tosucceed in the long term. However, no assurance can be given that theindustry-wide factors described above under "Our Operating Environment"or below under "Forward-Looking Information and Factors That May AffectFuture Results" or other significant factors will not have a materialadverse effect on our business and financial results.

Our 2008 guidance reflects theprojected impact of the loss of exclusivity in the U.S. of Norvasc (March 2007),Zyrtec/Zyrtec D (January 2008) and Camptosar (February 2008).

At current exchange rates, weforecast 2008 revenues of $47.0 billion to $49.0 billion, reported dilutedearnings per common share (EPS) of $1.73 to $1.88, Adjusted diluted EPS of$2.35 to $2.45, and cash flow from operations of $17 billion to $18 billion.

In addition, on a constant currencybasis, by the end of 2008, we expect to achieve a net reduction of the pre-taxtotal expense component of Adjusted income of at least $1.5 billion to $2.0billion, compared to 2006. (For an understanding of Adjusted income, see the "AdjustedIncome" section of this MD&A.)

As referenced in this section: (i) "currentexchange rates" is defined as rates approximating foreign currency spotrates in April 2008 and (ii) "constant currency basis" is defined asthe actual foreign exchange rates in effect during 2006.

Given these and other factors, areconciliation, at current exchange rates and reflecting management's currentassessment, of 2008 Adjusted income and Adjusted diluted EPS guidance to 2008reported Net income and reported diluted EPS guidance, follows:

|                                                                          |  | Full-Year  2008 Guidance |
|--------------------------------------------------------------------------|--|--------------------------|
| ($ billions, except per share  amounts)                             |  | Net  Income(a)           |  | Diluted  EPS(a) |
| Adjusted  income/diluted EPS(b) guidance                                 |  | ~$                       | 15.8-$16.6 |  | ~$ | 2.35-$2.45 |
| Purchase  accounting impacts, net of tax:                                |  |                          |  |  |  |  |
| Business  development transactions completed as of 12/31/07              |  |                          | (2.1) |  |  | (0.31) |
| Business  development transactions completed from 1/1/08 through 3/30/08 |  |                          | (0.3) |  |  | (0.05) |
| Costs related  to cost-reduction initiatives, net of tax                 |  |                          | (1.4-1.7) |  |  | (0.21-0.26) |
| Reported Net  income/diluted EPS guidance                                |  | ~$                       | 11.7-$12.8 |  | ~$ | 1.73-$1.88 |

   

| (a) | Excludes  the effects of major business development transactions not completed as of March  30, 2008.    |
|-----|----------------------------------------------------------------------------------------------------------|
| (b) | For  an understanding of Adjusted income, see the "Adjusted Income"  section of this MD&A. |

   

Our 2008 forecasted financialperformance guidance is subject to a number of factors and uncertainties, asdescribed in the "Forward-Looking Information and Factors That May AffectFuture Results" section of this MD&A.

FORWARD-LOOKING INFORMATION ANDFACTORS THAT MAY AFFECT FUTURE RESULTS

The Securities and ExchangeCommission encourages companies to disclose forward-looking information so thatinvestors can better understand a company's future prospects and make informedinvestment decisions. This report and other written or oral statements that wemake from time to time contain such forward-looking statements that set forthanticipated results based on management's plans and assumptions. Suchforward-looking statements involve substantial risks and uncertainties. We havetried, wherever possible, to identify such statements by using words such as "will,""anticipate," "estimate," "expect," "project,""intend," "plan," "believe," "target," "forecast"and other words and terms of similar meaning in connection with any discussionof future operating or financial performance or business plans and prospects.In particular, these include statements relating to future actions, businessplans and prospects, prospective products or product approvals, futureperformance or results of current and anticipated products, sales efforts,expenses, interest rates, foreign exchange rates, the outcome of contingencies,such as legal proceedings, and financial results. Among the factors that couldcause actual results to differ materially are the following:

| **•** | 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  availability or commercial potential of our products;                                                                                                                                                                                                                                   |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Speed with which regulatory  authorizations, pricing approvals and product launches may be achieved;                                                                                                                                                                                                                                                                                                                                                                             |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Success of external business  development activities;                                                                                                                                                                                                                                                                                                                                                                                                                            |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Competitive developments, including  with respect to competitor drugs and drug candidates that treat diseases and  conditions similar to those treated by our in-line drugs and drug candidates;                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Ability to successfully market both  new and existing products domestically and internationally;                                                                                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Difficulties or delays in  manufacturing;                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Trade buying patterns;                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **•** | Ability to meet generic and branded  competition after the loss of patent protection for our products and  competitor products;                                                                                                                                                                                                                                                                                                                                                  |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Impact of existing and future  legislation and regulatory provisions on product exclusivity;                                                                                                                                                                                                                                                                                                                                                                                     |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Trends toward managed care and  healthcare cost containment;                                                                                                                                                                                                                                                                                                                                                                                                                     |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | U.S. legislation or regulatory  action affecting, among other things, pharmaceutical product pricing,  reimbursement or access, including under Medicaid and Medicare; the  importation of prescription drugs from outside the U.S. at prices that are  regulated by governments of various foreign countries; direct-to-consumer  advertising and interactions with healthcare professionals; and the  involuntary approval of prescription medicines for over-the-counter use; |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Impact of the Medicare Prescription  Drug, Improvement, and Modernization Act of 2003;                                                                                                                                                                                                                                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Legislation or regulatory action in  markets outside the U.S. affecting pharmaceutical 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;                                                                                                                                                                                                                                                                                                                                                                 |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **•** | Significant  breakdown, infiltration or interruption of our information technology systems  and infrastructure;                                                                                                                                                                                                                                                                                                                                                                  |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Legal defense costs, insurance  expenses, settlement costs and the risk of an adverse decision or settlement  related to product liability, patent protection, governmental investigations,  ongoing efforts to explore various means for resolving asbestos litigation,  and other legal proceedings;                                                                                                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **•** | Ability to protect our 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 generally accepted  accounting principles;                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **•** | Uncertainties related to general  economic, political, business, industry, regulatory and market conditions;                                                                                                                                                                                                                                                                                                                                                                     |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Any changes in business, political  and economic conditions due to the threat of 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, segment and  geographic mix; and                                                                                                                                                                                                                                                                                                                                                                                                                         |
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **•** | Impact of acquisitions,  divestitures, restructurings, product withdrawals and other unusual items,  including our ability to realize the projected benefits of our cost-reduction  initiatives.                                                                                                                                                                                                                                                                                 |

    

We cannotguarantee that any forward-looking statement will be realized, although webelieve we have been prudent in our plans and assumptions. Achievement ofanticipated results is subject to substantial risks, uncertainties andinaccurate 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 noobligation to publicly update forward-looking statements, whether as a resultof new information, future events or otherwise. You are advised, however, toconsult any further disclosures we make on related subjects in our Forms 10-Q,8-K and 10-K reports to the Securities and Exchange Commission.

Our Form 10-K filing for the 2007fiscal year listed various important factors that could cause actual results todiffer materially from projected and historic results. We note these factorsfor investors as permitted by the Private Securities Litigation Reform Act of1995. Readers can find them in Part I, Item 1A, of that filing under theheading "Risk Factors and Cautionary Factors That May Affect FutureResults." We incorporate that section of that Form 10-K in this filing andinvestors should refer to it. You should understand that it is not possible topredict or identify all such factors. Consequently, you should not consider anysuch list to be a complete set of all potential risks or uncertainties.

This reportincludes discussion of certain clinical studies relating to various in-lineproducts and/or product candidates. These studies typically are part of alarger body of clinical data relating to such products or product candidates,and the discussion herein should be considered in the context of the largerbody of data.

Legal Proceedings andContingencies 

We and certain ofour subsidiaries are involved in various patent, product liability, consumer,commercial, securities, environmental and tax litigations and claims;government investigations; and other legal proceedings that arise from time totime in the ordinary course of our business. We do not believe any of them willhave a material adverse effect on our financial position.

Beginning in 2007upon the adoption of a new accounting standard, we record accruals for incometax contingencies to the extent that we conclude that a tax position is notsustainable under a 'more likely than not' standard and we record our estimateof the potential tax benefits in one tax jurisdiction that could result fromthe payment of income taxes in another tax jurisdiction when we conclude thatthe potential recovery is more likely than not. We record accruals for allother contingencies to the extent that we conclude their occurrence is probableand the related damages are estimable, and we record anticipated recoveriesunder existing insurance contracts when assured of recovery. If a range ofliability is probable and estimable and some amount within the range appears tobe a better estimate than any other amount within the range, we accrue thatamount. If a range of liability is probable and estimable and no amount withinthe range appears to be a better estimate than any other amount within therange, we accrue the minimum of such probable range. Many claims involve highlycomplex issues relating to causation, label warnings, scientific evidence,actual damages and other matters. Often these issues are subject to substantialuncertainties and, therefore, the probability of loss and an estimation ofdamages are difficult to ascertain. Consequently, we cannot reasonably estimatethe maximum potential exposure or the range of possible loss in excess ofamounts accrued for these contingencies. These assessments can involve a seriesof complex judgments about future events and can rely heavily on estimates andassumptions. Our assessments are based on estimates and assumptions that havebeen deemed reasonable by management. Litigation is inherently unpredictable,and excessive verdicts do occur. Although we believe we have substantialdefenses in these matters, we could in the future incur judgments or enter intosettlements of claims that could have a material adverse effect on our resultsof operations in any particular period.

Patent claimsinclude challenges to the coverage and/or validity of our patents on variousproducts or processes. Although we believe we have substantial defenses tothese challenges with respect to all our material patents, there can be noassurance as to the outcome of these matters, and a loss in any of these casescould result in a loss of patent protection for the drug at issue, which couldlead to a significant loss of sales of that drug and could materially affectfuture results of operations.

Item 3.  Quantitative andQualitative Disclosures About Market Risk.

Information required by this item isincorporated by reference from the discussion under the heading *FinancialRisk Management* in our 2007 Financial Report, which is filed as exhibit 13to our 2007 Form 10-K. 

Item 4.  Controls and Procedures.

As of the end of the period coveredby this report, we carried out an evaluation, under the supervision and withthe participation of our principal executive officer and principal financialofficer, of the effectiveness of the design and operation of our disclosurecontrols and procedures (as such term is defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Basedon this evaluation, our principal executive officer and principal financialofficer concluded that our disclosure controls and procedures are effective inalerting them in a timely manner to material information required to bedisclosed in our periodic reports 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. However,we do wish to highlight some changes which, taken together, are expected to havea favorable impact on our controls over a multi-year period. We continue topursue a multi-year initiative to outsource some transaction-processing activitieswithin certain accounting processes and are migrating to a consistententerprise resource planning system across the organization. These areenhancements of ongoing activities to support the growth of our financialshared service capabilities and standardize our financial systems. None ofthese initiatives is in response to any identified deficiency or weakness inour internal control over financial reporting.

**PARTII - OTHER INFORMATION**

Item 1.  Legal Proceedings

Certain legalproceedings in which we are involved are discussed in Note 20 to theconsolidated financial statements included in our 2007 Financial Report, whichis incorporated by reference in Part I, Item 3, of our Annual Reporton Form 10-K for the year ended December 31, 2007. The followingdiscussion is limited to certain recent developments concerning our legalproceedings and should be read in conjunction with our 2007 Financial Report.Unless otherwise indicated, all proceedings discussed in our 2007 FinancialReport remain outstanding. Reference also is made to the Legal Proceedings andContingencies section in Part I, Item 2, of this Form 10-Q.

**Patent Matters**

Lipitor(atorvastatin) and Caduet (atorvastatin/amlodipine combination)

In March 2008, wefiled two suits against Ranbaxy Pharmaceuticals, Inc. (Ranbaxy) in the U.S.District Court for the District of Delaware. The suits allege that Ranbaxy'sproposed generic versions of Lipitor and Caduet, respectively, would infringeour amorphous process patent for atorvastatin, which expires in 2016.

Lipitor(atorvastatin)

U.S. - basicpatent: As previously reported, in July 2007, a law firm that has representedRanbaxy in Lipitor patent litigation filed a request for reexamination of ourbasic Lipitor patent with the U.S. Patent and Trademark Office (the PatentOffice). The basic patent, including the six-month pediatric exclusivityperiod, expires in March 2010. In August 2007, the Patent Office granted therequest to reexamine the basic patent on its merits. In January 2008, the PatentOffice issued its initial official action, rejecting the patent's claims. InMarch 2008, we submitted our response to the Patent Office. In April 2008, thePatent Office notified us that it will confirm the patentability of the claimsof our basic Lipitor patent.

U.S. - enantiomerpatent: As previously reported, in January 2007, we filed a reissue applicationwith the Patent Office seeking to correct a technical defect in our patentcovering the enantiomer form of atorvastatin. The enantiomer patent, includingthe six-month pediatric exclusivity period, expires in June 2011. In August2007, the Patent Office issued its initial official action, which determinedthat the technical defect had been corrected but rejected the enantiomer patenton other grounds. In October 2007, we submitted our response to the PatentOffice. In April 2008, the Patent Office issued second, non-final officialactions rejecting the claims of the enantiomer patent. We will address theissues raised by the examiner in our response to the Patent Office. We continueto believe that we have strong arguments for securing the reissued patent.

Separately, aspreviously reported, in October 2007, Cobalt Pharmaceuticals, Inc. (Cobalt)notified us that it had filed an application with the FDA seeking approval tomarket a product containing atorvastatin sodium, a salt that is different fromatorvastatin calcium, which is used in Lipitor. The notice stated that Cobaltwas challenging our enantiomer patent and certain later-expiring patents, butnot our basic patent. In December 2007, we filed suit against Cobalt in theU.S. District Court for the District of Delaware asserting the validity andinfringement of the enantiomer patent. In April 2008, we entered into anagreement with Cobalt to settle this action, subject to certain conditions.

Canada -enantiomer patent: As previously reported, in January 2007, the CanadianFederal Court in Toronto denied our application to prevent approval in Canadaof Ranbaxy's proposed generic atorvastatin product based on our enantiomerpatent, which expires in July 2010. In February 2007, we appealed the decisionto the Federal Court of Appeal of Canada. In March 2008, the Federal Court ofAppeal of Canada reversed the decision and issued an order prohibitingregulatory approval of Ranbaxy's generic atorvastatin product in Canada untilthe expiration of our enantiomer patent in July 2010. Ranbaxy may seek a reviewof the decision by the Supreme Court of Canada.

We also areseeking to prevent approval in Canada of Apotex Inc.'s (Apotex) proposedgeneric atorvastatin product based on our enantiomer patent. A trial was heldon this matter in October 2007 in the Canadian Federal Court in Toronto and, onJanuary 2, 2008, the court denied our application. On January 3, 2008, weappealed the decision to the Federal Court of Appeal of Canada.  

Norvasc(amlodipine)

As previouslyreported, in 2006, the Federal Court of Appeal of Canada upheld the validity ofour Norvasc patent in Canada, which expires in August 2010, in an actioninvolving Ratiopharm. The Supreme Court of Canada denied Ratiopharm's petitionto appeal this decision. Certain other generic manufacturers are seeking tomarket their own amlodipine products in Canada. In April 2008, the Canadian FederalCourt in Toronto upheld the validity of our Norvasc patent in our actionagainst Pharmascience Inc. (Pharmascience) and issued an order preventingapproval of Pharmascience's generic besylate amlodipine product until theexpiration of our patent in August 2010. Pharmascience may appeal the decisionto the Federal Court of Appeal of Canada. Also in April 2008, we settled ouraction against Cobalt on terms that are not material to Pfizer. Challenges toour Norvasc patent in Canada by Pharmascience, with respect to its amlodipinemesylate product, and by Apotex remain pending.

Celebrex(celecoxib)

As previouslyreported, in our patent-infringement suit against Teva Pharmaceuticals USA,Inc. (Teva) relating to the 100, 200 and 400 mg doses of Celebrex, in March 2007the U.S. District Court for the District of New Jersey upheld our two mainpatents covering the active ingredient and a pharmaceutical compositionthereof, which expire in May 2014, as well as a secondary patent covering usein the treatment of inflammation, which expires in December 2015. In April2007, Teva appealed the decision to the U.S. Court of Appeals for the FederalCircuit. In March 2008, a panel of the Federal Circuit held that the two mainpatents are valid, enforceable and infringed, but ruled that the secondarypatent is invalid. The decision prohibits Teva from marketing its 100, 200 and400 mg generic celecoxib products before May 2014. Each of the parties hasrequested a panel rehearing and an en banc rehearing by the entire Federal Circuit.

In April 2008,Teva notified us that it had filed an amendment to its abbreviated new drugapplication with the FDA with respect to the 50 mg dose of Celebrex challengingour secondary patent for Celebrex covering use in the treatment of inflammationand seeking to market a 50 mg product containing celecoxib upon the expirationof our two main patents in May 2014. As noted, our pending action against Tevadiscussed above involves the 100, 200 and 400 mg doses.

In March 2008,Mylan Pharmaceuticals, Inc. notified us that it had filed an abbreviated newdrug application with the FDA challenging our secondary patent for Celebrexcovering use in the treatment of inflammation and seeking to market a productcontaining celecoxib upon the expiration of our two main patents in May 2014.

Detrol LA(tolterodine)

As previouslyreported, in October 2007, Teva notified us that it had filed an abbreviatednew drug application with the FDA challenging on various grounds four patentsrelating to Detrol LA, an extended-release formulation of Detrol (tolterodine),and seeking approval to market a generic version of Detrol LA. In December2007, we filed suit against Teva in the U.S. District Court for the SouthernDistrict of New York asserting the infringement of three of the patentsrelating to Detrol LA. In March 2008, this suit was transferred to the U.S.District Court for the District of New Jersey.

Two othermanufacturers - Impax Laboratories Inc. (Impax) in January 2008 and Sandoz, adivision of Novartis AG, in March 2008 - also notified us that they had filedabbreviated new drug applications with the FDA seeking approval to market theirgeneric versions of Detrol LA. Impax is challenging the same four patents asTeva. Sandoz is challenging three later-expiring patents but not the basicpatent, which (including the six-month pediatric exclusivity period) expires in2012. In March 2008, we filed suit against Impax in the U.S. District Court forthe Southern District of New York asserting the infringement of three of thepatents. In April 2008, this action was transferred to the U.S. District Courtfor the District of New Jersey.

**ProductLitigation**

Celebrex andBextra

As previouslyreported, beginning in late 2004, purported shareholder derivative actions havebeen filed in various federal courts and in state court in New York allegingthat certain of Pfizer's current and former officers and directors breachedfiduciary duties by causing Pfizer to misrepresent the safety of Celebrex and,in certain cases, Bextra. In June 2005, the federal actions were transferredfor consolidated pre-trial proceedings to a Multi-District Litigation (*In rePfizer Inc. Securities, Derivative and "ERISA" Litigation MDL-1688*)in the U.S. District Court for the Southern District of New York. In July 2007,the purported federal shareholder derivative action was dismissed withprejudice by the court in the Multi-District Litigation. In August 2007, theplaintiffs appealed the decision to the U.S. Court of Appeals for the SecondCircuit. In March 2008, the purported shareholder derivative action in theSupreme Court of the State of New York, New York County, also was dismissedwith prejudice. In April 2008, the plaintiff filed a notice of appeal with theAppellate Division of the Supreme Court of the State of New York, FirstDepartment. 

Mirapex

As previouslyreported, a number of individual lawsuits seeking damages have been filedagainst Pfizer and Boehringer Ingelheim Pharmaceuticals, Inc. (BIPI) in variousU.S. federal and state courts and one purported class action has been filed inCanada alleging that Mirapex, a treatment for Parkinson's disease, causescertain impulse-control disorders. We co-promoted Mirapex with BIPI until May2005 but, as a result of the sale of our interests in this product to BIPI, weno longer manufacture or sell Mirapex. In June 2007, all of the U.S. federalcases were transferred for consolidated pre-trial proceedings to aMulti-District Litigation (*In re Mirapex Products Liability Litigation MDL-1836*) in the U.S. District Court for the District of Minnesota. BIPI andPfizer have agreed to indemnify each other with respect to portions of certainof the claims in these actions.

**Commercial andOther Matters**

Average WholesalePrice Litigation

As previously reported, Pharmacia isa defendant, along with other pharmaceutical manufacturers, in a Multi-DistrictLitigation (*In re Pharmaceutical Industry Average Wholesale Price LitigationMDL-1456*) in the U.S. District Court for the District of Massachusetts inwhich the manufacturers are alleged to have provided average wholesale price(AWP) information for certain of their products that was higher than the actualprices at which those products were sold. The AWP is used to determinereimbursement levels under Medicare Part B and Medicaid and in manyprivate-sector insurance policies and medical plans. 

In April 2008, the court in theMulti-District Litigation granted preliminary approval with respect to thefairness of a proposed settlement of the claims against 11 defendants,including Pharmacia, for a total of $125 million. Pharmacia's contribution tothe settlement would be immaterial. The court has scheduled a hearing inDecember 2008 to consider final approval of the settlement.

**Tax Matters**

The United States is one of our major tax jurisdictions. We are currentlyappealing two issues related to the IRS' audits of the Pfizer Inc. tax returnsfor the years 2002 through 2005. The 2006 and 2007 tax years, as well asyear-to-date 2008, are currently under audit as part of the IRS ComplianceAssurance Process, a real-time audit process. All other tax years in the U.S.for Pfizer Inc. are closed under the statute of limitations. With respect toPharmacia Corporation, the IRS is currently conducting an audit for the year2003 through the date of merger with Pfizer (April 16, 2003). In addition tothe open audit years in the U.S., we have open audit years in other major taxjurisdictions, such as Canada (1998-2007), Japan (2006-2007), Europe (1996-2007),primarily reflecting Ireland, the U.K., France, Italy, Spain and Germany, andPuerto Rico (2003-2007).

We regularly reevaluate our tax positions based on the results of auditsof federal, state and foreign income tax filings, statute of limitationsexpirations and changes in tax law that would either increase or decrease thetechnical merits of a position relative to the more likely than not standard.We believe that our accruals for tax liabilities are adequate for all openyears. Many factors are considered in making these evaluations, including pasthistory, recent interpretations of tax law, and the specifics of each matter.Because tax regulations are subject to interpretation and tax litigation isinherently uncertain, these evaluations can involve a series of complexjudgments about future events and can rely heavily on estimates andassumptions. Our evaluations are based on estimates and assumptions that havebeen deemed reasonable by management. However, if our estimates are notrepresentative of actual outcomes, our results could be materially impacted.

Item 1A.  Risk Factors.

There have been no material changesfrom the risk factors disclosed in Part 1, Item 1A, of our 2007 Form 10-K.

Item 2.  Unregistered Salesof Equity Securities and Use of Proceeds. 

This table provides certaininformation with respect to our purchases of shares of Pfizer's common stockduring the fiscal first quarter of 2008:

| 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) |
| January 1, 2008, through  January 31, 2008   | 33,025     | $22.90     | --   | $5,533,679,153   |
| February 1, 2008, through  February 29, 2008 | 8,038     | $22.88     | --   | $5,533,679,153   |
| March 1, 2008, through  March 30, 2008       | 1,346,279     | $22.48     | --   | $5,533,679,153   |
| Total                                             | 1,387,342     | $22.50     | --   |  |

  

| (a)    | On June 23, 2005, Pfizer announced  that the Board of Directors authorized a $5 billion share-purchase plan  (the "2005 Stock Purchase Plan"). On June 26, 2006, Pfizer  announced that the Board of Directors increased the authorized amount of  shares to be purchased under the 2005 Stock Purchase Plan from $5 billion  to $18 billion. On January 23, 2008, Pfizer announced that the Board of  Directors had authorized a new $5 billion share-purchase plan to be utilized  from time to time.                                                                                                                                                                                                                                                                                   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (b)    | These columns reflect the following  transactions during the fiscal first quarter of 2008: (i) the deemed  surrender to Pfizer of 1,436 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 92,633 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 1,293,273 shares of common  stock to satisfy tax withholding obligations in connection with the vesting  of restricted stock and restricted stock units issued to employees. |

   

Item 3.  Defaults UponSenior Securities.

None   

Item 4.  Submission ofMatters to a Vote of Security Holders

The shareholders of the Company votedon four items at the Annual Meeting of Shareholders held on April 24, 2008:

| 1. | the election of fourteen directors  to terms ending in 2009                                                  |
|----|--------------------------------------------------------------------------------------------------------------|
| 2. | a proposal to ratify the  appointment of KPMG LLP as independent registered public accounting firm for  2008 |
| 3. | a shareholder proposal regarding  stock options                                                              |
| 4. | a shareholder proposal requesting separation  of Chairman and CEO roles                                      |

   

The nominees for director wereelected based upon the following votes:

| **Nominee**            | **Votes  For** | **Votes  Against** | **Abstentions** |
|------------------------|----------------|--------------------|-----------------|
|              |                |                    |                 |
| Dennis A.  Ausiello    | 5,550,363,913  | 143,003,972        | 78,105,700      |
| Michael S. Brown       | 5,519,542,163  | 174,591,879        | 77,339,543      |
| M. Anthony Burns       | 5,509,488,590  | 181,599,850        | 80,385,145      |
| Robert N. Burt         | 5,539,222,272  | 154,348,790        | 77,902,523      |
| W. Don Cornwell        | 5,481,944,713  | 210,305,110        | 79,223,762      |
| William H. Gray III    | 5,502,869,418  | 189,835,649        | 78,768,518      |
| Constance J. Horner    | 5,514,862,075  | 179,228,778        | 77,382,732      |
| William R. Howell      | 5,523,479,938  | 170,228,545        | 77,765,102      |
| James M. Kilts         | 5,546,371,070  | 148,297,168        | 76,805,347      |
| Jeffrey B. Kindler     | 5,508,923,069  | 184,756,052        | 77,794,464      |
| George A. Lorch        | 5,535,422,975  | 157,950,540        | 78,100,070      |
| Dana G. Mead           | 5,536,435,651  | 158,178,302        | 76,859,632      |
| Suzanne Nora Johnson   | 5,546,228,000  | 148,991,732        | 76,253,853      |
| William C. Steere, Jr. | 5,453,971,085  | 241,798,001        | 75,704,499      |

   

The proposal to ratify theappointment of KPMG LLP as independent registered public accounting firm for2008 received the following votes:

| **•** | 5,567,645,171                                  |  Votes for approval |
|------------|------------------------------------------------|--------------------------|
| **•** | 131,597,904                                    |  Votes against      |
| **•** | 72,230,510                                     |  Abstentions        |
| •     | There were no broker non-votes for  this item. |

   

The shareholder proposal regardingstock options received the following votes:

| **•** | 308,772,122   |  Votes for approval |
|------------|---------------|--------------------------|
| **•** | 4,268,882,176 |  Votes against      |
| **•** | 90,690,125    |  Abstentions        |
| **•** | 1,103,129,162 |  Broker non-votes   |

   

The shareholder proposal requesting separationof Chairman and CEO roles received the following votes:

| **•** | 1,961,674,533 |  Votes for approval |
|------------|---------------|--------------------------|
| **•** | 2,626,670,168 |  Votes against      |
| **•** | 79,999,722    |  Abstentions        |
| **•** | 1,103,129,162 |  Broker non-votes   |

   

Item 5.  Other Information.

None

   

| Item 6. | Exhibits.                  |
|---------|----------------------------|
|         |                  |  |  |
|         | 1)  Exhibit 10   | - | Amendment dated as of March 19,  2008, to Change-in-Control Severance Agreement with Martin Mackay |
|         |             |  |  |
|         | 2)  Exhibit 12   | - | Computation of Ratio of Earnings to  Fixed Charges |
|         |                  |  |  |
|         | 3)  Exhibit 15   | - | Accountants' Acknowledgment |
|         |                  |  |  |
|         | 4)  Exhibit 31.1 | - | Certification by the Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 |
|         |                  |  |  |
|         | 5)  Exhibit 31.2 | - | Certification by the Chief  Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 |
|         |                  |  |  |
|         | 6)  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 |
|         |                  |  |  |
|         | 7)  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 |

   

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:  May 2, 2008 |              | /s/ Loretta  V. Cangialosi                                                                                    |
|                                    |              |                                                                                                          |
|                                    |              | Loretta  V. Cangialosi, Vice President and Controller  (Principal Accounting Officer and  Duly Authorized Officer) |

Exhibit 10

**AMENDMENT TO CHANGE IN CONTROLSEVERANCE AGREEMENT**

AMENDMENT dated as of March 19, 2008 to Change in Control Severance Agreement(the "Severance Agreement") dated October 4, 2007 between Pfizer Inc.(the "Company") and Martin Mackay (the "Executive").

WHEREAS, the Company and the Executive entered into the Severance Agreement;and 

WHEREAS, the Company and the Executive wish to amend the provisions of theSeverance Agreement relating to the severance payment and toPerformance-Contingent Share Awards; 

NOW, THEREFORE, it is hereby agreed as follows: 

1.   The first paragraph ofSection 4(iv)(B) of the Severance Agreement is amended in its entirety to readas follows: "The Company shall pay you, on a date that is no later thanthe fifth day following the Date of Termination, as severance pay to you aseverance payment equal to 2.99 times the sum of (i) your full base salary and(ii) annual incentive payment, in each case in effect at the time the Notice ofTermination is given. In addition, the Company shall pay or otherwise transferto you, on a date no later than the fifth day following the Date ofTermination, amounts and property that you are eligible to receive in respectof awards made to you prior to the Date of Termination pursuant to the Company'sPerformance - Contingent Share Awards (or any successor long-term compensationplan or award in effect as of the Date of Termination) that remain outstandingas of the Date of Termination, such amounts and property to be calculated usingthe target number of shares, payments or other benefits that you could havereceived pursuant to all such outstanding awards."

2.   The second paragraph ofSection 4(iv)(B) of the Severance Agreement is deleted in its entirety.

3.   The Severance Agreement, asamended in Sections 1 and 2 hereof, shall remain in full force and effect inaccordance with its terms. 

IN WITNESS WHEREOF, the Company and the Executive have voluntarily causedthis Amendment to be signed as of the day and year first above written. 

PFIZER INC.

By /s/ Margaret M. ForanMargaret M. Foran, Senior Vice President-Corporate Governance, Associate General Counsel and Corporate Secretary 

EXECUTIVE/s/ Martin MackayMartin Mackay

Exhibit 12

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

|                                                                                                                                                         |   | Three Months  Ended  Mar. 30, |              |   | Year  Ended December 31, |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|---|------------------------------------|--------------|---|-------------------------------|
| (in millions, except ratios)                                                                                                                       |   | 2008                               |    |   | 2007                          |  | 2006 |  | 2005 |  | 2004 |  | 2003 |
|                                                                                                                                               |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Determination  of earnings:                                                                                                                             |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Income from  continuing operations before provision for taxes on income, minority  interests and cumulative effect of a change in accounting principles | $ | 3,557                              |              | $ | 9,278                         | $ | 13,028 | $ | 10,800 | $ | 13,403 | $ | 2,781 |
| Less:                                                                                                                                                   |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Minority  interests                                                                                                                                     |   | 6                                  |              |   | 42                            |  | 12 |  | 12 |  | 7 |  | 1 |
| Income adjusted  for minority interests                                                                                                                 |   | 3,551                              |              |   | 9,236                         |  | 13,016 |  | 10,788 |  | 13,396 |  | 2,780 |
| Add:                                                                                                                                                    |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Fixed charges                                                                                                                                           |   | 177                                |              |   | 541                           |  | 642 |  | 622 |  | 505 |  | 438 |
| Total earnings  as defined                                                                                                                              | $ | 3,728                              |              | $ | 9,777                         | $ | 13,658 | $ | 11,410 | $ | 13,901 | $ | 3,218 |
|                                                                                                                                               |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Fixed charges:                                                                                                                                          |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Interest  expense (a)                                                                                                                                   | $ | 142                                |              | $ | 397                           | $ | 488 | $ | 471 | $ | 347 | $ | 270 |
| Preferred stock  dividends (b)                                                                                                                          |   | 2                                  |              |   | 11                            |  | 14 |  | 14 |  | 12 |  | 10 |
| Rents	(c)                                                                                                                                               |   | 33                                 |              |   | 133                           |  | 140 |  | 137 |  | 146 |  | 158 |
| Fixed charges                                                                                                                                           |   | 177                                |              |   | 541                           |  | 642 |  | 622 |  | 505 |  | 438 |
|                                                                                                                                               |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Capitalized  interest                                                                                                                                   |   | 11                                 |              |   | 43                            |  | 29 |  | 17 |  | 12 |  | 20 |
|                                                                                                                                               |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Total fixed  charges                                                                                                                                    | $ | 188                                |              | $ | 584                           | $ | 671 | $ | 639 | $ | 517 | $ | 458 |
|                                                                                                                                               |   |                                    |              |   |                               |  |  |  |  |  |  |  |  |
| Ratio of  earnings to fixed charges                                                                                                                     |   | 19.8                               |              |   | 16.7                          |  | 20.4 |  | 17.9 |  | 26.9 |  | 7.0 |

   

All financial information reflectsthe following as discontinued operations for 2006, 2005, 2004 and 2003: theConsumer Healthcare business; certain European generics businesses; and for2004 and 2003: our in-vitro allergy and autoimmune diagnostics testing, andsurgical ophthalmics.

All financial information reflectsthe following as discontinued operations for 2003: our confectionery, shavingand fish-care products businesses, as well as the Estrostep, Loestrin andfemhrt women's health product lines for all the years presented.

| (a) | Interest expense includes  amortization of debt premium, discount and expenses. Interest expense does  not include interest related to uncertain tax positions of $83 million for  the first quarter of 2008; $331 million for 2007; $200 million for 2006; $203  million for 2005; $201 million for 2004; and $180 million for 2003. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                             |
| (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.                                                                                                                                               |

  

Exhibit15

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 May 2, 2008, included within the QuarterlyReport on Form 10-Q of Pfizer Inc. for the quarter ended March 30, 2008,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-8 dated April 27, 2001 (FileNo. 333-59660), 

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

- 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),

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

- Form S-8 dated March 1, 2007 (FileNo. 333-140987), 

- Form S-3 dated March 1, 2007 (FileNo. 333-140989), and

- Form S-3 dated March 30, 2007 (FileNo. 333-141729).

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 YorkMay 2, 2008

**Exhibit 31.1**

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

I, Jeffrey B. Kindler, 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:  May 2, 2008

  

| /s/ Jeffrey B. Kindler                                                |
|-----------------------------------------------------------------------|
| Jeffrey B. Kindler  Chairman of the Board and Chief Executive Officer |

**Exhibit 31.2**

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

I, Frank A. D'Amelio, 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:  May 2, 2008

  

| /s/ Frank A. D'Amelio                                                |
|----------------------------------------------------------------------|
| Frank A. D'Amelio  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, Jeffrey B. Kindler,hereby certify that, to the best of my knowledge, the Quarterly Report on Form10-Q of Pfizer Inc. for the quarter ended March 30, 2008 (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/ Jeffrey B. Kindler                                            Jeffrey B. KindlerChairman of the Board and Chief Executive OfficerMay 2, 2008

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, Frank A. D'Amelio,hereby certify that, to the best of my knowledge, the Quarterly Report on Form10-Q of Pfizer Inc. for the quarter ended March 30, 2008 (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/ Frank A. D'Amelio            Frank A. D'AmelioSenior Vice President and Chief Financial OfficerMay 2, 2008

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.