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

The following commentary should be read in conjunction with the consolidated condensed financial statements and notes to consolidated condensed financial statements on pages 7 to 21 of this report. When reviewing the commentary below, you should keep in mind the substantial risks and uncertainties that characterize our business. In particular, we encourage you to review the risks and uncertainties described in "Item 1A. RISK FACTORS" in our 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2008. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business; we encourage you to review the examples of our forward-looking statements under the heading "Cautionary Note Regarding Forward-Looking Statements" on pages 46 to 47 of this report. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments.

Overview

Our Business

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

We have three principal operating segments: Wyeth Pharmaceuticals (Pharmaceuticals), Wyeth Consumer Healthcare (Consumer Healthcare) and Fort Dodge Animal Health (Animal Health), which we manage separately because they develop, manufacture, distribute and sell distinct products and provide services that require differing technologies and marketing strategies. These segments reflect how senior management reviews the business, makes investing and resource allocation decisions, and assesses operating performance. The percentage of worldwide net revenue and revenue generated outside the United States by operating segment for the 2008 first nine months was as follows:

                                                                   Consumer
                                         Pharmaceuticals          Healthcare          Animal Health
% of 2008 first nine months
worldwide net revenue                          84%                   11%                   5%
% of 2008 first nine months
segment net revenue generated
outside the United States                      54%                   52%                   64%

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

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

We also strive to innovate commercially and change the way we approach our business in response to the challenging global health care environment. In 2008, we initiated Project Impact, a company-wide program designed to initially address short-term fiscal challenges, particularly the significant loss of sales and profits resulting from the launch of generic versions of PROTONIX. Longer-term, Project Impact will include strategic actions designed to fundamentally change how we conduct business as we adapt to the continuously changing business climate.

In the 2008 first nine months, we received regulatory approvals for three new products. In February, the U.S. Food and Drug Administration (FDA) approved XYNTHA (Antihemophilic Factor [Recombinant], Plasma/Albumin-Free), a recombinant factor VIII product for patients with hemophilia A for both the control and prevention of bleeding episodes and surgical prophylaxis. Also, in February, the FDA approved PRISTIQ (desvenlafaxine), a structurally novel, once-daily serotonin-norepinephrine reuptake inhibitor, to treat adult patients with major depressive disorder. In April, we and our collaboration partner, Progenics Pharmaceuticals, Inc. (Progenics), received FDA approval for RELISTOR (methylnaltrexone bromide) for subcutaneous injection for the treatment of opioid-induced constipation in advanced-illness patients who are receiving palliative care. We and Progenics also have received approval from the European Commission and Health Canada for RELISTOR subcutaneous injection for the same indication.

2008 First Nine Months Financial Highlights

• Worldwide net revenue increased 5% over the 2007 first nine months to $17,485.6 million;

• Worldwide Pharmaceuticals net revenue increased 5% over the 2007 first nine months due primarily to higher sales of ENBREL, PREVNAR and Nutritional products and the favorable impact of foreign exchange. Net revenue for EFFEXOR and ZOSYN also increased for the 2008 first nine months. Also contributing to net revenue growth were new products such as TYGACIL, TORISELand PRISTIQ. The increases were partially offset by lower sales of the PROTONIX family;

• Consumer Healthcare net revenue increased 4% over the 2007 first nine months resulting from higher sales of CENTRUM and CALTRATE and the favorable impact of foreign exchange, which were partially offset by lower sales of ROBITUSSIN; and

• Animal Health net revenue increased 8% over the 2007 first nine months due to higher sales of livestock, poultry and companion animal products and the favorable impact of foreign exchange, which were offset, in part, by lower sales of equine products.

Our Principal Products

Set forth below is a summary of worldwide net revenue performance of our
principal products for the 2008 first nine months:



                                                               % Increase
                                              2008 First     (Decrease) over
                                              Nine Months    2007 First Nine
        (Dollars in millions)                 Net Revenue        Months
        EFFEXOR                              $     3,026.3             7%
        PREVNAR                                    2,113.4            12%
        ENBREL
        Outside U.S. and Canada                    1,995.1            35%
        Alliance revenue - U.S. and Canada           903.6            23%
        Nutritionals                               1,248.7            19%
        ZOSYN/TAZOCIN                                965.9            14%
        PREMARIN family                              808.6             2%
        PROTONIX family                              620.7          (57)%

• EFFEXOR (EFFEXOR and EFFEXOR XR) is our novel antidepressant for treating adult patients with major depressive disorder, generalized anxiety disorder, social anxiety disorder and panic disorder. EFFEXOR remains our largest franchise and the number one selling antidepressant globally. In the United States, demand for EFFEXOR XR prescriptions declined slightly in the first nine months of 2008 as we shifted promotional support to the launch of PRISTIQ, our new product for the treatment of adult patients with major depressive disorder.

• PREVNAR is our vaccine for preventing invasive pneumococcal disease in infants and children. PREVNAR is one of the world's best selling vaccines and now is available in 92 countries worldwide and is included in 28 national immunization programs (NIPs), with several additional countries announcing their intention to initiate NIPs.

• ENBREL is our treatment for rheumatoid arthritis, psoriasis and other conditions. We have exclusive rights to ENBREL outside the United States and Canada. We co-promote ENBREL with Amgen Inc. (Amgen) in the United States and Canada. ENBREL continues as the leading biotechnology brand in the world and ranks fifth in worldwide sales among the top pharmaceutical products.

• Nutritionals includes our infant formula and toddler products PROGRESS, PROMIL and S-26. We continue to expand into new markets, grow our business in the countries where we compete, particularly in key emerging markets such as China. We continue to focus our business on the premium sector of the market.

• ZOSYN (TAZOCIN internationally), our broad-spectrum I.V. antibiotic, continues to be the number one selling injectable antibiotic worldwide. Our new advanced formulation of ZOSYN now is available worldwide.

• Our PREMARIN family of products remains the leading therapy to help women address moderate to severe menopausal symptoms.

• Sales of PROTONIX (pantoprazole sodium), our branded proton pump inhibitor indicated for gastroesophageal reflux disease, have been adversely affected during 2008 by the "at risk" launch of generic pantoprazole tablets in the United States by Teva Pharmaceuticals USA, Inc. (Teva) and Sun Pharmaceutical Industries Ltd. (Sun). We launched our own generic version of PROTONIX tablets in the 2008 first quarter. While our own generic has had some success in the marketplace, the sales of our own generic have not, and cannot, offset the substantial harm caused by the launch of infringing generics. We will continue to vigorously pursue our litigation against Teva, Sun and other infringing generics.

See "Our Challenging Business Environment" beginning on page 30 for a discussion of certain competitive and other factors that may impact our principal products.

For more detail regarding our principal products, the preceding summary should be read in conjunction with our principal product summary in the overview section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2007 Financial Report as incorporated in our 2007 Annual Report on Form 10-K (2007 Financial Report) and in our Quarterly Reports on Form 10-Q for the 2008 first and second quarters.

Our Product Pipeline

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

With respect to TYGACIL (tigecycline), our innovative broad-spectrum I.V. antibiotic for serious, hospital-based infections, in May 2008, we received an approvable letter from the FDA with respect to our supplemental New Drug Application (NDA) supporting TYGACIL as a treatment for community-acquired pneumonia and as a treatment for additional resistant pathogens in the approved complicated skin and skin structure infection and complicated intra-abdominal infection indications. In its letter, the FDA requested that, before the application could be approved, we provide additional analyses to support the safety and efficacy of TYGACIL for the treatment of patients with community-acquired pneumonia with illness severe enough to require hospitalization, including those who are at higher risk of mortality, together with information regarding the risk/benefit of TYGACIL relative to any potential liver toxicity. In September 2008, we submitted our complete response to the approvable letter, resulting in a new FDA action date in the 2009 first quarter. In April 2008, we withdrew our regulatory filing in the European Union (EU) for TYGACIL for the treatment of community-acquired pneumonia based on the opinion of the Committee for Medicinal Products for Human Use (CHMP) that our clinical data were not sufficient to allow the CHMP to conclude a positive risk/benefit balance in community-acquired pneumonia at this time. We are commencing a new Phase 2 clinical trial of TYGACIL for the treatment of hospital-acquired pneumonia in the fourth quarter of 2008.

Our NDA filing for PRISTIQ, a structurally novel, once-daily serotonin-norepinephrine reuptake inhibitor for the treatment of adult patients with major depressive disorder (MDD), was approved by the FDA in February 2008. FDA approval was subject to several post-marketing commitments. We began shipping PRISTIQ in April 2008 and conducted our full U.S. launch of the product in May 2008. In October 2008, as part of our global regulatory strategy and in consultation with the CHMP, we withdrew our central European Marketing Authorization Application (MAA) for desvenlafaxine for the treatment of MDD in adults and have chosen not to pursue it at this time. This decision was based on preliminary feedback from representatives of the CHMP that additional efficacy data for desvenlafaxine would be required for CHMP to recommend a positive opinion. We have received approval for PRISTIQ for the treatment of MDD in adults in Australia and Brazil, and applications currently are pending in 22 additional markets.

With respect to our NDA filing with the FDA for PRISTIQ as a non-hormonal treatment for vasomotor symptoms associated with menopause, we received an approvable letter from the FDA on July 23, 2007. In its letter, the FDA indicated that before the application could be approved, among other things, it would be necessary for us to provide additional data regarding the potential for serious adverse cardiovascular and hepatic effects associated with the use of PRISTIQ in this indication. The FDA requested that these data come from a randomized, placebo-controlled clinical trial of a duration of one year or more conducted in postmenopausal women. The requested clinical trial currently is under way and will take at least 18 months to complete. With respect to regulatory review of desvenlafaxine for the treatment of vasomotor symptoms in the EU, we believe additional data will be necessary to address questions raised by the CHMP regarding the risk/benefit profile of desvenlafaxine in this indication, which could include data from the new study requested by the FDA. As a result, in March 2008, we withdrew our MAA in the EU for this indication.

In September 2008, we terminated further development of PRISTIQ for diabetic peripheral neuropathy.

We and our collaboration partner, Progenics, received approval for RELISTOR subcutaneous injection for the treatment of opioid-induced constipation (OIC) in advanced-illness patients who are receiving palliative care, when response to laxative therapy has not been sufficient, from the FDA in April 2008 and from the European Commission in July 2008. We began shipping subcutaneous RELISTOR in the United States in June 2008 and conducted our full U.S. launch of the product in August 2008, and we have been launching subcutaneous RELISTOR in Europe on a country-by-country basis over the past several months. We and Progenics are working to develop subcutaneous and/or oral formulations of RELISTOR for the treatment of OIC in other settings, such as chronic pain. In addition, we and Progenics are studying the results of our Phase 3 studies of intravenous RELISTOR in the management of post-operative ileus to determine whether and how to continue development of the intravenous formulation for this indication.

Our NDA for XYNTHA was approved by the FDA in February 2008, and we began shipping the product in the United States in September 2008. XYNTHA is a recombinant factor VIII product for patients with hemophilia A for both the control and prevention of bleeding episodes and surgical prophylaxis. XYNTHA is manufactured and formulated

using an albumin-free process and state-of-the-art nanofiltration technology. It also is the only recombinant factor VIII product to utilize an entirely non-human and non-animal based purification process. Our EU regulatory filing for REFACTO AF, the trade name for XYNTHA in the EU, remains under regulatory review.

With respect to VIVIANT (bazedoxifene), our selective estrogen receptor modulator for postmenopausal osteoporosis, the FDA has advised us that it expects to convene an advisory committee to review our pending NDAs for both the treatment and prevention indications. We have received approvable letters with respect to each of these NDAs, in which, among other things, the FDA requested further analyses and discussion concerning the incidence of stroke and venous thrombotic events, identified certain issues concerning data collection and reporting and requested additional source documents. We expect that the FDA-requested advisory committee meeting will be scheduled following submission of our complete response to the approvable letters with respect to the prevention and treatment indications, which we plan to file in the first half of 2009. In September 2007, we submitted our MAA in Europe for VIVIANT for the treatment and prevention of osteoporosis. During the ongoing review, the assessors have raised concerns similar to the FDA, as well as questions regarding non-clinical safety data. We are submitting responses during the second half of 2008 and now anticipate a CHMP opinion in the 2009 first quarter.

With respect to APRELA(bazedoxifene/conjugated estrogens), our tissue selective estrogen complex under development for menopausal symptoms and osteoporosis, we met with the FDA in early 2008 to review the results from our Phase 3 clinical trials and discuss our planned NDA filing. While our discussions with the FDA are not yet complete, our plans currently contemplate an initial NDA filing for only the lower of the two principal doses studied in those trials. We must successfully complete additional work before filing an NDA, including finalizing our proposed commercial formulation and linking it to the formulations used in the clinical trials, and we now expect to file an initial NDA no earlier than the second half of 2009. Depending on the outcome of this work and future interactions with the FDA, it is possible that additional clinical data may be necessary to support approval.

In September 2008, we withdrew our EU regulatory filing for ANYA, the proposed trade name in the EU for LYBREL (levonorgestrel/ethinyl estradiol), a new low-dose, non-cyclic continuous combination oral contraceptive that was approved by the FDA in May 2007, following a determination by an external scientific advisory group to the CHMP, to which the application was referred, that there was not enough EU data to support the efficacy of the product and that an additional study would be required.

Our Phase 3 clinical program for our new 13-valent pneumococcal conjugate vaccine remains ongoing, with the FDA granting fast track designation to the vaccine for use in infants and toddlers in May 2008. We are submitting our biologics license application for the vaccine to the FDA on a rolling basis as sections of the application are completed in order to facilitate the FDA's review. Assuming positive results in our Phase 3 program, we expect to complete our U.S. filing for pediatric use of the vaccine in the first quarter of 2009, with other pediatric filings outside the United States expected at the same time or possibly earlier. Our candidate 13-valent pneumococcal conjugate vaccine also is being studied in Phase 3 global clinical trials in adults, with regulatory filings expected in 2010.

In December 2007, we and our collaboration partner, Elan Corporation, plc (Elan), initiated a Phase 3 clinical program for our immunotherapeutic product candidate, bapineuzumab (AAB-001), for the treatment of patients with mild to moderate Alzheimer's disease. Elan is conducting the Phase 3 clinical program in North America while we are conducting the program in other countries worldwide. Based on an interim analysis of data from the principal Phase 2 trial, in early 2008, we initiated the submission of clinical trial applications to support initiating the Phase 3 program outside North America prior to the availability of the final Phase 2 data. In some countries, regulatory authorities have asked to review the full Phase 2 data, the Phase 3 protocols and amendments, and/or the Phase 3 safety experience to date before approving the clinical trial applications or permitting continued enrollment and dosing. These actions have resulted in slower enrollment than originally planned, and discussions with regulatory authorities are continuing.

We also have two Phase 3 clinical programs in oncology under way: inotuzumab ozogamicin (CMC-544), a targeted calicheamicin conjugate under development for the treatment of follicular lymphoma, and bosutinib (SKI-606), a targeted kinase inhibitor under development for the treatment of chronic myelogenous leukemia.

We continue to actively pursue in-licensing opportunities and strategic collaborations to supplement our internal research and development efforts. We face heavy competition from our peers in securing these relationships but believe that the excellence of our research and development and commercial organizations and the breadth of our expertise across traditional pharmaceuticals, biotechnology and vaccines position us well.

Certain Product Liability Litigation

Diet Drug Litigation

Our diet drug litigation is described in greater detail in Note 14 to our consolidated financial statements, "Contingencies and Commitments," contained in our 2007 Financial Report and in Note 8 to our consolidated condensed financial statements, "Contingencies and Commitments," contained in this Quarterly Report on Form 10-Q and our Quarterly Reports on Form 10-Q for the 2008 first and second quarters. The $1,359.0 million reserve balance at September 30, 2008 represents our best estimate, within a range of outcomes, of the aggregate amount required to cover diet drug litigation costs, including payments in connection with the nationwide settlement, claims asserted by opt outs from the nationwide settlement and primary pulmonary hypertension (PPH) claims, and including our legal fees related to the diet drug litigation. It is possible that additional reserves may be required in the future, although we do not believe that the amount of any such additional reserves is likely to be material.

On October 10, 2008, a jury in the Philadelphia Court of Common Pleas hearing the case of Crowder, et al. v. Wyeth, et al., No. 06-00972, returned a verdict in our favor at the close of the first phase of a reverse-bifurcated trial; the trial therefore did not continue to the second, liability, phase. The jury found that plaintiffs had not proved that the use of PONDIMIN by the plaintiffs' decedent had caused the PPH that led to her death. On October 22, 2008, a jury in New Jersey Superior Court, Bergen County, hearing the case of Stribling v. Wyeth Inc., et al., No. BER-L-2352-07 MT, in which plaintiff alleged that her use of PONDIMIN had caused PPH, returned a verdict in favor of the plaintiff and assessed total compensatory damages of $3.0 million against us. We are reviewing our post-trial options. Prior to the start of both of these trials, the respective courts had ruled that plaintiffs could not pursue claims for punitive damages in the cases. There are no trials of additional diet drug cases scheduled for the remainder of 2008; additional trials are scheduled for 2009. Individual trial results depend on a variety of factors, including many that are unique to the particular case, and our trial results to date, therefore, may not be predictive of future trial results.

Hormone Therapy Litigation

During 2006, we began the first of a number of trials in our hormone therapy litigation, which is described in greater detail in Note 14 to our consolidated financial statements, "Contingencies and Commitments," contained in our 2007 Financial Report and in Note 8 to our consolidated condensed financial statements, "Contingencies and Commitments," contained in this Quarterly Report on Form 10-Q and our Quarterly Reports on Form 10-Q for the 2008 first and second quarters. As of October 29, 2008, we were defending approximately 8,700 actions brought on behalf of approximately 11,000 women in various federal and state courts throughout the United States for personal injuries, including primarily claims for breast cancer, as well as claims for, among other conditions, stroke, ovarian cancer and heart disease, allegedly resulting from their use of PREMARIN or PREMPRO. We also face putative class action lawsuits from users of PREMARIN or PREMPRO seeking medical monitoring and purchase price refunds, as well as other damages. Most of these putative class actions have been dismissed or withdrawn, although a hearing for class certification in a West Virginia statewide refund class action is set for later this year.

Of the 30 hormone therapy cases alleging breast cancer that have been resolved after being set for trial, 24 now have been resolved in our favor (by voluntary dismissal by the plaintiffs (14), summary judgment (6), defense verdict (3) or judgment for us notwithstanding the verdict (1)), several of which are being appealed by the plaintiffs. Of the remaining six cases, three such cases have been settled, one resulted in a plaintiffs' verdict that was vacated by the . . .