Few big-selling medicines have emerged from the labs at Pfizer since Viagra, the anti-impotence pill was introduced in 1998, despite the company's unmatched research budget.

But Dolsten said people should not look through "eyes of the past," but instead focus on the pipeline of experimental drugs now making their way through clinical trials at Pfizer. They include compounds to treat arthritis and Alzheimer's disease, and to prevent strokes linked to irregular heartbeats.

Morgan Stanley Global Healthcare would have preferred more new drugs to have come out of its laboratories in recent years

"Pfizer are building a coherent organization, allowing a diversity of approaches for success", he said, including an increasing focus on biotechnology medicines that target proteins linked to specific diseases.

Dolsten, former head of research for Wyeth, became co-head of research at Pfizer when the larger company acquired Wyeth for $67 billion last October sharing responsibility with Pfizer veteranMartin Mackay.

But McKay left Pfize just seven months later to head research at rival AstraZeneca Plc (AZN.L), leaving Dolsten in command of research for the world's largest drugmaker.

McKay's unexpected departure from Pfizer underscored the often-told difficulties of consolidating research efforts from mega-mergers of drugmakers with different product lines and cultures.

Dolsten noted that Pfize and other big pharmaceutical companies traditionally have earmarked 15 to 20 percent of annual company revenue to research and development.

Pfizer spent $2.19 billion on research and development in the second quarter, amounting to about 13 percent of its $17.3 billion in quarterly revenue.

Dolsten said Pfize needs to be more flexible about its level of R&D spending, and that the traditional industry research spending formula should not be carved into stone.

By relying more on external research partnerships, such as with biotechs and universities, Dolsten said Pfizer, could amplify its research and development output.

The depressed share price of Pfizer however, reflects investor doubts whether Pfizer can indeed finally revive its research labs, which faltered badly after its earlier mega-mergers over the past decade with U.S. rivals Warner-Lambert and Pharmacia.

In the meantime, Pfizer is counting on cost savings from its latest mega-deal and Wyeth's vaccines and biotech drugs to keep its earnings fairly intact. When Pfizer's $11 billion-a-year Lipitor cholesterol fighter begins facing U.S. generic competition late next year.

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