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DELAWARE
(State of Incorporation)
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13-5315170
(I.R.S. Employer Identification No.)
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| Large Accelerated filer X | Accelerated filer | Non-accelerated filer |
Smaller reporting company
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Page
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3
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4
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5
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7
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40
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41
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75
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75
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76
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76
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77
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77
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77
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77
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77
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78
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Three Months Ended
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||||||||
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(millions, except per common share data)
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April 1,
2012
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April 3,
2011
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||||||
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Revenues
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$ | 15,405 | $ | 16,502 | ||||
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Costs and expenses:
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||||||||
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Cost of sales(a)
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2,974 | 3,693 | ||||||
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Selling, informational and administrative expenses(a)
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4,133 | 4,503 | ||||||
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Research and development expenses(a)
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2,072 | 2,091 | ||||||
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Amortization of intangible assets
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1,420 | 1,376 | ||||||
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Restructuring charges and certain acquisition-related costs
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596 | 894 | ||||||
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Other deductions––net
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1,657 | 827 | ||||||
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Income from continuing operations before provision for taxes on income
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2,553 | 3,118 | ||||||
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Provision for taxes on income
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750 | 894 | ||||||
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Income from continuing operations
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1,803 | 2,224 | ||||||
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Discontinued operations––net of tax
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–– | 10 | ||||||
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Net income before allocation to noncontrolling interests
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1,803 | 2,234 | ||||||
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Less: Net income attributable to noncontrolling interests
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9 | 12 | ||||||
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Net income attributable to Pfizer Inc.
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$ | 1,794 | $ | 2,222 | ||||
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Earnings per common share––basic:
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||||||||
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Income from continuing operations attributable to Pfizer Inc. common shareholders
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$ | 0.24 | $ | 0.28 | ||||
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Discontinued operations––net of tax
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–– | –– | ||||||
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Net income attributable to Pfizer Inc. common shareholders
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$ | 0.24 | $ | 0.28 | ||||
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Earnings per common share––diluted:
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||||||||
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Income from continuing operations attributable to Pfizer Inc. common shareholders
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$ | 0.24 | $ | 0.28 | ||||
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Discontinued operations––net of tax
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–– | –– | ||||||
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Net income attributable to Pfizer Inc. common shareholders
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$ | 0.24 | $ | 0.28 | ||||
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Weighted-average shares––Basic
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7,537 | 7,982 | ||||||
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Weighted-average shares––Diluted
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7,598 | 8,035 | ||||||
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Cash dividends paid per common share
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$ | 0.22 | $ | 0.20 | ||||
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(a)
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Exclusive of amortization of intangible assets, except as disclosed in Note 9B. Goodwill and Other Intangible Assets: Other Intangible Assets.
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Three Months Ended
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||||||||
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(millions of dollars)
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April 1,
2012
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April 3,
2011
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||||||
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Net income before allocation to noncontrolling interests
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$ | 1,803 | $ | 2,234 | ||||
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Other Comprehensive Income
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||||||||
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Foreign currency translation adjustments
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$ | 263 | $ | 1,589 | ||||
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Reclassification adjustments(a)
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–– | (7 | ) | |||||
| 263 | 1,582 | |||||||
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Unrealized holding gains/(losses) on derivative financial instruments
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427 | 307 | ||||||
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Reclassification adjustments for realized gains(a)
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(300 | ) | (510 | ) | ||||
| 127 | (203 | ) | ||||||
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Unrealized holding gains/(losses) on available-for-sale securities
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80 | (36 | ) | |||||
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Reclassification adjustments for realized losses(a)
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17 | 10 | ||||||
| 97 | (26 | ) | ||||||
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Benefit plans: Actuarial gains/(losses)
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1 | –– | ||||||
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Reclassification adjustments related to amortization(b)
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117 | 70 | ||||||
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Reclassification adjustments related to curtailments and settlements, net(b)
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120 | 51 | ||||||
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Other
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15 | (87 | ) | |||||
| 253 | 34 | |||||||
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Benefit plans: Prior service (costs)/credits and other
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–– | 1 | ||||||
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Reclassification adjustments related to amortization(b)
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(19 | ) | (18 | ) | ||||
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Reclassification adjustments related to curtailments and settlements, net(b)
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(9 | ) | (11 | ) | ||||
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Other
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(2 | ) | (3 | ) | ||||
| (30 | ) | (31 | ) | |||||
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Other comprehensive income, before tax
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710 | 1,356 | ||||||
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Tax expense/(benefit) on other comprehensive income(c)
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204 | (28 | ) | |||||
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Other comprehensive income before allocation to noncontrolling interests
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$ | 506 | $ | 1,384 | ||||
| Comprehensive Income | ||||||||
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Comprehensive income before allocation to noncontrolling interests
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$ | 2,309 | $ | 3,618 | ||||
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Less: Comprehensive income attributable to noncontrolling interests
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8 | 16 | ||||||
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Comprehensive income attributable to Pfizer Inc.
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$ | 2,301 | $ | 3,602 | ||||
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(a)
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Reclassified into Other deductions—net in the Condensed Consolidated Statements of Income.
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(b)
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Generally reclassified into Cost of sales, Selling, informational and administrative expenses, and Research and development expenses in the Condensed Consolidated Statements of Income.
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(c)
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See Note 5B. Tax Matters: Taxes on Items of Other Comprehensive Income.
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(millions of dollars)
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April 1,
2012
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Dec. 31,
2011
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||||||
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(Unaudited)
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|||||||
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Assets
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||||||||
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Cash and cash equivalents
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$ | 2,934 | $ | 3,182 | ||||
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Short-term investments
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21,038 | 23,270 | ||||||
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Accounts receivable, less allowance for doubtful accounts
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14,182 | 13,608 | ||||||
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Inventories
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7,189 | 6,969 | ||||||
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Taxes and other current assets
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9,361 | 9,441 | ||||||
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Assets of discontinued operations and other assets held for sale
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159 | 101 | ||||||
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Total current assets
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54,863 | 56,571 | ||||||
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Long-term investments
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10,632 | 9,814 | ||||||
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Property, plant and equipment, less accumulated depreciation
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16,192 | 16,938 | ||||||
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Goodwill
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45,252 | 45,067 | ||||||
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Identifiable intangible assets, less accumulated amortization
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52,801 | 53,833 | ||||||
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Taxes and other noncurrent assets
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5,943 | 5,779 | ||||||
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Total assets
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$ | 185,683 | $ | 188,002 | ||||
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Liabilities and Shareholders’ Equity
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||||||||
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Short-term borrowings, including current portion of long-term debt
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$ | 5,526 | $ | 4,018 | ||||
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Accounts payable
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3,091 | 3,836 | ||||||
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Dividends payable
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1 | 1,796 | ||||||
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Income taxes payable
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1,930 | 1,013 | ||||||
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Accrued compensation and related items
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1,752 | 2,169 | ||||||
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Other current liabilities
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14,794 | 15,237 | ||||||
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Total current liabilities
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27,094 | 28,069 | ||||||
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Long-term debt
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33,543 | 34,931 | ||||||
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Pension benefit obligations
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6,181 | 6,355 | ||||||
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Postretirement benefit obligations
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3,346 | 3,344 | ||||||
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Noncurrent deferred tax liabilities
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19,739 | 19,597 | ||||||
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Other taxes payable
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6,984 | 6,886 | ||||||
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Other noncurrent liabilities
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5,119 | 6,199 | ||||||
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Total liabilities
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102,006 | 105,381 | ||||||
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Commitments and Contingencies
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||||||||
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Preferred stock
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43 | 45 | ||||||
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Common stock
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446 | 445 | ||||||
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Additional paid-in capital
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71,786 | 71,423 | ||||||
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Employee benefit trusts
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(2 | ) | (3 | ) | ||||
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Treasury stock
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(33,519 | ) | (31,801 | ) | ||||
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Retained earnings
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48,124 | 46,210 | ||||||
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Accumulated other comprehensive loss
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(3,622 | ) | (4,129 | ) | ||||
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Total Pfizer Inc. shareholders’ equity
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83,256 | 82,190 | ||||||
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Equity attributable to noncontrolling interests
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421 | 431 | ||||||
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Total shareholders’ equity
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83,677 | 82,621 | ||||||
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Total liabilities and shareholders’ equity
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$ | 185,683 | $ | 188,002 | ||||
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Three Months Ended
|
||||||||
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(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
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Operating Activities:
|
||||||||
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Net income before allocation to noncontrolling interests
|
$ | 1,803 | $ | 2,234 | ||||
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Adjustments to reconcile net income before allocation to noncontrolling interests to net
cash provided by operating activities:
|
||||||||
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Depreciation and amortization
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2,252 | 2,104 | ||||||
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Share-based compensation expense
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130 | 122 | ||||||
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Asset write-offs and impairment charges
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650 | 182 | ||||||
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Deferred taxes from continuing operations
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(404 | ) | (120 | ) | ||||
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Benefit plan contributions in excess of expense
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(71 | ) | (383 | ) | ||||
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Other non-cash adjustments, net
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(28 | ) | (19 | ) | ||||
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Other changes in assets and liabilities, net of acquisitions and divestitures
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(1,558 | ) | 522 | |||||
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Net cash provided by operating activities
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2,774 | 4,642 | ||||||
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Investing Activities:
|
||||||||
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Purchases of property, plant and equipment
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(254 | ) | (250 | ) | ||||
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Purchases of short-term investments
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(6,344 | ) | (3,352 | ) | ||||
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Proceeds from redemptions and sales of short-term investments
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8,119 | 2,553 | ||||||
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Net proceeds from redemptions and sales of short-term investments with original
maturities of 90 days or less
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623 | 5,983 | ||||||
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Purchases of long-term investments
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(1,184 | ) | (1,932 | ) | ||||
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Proceeds from redemptions and sales of long-term investments
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302 | 888 | ||||||
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Acquisitions, net of cash acquired
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(782 | ) | (3,169 | ) | ||||
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Other investing activities
|
(29 | ) | 4 | |||||
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Net cash provided by investing activities
|
451 | 725 | ||||||
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Financing Activities:
|
||||||||
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Proceeds from short-term borrowings
|
1,561 | 2,682 | ||||||
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Principal payments on short-term borrowings
|
–– | (1,636 | ) | |||||
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Net payments on short-term borrowings with original maturities of
90 days or less
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(1,791 | ) | (584 | ) | ||||
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Principal payments on long-term debt
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(3 | ) | (3,878 | ) | ||||
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Purchases of common stock
|
(1,659 | ) | (1,430 | ) | ||||
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Cash dividends paid
|
(1,650 | ) | (1,591 | ) | ||||
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Other financing activities
|
35 | 33 | ||||||
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Net cash used in financing activities
|
(3,507 | ) | (6,404 | ) | ||||
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Effect of exchange-rate changes on cash and cash equivalents
|
34 | 32 | ||||||
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Net decrease in cash and cash equivalents
|
(248 | ) | (1,005 | ) | ||||
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Cash and cash equivalents at beginning of period
|
3,182 | 1,735 | ||||||
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Cash and cash equivalents at end of period
|
$ | 2,934 | $ | 730 | ||||
| Supplemental Cash Flow Information: | ||||||||
|
Cash paid/(refunded) during the period for:
|
||||||||
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Income taxes
|
$ | 451 | $ | (134 | ) | |||
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Interest
|
508 | 687 | ||||||
|
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●
|
Presentation of comprehensive income in financial statements. As a result of adopting this new standard, we have presented a separate Condensed Consolidated Statement of Comprehensive Income.
|
|
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●
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An amendment to the guidelines on the measurement and disclosure of fair value that is consistent between U.S. GAAP and International Financial Reporting Standards. The adoption of this new standard did not have a significant impact on our financial statements.
|
|
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●
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Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).
|
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●
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Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable (Level 2 inputs).
|
|
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●
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Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).
|
|
Three Months Ended
|
||||
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(millions of dollars)
|
April 3,
2011
|
|||
|
Revenues
|
$ | 177 | ||
|
Pre-tax income from discontinued operations
|
$ | 28 | ||
|
Provision for taxes on income(a)
|
(18 | ) | ||
|
Income from discontinued operations––net of tax
|
$ | 10 | ||
|
Discontinued operations––net of tax
|
$ | 10 | ||
|
(a)
|
Deferred tax amounts are not significant.
|
|
|
●
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for our cost-reduction and productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems; and
|
|
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●
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for our acquisition activity, we typically incur costs that can include transaction costs, integration costs (such as expenditures for consulting and the integration of systems and processes) and restructuring charges, related to employees, assets and activities that will not continue in the combined company.
|
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Three Months Ended
|
||||||||
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(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Transaction costs(a)
|
$ | –– | $ | 10 | ||||
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Integration costs(b)
|
100 | 179 | ||||||
|
Restructuring charges(c):
|
||||||||
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Employee termination costs
|
267 | 667 | ||||||
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Asset impairments
|
218 | 25 | ||||||
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Other
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11 | 13 | ||||||
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Restructuring charges and certain acquisition-related costs
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596 | 894 | ||||||
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Additional depreciation––asset restructuring, recorded in our condensed consolidated statements of income as follows(d):
|
||||||||
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Cost of sales
|
79 | 172 | ||||||
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Selling, informational and administrative expenses
|
2 | 7 | ||||||
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Research and development expenses
|
259 | 64 | ||||||
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Total additional depreciation––asset restructuring
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340 | 243 | ||||||
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Implementation costs, recorded in our condensed consolidated statements of income as follows(e):
|
||||||||
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Selling, informational and administrative expenses
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15 | –– | ||||||
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Research and development expenses
|
48 | 10 | ||||||
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Total implementation costs
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63 | 10 | ||||||
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Total costs associated with cost-reduction initiatives and acquisition activity
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$ | 999 | $ | 1,147 | ||||
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(a)
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Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services.
|
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(b)
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Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes.
|
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(c)
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From the beginning of our cost-reduction and transformation initiatives in 2005 through April 1, 2012, Employee termination costs represent the expected reduction of the workforce by approximately 59,400 employees, mainly in manufacturing and sales and research, of which approximately 46,300 employees have been terminated as of April 1, 2012. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination. Asset impairments primarily include charges to write down property, plant and equipment to fair value. Other primarily includes costs to exit certain assets and activities.
|
|
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The restructuring charges for the three months ended April 1, 2012 are associated with the following:
|
|
|
●
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Primary Care operating segment ($3 million), Specialty Care and Oncology operating segment ($3 million), Established Products and Emerging Markets operating segment ($3 million), Animal Health and Consumer Healthcare operating segment ($5 million), research and development operations ($12 million), manufacturing operations ($152 million) and Corporate ($318 million).
|
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The restructuring charges for the three months ended April 3, 2011 are associated with the following:
|
|
|
●
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Primary Care operating segment ($46 million), Specialty Care and Oncology operating segment ($35 million), Established Products and Emerging Markets operating segment ($4 million), Animal Health and Consumer Healthcare operating segment ($10 million), Nutrition operating segment ($2 million), research and development operations ($422 million), manufacturing operations ($75 million) and Corporate ($111 million).
|
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(d)
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Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
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(e)
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Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productivity initiatives.
|
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Fair Value(a)
|
||||||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
Level 1
|
Level 2
|
Level 3
|
Impairment
|
|||||||||||
|
Long-lived assets held-for-sale (b)
|
$ | 112 | $ | — | $ | 112 | $ | — | $ | 218 | ||||||
|
(a)
|
See Note 1C. Basis of Presentation and Significant Accounting Policies: Fair Value.
|
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(b)
|
Reflects property, plant and equipment and other long-lived assets written down to their fair value of $112 million, less costs to sell of $2 million (a net of $110 million), in the first quarter of 2012. The impairment charges of $218 million are included in Restructuring charges and certain acquisition-related costs. Fair value is determined primarily using a market approach, with various inputs, such as recent sales transactions.
|
|
Costs Incurred
|
Activity
|
Accrual
|
||||||||||
|
(millions of dollars)
|
2005-2012 |
Through
April 1,
2012(a)
|
As of
April 1,
2012(b)
|
|||||||||
|
Employee termination costs
|
$ | 10,869 | $ | 8,638 | $ | 2,231 | ||||||
|
Asset impairments
|
2,782 | 2,782 | –– | |||||||||
|
Other
|
1,033 | 949 | 84 | |||||||||
|
Total restructuring charges
|
$ | 14,684 | $ | 12,369 | $ | 2,315 | ||||||
|
(a)
|
Includes adjustments for foreign currency translation.
|
|
(b)
|
Included in Other current liabilities ($1.4 billion) and Other noncurrent liabilities ($891 million).
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Interest income(a)
|
$ | (81 | ) | $ | (105 | ) | ||
|
Interest expense(a)
|
390 | 458 | ||||||
|
Net interest expense
|
309 | 353 | ||||||
|
Royalty-related income
|
(97 | ) | (171 | ) | ||||
|
Net gains on asset disposals
|
(7 | ) | (12 | ) | ||||
|
Certain legal matters, net(b)
|
814 | 501 | ||||||
|
Certain asset impairment charges(c)
|
432 | 157 | ||||||
|
Other, net
|
206 | (1 | ) | |||||
|
Other deductions––net
|
$ | 1,657 | $ | 827 | ||||
|
(a)
|
Interest income decreased in 2012 due to lower interest rates earned on investments. Interest expense decreased in 2012 due to lower long- and short-term debt balances and the effective conversion of some fixed-rate liabilities to floating-rate liabilities by using interest rate swaps.
|
|
(b)
|
In 2012, primarily relates to a $450 million charge in connection with an agreement-in-principle to settle a lawsuit by Brigham Young University related to Celebrex and charges for hormone-replacement therapy litigation. In 2011, primarily relates to charges for hormone-replacement therapy litigation (see Note 12. Commitments and Contingencies).
|
|
(c)
|
In 2012, primarily includes intangible asset impairments of approximately $395 million reflecting (i) $297 million of in-process research and development (IPR&D) that targeted autoimmune and inflammatory diseases, (ii) $45 million related to our Consumer Healthcare indefinite-lived brand, Robitussin, and (iii) $53 million of developed technology rights comprising the impairments of two assets. See also the table below. In 2011, relates to IPR&D for the treatment of a certain autoimmune and inflammatory disease. The impairment charges reflect, among other things, the impact of new scientific findings for IPR&D, and an increased competitive environment for Robitussin.
|
|
Fair Value(a)
|
||||||||||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
Level 1
|
Level 2
|
Level 3
|
Impairment
|
|||||||||||||||
|
Intangible assets – IPR&D
|
$ | –– | $ | –– | $ | –– | $ | –– | $ | 297 | ||||||||||
|
Intangible assets – Other
|
516 | –– | –– | 516 | 98 | |||||||||||||||
|
Total(b)(c)
|
$ | 516 | $ | –– | $ | –– | $ | 516 | $ | 395 | ||||||||||
|
(a)
|
See Note 1C. Basis of Presentation and Significant Accounting Policies: Fair Value.
|
|
(b)
|
Reflects intangible assets written down to their fair value of $516 million in the first quarter of 2012. The impairment charges of $395 million are included in Other deductions––net. When we are required to determine the fair value of intangible assets other than goodwill, we use an income approach, specifically the multi-period excess earnings method, also known as the discounted cash flow method. We start with a forecast of all the expected net cash flows associated with the asset, which includes the application of a terminal value for indefinite-lived assets, and then we apply an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of competitive, legal and/or regulatory forces on the projections and the impact of technological risk associated with in-process research and development assets, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.
|
|
(c)
|
Included in Identifiable intangible assets, less accumulated amortization.
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Taxes on Other Comprehensive Income
|
||||||||
|
Foreign currency translation adjustments(a)
|
$ | 67 | $ | 40 | ||||
|
Unrealized holding gains/(losses) on derivative financial instruments
|
159 | 126 | ||||||
|
Reclassification adjustments for realized gains
|
(115 | ) | (194 | ) | ||||
| 44 | (68 | ) | ||||||
|
Unrealized gains/(losses) on available-for-sale securities
|
14 | (3 | ) | |||||
|
Reclassification adjustments for realized losses
|
7 | 1 | ||||||
| 21 | (2 | ) | ||||||
|
Benefit plans: Actuarial gains/(losses)
|
–– | –– | ||||||
|
Reclassification adjustments related to amortization
|
44 | 25 | ||||||
|
Reclassification adjustments related to curtailments and settlements, net
|
43 | 19 | ||||||
|
Other
|
(1 | ) | (27 | ) | ||||
| 86 | 17 | |||||||
|
Benefit plan: Prior service (costs)/credits and other
|
–– | –– | ||||||
|
Reclassification adjustments related to amortization
|
(8 | ) | (7 | ) | ||||
|
Reclassification adjustments related to curtailments and settlements, net
|
(4 | ) | (4 | ) | ||||
|
Other
|
(2 | ) | (4 | ) | ||||
| (14 | ) | (15 | ) | |||||
|
Tax expense/(benefit) on other comprehensive income
|
$ | 204 | $ | (28 | ) | |||
|
(a)
|
Taxes are not provided for foreign currency translation relating to permanent investments in international subsidiaries.
|
|
|
●
|
With respect to Pfizer Inc., tax years 2006-2010 are currently under audit. Tax years 2011-2012 are not yet under audit. All other tax years are closed.
|
|
|
●
|
With respect to Wyeth, tax years 2006 through the Wyeth acquisition date (October 15, 2009) are currently under audit. All other tax years are closed.
|
|
|
●
|
With respect to King Pharmaceuticals, Inc. (King), tax year 2008 is currently under audit, and for Alpharma Inc. (a subsidiary of King) tax years 2005-2007 are currently under audit. Tax years 2009 through the date of acquisition (January 31, 2011) are open but not under audit. All other tax years are closed. The open tax years and audits for King and its subsidiaries are not considered material to Pfizer.
|
|
Net Unrealized Gain/(Losses)
|
Benefit Plans
|
|||||||||||||||||||||||
|
(millions of dollars)
|
Currency
Translation
Adjustment
And Other
|
Derivative
Financial
Instruments
|
Available
For-Sale
Securities
|
Actuarial
Gains/(Losses)
|
Prior Service (Costs)/
Credits And Other
|
Accumulated
Other
Comprehensive
Income/(Expense)
|
||||||||||||||||||
|
Balance, January 1, 2012
|
$ | 944 | $ | (361 | ) | $ | 46 | $ | (5,120 | ) | $ | 362 | $ | (4,129 | ) | |||||||||
|
Other comprehensive income/(expense)(a)
|
197 | 83 | 76 | 167 | (16 | ) | 507 | |||||||||||||||||
|
Balance, April 1, 2012
|
$ | 1,141 | $ | (278 | ) | $ | 122 | $ | (4,953 | ) | $ | 346 | $ | (3,622 | ) | |||||||||
|
(a)
|
Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests of $1 million loss for the first quarter of 2012.
|
|
(millions of dollars)
|
April 1,
2012
|
Dec. 31,
2011
|
||||||
|
Selected financial assets measured at fair value on a recurring basis(a) :
|
||||||||
|
Trading securities(b)
|
$ | 138 | $ | 154 | ||||
|
Available-for-sale debt securities(c)
|
27,855 | 29,179 | ||||||
|
Available-for-sale money market funds(d)
|
1,639 | 1,727 | ||||||
|
Available-for-sale equity securities, excluding money market funds(c)
|
371 | 317 | ||||||
|
Derivative financial instruments in receivable positions(e):
|
||||||||
|
Interest rate swaps
|
825 | 1,033 | ||||||
|
Foreign currency forward-exchange contracts
|
240 | 349 | ||||||
|
Foreign currency swaps
|
93 | 17 | ||||||
|
Total
|
31,161 | 32,776 | ||||||
|
Other selected financial assets(f):
|
||||||||
|
Held-to-maturity debt securities, carried at amortized cost(c)
|
1,591 | 1,587 | ||||||
|
Private equity securities, carried at equity method or at cost(g)
|
1,010 | 1,020 | ||||||
|
Total
|
2,601 | 2,607 | ||||||
|
Total selected financial assets
|
$ | 33,762 | $ | 35,383 | ||||
|
Financial liabilities measured at fair value on a recurring basis(a):
|
||||||||
|
Derivative financial instruments in a liability position(h):
|
||||||||
|
Foreign currency swaps
|
$ | 539 | $ | 1,396 | ||||
|
Foreign currency forward-exchange contracts
|
278 | 355 | ||||||
|
Interest rate swaps
|
26 | 14 | ||||||
|
Total
|
843 | 1,765 | ||||||
|
Other financial liabilities(i):
|
||||||||
|
Short-term borrowings, carried at historical proceeds, as adjusted(f)
|
5,526 | 4,018 | ||||||
|
Long-term debt, carried at historical proceeds, as adjusted(j), (k)
|
33,543 | 34,931 | ||||||
|
Total
|
39,069 | 38,949 | ||||||
|
Total selected financial liabilities
|
$ | 39,912 | $ | 40,714 | ||||
|
(a)
|
We use a market approach in valuing financial instruments on a recurring basis. See also Note 1C. Basis of Presentation and Significant Accounting Policies: Fair Value. All of our financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except that included in available-for-sale equity securities, excluding money market funds, are $131 million as of April 1, 2012 and $85 million as of December 31, 2011 of investments that use Level 1 inputs in the calculation of fair value, and $16 million as of April 1, 2012 and $25 million as of December 31, 2011 that use Level 3 inputs.
|
|
(b)
|
Trading securities are held in trust for legacy business acquisition severance benefits.
|
|
(c)
|
Gross unrealized gains and losses are not significant.
|
|
(d)
|
Includes approximately $625 million as of April 1, 2012 and December 31, 2011 of money market funds held in escrow to secure certain of Wyeth’s payment obligations under its 1999 Nationwide Class Action Settlement Agreement, which relates to litigation against Wyeth concerning its former weight-loss products, Redux and Pondimin. The amount also includes $372 million as of April 1, 2012 and $357 million as of December 31, 2011 of money market funds held in trust in connection with the asbestos litigation involving Quigley Company, Inc., a wholly owned subsidiary.
|
|
(e)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $123 million and foreign currency swaps with fair values of $16 million at April 1, 2012; and foreign currency forward-exchange contracts with fair values of $169 million and interest rate swaps with fair values of $8 million at December 31, 2011.
|
|
(f)
|
The differences between the estimated fair values and carrying values of these financial assets and liabilities not measured at fair value on a recurring basis were not significant as of April 1, 2012 or December 31, 2011. Held-to-maturity debt securities and our short-term and long-term debt fair value are based on Level 2 valuations using a market approach. Fair value measurements for private equity securities are based on Level 3 valuations using a market approach.
|
|
(g)
|
Our private equity securities represent investments in the life sciences sector.
|
|
(h)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $190 million and foreign currency swaps with fair values of $99 million at April 1, 2012; and foreign currency forward-exchange contracts with fair values of $141 million and foreign currency swaps with fair values of $123 million at December 31, 2011.
|
|
(i)
|
Some carrying amounts may include adjustments for discount or premium amortization or for the effect of interest rate swaps designated as hedges.
|
|
(j)
|
Includes foreign currency debt with fair values of $855 million at April 1, 2012 and $919 million at December 31, 2011, which are used as hedging instruments.
|
|
(k)
|
The fair value of our long-term debt is $38.6 billion at April 1, 2012 and $40.1 billion at December 31, 2011.
|
|
(millions of dollars)
|
April 1,
2012
|
Dec. 31,
2011
|
||||||
|
Assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 934 | $ | 900 | ||||
|
Short-term investments
|
21,038 | 23,270 | ||||||
|
Long-term investments
|
10,632 | 9,814 | ||||||
|
Taxes and other current assets(a)
|
294 | 357 | ||||||
|
Taxes and other noncurrent assets(b)
|
864 | 1,042 | ||||||
|
Total
|
$ | 33,762 | $ | 35,383 | ||||
|
Liabilities:
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 5,526 | $ | 4,018 | ||||
|
Other current liabilities(c)
|
283 | 459 | ||||||
|
Long-term debt
|
33,543 | 34,931 | ||||||
|
Other noncurrent liabilities(d)
|
560 | 1,306 | ||||||
|
Total
|
$ | 39,912 | $ | 40,714 | ||||
|
(a)
|
As of April 1, 2012, derivative instruments at fair value include foreign currency forward-exchange contracts ($240 million), foreign currency swaps ($33 million) and interest rate swaps ($21 million) and, at December 31, 2011, include foreign currency forward-exchange contracts ($349 million) and interest rate swaps ($8 million).
|
|
(b)
|
As of April 1, 2012, derivative instruments at fair value include interest rate swaps ($804 million) and foreign currency swaps ($60 million) and, at December 31, 2011, include interest rate swaps ($1.0 billion) and foreign currency swaps ($17 million).
|
|
(c)
|
At April 1, 2012, derivative instruments at fair value include foreign currency forward-exchange contracts ($278 million) and foreign currency swaps ($5 million) and, at December 31, 2011, include foreign currency forward-exchange contracts ($355 million) and foreign currency swaps ($104 million).
|
|
(d)
|
At April 1, 2012, derivative instruments at fair value include foreign currency swaps ($534 million) and interest rate swaps ($26 million) and, at December 31, 2011, include foreign currency swaps ($1.3 billion) and interest rate swaps ($14 million).
|
|
Years
|
||||||||||||||||
|
(millions of dollars)
|
Within 1
|
Over 1
to 5
|
Over 5
to 10
|
Total as of
April 1,
2012
|
||||||||||||
|
Available-for-sale debt securities:
|
||||||||||||||||
|
Western European, Scandinavian and other government debt
|
$ | 9,744 | $ | 1,567 | $ | –– | $ | 11,311 | ||||||||
|
Corporate debt(a)
|
2,606 | 2,546 | 382 | 5,534 | ||||||||||||
|
U.S. Government debt
|
4,395 | –– | 257 | 4,652 | ||||||||||||
|
Western European, Scandinavian and other government agency debt
|
2,195 | 305 | –– | 2,500 | ||||||||||||
|
Federal Home Loan Mortgage Corporation and Federal National
Mortgage Association asset-backed securities
|
–– | 2,270 | 1 | 2,271 | ||||||||||||
|
Supranational debt
|
1,149 | 438 | –– | 1,587 | ||||||||||||
|
Held-to-maturity debt securities:
|
||||||||||||||||
|
Certificates of deposit and other
|
1,202 | 381 | 8 | 1,591 | ||||||||||||
|
Total debt securities
|
$ | 21,291 | $ | 7,507 | $ | 648 | $ | 29,446 | ||||||||
|
(a)
|
Largely issued by above-investment-grade institutions in the financial services sector.
|
|
Amount of
Gains/(Losses)
Recognized in OID(a) (b) (c)
|
Amount of
Gains/(Losses)
Recognized in OCI
(Effective Portion)(a) (d)
|
Amount of
Gains/(Losses)
Reclassified from
OCI into OID
(Effective Portion)(a) (d)
|
||||||||||||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||||||
|
Derivative Financial Instruments in Cash
Flow Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | –– | $ | –– | $ | 428 | $ | 305 | $ | 300 | $ | 506 | ||||||||||||
|
Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
(1 | ) | 2 | 125 | 33 | –– | –– | |||||||||||||||||
|
Derivative Financial Instruments Not
Designated as Hedges
|
||||||||||||||||||||||||
|
Foreign currency forward-exchange contracts
|
(127 | ) | (197 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Foreign currency swaps
|
(23 | ) | 30 | –– | –– | –– | –– | |||||||||||||||||
|
Non-Derivative Financial Instruments in
Net Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency short-term borrowings
|
–– | –– | –– | 43 | –– | –– | ||||||||||||||||||
|
Foreign currency long-term debt
|
–– | –– | 50 | 28 | –– | –– | ||||||||||||||||||
|
All other net
|
(1 | ) | (1 | ) | 9 | 2 | –– | 4 | ||||||||||||||||
|
Total
|
$ | (152 | ) | $ | (166 | ) | $ | 612 | $ | 411 | $ | 300 | $ | 510 | ||||||||||
|
(a)
|
OID = Other (income)/deductions—net, included in the income statement account, Other deductions—net. OCI = Other comprehensive income/(loss), included in the balance sheet account Accumulated other comprehensive loss.
|
|
(b)
|
Also includes gains and losses attributable to the hedged risk in fair value hedge relationships.
|
|
(c)
|
There was no significant ineffectiveness in the first quarters of 2012 or 2011.
|
|
(d)
|
Amounts presented represent the effective portion of the gain or loss. For derivative financial instruments in cash flow hedge relationships, the effective portion is included in Other comprehensive income/(loss)–– unrealized holding gains/(losses) on derivative financial instruments. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in Other comprehensive income/(loss)––foreign currency translation adjustments.
|
|
(millions of dollars)
|
April 1,
2012
|
Dec. 31,
2011
|
||||||
|
Finished goods
|
$ | 2,939 | $ | 2,543 | ||||
|
Work-in-process
|
3,315 | 3,541 | ||||||
|
Raw materials and supplies
|
935 | 885 | ||||||
|
Total inventories
|
$ | 7,189 | $ | 6,969 | ||||
|
Noncurrent portion not included above(a)
|
$ | 755 | $ | 800 | ||||
|
(a)
|
Included in Taxes and other noncurrent assets. There are no recoverability issues associated with these amounts.
|
|
(millions of dollars)
|
Primary
Care
|
Specialty
Care and
Oncology
|
Established
Products and
Emerging
Markets
|
Animal
Health and
Consumer
Healthcare
|
Nutrition
|
Total
|
||||||||||||||||||
|
Balance, December 31, 2011
|
$ | 6,229 | $ | 17,097 | $ | 18,746 | $ | 2,497 | $ | 498 | $ | 45,067 | ||||||||||||
|
Additions(a)
|
— | — | — | 361 | — | 361 | ||||||||||||||||||
|
Other(b)
|
(24 | ) | (66 | ) | (73 | ) | (17 | ) | 4 | (176 | ) | |||||||||||||
|
Balance, April 1, 2012
|
$ | 6,205 | $ | 17,031 | $ | 18,673 | $ | 2,841 | $ | 502 | $ | 45,252 | ||||||||||||
|
(a)
|
Related to our acquisitions of Alacer and Ferrosan, see Note 2A. Acquisitions and Divestitures: Acquisitions.
|
|
(b)
|
Primarily reflects the impact of foreign exchange.
|
|
April 1, 2012
|
December 31, 2011
|
|||||||||||||||||||||||
|
(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
|
$ | 73,127 | $ | (33,447 | ) | $ | 39,680 | $ | 73,088 | $ | (32,013 | ) | $ | 41,075 | ||||||||||
|
Brands
|
1,938 | (709 | ) | 1,229 | 1,678 | (687 | ) | 991 | ||||||||||||||||
|
License agreements
|
440 | (246 | ) | 194 | 425 | (215 | ) | 210 | ||||||||||||||||
|
Other
|
651 | (398 | ) | 253 | 623 | (362 | ) | 261 | ||||||||||||||||
|
Total finite-lived intangible assets
|
76,156 | (34,800 | ) | 41,356 | 75,814 | (33,277 | ) | 42,537 | ||||||||||||||||
|
Indefinite-lived intangible assets:
|
||||||||||||||||||||||||
|
Brands
|
10,480 | — | 10,480 | 10,027 | — | 10,027 | ||||||||||||||||||
|
In-process research and development
|
892 | — | 892 | 1,197 | — | 1,197 | ||||||||||||||||||
|
Trademarks
|
73 | — | 73 | 72 | — | 72 | ||||||||||||||||||
|
Total indefinite-lived intangible assets
|
11,445 | — | 11,445 | 11,296 | — | 11,296 | ||||||||||||||||||
|
Total identifiable intangible assets(a)
|
$ | 87,601 | $ | (34,800 | ) | $ | 52,801 | $ | 87,110 | $ | (33,277 | ) | $ | 53,833 | ||||||||||
|
(a)
|
The decrease is primarily related to amortization, as well as impairment charges (see Note 4. Other Deductions—Net), partially offset by the assets acquired as part of the acquisitions of Ferrosan and Alacer (see Note 2A. Acquisitions and Divestitures: Acquisitions) and the impact of foreign exchange.
|
|
●
|
Developed Technology Rights: Specialty Care (65%); Established Products (17%); Primary Care (14%); Animal Health (2%); Oncology (1%); and Nutrition (1%)
|
|
●
|
Brands, finite-lived: Consumer Healthcare (66%); Established Products (23%); and Animal Health (11%)
|
|
●
|
Brands, indefinite-lived: Consumer Healthcare (53%); Established Products (25%); and Nutrition (22%)
|
|
●
|
IPR&D: Worldwide Research and Development (43%); Specialty Care (19%); Primary Care (19%); Established Products (10%); Oncology (7%); and Animal Health (2%)
|
|
Pension Plans
|
||||||||||||||||||||||||||||||||
|
U.S.
Qualified(a)
|
U.S.
Supplemental
(Non-Qualified)(b)
|
International(c)
|
Postretirement
Plans
|
|||||||||||||||||||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
||||||||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 96 | $ | 90 | $ | 10 | $ | 9 | $ | 55 | $ | 62 | $ | 18 | $ | 17 | ||||||||||||||||
|
Interest cost
|
183 | 185 | 17 | 19 | 103 | 111 | 46 | 49 | ||||||||||||||||||||||||
|
Expected return on plan assets
|
(245 | ) | (221 | ) | –– | –– | (108 | ) | (109 | ) | (9 | ) | (9 | ) | ||||||||||||||||||
|
Amortization of:
|
||||||||||||||||||||||||||||||||
|
Actuarial losses
|
80 | 35 | 11 | 9 | 18 | 21 | 8 | 4 | ||||||||||||||||||||||||
|
Prior service credits
|
(3 | ) | (2 | ) | (1 | ) | (1 | ) | (2 | ) | (1 | ) | (12 | ) | (14 | ) | ||||||||||||||||
|
Curtailments and settlements––net
|
44 | 17 | 13 | 12 | (10 | ) | (2 | ) | (11 | ) | (6 | ) | ||||||||||||||||||||
|
Special termination benefits
|
5 | 5 | 10 | 7 | 2 | 3 | 2 | –– | ||||||||||||||||||||||||
|
Net periodic benefit costs
|
$ | 160 | $ | 109 | $ | 60 | $ | 55 | $ | 58 | $ | 85 | $ | 42 | $ | 41 | ||||||||||||||||
|
(a)
|
The increase in net periodic benefit costs in the first three months of 2012, compared to the first three months of 2011, for our U.S. qualified plans was primarily driven by a decrease in the discount rate and lower than expected actual returns during 2011 and higher settlement charges associated with ongoing restructuring initiatives.
|
|
|
The increase in net periodic benefit costs in the first three months of 2012, compared to the first three months of 2011, for our U.S. supplemental (non-qualified) pension plans was primarily driven by higher special termination benefits.
|
|
(b)
|
The decrease in net periodic benefit costs in the first three months of 2012, compared to the first three months of 2011, for our international pension plans was primarily driven by changes in assumptions in our U.K. plans in 2011 and higher curtailment gains associated with ongoing restructuring initiatives.
|
|
Three Months Ended
|
||||||||
|
(millions)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
EPS Numerator––Basic:
|
||||||||
|
Income from continuing operations
|
$ | 1,803 | $ | 2,224 | ||||
|
Less: Net income attributable to noncontrolling interests
|
9 | 12 | ||||||
|
Income from continuing operations attributable to Pfizer Inc.
|
1,794 | 2,212 | ||||||
|
Less: Preferred stock dividends––net of tax
|
–– | –– | ||||||
|
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
1,794 | 2,212 | ||||||
|
Discontinued operations––net of tax
|
–– | 10 | ||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 1,794 | $ | 2,222 | ||||
|
EPS Numerator––Diluted:
|
||||||||
|
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions
|
$ | 1,794 | $ | 2,212 | ||||
|
Discontinued operations––net of tax
|
–– | 10 | ||||||
|
Net income attributable to Pfizer Inc. common shareholders and assumed conversions
|
$ | 1,794 | $ | 2,222 | ||||
|
EPS Denominator:
|
||||||||
|
Weighted-average number of common shares outstanding––Basic
|
7,537 | 7,982 | ||||||
|
Common-share equivalents: stock options, stock issuable under employee compensation plans andconvertible preferred stock
|
61 | 53 | ||||||
|
Weighted-average number of common shares outstanding––Diluted
|
7,598 | 8,035 | ||||||
|
Stock options that had exercise prices greater than the average market price of our commonstock issuable under employee compensation plans(a)
|
223 | 290 | ||||||
|
(a)
|
These common stock equivalents were outstanding during the first quarter of 2012 and 2011, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
|
|
|
●
|
Patent litigation, which typically involves challenges to the coverage and/or validity of our patents on various products or processes. We are the plaintiff in the vast majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in a loss of patent protection for the drug at issue, a significant loss of revenues from that drug and impairments of any associated assets.
|
|
|
●
|
Product liability and other product-related litigation, which can include personal injury, consumer, off-label promotion, securities-law, antitrust and breach of contract claims, among others, often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters.
|
|
|
●
|
Commercial and other litigation, which can include merger-related and product-pricing claims and environmental claims and proceedings, can involve complexities that will vary from matter to matter.
|
|
|
●
|
Government investigations, which often are related to the extensive regulation of pharmaceutical companies by national, state and local government agencies in the U.S. and in other countries.
|
|
●
|
Quigley
|
|
|
●
|
the payment to the Ad Hoc Committee, for the benefit of the Ad Hoc Committee claimants, of a first installment of $500 million upon receipt by Pfizer of releases of asbestos-related claims against Pfizer Inc. from Ad Hoc Committee claimants holding $500 million in the aggregate of claims (Pfizer began paying this first installment in June 2011);
|
|
|
●
|
the payment to the Ad Hoc Committee, for the benefit of the Ad Hoc Committee claimants, of a second installment of $300 million upon Pfizer’s receipt of releases of asbestos-related claims against Pfizer Inc. from Ad Hoc Committee claimants holding an additional $300 million in the aggregate of claims following the earlier of the effective date of a revised plan of reorganization and April 6, 2013;
|
|
|
●
|
the payment of the Ad Hoc Committee’s legal fees and expenses incurred in this matter up to a maximum of $19 million (Pfizer began paying these legal fees and expenses in May 2011); and
|
|
|
●
|
the procurement by Pfizer of insurance for the benefit of certain Ad Hoc Committee claimants to the extent such claimants with non-malignant diseases have a future disease progression to a malignant disease (Pfizer procured this insurance in August 2011).
|
|
●
|
Other Matters
|
|
●
|
Securities and ERISA Actions
|
|
●
|
Securities Action in New Jersey
|
|
●
|
Other
|
|
●
|
Securities Action
|
|
●
|
Actions by Health Care Service Corporation
|
|
●
|
Personal Injury and Economic Loss Actions
|
|
●
|
Government Inquiries; Action by the State of Nevada
|
|
●
|
Personal Injury Actions
|
|
●
|
Antitrust Actions
|
|
●
|
Off-Label Promotion Actions in the U.S.
|
|
●
|
Personal Injury Actions in the U.S. and Certain Other Countries
|
|
●
|
Antitrust Action in the U.S.
|
|
●
|
Whistleblower Action
|
|
●
|
Antitrust Actions
|
|
|
●
|
In February 2009, special masters of the U.S. Court of Federal Claims rejected the three cases brought on the theory that a combination of MMR and thimerosal-containing vaccines caused petitioners’ conditions. After these rulings were affirmed by the U.S. Court of Federal Claims, two of them were appealed by petitioners to the U.S. Court of Appeals for the Federal Circuit. In 2010, the Federal Circuit affirmed the decisions of the special masters in both of these cases.
|
|
|
●
|
In March 2010, special masters of the U.S. Court of Federal Claims rejected the three additional test cases brought on the theory that thimerosal-containing vaccines alone caused petitioners’ conditions. Petitioners did not seek review by the U.S. Court of Federal Claims of the decisions of the special masters in these latter three test cases, and judgments were entered dismissing the cases in April 2010.
|
|
|
●
|
Petitioners in each of the six test cases have filed an election to bring a civil action.
|
|
●
|
Primary Care operating segment––includes revenues and earnings, as defined by management, from human pharmaceutical products primarily prescribed by primary-care physicians, and may include products in the following therapeutic and disease areas: Alzheimer’s disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in this unit include Celebrex, Chantix/Champix, Lipitor (in certain European Union (EU) countries and in Australia and New Zealand), Lyrica, Premarin, Pristiq and Viagra. All revenues and earnings for such products are allocated to the Primary Care unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.
|
|
●
|
Specialty Care and Oncology operating segment––comprises the Specialty Care business unit and the Oncology business unit.
|
|
|
-
|
Specialty Care––includes revenues and earnings, as defined by management, from human pharmaceutical products primarily prescribed by physicians who are specialists, and may include products in the following therapeutic and disease areas: anti-infectives, endocrine disorders, hemophilia, inflammation, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. Examples of products in this unit include BeneFIX, Enbrel, Genotropin, Geodon, the Prevnar/Prevenar franchise, ReFacto AF, Revatio, Vfend (outside the U.S.), Xalatan (outside the U.S.), Xyntha and Zyvox. All revenues and earnings for such products are allocated to the Specialty Care unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.
|
|
|
-
|
Oncology–– includes revenues and earnings, as defined by management, from human prescription pharmaceutical products addressing oncology and oncology-related illnesses. The products in this unit include Sutent, Torisel, Xalkori and Inlyta. All revenues and earnings for such products are allocated to the Oncology unit, except those generated in Emerging Markets and those that are managed by the Established Products unit.
|
|
●
|
Established Products and Emerging Markets operating segment––comprises the Established Products business unit and the Emerging Markets business unit.
|
|
|
-
|
Established Products––generally includes revenues and earnings, as defined by management, from human prescription pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products are transferred to this unit in the beginning of the fiscal year following loss of patent protection or marketing exclusivity. In certain situations, products may be transferred to this unit at a different point than the beginning of the fiscal year following loss of patent protection or marketing exclusivity in order to maximize their value. This unit also excludes revenues and earnings generated in Emerging Markets. Examples of products in this unit include Arthrotec, Effexor, Lipitor (in the U.S. and Japan), Medrol, Norvasc, Protonix, Relpax, Xalatan (in the U.S., Canada and South Korea) and Zosyn/Tazocin.
|
|
|
-
|
Emerging Markets––includes revenues and earnings, as defined by management, from all human prescription pharmaceutical products sold in Emerging Markets, including Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.
|
|
●
|
Animal Health and Consumer Healthcare operating segment—comprises the Animal Health business unit and the Consumer Healthcare business unit.
|
|
|
-
|
Animal Health––includes worldwide revenues and earnings, as defined by management, from products and services to prevent and treat disease in livestock and companion animals, including vaccines, parasiticides and anti-infectives.
|
|
|
-
|
Consumer Healthcare––generally includes worldwide revenues and earnings, as defined by management, from non-prescription products in the following therapeutic categories: dietary supplements, pain management, respiratory and personal care. Products marketed by Consumer Healthcare include Advil, Caltrate, Centrum, ChapStick, Emergen-C, Preparation H and Robitussin.
|
|
●
|
Nutrition operating segment––generally includes revenues and earnings, as defined by management, from a full line of infant and toddler nutritional products sold outside of the U.S. and Canada. On April 23, 2012, we announced that we have entered into an agreement to sell our Nutrition operating segment to Nestlé. See Note 14. Subsequent Event for more information.
|
|
|
●
|
Worldwide Research and Development (WRD), which is generally responsible for human health research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. Worldwide Research and Development is also responsible for all human-health-related regulatory submissions and interactions with regulatory agencies, including all safety-event activities.
|
|
|
●
|
Pfizer Medical is responsible for external affairs relating to all therapeutic areas, providing Pfizer-related medical information to healthcare providers, patients and other parties, and quality assurance and regulatory compliance activities, which include conducting clinical trial audits and readiness reviews.
|
|
|
●
|
Corporate, which is responsible for platform functions such as finance, global real estate operations, human resources, legal, compliance, science and technology, worldwide procurement, worldwide public affairs and policy and worldwide technology. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.
|
|
|
●
|
Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) acquisition-related activities, where we incur costs for restructuring, integration, implementation and executing the transaction; and (iii) certain significant items, which include non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and sales of assets or businesses.
|
|
Revenues
|
R&D Expenses
|
Earnings(a)
|
||||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
April 1,
2012
|
April 3,
2011
|
||||||||||||||||||
|
Reportable Segments:
Primary Care
|
$ | 4,097 | $ | 5,441 | $ | 241 | $ | 323 | $ | 2,670 | $ | 3,551 | ||||||||||||
|
Specialty Care and Oncology
|
3,868 | 4,238 | 373 | 347 | 2,596 | 2,878 | ||||||||||||||||||
|
Established Products and Emerging Markets(b)
|
5,100 | 4,545 | 73 | 56 | 3,177 | 2,481 | ||||||||||||||||||
|
Animal Health and Consumer Healthcare
|
1,761 | 1,727 | 93 | 101 | 495 | 489 | ||||||||||||||||||
|
Total reportable segments
|
14,826 | 15,951 | 780 | 827 | 8,938 | 9,399 | ||||||||||||||||||
|
Nutrition and other business activities(c)
|
579 | 551 | 682 | 857 | (539 | ) | (722 | ) | ||||||||||||||||
|
Reconciling Items:
|
||||||||||||||||||||||||
|
Corporate(d)
|
–– | –– | 286 | 325 | (1,820 | ) | (1,844 | ) | ||||||||||||||||
|
Purchase accounting adjustments(e)
|
–– | –– | 10 | –– | (1,458 | ) | (1,785 | ) | ||||||||||||||||
|
Acquisition-related costs(f)
|
–– | –– | 5 | 4 | (182 | ) | (575 | ) | ||||||||||||||||
|
Certain significant items(g)
|
–– | –– | 302 | 70 | (2,069 | ) | (1,208 | ) | ||||||||||||||||
|
Other unallocated(h)
|
–– | –– | 7 | 8 | (317 | ) | (147 | ) | ||||||||||||||||
| $ | 15,405 | $ | 16,502 | $ | 2,072 | $ | 2,091 | $ | 2,553 | $ | 3,118 | |||||||||||||
|
(a)
|
Income from continuing operations before provision for taxes on income.
|
|
(b)
|
Revenues from the Established Products and Emerging Markets segment increased in the three months ended April 1, 2012 as compared to the three months ended April 3, 2011 due to additional products losing exclusivity and moving to the Established Products unit.
Earnings from the Established Products and Emerging Markets segment increased in the three months ended April 1, 2012 as compared to the three months ended April 3, 2011 primarily due to additional products losing exclusivity and moving to the Established Products unit, as well as change in the mix of products.
|
|
(c)
|
Other business activities includes the revenues and operating results of Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales operation, and the research and development costs managed by our Worldwide Research and Development organization and our Pfizer Medical organization.
|
|
(d)
|
Corporate for R&D expenses includes, among other things, administration expenses and compensation expenses associated with our research and development activities and for Earnings includes, among other things, administration expenses, interest income/(expense), certain compensation and other costs not charged to our operating segments.
|
|
(e)
|
Purchase accounting adjustments include certain charges related to the fair value adjustments to inventory, intangible assets and property, plant and equipment.
|
|
(f)
|
Acquisition-related costs can include costs associated with acquiring, integrating and restructuring newly acquired businesses, such as transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring (see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives for additional information).
|
|
(g)
|
Certain significant items are substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include restructuring charges and implementation costs associated with our cost-reduction and productivity initiatives that are not associated with an acquisition, the impact of certain tax and/or legal settlements and certain asset impairments.
|
|
|
For Earnings in the first quarter of 2012, certain significant items for earnings includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $817 million, (ii) charges for certain legal matters of $775 million, (iii) certain asset impairment charges of $412 million and (iv) other charges of $65 million (see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other Deductions––Net for additional information).
|
|
|
For Earnings in the first quarter of 2011, certain significant items for earnings includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $572 million, (ii) charges for certain legal matters of $472 million, (iii) certain asset impairment charges of $157 million and (iv) other charges of $7 million (see Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives and Note 4. Other Deductions––Net for additional information).
|
|
R&D Expenses
For the first quarter of 2012 and 2011, certain significant items for R&D primarily reflect additional depreciation.
|
|
(h)
|
Includes overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
|
|
Three Months Ended
|
||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
% Change
|
|||||||||
|
Revenues
|
||||||||||||
|
United States
|
$ | 5,954 | $ | 7,024 | (15 | ) | ||||||
|
Developed Europe(a)
|
3,592 | 3,884 | (8 | ) | ||||||||
|
Developed Rest of World(b)
|
2,635 | 2,546 | 3 | |||||||||
|
Emerging Markets(c)
|
3,224 | 3,048 | 6 | |||||||||
|
Total Revenues
|
$ | 15,405 | $ | 16,502 | (7 | ) | ||||||
|
(a)
|
Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries. Revenues denominated in euros were $2.6 billion in the first quarter of 2012 and $2.9 billion in the first quarter of 2011.
|
|
(b)
|
Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.
|
|
(c)
|
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Revenues from biopharmaceutical products:
|
||||||||
|
Lipitor(a)
|
$ | 1,395 | $ | 2,385 | ||||
|
Lyrica
|
955 | 826 | ||||||
|
Prevnar 13/Prevenar 13
|
941 | 996 | ||||||
|
Enbrel (Outside the U.S. and Canada)
|
899 | 870 | ||||||
|
Celebrex
|
634 | 591 | ||||||
|
Viagra
|
496 | 470 | ||||||
|
Norvasc
|
334 | 356 | ||||||
|
Zyvox
|
325 | 319 | ||||||
|
Sutent
|
300 | 276 | ||||||
|
Premarin family
|
261 | 235 | ||||||
|
Xalatan/Xalacom
|
227 | 392 | ||||||
|
Detrol/Detrol LA
|
195 | 225 | ||||||
|
Genotropin
|
195 | 209 | ||||||
|
BeneFIX
|
183 | 164 | ||||||
|
Geodon/Zeldox
|
181 | 232 | ||||||
|
Vfend
|
178 | 195 | ||||||
|
Chantix/Champix
|
178 | 199 | ||||||
|
Pristiq
|
151 | 129 | ||||||
|
Prevnar/Prevenar (7-valent)
|
138 | 153 | ||||||
|
Revatio
|
136 | 123 | ||||||
|
Medrol
|
134 | 121 | ||||||
|
ReFacto AF/Xyntha
|
132 | 117 | ||||||
|
Zoloft
|
130 | 135 | ||||||
|
Effexor
|
129 | 204 | ||||||
|
Zosyn/Tazocin
|
128 | 179 | ||||||
|
Zithromax/Zmax
|
123 | 128 | ||||||
|
Aricept(b)
|
94 | 106 | ||||||
|
Fragmin
|
91 | 91 | ||||||
|
Relpax
|
85 | 80 | ||||||
|
Cardura
|
84 | 96 | ||||||
|
Rapamune
|
82 | 89 | ||||||
|
Tygacil
|
81 | 73 | ||||||
|
Xanax XR
|
68 | 76 | ||||||
|
BMP2
|
67 | 93 | ||||||
|
Caduet
|
65 | 142 | ||||||
|
EpiPen(c)
|
58 | 35 | ||||||
|
Neurontin
|
58 | 71 | ||||||
|
Sulperazon
|
58 | 55 | ||||||
|
Diflucan
|
57 | 65 | ||||||
|
Aromasin
|
56 | 114 | ||||||
|
Arthrotec
|
56 | 59 | ||||||
|
Unasyn
|
54 | 53 | ||||||
|
Alliance revenues(d)
|
836 | 884 | ||||||
|
All other biopharmaceutical products
|
2,037 | 1,813 | ||||||
|
Total revenues from biopharmaceutical products
|
13,065 | 14,224 | ||||||
|
Revenues from other products:
|
||||||||
|
Animal Health
|
1,026 | 982 | ||||||
|
Consumer Healthcare
|
735 | 745 | ||||||
|
Nutrition
|
513 | 470 | ||||||
|
Other(e)
|
66 | 81 | ||||||
|
Total revenues
|
$ | 15,405 | $ | 16,502 | ||||
|
(a)
|
On November 30, 2011, Lipitor lost exclusivity in the U.S. This loss of exclusivity reduced revenues by $922 million in the first quarter of 2012, in comparison with the first quarter of 2011.
|
|
(b)
|
Represents direct sales under license agreement with Eisai Co., Ltd.
|
|
(c)
|
Acquired from King.
|
|
(d)
|
Includes Enbrel (in the U.S. and Canada), Aricept, Exforge, Rebif and Spiriva.
|
|
(e)
|
Includes revenues generated primarily from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization.
|
|
●
|
Overview of Our Performance, Operating Environment, Strategy and Outlook. This section, beginning on page 43, provides information about the following: our business; our performance during the first quarter of 2012; our operating environment; our strategy; our business development initiatives; and our financial guidance for 2012.
|
|
●
|
Analysis of the Condensed Consolidated Statements of Income. This section begins on page 50, and consists of the following sub-sections:
|
|
|
o
|
Revenues. This sub-section, beginning on page 50, provides an analysis of our products and revenues for the first quarter of 2012 and 2011, as well as an overview of research and development expenses and important biopharmaceutical product developments.
|
|
|
o
|
Costs and Expenses. This sub-section, beginning on page 60, provides a discussion about our costs and expenses.
|
|
|
o
|
Provision for Taxes on Income. This sub-section, on page 64, provides a discussion of items impacting our tax provisions.
|
|
|
o
|
Discontinued Operations. This sub-section, beginning on page 64, provides an analysis of the financial statement impact of our discontinued operations.
|
|
|
o
|
Adjusted Income. This sub-section, beginning on page 65, provides a discussion of an alternative view of performance used by management.
|
|
●
|
Analysis of the Condensed Consolidated Balance Sheets. This section, on page 69, provides a discussion of changes in certain balance sheet accounts.
|
|
●
|
Analysis of the Condensed Consolidated Statements of Cash Flows. This section, beginning on page 69, provides an analysis of our cash flows for the first quarter of 2012 and 2011.
|
|
●
|
Analysis of Financial Condition, Liquidity and Capital Resources. This section, beginning on page 70, provides an analysis of our financial assets and liabilities as of April 1, 2012 and December 31, 2011 and a discussion of our outstanding debt and commitments that existed as of April 1, 2012 and December 31, 2011. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future activities.
|
|
●
|
New Accounting Standards. This section, beginning on page 73, discusses recently adopted accounting standards.
|
|
●
|
Forward-Looking Information and Factors That May Affect Future Results. This section, beginning on page 73, 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 and operating performance, business plans and prospects, in-line products and product candidates, strategic review, capital allocation, and share-repurchase and dividend-rate plans. Such forward-looking statements are based on management’s current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances.
|
|
Three Months Ended
|
||||||||||||
|
(millions of dollars, except per common share data)
|
April 1,
2012
|
April 3,
2011
|
% Change
|
|||||||||
|
Revenues
|
$ | 15,405 | $ | 16,502 | (7 | ) | ||||||
|
Cost of sales
|
2,974 | 3,693 | (19 | ) | ||||||||
|
% of revenues
|
19.3 | % | 22.4 | % | ||||||||
|
Selling, informational and administrative expenses
|
4,133 | 4,503 | (8 | ) | ||||||||
|
% of revenues
|
26.8 | % | 27.3 | % | ||||||||
|
Research and development expenses
|
2,072 | 2,091 | (1 | ) | ||||||||
|
% of revenues
|
13.5 | % | 12.7 | % | ||||||||
|
Amortization of intangible assets
|
1,420 | 1,376 | 3 | |||||||||
|
% of revenues
|
9.2 | % | 8.3 | % | ||||||||
|
Restructuring charges and certain acquisition-related costs
|
596 | 894 | (33 | ) | ||||||||
|
% of revenues
|
3.9 | % | 5.4 | % | ||||||||
|
Other deductions––net
|
1,657 | 827 | 100 | |||||||||
|
Income from continuing operations before provision for taxes on income
|
2,553 | 3,118 | (18 | ) | ||||||||
|
% of revenues
|
16.6 | % | 18.9 | % | ||||||||
|
Provision for taxes on income
|
750 | 894 | (16 | ) | ||||||||
|
Effective tax rate
|
29.4 | % | 28.7 | % | ||||||||
|
Income from continuing operations
|
1,803 | 2,224 | (19 | ) | ||||||||
|
% of revenues
|
11.7 | % | 13.5 | % | ||||||||
|
Discontinued operations––net of tax
|
–– | 10 | (100 | ) | ||||||||
|
Net income before allocation to noncontrolling interests
|
1,803 | 2,234 | (19 | ) | ||||||||
|
% of revenues
|
11.7 | % | 13.5 | % | ||||||||
|
Less: Net income attributable to noncontrolling interests
|
9 | 12 | (25 | ) | ||||||||
|
Net income attributable to Pfizer Inc.
|
$ | 1,794 | $ | 2,222 | (19 | ) | ||||||
|
% of revenues
|
11.6 | % | 13.5 | % | ||||||||
|
Earnings per common share––basic:
|
||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
common shareholders
|
$ | 0.24 | $ | 0.28 | (14 | ) | ||||||
|
Discontinued operations––net of tax
|
–– | –– | –– | |||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.24 | $ | 0.28 | (14 | ) | ||||||
|
Earnings per common share––diluted:
|
||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
common shareholders
|
$ | 0.24 | $ | 0.28 | (14 | ) | ||||||
|
Discontinued operations––net of tax
|
–– | –– | –– | |||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.24 | $ | 0.28 | (14 | ) | ||||||
|
Cash dividends paid per common share
|
$ | 0.22 | $ | 0.20 | 10 | |||||||
|
Three Months Ended
|
||||||||||||||||
|
(millions of dollars)
|
April 1, 2012 vs.
April 3, 2011
Worldwide
Incr./(Decr.)
|
% Change
Worldwide
|
% Change
U.S.
|
% Change
International
|
||||||||||||
|
Lyrica
|
$ | 129 | 16 | 9 | 21 | |||||||||||
|
Celebrex
|
43 | 7 | 6 | 9 | ||||||||||||
|
Enbrel (outside the U.S. and Canada)
|
29 | 3 | –– | 3 | ||||||||||||
|
Viagra
|
26 | 6 | 13 | (2 | ) | |||||||||||
|
Premarin family
|
26 | 11 | 11 | 9 | ||||||||||||
|
Sutent
|
24 | 9 | 25 | 3 | ||||||||||||
|
EpiPen(a)
|
23 | 66 | 59 | 133 | ||||||||||||
|
Pristiq
|
22 | 17 | 12 | 43 | ||||||||||||
|
BeneFIX
|
19 | 12 | 20 | 5 | ||||||||||||
|
Prevnar/Prevenar (7-valent)
|
(15 | ) | (10 | ) | –– | (10 | ) | |||||||||
|
Vfend(b)
|
(17 | ) | (9 | ) | (46 | ) | 3 | |||||||||
|
Chantix/Champix
|
(21 | ) | (11 | ) | (2 | ) | (18 | ) | ||||||||
|
Norvasc
|
(22 | ) | (6 | ) | 56 | (8 | ) | |||||||||
|
BMP2
|
(26 | ) | (28 | ) | (24 | ) | * | |||||||||
|
Detrol/Detrol LA
|
(30 | ) | (13 | ) | (13 | ) | (14 | ) | ||||||||
|
Geodon/Zeldox(b)
|
(51 | ) | (22 | ) | (26 | ) | –– | |||||||||
|
Zosyn/Tazocin(b)
|
(51 | ) | (28 | ) | (40 | ) | (11 | ) | ||||||||
|
Prevnar 13/Prevenar 13
|
(55 | ) | (6 | ) | (15 | ) | 12 | |||||||||
|
Aromasin(b)
|
(58 | ) | (51 | ) | (89 | ) | (32 | ) | ||||||||
|
Effexor(b)
|
(75 | ) | (37 | ) | (59 | ) | (15 | ) | ||||||||
|
Caduet(b)
|
(77 | ) | (54 | ) | (89 | ) | (8 | ) | ||||||||
|
Xalatan/Xalacom(b)
|
(165 | ) | (42 | ) | (92 | ) | (16 | ) | ||||||||
|
Lipitor(b)
|
(990 | ) | (42 | ) | (71 | ) | (6 | ) | ||||||||
|
Alliance revenue(b)
|
(48 | ) | (5 | ) | 5 | (23 | ) | |||||||||
|
All other biopharmaceutical products(c)
|
224 | 12 | 27 | 4 | ||||||||||||
|
Animal Health products
|
44 | 4 | 10 | 1 | ||||||||||||
|
Nutrition products
|
43 | 9 | –– | 9 | ||||||||||||
|
Consumer Healthcare products
|
(10 | ) | (1 | ) | (10 | ) | 7 | |||||||||
|
Other(d)
|
(15 | ) | 19 | 17 | (28 | ) | ||||||||||
|
(a)
|
Legacy King product.
|
|
(b)
|
Lipitor lost exclusivity in the U.S. in November 2011, Japan in June 2011, Canada in May 2010, Spain in July 2010, Brazil in August 2010 and Mexico in December 2010. Xalatan lost exclusivity in the U.S. in March 2011 and in the majority of European markets in January 2012. Caduet lost exclusivity in the U.S. in November 2011. Effexor XR lost exclusivity in the U.S. in July 2010. Aromasin lost exclusivity in the U.S. in April 2011 and in the majority of European markets and Japan in July 2011. Vfend tablets lost exclusivity in the U.S. in February 2011. Zosyn lost exclusivity in the U.S. in September 2009. Geodon lost exclusivity in the U. S. in March 2012. We lost exclusivity for Aricept 5mg and 10mg tablets, which are included in Alliance revenues, in the U.S. in November 2010 and in many of the major European markets in February 2012.
|
|
(c)
|
Includes the “All other” category included in the Revenues—Major Biopharmaceutical Products table presented in this MD&A, which includes sales of generic atorvastatin.
|
|
(d)
|
Includes revenues generated primarily from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization.
|
| * Calculation not meaningful. | |
|
|
●
|
charges for certain legal matters that were approximately $313 million higher in the first quarter of 2012 than in the same period in 2011 (see further discussion in the “Costs and Expenses––Other (Income)/Deductions––Net” section of this MD&A and Notes to Condensed Consolidated Financial Statements—Note 4. Other Deductions––net);
|
|
|
●
|
asset impairment charges that were approximately $275 million higher in the first quarter of 2012 than in the same period in 2011 (see further discussion in the “Costs and Expenses––Other (Income)/Deductions––Net” section of this MD&A and Notes to Condensed Consolidated Financial Statements—Note 4. Other Deductions––net);
|
|
|
●
|
higher charges of $245 million in 2012 compared to 2011 related to our non-acquisition related cost-reduction and productivity initiatives; and
|
|
|
●
|
lower purchase accounting impacts of $326 million in 2012 compared to the same period in 2011; and
|
|
|
●
|
lower acquisition-related costs of $393 million in 2012 compared to the same period in 2011.
|
|
|
●
|
approximately $123.4 million and $166.2 million, respectively, recorded as a reduction to Revenues, related to the higher, extended and expanded rebate provisions and the Medicare “coverage gap” discount provision; and
|
|
|
●
|
approximately $103.4 million and $69.3 million, respectively, recorded in Selling, informational and administrative expenses, related to the annual fee payable to the federal government (which is payable annually through 2018 and is not deductible for U.S. income tax purposes) based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs.
|
|
|
●
|
Lipitor in the U.S.—Lipitor lost exclusivity in the U.S. in November 2011. Following the end of the 180-day generic exclusivity period in late May 2012, we expect the entry of multi-source generic competition in the U.S., with attendant increased competitive pressures. Beginning in 2012, sales of Lipitor in the U.S. are reported in our Established Products business unit.
|
|
|
●
|
Other recent loss of exclusivity impacts––In the U.S., we lost exclusivity for Vfend tablets in February 2011, for Xalatan in March 2011, for Caduet in November 2011 and for Geodon in March 2012. The basic U.S. patent (including the six-month pediatric exclusivity period) for Protonix expired in January 2011. The basic patent for Vfend tablets in Brazil expired in January 2011. We lost exclusivity for Aromasin in the U.S. in April 2011 and in the majority of European markets and Japan in July 2011. We lost exclusivity for Xalatan and Xalacom in the majority of European markets in January 2012. We lost exclusivity for Aricept in many of the major European markets in February 2012.
|
|
|
●
|
Revatio tablet in the U.S. in September 2012, which reflects the extension of the exclusivity period from March to September 2012 as the result of a pediatric extension; and
|
|
|
●
|
Detrol IR in the U.S. in September 2012.
|
|
|
●
|
Aricept––Our rights to Aricept in Japan will return to Eisai Co., Ltd. in December 2012.
|
|
|
●
|
Spiriva–– Our collaboration with Boehringer Ingelheim (BI) for Spiriva will expire on a country-by-country basis between 2012 and 2016, including the expiration in certain EU markets in 2012.
|
|
|
●
|
In early 2011, we announced that we were conducting a strategic review of all of our businesses and assets. On July 7, 2011, we announced our decisions to explore strategic alternatives for our Animal Health and Nutrition businesses and noted that they may include, among other things, a full or partial separation of each of these businesses through a spin-off, sale, or other transaction. We indicated that these potential actions may create greater shareholder value, enable us to become a more focused organization and optimize capital allocation. Given the separate and distinct nature of Animal Health and Nutrition, we stated we may pursue a different strategic alternative for each of these businesses.
|
|
|
●
|
On March 12, 2012, Biocon and Pfizer announced the conclusion of their alliance to commercialize Biocon’s biosimilar versions of insulin and insulin analog products. The companies agreed that due to the individual priorities for their respective biosimilars businesses, it is in their best interest to move forward independently.
|
|
|
●
|
On February 26, 2012, we completed our acquisition of Alacer Corp. (Alacer), a privately owned company that manufactures, markets and distributes Emergen-C, a line of effervescent, powdered drink mix vitamin supplements that is the largest-selling branded vitamin C line in the U.S. For additional information on our acquisition of Alacer, see Notes to Condensed Consolidated Financial Statements—Note 2A. Acquisitions and Divestitures: Acquisitions. The allocation of the consideration transferred has not been finalized.
|
|
|
●
|
On December 1, 2011, we completed our acquisition of the consumer healthcare business of Ferrosan Holding A/S (Ferrosan), a Danish company engaged in the sale of science-based consumer healthcare products, including dietary supplements and lifestyle products, primarily in the Nordic region and the emerging markets of Russia and Central and Eastern Europe. Due to the fact that financial information included in our fiscal year 2011 consolidated financial statements for our subsidiaries operating outside the U.S. is as of and for the year ended November 30, this acquisition is reflected in our condensed consolidated financials in the first fiscal quarter of 2012. Our acquisition of Ferrosan’s consumer healthcare business increases our presence in dietary supplements with a new set of brands and pipeline products. Also, we believe that the acquisition allows us to expand the marketing of Ferrosan’s brands through Pfizer’s global footprint and provide greater distribution and scale for certain Pfizer brands, such as Centrum and Caltrate, in Ferrosan’s key markets. For additional information on our acquisition of Ferrosan, see Notes to Condensed Consolidated Financial Statements—Note 2A. Acquisitions and Divestitures: Acquisitions. The allocation of the consideration transferred has not been finalized.
|
|
|
●
|
On August 1, 2011, we sold our Capsugel business for approximately $2.4 billion in cash. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 2B. Acquisitions and Divestitures: Divestitures.
|
|
Full-Year 2012 Guidance
|
||
|
(billions of dollars, except per share amounts)
|
Net Income(a)
|
Diluted EPS(a)
|
|
Adjusted income/diluted EPS(b) guidance
|
~$16.1 - $16.9
|
~$2.14 - $2.24
|
|
Purchase accounting impacts of transactions completed as of 4/1/12
|
(3.8)
|
(0.51)
|
|
Acquisition-related costs
|
(0.5 - 0.7)
|
(0.07 - 0.09)
|
|
Non-acquisition-related restructuring costs(c)
Other certain significant items incurred as of 4/1/12
|
(1.8 - 2.0)
(0.9)
|
(0.23 - 0.26)
(0.11)
|
|
Income from discontinued operations(d)
|
0.4
|
0.06
|
|
Reported net income attributable to Pfizer Inc./diluted EPS guidance
|
~$9.1 - $10.3
|
~$1.23 - $1.38
|
|
(a)
|
Includes revenues and expenses related to the Nutrition business as a discontinued operation, but does not include any gain on the pending sale of the Nutrition business. Does not assume the completion of any business-development transactions not completed as of April 1, 2012, including any one-time upfront payments associated with such transactions. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of April 30, 2012.
|
|
(b)
|
For an understanding of Adjusted income and Adjusted diluted EPS, see the “Adjusted Income” section of this MD&A.
|
|
(c)
|
Includes amounts related to our initiatives to reduce R&D spending, including our realigned R&D footprint, and amounts related to other cost-reduction and productivity initiatives. In the reconciliation between Net income attributable to Pfizer Inc., as reported under principles generally accepted in the United States of America (U.S. GAAP), and Adjusted income, and in the reconciliation between diluted EPS, as reported under U.S. GAAP, and Adjusted diluted EPS, these amounts are categorized as Certain Significant Items (see the “Adjusted Income––Reconciliation” section of this MD&A).
|
|
The changes in the amounts from the reconciliation relating to the 2012 financial guidance in the Company’s 2011 Annual Report on Form 10-K are primarily due to the reclassification of costs from Acquisition-Related Costs to Non-Acquisition Related Restructuring Costs.
|
|
|
(d)
|
Income attributable to Pfizer’s Nutrition business.
|
|
% Change in Revenues
|
||||||||||||||||||||||||||||||||||||
|
World-
|
Inter-
|
|||||||||||||||||||||||||||||||||||
|
Worldwide
|
U.S.
|
International
|
wide
|
U.S.
|
national
|
|||||||||||||||||||||||||||||||
|
April 1,
|
April 3,
|
April 1,
|
April 3,
|
April 1,
|
April 3,
|
|||||||||||||||||||||||||||||||
|
(millions of dollars)
|
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
12/11 | 12/11 | 12/11 | |||||||||||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||||||||||||||
|
Biopharmaceutical revenues:
|
||||||||||||||||||||||||||||||||||||
|
Primary Care Operating
Segment
|
$ | 4,097 | $ | 5,441 | $ | 2,001 | $ | 3,193 | $ | 2,096 | $ | 2,248 | (25 | ) | (37 | ) | (7 | ) | ||||||||||||||||||
|
Specialty Care
|
3,580 | 3,927 | 1,618 | 1,949 | 1,962 | 1,978 | (9 | ) | (17 | ) | (1 | ) | ||||||||||||||||||||||||
|
Oncology
|
288 | 311 | 123 | 89 | 165 | 222 | (7 | ) | 38 | (26 | ) | |||||||||||||||||||||||||
|
SC&O Operating Segment
|
3,868 | 4,238 | 1,741 | 2,038 | 2,127 | 2,200 | (9 | ) | (15 | ) | (3 | ) | ||||||||||||||||||||||||
|
Emerging Markets
|
2,299 | 2,178 | –– | –– | 2,299 | 2,178 | 6 | –– | 6 | |||||||||||||||||||||||||||
|
Established Products
|
2,801 | 2,367 | 1,443 | 1,032 | 1,358 | 1,335 | 18 | 40 | 2 | |||||||||||||||||||||||||||
|
EP&EM Operating Segment
|
5,100 | 4,545 | 1,443 | 1,032 | 3,657 | 3,513 | 12 | 40 | 4 | |||||||||||||||||||||||||||
|
|
13,065 | 14,224 | 5,185 | 6,263 | 7,880 | 7,961 | (8 | ) | (17 | ) | (1 | ) | ||||||||||||||||||||||||
|
Other product revenues:
|
||||||||||||||||||||||||||||||||||||
|
Animal Health
|
1,026 | 982 | 422 | 382 | 604 | 600 | 4 | 10 | 1 | |||||||||||||||||||||||||||
|
Consumer Healthcare
|
735 | 745 | 326 | 361 | 409 | 384 | (1 | ) | (10 | ) | 7 | |||||||||||||||||||||||||
|
AH&CH Operating Segment
|
1,761 | 1,727 | 748 | 743 | 1,013 | 984 | 2 | (1 | ) | 3 | ||||||||||||||||||||||||||
|
Nutrition Operating Segment
|
513 | 470 | –– | –– | 513 | 470 | 9 | –– | 9 | |||||||||||||||||||||||||||
|
Other (a)
|
66 | 81 | 21 | 18 | 45 | 63 | (19 | ) | 17 | (28 | ) | |||||||||||||||||||||||||
| 579 | 551 | 21 | 18 | 558 | 533 | 5 | 17 | 5 | ||||||||||||||||||||||||||||
|
Total revenues
|
$ | 15,405 | $ | 16,502 | $ | 5,954 | $ | 7,024 | $ | 9,451 | $ | 9,478 | (7 | ) | (15 | ) | –– | |||||||||||||||||||
|
(a)
|
Includes revenues generated primarily from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization.
|
|
|
●
|
the decrease of approximately $1.3 billion in operational revenues due to the loss of exclusivity of various products in certain markets, including a decrease of $991 million in operational revenues from Lipitor;
|
|
|
●
|
a lower reduction in revenues related to U.S. Healthcare Legislation of $43 million in the first quarter of 2012 compared to the first quarter of 2011; and
|
|
|
●
|
an increase in operational revenues for certain biopharmaceutical products, particularly Lyrica, Celebrex and Enbrel.
|
|
|
●
|
in the U.S., revenues from biopharmaceutical products decreased 17% in the first quarter of 2012, compared to the same period in 2011, primarily reflecting lower revenues from Lipitor, Xalatan, Caduet, Effexor, Geodon, Zosyn, Aromasin and Vfend, all due to loss of exclusivity, and lower revenues from Prevnar 13. The impact of these adverse factors was partially offset by the strong performance of certain other biopharmaceutical products and the lower reduction in revenues related to U.S. Healthcare Legislation.
|
|
|
●
|
in our international markets, revenues from biopharmaceutical products decreased 1% in the first quarter of 2012 compared to the first quarter of 2011, reflecting the unfavorable impact of foreign exchange of 1% in the first quarter of 2012. Operationally, revenues were flat primarily impacted by declines in Lipitor, Xalatan/Xalacom, Norvasc, Aromasin and Effexor, all due to loss of exclusivity in certain markets, and lower Alliance revenues, primarily due to the loss of exclusivity of Aricept in many major European markets as well as lower revenues for Spiriva in certain European countries reflecting the final-year terms of our Spiriva collaboration agreements relating to those countries.
|
|
●
|
Primary Care unit revenues decreased 25% in the first quarter of 2012, compared to the same period in 2011, due to lower operational revenues of 25%, primarily due to the loss of exclusivity of Lipitor in the U.S. in November 2011 and the resulting shift in the reporting of U.S. Lipitor revenues to the Established Products unit beginning January 1, 2012. U.S. branded Lipitor revenues, reported by the Established Products business unit in the first quarter of 2012, decreased to $383 million, or 71%, from $1.3 billion compared to the same period in 2011. Collectively, the decline in revenues for Lipitor in the U.S. and for certain other Primary Care unit products that lost exclusivity in various markets in 2011, as well as the resulting shift in the reporting of such product revenues to the Established Products unit, reduced Primary Care unit revenues by $1.5 billion, or 28%, in comparison with the first quarter of 2011. The impact of these declines was partially offset by the strong growth of Lyrica, most notably in Japan, in addition to the solid performance of Celebrex and Premarin.
|
|
●
|
Specialty Care unit revenues decreased 9% in the first quarter of 2012, compared to the same period in 2011, due to lower operational revenues of 9%. Operational revenues were unfavorably impacted by lower Prevnar 13/Prevenar 13 revenues in the U.S. and developed Europe primarily because most patients eligible to receive the pediatric catch-up dose have already been vaccinated. Prevnar 13 U.S. revenues were also impacted by a lower birth cohort compared with the same quarter last year. Additionally, Specialty Care unit revenues were unfavorably impacted by the losses of exclusivity of Vfend and Xalatan in the U.S. in February and March 2011, respectively, and the resulting shift in the reporting of Vfend and Xalatan U.S. revenues to the Established Products unit beginning January 1, 2012, as well as the loss of exclusivity of Geodon in the U.S. in March 2012. Collectively, these developments relating to Vfend, Xalatan, and Geodon and the impact of other Specialty Care unit products that lost exclusivity in various markets in 2011 reduced Specialty Care unit revenues by $264 million, or 7%, in comparison with the first quarter of 2011. Operational revenues were favorably impacted by the growth of Enbrel, as well as the Prevenar franchise in Japan and Australia.
|
|
●
|
Oncology unit revenues decreased 7% in the first quarter of 2012, compared to the same period in 2011, due to lower operational revenues of 7%. Operational revenues were unfavorably impacted by the loss of exclusivity of Aromasin in the majority of European markets in the second half of 2011 and the resulting shift in the reporting of such revenues to the Established Products unit beginning January 1, 2012. This loss of exclusivity reduced Oncology unit revenues by $61 million, or 20%, in comparison with the first quarter of 2011. Operational revenues were favorably impacted by the growth of Sutent, as well as the launches of Inlyta and Xalkori in the U.S.
|
|
●
|
Established Products unit revenues increased 18% in the first quarter of 2012 compared to the same period in 2011 due to higher operational revenues of 17% and a 1% favorable impact of foreign exchange. The increase in Established Products unit operational revenues in the first quarter of 2012 was mainly due to recent launches of generic versions of certain Pfizer branded primary care and specialty care products, including $383 million of U.S. branded Lipitor revenues and by our agreement granting Watson Pharmaceuticals, Inc. the exclusive right to sell the authorized generic version of Lipitor in the U.S. Operational revenues were unfavorably impacted by the entry of multi-source generic competition in the U.S. for donepezil (Aricept) in May 2011.
|
|
●
|
Emerging Markets unit revenues increased 6%, in the first quarter of 2012 compared to the same period in 2011, due to higher operational revenues of 9%, partially offset by a 3% unfavorable impact of foreign exchange. The increase in Emerging Markets unit operational revenues in the first quarter of 2012 was due to continued volume growth across the product portfolio, primarily in China, Russia and Mexico, as a result of more focused, targeted promotional efforts for key products. These increases were partially offset by the negative impact of increased pricing pressures and changes in the timing of government purchases in Turkey.
|
|
●
|
Animal Health unit revenues increased 4% in the first quarter of 2012, compared to the same period in 2011, reflecting higher operational revenues of 6% and the unfavorable impact of foreign exchange of 2%. Operational revenues from Animal Health products were favorably impacted compared to the same period in 2011 primarily by the full-quarter impact of legacy King product revenues in the first quarter of 2012 compared with the partial-quarter impact in the first quarter of 2011, as well as solid performances in both the global livestock and the companion animal portfolios.
|
|
●
|
Consumer Healthcare unit revenues decreased 1% in the first quarter of 2012, compared to the same period in 2011, reflecting lower operational revenues of 1%. The operational revenue decrease was primarily due to the impact of a less severe cold/flu season and the restocking of Centrum in Europe in the prior-year quarter after the temporary voluntary withdrawal of that product in Europe in the third quarter of 2010.
|
|
●
|
Nutrition unit revenues increased 9% in the first quarter of 2012, compared to the same period in 2011, reflecting higher operational revenues of 8% and the favorable impact of foreign exchange of 1%. The operational revenue increase was primarily due to benefits from continued successful new product launches, increased promotional activities and overall strength in key markets, most notably China. On April 23, 2012, we announced that we have entered into an agreement to sell our Nutrition operating segment to Nestlé. See Notes to Condensed Consolidated Financial Statements—Note 14. Subsequent Event for more information.
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Medicaid and related state program rebates(a)
|
$ | 220 | $ | 353 | ||||
|
Medicare rebates(a)
|
234 | 363 | ||||||
|
Performance-based contract rebates(a), (b)
|
540 | 844 | ||||||
|
Chargebacks(c)
|
932 | 800 | ||||||
|
Total
|
$ | 1,926 | $ | 2,360 | ||||
|
(a)
|
Rebates are product-specific and, therefore, for any given year are impacted by the mix of products sold.
|
|
(b)
|
Performance-based contracts are with wholesalers/distributors, as well as with managed care customers, including health maintenance organizations and pharmacy benefit managers, who receive rebates based on the achievement of contracted performance terms for specific products or sales milestones.
|
|
(c)
|
Chargebacks primarily represent reimbursements to wholesalers for honoring contracted prices to third parties.
|
|
|
●
|
the impact of decreased Medicare, Medicaid and performance-based contract rebates contracted for Lipitor and certain other products that have lost exclusivity;
|
|
|
●
|
changes in product mix; and
|
|
|
●
|
the impact on chargebacks of decreased sales for certain products that have lost exclusivity;
|
|
|
●
|
an increase in chargebacks for our branded products as a result of increasing competitive pressures and increasing sales for certain branded products and certain generic products sold by our Greenstone unit that are subject to chargebacks.
|
|
Three Months Ended
|
|||||||||
|
% Change
|
|||||||||
|
(millions of dollars)
|
April 1,
|
From April 3,
|
|||||||
|
Product
|
Primary Indications
|
2012
|
2011
|
||||||
|
Lipitor
|
Reduction of LDL cholesterol
|
$ | 1,395 | (42 | ) | ||||
|
Lyrica
|
Epilepsy, post-herpetic neuralgia and diabetic peripheral
neuropathy, fibromyalgia
|
955 | 16 | ||||||
|
Prevnar 13/Prevenar 13
|
Vaccine for prevention of pneumococcal disease
|
941 | (6 | ) | |||||
|
Enbrel (Outside the U.S. and Canada)
|
Rheumatoid, juvenile rheumatoid and psoriatic arthritis,
plaque psoriasis and ankylosing spondylitis
|
899 | 3 | ||||||
|
Celebrex
|
Arthritis pain and inflammation, acute pain
|
634 | 7 | ||||||
|
Viagra
|
Erectile dysfunction
|
496 | 6 | ||||||
|
Norvasc
|
Hypertension
|
334 | (6 | ) | |||||
|
Zyvox
|
Bacterial infections
|
325 | 2 | ||||||
|
Sutent
|
Advanced and/or metastatic renal cell carcinoma (mRCC) and
refractory gastrointestinal stromal tumors (GIST) and
advanced pancreatic neuroendocrine tumor
|
300 | 9 | ||||||
|
Premarin family
|
Menopause
|
261 | 11 | ||||||
|
Xalatan/Xalacom
|
Glaucoma and ocular hypertension
|
227 | (42 | ) | |||||
|
Detrol/Detrol LA
|
Overactive bladder
|
195 | (13 | ) | |||||
|
Genotropin
|
Replacement of human growth hormone
|
195 | (7 | ) | |||||
|
BeneFIX
|
Hemophilia
|
183 | 12 | ||||||
|
Geodon/Zeldox
|
Schizophrenia; acute manic or mixed episodes associated
with bipolar disorder; maintenance treatment of bipolar mania
|
181 | (22 | ) | |||||
|
Vfend
|
Fungal infections
|
178 | (9 | ) | |||||
|
Chantix/Champix
|
An aid to smoking cessation treatment
|
178 | (11 | ) | |||||
|
Pristiq
|
Depression
|
151 | 17 | ||||||
|
Prevnar/Prevenar (7-valent)
|
Vaccine for prevention of invasive pneumococcal disease
|
138 | (10 | ) | |||||
|
Revatio
|
Pulmonary arterial hypertension (PAH)
|
136 | 11 | ||||||
|
Medrol
|
Inflammation
|
134 | 11 | ||||||
|
ReFacto AF/Xyntha
|
Hemophilia
|
132 | 13 | ||||||
|
Zoloft
|
Depression and certain anxiety disorders
|
130 | (4 | ) | |||||
|
Effexor
|
Depression and certain anxiety disorders
|
129 | (37 | ) | |||||
|
Zosyn/Tazocin
|
Antibiotic
|
128 | (28 | ) | |||||
|
Zithromax/Zmax
|
Bacterial infections
|
123 | (4 | ) | |||||
|
Aricept(a)
|
Alzheimer’s disease
|
94 | (11 | ) | |||||
|
Fragmin
|
Anticoagulant
|
91 | –– | ||||||
|
Relpax
|
Treat the symptoms of migraine headache
|
85 | 6 | ||||||
|
Cardura
|
Hypertension/Benign prostatic hyperplasia
|
84 | (13 | ) | |||||
|
Rapamune
|
Immunosuppressant
|
82 | (8 | ) | |||||
|
Tygacil
|
Antibiotic
|
81 | 11 | ||||||
|
Xanax XR
|
Anxiety disorders
|
68 | (11 | ) | |||||
|
BMP2
|
Development of bone and cartilage
|
67 | (28 | ) | |||||
|
Caduet
|
Reduction of LDL cholesterol and hypertension
|
65 | (54 | ) | |||||
|
EpiPen(b)
|
Epinephrine injection used in treatment of life-threatening
allergic reactions
|
58 | 66 | ||||||
|
Neurontin
|
Seizures
|
58 | (18 | ) | |||||
|
Sulperazon
|
Antibiotic
|
58 | 5 | ||||||
|
Diflucan
|
Fungal infections
|
57 | (12 | ) | |||||
|
Aromasin
|
Breast cancer
|
56 | (51 | ) | |||||
|
Arthrotec
|
Osteoarthritis and rheumatoid arthritis
|
56 | (5 | ) | |||||
|
Unasyn
|
Injectable antibacterial
|
54 | 2 | ||||||
|
Alliance revenues(c)
|
Various
|
836 | (5 | ) | |||||
|
All other
|
Various
|
2,037 | 12 | ||||||
|
(a)
|
Represents direct sales under license agreement with Eisai Co., Ltd.
|
|
(b)
|
Legacy King product. King’s operations are included in our financial statements commencing from the acquisition date of January 31, 2011.
|
|
(c)
|
Enbrel (in the U.S. and Canada), Aricept, Exforge, Rebif and Spiriva.
|
|
●
|
Lipitor, for the treatment of elevated LDL-cholesterol levels in the blood, is the most widely used branded prescription treatment for lowering cholesterol. Lipitor recorded worldwide revenues of $1.4 billion, or a decrease of 42%, in the first quarter of 2012, compared to the same period in 2011, due to:
|
|
|
o
|
the impact of loss of exclusivity in Canada in May 2010, Spain in July 2010, Brazil in August 2010, Mexico in December 2010, Japan in June 2011 (with generic entry occurring in November 2011) and the U.S. in November 2011;
|
|
|
o
|
the continuing impact of an intensely competitive lipid-lowering market with competition from generics and branded products worldwide; and
|
|
|
o
|
increased payer pressure worldwide, including the need for flexible rebate policies.
|
|
|
o
|
in the U.S., Lipitor revenues were $383 million, a decrease of 71% in the first quarter of 2012, compared to the same period in 2011; and
|
|
|
o
|
in our international markets, Lipitor revenues were $1.0 billion, a decrease of 6%, in the first quarter of 2012, compared to the same period in 2011. Foreign exchange had a favorable impact on international revenues of $2 million in the first quarter of 2012, compared to the same period in 2011.
|
|
●
|
Lyrica, indicated for the management of post-herpetic neuralgia, neuropathic pain associated with diabetic peripheral neuropathy, the management of fibromyalgia, and as adjunctive therapy for adult patients with partial onset seizures in the U.S., and for neuropathic pain (peripheral and central), adjunctive treatment of epilepsy and general anxiety disorder in certain countries outside the U.S., recorded an increase in worldwide revenues of 16% in the first quarter of 2012, compared to the same period in 2011. Lyrica had a strong operational performance in international markets in the first quarter of 2012, including Japan, where Lyrica was launched in 2010 as the first product approved for the peripheral neuropathic pain (NeP) indication. Internationally, Lyrica revenues increased 21% in the first quarter of 2012, compared to the same period in 2011 with the growth being attributed to a focus on enhancing the neuropathic pain diagnosis and treatment rates, the successful launches of the general anxiety disorder indications to pneumocystic carinii pneumonia and the promotion of the new Phase IV data in post-traumatic NeP. In the U.S., revenues increased 9% in the first quarter of 2012, compared to the same period in 2011. Notwithstanding this increase, U.S. revenues continue to be affected by increased competition from generic versions of competitive medicines, as well as managed care pricing and formulary pressures.
|
|
●
|
Prevnar 13/Prevenar 13 is our 13-valent pneumococcal conjugate vaccine for the prevention of various syndromes of pneumococcal disease in infants and young children and in adults 50 years of age and older. Prevnar 13/Prevenar 13 for use in infants and young children has been launched in the U.S. for the prevention of invasive pneumococcal disease caused by the 13 serotypes in Prevnar 13 and otitis media caused by the seven serotypes in Prevnar, and in the EU and many other international markets for the prevention of invasive pneumococcal disease, otitis media and pneumococcal pneumonia caused by the vaccine serotypes. Worldwide revenues for Prevnar 13/Prevenar 13 decreased 6% in the first quarter of 2012, compared to the same period in 2011 primarily due to lower revenues in the U.S. and Developed Europe due to a decline in the number of patients eligible to receive the pediatric catch-up dose and a lower birth cohort in the U.S. In 2011, we received approval of Prevnar 13/Prevenar 13 for use in adults 50 years of age and older in the U.S. for the prevention of pneumococcal pneumonia and invasive pneumococcal disease caused by the 13 serotypes in Prevnar 13, and in the EU for the prevention of invasive pneumococcal disease caused by the vaccine serotypes. To date, Prevenar 13 for use in adults 50 years of age and older has been approved in over 40 countries and has been launched in the U.S., 12 Developed Europe markets and 14 Emerging Market countries.
|
|
●
|
Enbrel, for the treatment of moderate-to-severe rheumatoid arthritis, polyarticular juvenile rheumatoid arthritis, psoriatic arthritis, plaque psoriasis and ankylosing spondylitis, a type of arthritis affecting the spine, recorded an increase in worldwide revenues, excluding the U.S. and Canada, of 3% in the first quarter of 2012, compared to the same period in 2011. Enbrel revenues from the U.S. and Canada are included in Alliance revenues.
|
|
●
|
Celebrex, indicated for the treatment of the signs and symptoms of osteoarthritis and rheumatoid arthritis worldwide and for the management of acute pain in adults in the U.S., Japan and certain markets in the EU, recorded increases in worldwide revenues of 7% in the first quarter of 2012, compared to the same period in 2011. In the U.S., volume continues to be challenged by increased competition from generic versions of competitive medicines and managed care formulary pressures. Celebrex is supported by continued educational and promotional efforts highlighting its efficacy and safety profile for appropriate patients.
|
|
●
|
Viagra remains the leading treatment for erectile dysfunction. Viagra worldwide revenues increased 6% in the first quarter of 2012, compared to the same period in 2011.
|
|
●
|
Norvasc, for treating hypertension, lost exclusivity in the U.S. and other major markets in 2007 and in Canada in 2009. Norvasc worldwide revenues decreased 6% in the first quarter of 2012, compared to the same period in 2011.
|
|
●
|
Zyvox is the world’s best-selling agent among those used to treat serious Gram-positive pathogens, including methicillin-resistant staphylococcus-aureus. Zyvox worldwide revenues increased 2% in the first quarter of 2012, compared to the same period in 2011, primarily due to growth in emerging markets.
|
|
●
|
Sutent is for the treatment of advanced renal cell carcinoma, including metastatic renal cell carcinoma (mRCC) and gastrointestinal stromal tumors after disease progression on, or intolerance to, imatinib mesylate and advanced pancreatic neuroendocrine tumor. Sutent worldwide revenues increased 9% in the first quarter of 2012, compared to the same period in 2011, due to strong operational performance driven by increased market share in the U.S. and emerging markets, as well as approval of Sutent to treat progressive, well-differentiated pancreatic neuroendocrine tumors, a rare disease, in the U.S. in May 2011 and in the EU in late 2010. We continue to drive total revenue and prescription growth, supported by cost-effectiveness data and efficacy data in first-line mRCC––including two-year survival data, which represent the first time that overall survival of two years has been seen in the treatment of advanced kidney cancer, as well as through increasing access and healthcare coverage. As of March 31, 2012, Sutent was the most prescribed oral mRCC therapy in the U.S.
|
|
●
|
Our Premarin family of products remains the leading therapy to help women address moderate-to-severe menopausal symptoms. It recorded an increase in worldwide revenues of 11% in the first quarter of 2012, compared to the same period in 2011 primarily attributed to increased market share for Premarin VC, favorable wholesaler inventory levels and a price increase in January 2012, partially offset by unfavorable rebates.
|
|
●
|
Xalabrands consists of Xalatan, a prostaglandin, which is a branded agent used to reduce elevated eye pressure in patients with open-angle glaucoma or ocular hypertension, and Xalacom, a fixed combination prostaglandin (Xalatan) and beta blocker (timolol) available outside the U.S. Xalatan/Xalacom worldwide revenues decreased 42% in the first quarter of 2012, compared to the same period in 2011. Lower revenues were due to the loss of exclusivity in the U.S. in March 2011 and in the majority of European markets in January 2012.
|
|
●
|
Detrol/Detrol LA, a muscarinic receptor antagonist, is one of the most prescribed branded medicines worldwide for overactive bladder. Detrol LA is an extended-release formulation taken once a day. Detrol/Detrol LA worldwide revenues declined 13% the first quarter of 2012, compared to the same period in 2011, primarily due to increased competition from other branded medicines and a shift in promotional focus to our Toviaz product in most major markets. Detrol immediate release (Detrol IR) will lose exclusivity in the U.S. in September 2012.
|
|
●
|
Genotropin, one of the world’s leading human growth hormones, is used in children for the treatment of short stature with growth hormone deficiency, Prader-Willi Syndrome, Turner Syndrome, Small for Gestational Age Syndrome, Idiopathic Short Stature (in the U.S. only) and Chronic Renal Insufficiency (outside the U.S. only), as well as in adults with growth hormone deficiency. Genotropin is supported by a broad platform of innovative injection-delivery devices and patient-support programs. Genotropin worldwide revenues decreased 7% in the first quarter of 2012, compared to the same period in 2011.
|
|
●
|
BeneFIX and ReFacto AF/Xyntha are hemophilia products using state-of-the-art manufacturing that assist patients with a lifelong bleeding disorder. BeneFIX is the only available recombinant factor IX product for the treatment of hemophilia B, while ReFacto AF/Xyntha are recombinant factor VIII products for the treatment of hemophilia A. Both products are indicated for the control and prevention of bleeding in patients with these disorders and in some countries also are indicated for prophylaxis in certain situations, such as surgery. BeneFIX recorded an increase in worldwide revenues of 12% in the first quarter of 2012, compared to the same period in 2011, primarily due to price increases and strong demand due to adherence programs in the U.S. and strong new patient uptake in Japan. ReFacto AF/Xyntha recorded an increase in worldwide revenues of 13% in the first quarter of 2012, compared to the same period in 2011, primarily due to growth in emerging markets.
|
|
●
|
Geodon/Zeldox, an atypical antipsychotic, is indicated for the treatment of schizophrenia, as monotherapy for the acute treatment of bipolar manic or mixed episodes, and as an adjunct to lithium or valproate for the maintenance treatment of bipolar disorder. Geodon worldwide revenues decreased 22% in the first quarter of 2012, compared to the same period in 2011, primarily due to loss of exclusivity in the U.S. in March 2012.
|
|
●
|
Vfend is a broad-spectrum agent for treating yeast and molds. Vfend worldwide revenues decreased 9% in the first quarter of 2012, compared to the same period in 2011. While international revenues of Vfend continued to be driven by its acceptance as an excellent broad-spectrum agent for treating serious yeast and molds, revenues in the U.S. declined primarily due to the loss of exclusivity of Vfend tablets and the launch of generic voriconazole (generic Vfend) in February 2011.
|
|
●
|
Chantix/Champix is an aid to smoking-cessation treatment in adults 18 years of age and older. Chantix/Champix worldwide revenues decreased 11% in the first quarter of 2012, compared to the same period in 2011. Revenues in the first quarter of 2012 primarily decreased due to the impact of changes to the product’s label and other factors. We are continuing our educational and promotional efforts, which are focused on addressing the significant health consequences of smoking highlighting the Chantix/Champix benefit-risk proposition and emphasizing the importance of the physician-patient dialogue in helping patients quit smoking.
|
|
●
|
Pristiq is approved for the treatment of major depressive disorder in the U.S. and in various other countries. Pristiq has also been approved for treatment of moderate-to-severe vasomotor symptoms (VMS) associated with menopause in Thailand, Mexico, the Philippines and Ecuador. Pristiq recorded an increase in worldwide revenues of 17% in first quarter of 2012, compared to the same period in 2011, primarily driven by a new, more focused targeted strategy and promotional activities in the U.S., and internationally by both launches in new markets and further penetration in existing markets.
|
|
●
|
Prevnar/Prevenar (7-valent), our 7-valent pneumococcal conjugate vaccine for preventing invasive, and, in certain international markets, non-invasive pneumococcal disease in infants and young children, recorded a decrease in worldwide revenues of 10% in first quarter of 2012, compared to the same period in 2011. Many markets have transitioned from the use of Prevnar/Prevenar (7-valent) to Prevnar 13/Prevenar 13, resulting in lower revenues for Prevnar/Prevenar (7-valent). We expect this trend to continue.
|
|
●
|
Revatio, for the treatment of pulmonary arterial hypertension (PAH), had an increase in worldwide revenues of 11% in first quarter of 2012, compared to the same period in 2011, due in part to increased PAH awareness driving earlier diagnosis in the U.S. and EU. In the U.S., Revatio tablet will lose exclusivity in September 2012, and Revatio IV injection will lose exclusivity in May 2013.
|
|
●
|
Effexor, an antidepressant for treating adult patients with major depressive disorder, generalized anxiety disorder, social anxiety disorder and panic disorder, recorded a decrease in worldwide revenues of 37% in the first quarter of 2012, compared to the same period in 2011. Effexor and Effexor XR, an extended-release formulation, face generic competition in most markets, including in the U.S., where Effexor XR lost exclusivity on July 1, 2010. This generic competition had a negative impact in the first quarter of 2012 and 2011, and will continue to have a significant adverse impact on our revenues for Effexor and Effexor XR.
|
|
●
|
Zosyn/Tazocin, our broad-spectrum intravenous antibiotic, faces generic global competition. U.S. exclusivity was lost in September 2009. Zosyn/Tazocin recorded a decrease in worldwide revenues of 28% in first quarter of 2012, compared to the same period in 2011.
|
|
●
|
Caduet is a single-pill therapy combining Lipitor and Norvasc for the prevention of cardiovascular events. Caduet worldwide revenues decreased 54% in first quarter of 2012, compared to the same period in 2011, primarily due to the loss of U.S. exclusivity in November 2011.
|
|
●
|
Xalkori, for the treatment of patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) that is anaplastic lymphoma kinase (ALK)-positive as detected by an FDA-approved test, was approved by the FDA in August 2011. Xalkori has been approved in several other markets, including South Korea, Switzerland, Mexico, Israel, Japan and Canada for the treatment of ALK-positive advanced NSCLC.
|
|
●
|
Inlyta was approved by the FDA in January 2012 and by the Swiss health authority in April 2012 for the treatment of patients with advanced renal cell carcinoma after failure of a prior systemic treatment.
|
|
●
|
Alliance revenues worldwide decreased 5% in first quarter of 2012, compared to the same period in 2011, mainly due to the loss of exclusivity for Aricept 5mg and 10mg tablets in the U.S. in November 2010 and the entry of multi-source generic competition in the U.S. in May 2011, partially offset by the strong performance of Spiriva and Enbrel in the U.S. and Canada. We expect that the Aricept 23mg tablet will have exclusivity in the U.S. until July 2013. See the “Industry-Specific Challenges” section of this MD&A for a discussion regarding the expiration of various contract rights relating to Spiriva and Aricept in 2012. ELIQUIS (apixaban) is being jointly developed and commercialized by Pfizer and Bristol-Myers Squibb (BMS). The two companies share with respect to the approved indication in the EU and, if and when indications for ELIQUIS are approved in various markets, will share on a global basis commercialization expenses and profit/losses equally.
|
|
Research and Development Expenses
|
||||||||||||
|
Three Months Ended
|
||||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
% Incr./
(Decr.)
|
|||||||||
|
Primary Care Operating Segment(a)
|
$ | 241 | $ | 323 | (25 | ) | ||||||
|
Specialty Care and Oncology Operating Segment(a)
|
373 | 347 | 7 | |||||||||
|
Established Products and Emerging Markets Operating Segment(a)
|
73 | 56 | 30 | |||||||||
|
Animal Health and Consumer Healthcare Operating Segment(a)
|
93 | 101 | (8 | ) | ||||||||
|
Nutrition and Pfizer CentreSource(a)
|
8 | 11 | (27 | ) | ||||||||
|
Worldwide Research and Development and Pfizer Medical(b)
|
674 | 846 | (20 | ) | ||||||||
|
Corporate and other(c)
|
610 | 407 | 50 | |||||||||
| $ | 2,072 | $ | 2,091 | (1 | ) | |||||||
|
(a)
|
Our operating segments, in addition to their sales and marketing responsibilities, are responsible for certain development activities. Generally, these responsibilities relate to additional indications for in-line products and IPR&D projects that have achieved proof-of-concept. R&D spending may include upfront and milestone payments for intellectual property rights.
|
|
(b)
|
Worldwide Research and Development is generally responsible for human health research projects until proof-of-concept is achieved, and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. Worldwide Research and Development is also responsible for all human-health-related regulatory submissions and interactions with regulatory agencies, including all safety-event activities. Pfizer Medical is responsible for external affairs relating to all therapeutic areas, providing Pfizer-related medical information to healthcare providers, patients and other parties, and quality assurance and regulatory compliance activities, which include conducting clinical trial audits and readiness reviews. The decrease in 2012 results from cost savings associated with the R&D productivity initiative announced on February 1, 2011 (see the “Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A).
|
|
(c)
|
Corporate and other includes unallocated costs, primarily facility costs, information technology, share-based compensation, and restructuring-related costs. The increase in 2012 results primarily from additional depreciation – asset restructuring associated with the R&D productivity initiative announced on February 1, 2011 (see the “Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A).
|
|
Recent FDA approvals:
|
||
|
PRODUCT
|
INDICATION
|
DATE APPROVED
|
|
ELELYSO (taliglucerase alfa)(a)
|
Treatment of adults with a confirmed diagnosis of type 1 Gaucher disease
|
May 2012
|
|
INLYTA (Axitinib)
|
Treatment of advanced renal cell carcinoma after failure of one prior systemic therapy
|
January 2012
|
|
Prevnar 13 Adult
|
Prevention of pneumococcal pneumonia and invasive disease in adults 50 years of age and older
|
December 2011
|
|
Xalkori (Crizotinib)
|
Treatment of ALK-positive advanced non-small cell lung cancer
|
August 2011
|
|
Oxecta––Immediate release oxycodone with Aversion technology (formerly Acurox) (without niacin)(b)
|
Management of moderate-to-severe pain where the use of an opioid analgesic is appropriate
|
June 2011
|
|
Sutent
|
Treatment of unresectable pancreatic neuroendocrine tumor
|
May 2011
|
|
(a)
|
In November 2009, we entered into a license and supply agreement with Protalix BioTherapeutics, which provides us exclusive worldwide rights, except in Israel, to develop and commercialize ELELYSO (taliglucerase alpha) for the treatment of Gaucher disease.
|
|
(b)
|
In early 2011, we acquired King, which has an exclusive license from Acura Pharmaceuticals, Inc. (Acura) to sell Oxecta in the U.S., Canada and Mexico.
|
|
Pending U.S. new drug applications (NDA) and supplemental filings:
|
||
|
PRODUCT
|
INDICATION
|
DATE FILED*
|
|
Tafamidis meglumine
|
Treatment of transthyretin familial amyloid polyneuropathy (TTR-FAP)
|
February 2012
|
|
Lyrica
|
Treatment of central neuropathic pain due to spinal cord injury
|
February 2012
|
|
Revatio
|
Pediatric PAH
|
January 2012
|
|
Bosutinib
|
Treatment of previously treated chronic myelogenous leukemia
|
January 2012
|
|
Tofacitinib(a)
|
Treatment of moderate-to-severe active rheumatoid arthritis
|
December 2011
|
|
Apixaban(b)
|
Prevention of stroke and systemic embolism in patients with atrial fibrillation
|
November 2011
|
|
Genotropin(c)
|
Replacement of human growth hormone deficiency (Mark VII multidose disposable device)
|
December 2009
|
|
Celebrex(d)
|
Chronic pain
|
October 2009
|
|
Geodon(e)
|
Treatment of bipolar disorder––pediatric filing
|
December 2008
|
|
Remoxy(f)
|
Management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time
|
August 2008
|
|
Spiriva(g)
|
Respimat device for chronic obstructive pulmonary disease
|
January 2008
|
|
Zmax(h)
|
Treatment of bacterial infections––sustained release––acute otitis media (AOM) and sinusitis––pediatric filing
|
January 2007
|
|
Viviant(i)
|
Osteoporosis treatment and prevention
|
August 2006
|
|
*
|
The dates set forth in this column are the dates on which the FDA accepted our submissions.
|
|
(a)
|
On May 9, 2012, the FDA’s Arthritis Advisory Committee voted 8 to 2 to recommend approval of tofacitinib for the treatment of adult patients with moderately to severely active rheumatoid arthritis. The Committee’s recommendation will be considered by the FDA in its review of the NDA for tofacitinib.
|
|
(b)
|
This indication for apixaban is being developed in collaboration with our alliance partner, BMS.
|
|
(c)
|
In April 2010, we received a “complete response” letter from the FDA for the Genotropin Mark VII multidose disposable device submission. In August 2010, we submitted our response to address the requests and recommendations included in the FDA letter. In April 2011, we received a second “complete response” letter from the FDA, requesting additional information. We are assessing the requests and recommendations included in the FDA’s letter.
|
|
(d)
|
In June 2010, we received a “complete response” letter from the FDA for the Celebrex chronic pain supplemental NDA. The supplemental NDA remains pending while we await the completion of ongoing studies to determine next steps.
|
|
(e)
|
In October 2009, we received a “complete response” letter from the FDA with respect to the supplemental NDA for Geodon for the treatment of acute bipolar mania in children and adolescents aged 10 to 17 years. In October 2010, we submitted our response. In April 2010, we received a “warning letter” from the FDA with respect to the clinical trial in support of this supplemental NDA. We are working to address the issues raised in the letter. In April 2011, we received a second “complete response” letter from the FDA in which the FDA indicated that, in its view, the reliability of the data supporting the filing had not yet been demonstrated. We are working to better understand the issues raised in the letter.
|
|
(f)
|
In 2005, King entered into an agreement with Pain Therapeutics, Inc. (PT) to develop and commercialize Remoxy. In August 2008, the FDA accepted the NDA for Remoxy that had been submitted by King and PT. In December 2008, the FDA issued a “complete response” letter. In March 2009, King exercised its right under the agreement with PT to assume sole control and responsibility for the development of Remoxy. In December 2010, King resubmitted the NDA for Remoxy with the FDA. In June 2011, we and PT announced that a “complete response” letter was received from the FDA with regard to the resubmission of the NDA. We are working to address the issues raised in the letter, which primarily relate to manufacturing. There are several key decision points over the next several months that will determine the timing and the nature of our response to the FDA’s “complete response” letter.
|
|
(g)
|
Boehringer Ingelheim (BI), our alliance partner, holds the NDAs for Spiriva Handihaler and Spiriva Respimat. In September 2008, BI received a “complete response” letter from the FDA for the Spiriva Respimat submission. The FDA is seeking additional data, and we are coordinating with BI, which is working with the FDA to provide the additional information. A full response will be submitted to the FDA upon the completion of planned and ongoing studies.
|
|
(h)
|
In September 2007, we received an “approvable” letter from the FDA for Zmax that set forth requirements to obtain approval for the pediatric acute otitis media (AOM) indication based on pharmacokinetic data. In January 2010, we filed a supplemental NDA, which proposed the inclusion of the new indications for AOM and acute bacterial sinusitis in pediatric patients. In May 2011, we received a “complete response” letter from the FDA with respect to the supplemental NDA. We are working to determine the next steps.
|
|
(i)
|
Two “approvable” letters were received by Wyeth in April and December 2007 from the FDA for Viviant (bazedoxifene), for the prevention of post-menopausal osteoporosis, that set forth the additional requirements for approval. In May 2008, Wyeth received an “approvable” letter from the FDA for the treatment of post-menopausal osteoporosis. The FDA is seeking additional data, and we have been systematically working through these requirements and seeking to address the FDA’s concerns. A full response will be provided to the FDA. In February 2008, the FDA advised Wyeth that it expects to convene an advisory committee to review the pending NDAs for both the treatment and prevention indications after we submit our response to the “approvable” letters. In April 2009, Wyeth received approval in the EU for CONBRIZA (the EU trade name for Viviant) for the treatment of post-menopausal osteoporosis in women at increased risk of fracture. Viviant was also approved in Japan in July 2010 for the treatment of post-menopausal osteoporosis and in Korea in November 2011 for the treatment and prevention of post-menopausal osteoporosis.
|
|
Regulatory approvals and filings in the EU and Japan:
|
|||
|
PRODUCT
|
DESCRIPTION OF EVENT
|
DATE APPROVED
|
DATE FILED*
|
|
Xalkori (Crizotinib)
|
Approval in Japan for treatment of ALK-positive advanced non-small cell lung cancer
|
March 2012
|
—
|
|
Toviaz
|
Application filed in Japan for treatment of overactive bladder
|
—
|
March 2012
|
|
Tofacitinib
|
Application filed in Japan for treatment of rheumatoid arthritis
|
—
|
December 2011
|
|
Celecox (Celebrex)
|
Approval in Japan for treatment of acute pain
|
December 2011
|
—
|
|
Apixaban(a)
|
Application filed in Japan for prevention of stroke and systemic embolism in patients with non-valvular atrial fibrillation
|
—
|
December 2011
|
|
Vyndaqel (Tafamidis meglumine)
|
Approval in the EU for treatment of TTR-FAP in adult patients with stage 1 symptomatic polyneuropathy
|
November 2011
|
—
|
|
Tofacitinib
|
Application filed in the EU for treatment of moderate-to-severe active rheumatoid arthritis
|
—
|
November 2011
|
|
Prevenar 13 Adult
|
Approval in the EU for prevention of invasive pneumococcal disease in adults 50 years of age and older
|
October 2011
|
—
|
|
Sutent
|
Application filed in Japan for treatment of pancreatic neuroendocrine tumor
|
—
|
October 2011
|
|
Lyrica
|
Application filed in Japan for treatment of fibromyalgia
|
—
|
October 2011
|
|
ELIQUIS (Apixaban)(a)
|
Application filed in the EU for prevention of stroke in patients with atrial fibrillation
|
—
|
October 2011
|
|
Bosutinib
|
Application filed in the EU for treatment of newly diagnosed chronic myelogenous leukemia
|
—
|
August 2011
|
|
Crizotinib
|
Application filed in the EU for treatment of previously treated ALK-positive advanced non-small cell lung cancer
|
—
|
August 2011
|
|
Axitinib
|
Application filed in Japan for treatment of advanced renal cell carcinoma not indicated for curative resection, mRCC
|
—
|
July 2011
|
|
ELIQUIS
(Apixaban)(b)
|
Approval in the EU for prevention of venous thromboembolism following elective hip or knee-replacement surgery
|
May 2011
|
—
|
|
Axitinib
|
Application filed in the EU for treatment of advanced renal cell carcinoma after failure of prior systemic treatment
|
—
|
May 2011
|
|
Revatio
|
Approval in the EU for pediatric PAH
|
May 2011
|
—
|
|
Taliglucerase alfa
|
Application filed in the EU for treatment of Gaucher disease
|
—
|
November 2010
|
|
*
|
For applications in the EU, the dates set forth in this column are the dates on which the European Medicines Agency (EMA) validated our submissions.
|
|
(a)
|
This indication for ELIQUIS (apixaban) is being developed in collaboration with BMS.
|
|
(b)
|
This indication for ELIQUIS (apixaban) was developed and is being commercialized in collaboration with BMS.
|
|
Late-stage clinical trials for additional uses and dosage forms for in-line and in-registration products:
|
|
|
PRODUCT
|
INDICATION
|
|
ELIQUIS (Apixaban)
|
For the prevention and treatment of venous thromboembolism, which is being developed in collaboration with BMS
|
|
Eraxis/Vfend Combination
|
Aspergillosis fungal infections
|
|
INLYTA (Axitinib)
|
Oral and selective inhibitor of vascular endothelial growth factor (VEGF) receptor 1, 2 & 3 for the treatment of renal cell carcinoma in treatment-naïve patients and (Asia only) adjuvant renal cell carcinoma
|
|
Lyrica
|
Peripheral neuropathic pain; CR (once-a-day) dosing
|
|
Sutent
|
Adjuvant renal cell carcinoma
|
|
Tofacitinib
|
A JAK kinase inhibitor for the treatment of psoriasis and ulcerative colitis
|
|
Torisel
|
Renal cell carcinoma 2nd line (after disease progression on or after Sutent therapy)
|
|
Xalkori (Crizotinib)
|
An oral ALK and c-Met inhibitor for the treatment of ALK-positive 1st and 2nd line (supports full approval in the U.S.) non-small cell lung cancer
|
|
Xiapex
|
Peyronie’s disease
|
|
Zithromax/chloroquine
|
Malaria
|
|
New drug candidates in late-stage development:
|
|
|
CANDIDATE
|
INDICATION
|
|
ALO-02
|
A Mu-type opioid receptor agonist for the management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time
|
|
Bapineuzumab(a)
|
An investigational anti-beta-amyloid immunotherapy being studied for mild to moderate Alzheimer’s disease being developed in collaboration with Janssen Alzheimer Immunotherapy Research & Development, LLC (Janssen AI), a subsidiary of Johnson & Johnson
|
|
Bazedoxifene-conjugated estrogens
|
A tissue-selective estrogen complex for the treatment of menopausal vasomotor symptoms
|
|
Dacomitinib
|
A pan-HER tyrosine kinase inhibitor for the treatment of previously treated advanced non-small cell lung cancer
|
|
Inotuzumab ozogamicin
|
An antibody drug conjugate, consisting of an anti-CD22 monotherapy antibody linked to a cytotoxic agent, calicheamycin, for the treatment of aggressive Non-Hodgkin’s Lymphoma
|
|
Tanezumab(b)
|
An anti-nerve growth factor monoclonal antibody for the treatment of pain (on clinical hold)
|
|
(a)
|
Our collaboration with Janssen AI on bapineuzumab, a potential treatment for mild-to-moderate Alzheimer’s disease, continues with four Phase 3, double-blind studies. Janssen AI is leading the two, primarily North American Phase 3 studies (301 and 302). Study 302 has completed, but the results remain blinded. Janssen AI expects that Study 301 will complete in the coming months. We are conducting the two, primarily international Phase 3 studies (3000 and 3001). We expect that the last patient will have completed our two, primarily international 18-month trials, including associated biomarker studies, in 2014.
|
|
(b)
|
Following requests by the FDA in 2010, we suspended and subsequently terminated worldwide the osteoarthritis, chronic low back pain and painful diabetic peripheral neuropathy studies of tanezumab. The FDA’s requests followed a small number of reports of osteoarthritis patients treated with tanezumab who experienced the worsening of osteoarthritis leading to total joint replacement and also reflected the FDA’s concerns regarding the potential for such events in other patient populations. In December 2010, the FDA placed a clinical hold on all other anti-nerve growth factor therapies under clinical investigation in the U.S. Studies of tanezumab in cancer pain were allowed to continue. Extensive analyses were undertaken of all total joint replacements reported in studies of tanezumab. The results of these analyses and the conclusions drawn were provided to the FDA. On March 12, 2012, the FDA Arthritis Advisory Committee met to discuss the future development of nerve growth factor inhibitors, including tanezumab. The Committee voted that there is a role for the ongoing development of nerve growth factor inhibitors in conditions such as osteoarthritis and for the management of pain associated with conditions other than osteoarthritis for which there are no agents with demonstrated analgesic effect. The Committee’s recommendations are not binding on the FDA, which will make the final determination on the partial clinical hold. Discussions with FDA are ongoing in an effort to resume clinical development of tanezumab.
|
|
Three Months Ended
|
Incr./
(Decr.)
|
|||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
12/11 | |||||||||
|
Cost of sales
|
$ | 2,974 | $ | 3,693 | (19 | )% | ||||||
|
|
●
|
lower purchase accounting charges, primarily reflecting the fair value adjustments to acquired inventory from Wyeth that was subsequently sold;
|
|
|
●
|
savings associated with our cost-reduction and productivity initiatives, and
|
|
|
●
|
the favorable impact of foreign exchange of 4%;
|
|
|
●
|
a shift in geographic and business mix.
|
|
Three Months Ended
|
Incr./
(Decr.)
|
|||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
12/11 | |||||||||
|
Selling, informational and administrative expenses
|
$ | 4,133 | $ | 4,503 | (8 | )% | ||||||
|
|
●
|
savings generated from a reduction in the field force and a decrease in promotional spending, both partially in response to product losses of exclusivity; and
|
|
|
●
|
more streamlined corporate functions.
|
|
Three Months Ended
|
Incr./
(Decr.)
|
|||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
12/11 | |||||||||
|
Research and development expenses
|
$ | 2,072 | $ | 2,091 | (1 | )% | ||||||
|
|
●
|
savings generated by the discontinuation of certain therapeutic areas and R&D programs in connection with our previously announced cost-reduction and productivity initiatives;
|
|
|
●
|
higher charges related to those initiatives.
|
|
Three Months Ended
|
Incr./
(Decr.)
|
|||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
12/11 | |||||||||
|
Costs associated with cost-reduction/productivity initiatives and acquisition activity
|
$ | 999 | $ | 1,147 | (13 | )% | ||||||
|
|
●
|
for our cost-reduction and productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems; and
|
|
|
●
|
for our acquisition activity, we typically incur costs that can include transaction costs, integration costs (such as expenditures for consulting and the integration of systems and processes) and restructuring charges, related to employees, assets and activities that will not continue in the combined company.
|
|
●
|
The closing of duplicative facilities and other site rationalization actions Company-wide, including research and development facilities, manufacturing plants, sales offices and other corporate facilities. Among the more significant actions are the following:
|
|
|
●
|
Manufacturing: After the acquisition of Wyeth, our manufacturing sites totaled 81. Other acquisitions have added 20 manufacturing sites and we have subsequently exited 9. Our plant network strategy will result in the exit of a further 10 sites over the next several years.
|
|
|
●
|
Research and Development: After the acquisition of Wyeth, we operated in 20 R&D sites and announced that we would close a number of sites. We have completed a number of site closures, including our Sandwich, U.K. research and development facility, except for a small presence. In addition, in 2011, we rationalized several other sites to reduce and optimize the overall R&D footprint. We disposed of our toxicology site in Catania, Italy; exited our R&D sites in Aberdeen and Gosport, U.K.; and disposed of a vacant site in St. Louis, MO. We are presently marketing for sale, lease or sale/lease-back, either a portion of or all of certain of our R&D campuses. Locations with R&D operations are in the U.S., Europe, Canada and China, with five major research sites in addition to a number of specialized units. We also re-prioritized our commitments to disease areas and have discontinued certain therapeutic areas and R&D programs.
|
|
●
|
Workforce reductions across all areas of our business and other organizational changes, primarily in the U.S. field manufacturing, R&D and corporate functions. We identified areas for a reduction in workforce across all of our businesses. After the closing of the Wyeth acquisition, the combined workforce was approximately 120,700. As of April 1, 2012, after giving effect to the impact of acquisitions subsequent to the Wyeth acquisition, the workforce totaled approximately 102,500, a decrease of 1,200, primarily in the U.S. field force, manufacturing, R&D and corporate operations, from 103,700 as of December 31, 2011. We have exceeded our original target for reducing the combined Pfizer/Wyeth workforce.
|
|
●
|
The increased use of shared services.
|
|
●
|
Procurement savings.
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Transaction costs(a)
|
$ | –– | $ | 10 | ||||
|
Integration costs(b)
|
100 | 179 | ||||||
|
Restructuring charges(c):
|
||||||||
|
Employee termination costs
|
267 | 667 | ||||||
|
Asset impairments
|
218 | 25 | ||||||
|
Other
|
11 | 13 | ||||||
|
Restructuring charges and certain acquisition-related costs
|
596 | 894 | ||||||
|
Additional depreciation––asset restructuring, recorded in our condensed consolidated statements of income as follows(d):
|
||||||||
|
Cost of sales
|
79 | 172 | ||||||
|
Selling, informational and administrative expenses
|
2 | 7 | ||||||
|
Research and development expenses
|
259 | 64 | ||||||
|
Total additional depreciation––asset restructuring
|
340 | 243 | ||||||
|
Implementation costs, recorded in our condensed consolidated statements of income as follows(e):
|
||||||||
|
Selling, informational and administrative expenses
|
15 | –– | ||||||
|
Research and development expenses
|
48 | 10 | ||||||
|
Total implementation costs
|
63 | 10 | ||||||
|
Total costs associated with cost-reduction initiatives and acquisition activity
|
$ | 999 | $ | 1,147 | ||||
|
(a)
|
Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services.
|
|
|
(b)
|
Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes.
|
|
|
(c)
|
From the beginning of our cost-reduction and transformation initiatives in 2005 through April 1, 2012, Employee termination costs represent the expected reduction of the workforce by approximately 59,400 employees, mainly in manufacturing and sales and research, of which approximately 46,300 employees have been terminated as of April 1, 2012. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination. Asset impairments primarily include charges to write down property, plant and equipment to fair value. Other primarily includes costs to exit certain assets and activities.
|
|
|
The restructuring charges for the three months ended April 1, 2012 are associated with the following:
|
||
|
●
|
Primary Care operating segment ($3 million), Specialty Care and Oncology operating segment ($3 million), Established Products and Emerging Markets operating segment ($3 million), Animal Health and Consumer Healthcare operating segment ($5 million), research and development operations ($12 million), manufacturing operations ($152 million) and Corporate ($318 million).
|
|
|
The restructuring charges for the three months ended April 3, 2011 are associated with the following:
|
||
|
●
|
Primary Care operating segment ($46 million), Specialty Care and Oncology operating segment ($35 million), Established Products and Emerging Markets operating segment ($4 million), Animal Health and Consumer Healthcare operating segment ($10 million), Nutrition operating segment ($2 million), research and development operations ($422 million), manufacturing operations ($75 million) and Corporate ($111 million).
|
|
|
(d)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
|
|
(e)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productivity initiatives.
|
|
|
Costs Incurred
|
Activity
|
Accrual
|
||||||||||
|
(millions of dollars)
|
2005-2012 |
Through
April 1,
2012(a)
|
As of
April 1,
2012(b)
|
|||||||||
|
Employee termination costs
|
$ | 10,869 | $ | 8,638 | $ | 2,231 | ||||||
|
Asset impairments
|
2,782 | 2,782 | –– | |||||||||
|
Other
|
1,033 | 949 | 84 | |||||||||
|
Total restructuring charges
|
$ | 14,684 | $ | 12,369 | $ | 2,315 | ||||||
|
(a)
|
Includes adjustments for foreign currency translation.
|
|
(b)
|
Included in Other current liabilities ($1.4 billion) and Other noncurrent liabilities ($891 million).
|
|
Three Months Ended
|
Incr./
(Decr.)
|
||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
12/11 | ||||||||
|
Other Deductions—Net
|
$ | 1,657 | $ | 827 | 100 | % | |||||
|
|
●
|
charges for litigation-related matters that were $313 million higher in the first quarter of 2012 than in the same period in 2011, primarily due to a $450 million charge in connection with an agreement-in-principle to settle a lawsuit by Brigham Young University related to Celebrex;
|
|
|
● |
certain asset impairment charges that were approximately $275 million higher in the first quarter of 2012 than in the same period in 2011, (see below); and
|
|
|
● |
lower royalty-related income of $74 million;
|
|
|
●
|
lower net interest expense of $44 million.
|
|
Three Months Ended
|
Incr./
(Decr.)
|
||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
12/11 | ||||||||
|
Provision for taxes on income
|
$ | 750 | $ | 894 | (16 | )% | |||||
|
Effective tax rate on continuing operations
|
29.4 | % | 28.7 | % | |||||||
| Three Months Ended | ||||
|
(millions of dollars)
|
April 3,
2011
|
|||
|
Revenues
|
$ | 177 | ||
|
Pre-tax income from discontinued operations
|
$ | 28 | ||
|
Provision for taxes on income(a)
|
(18 | ) | ||
|
Income from discontinued operations––net of tax
|
$ | 10 | ||
|
Discontinued operations––net of tax
|
$ | 10 | ||
|
(a)
|
Deferred tax amounts are not significant.
|
|
●
|
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
|
|
●
|
senior management’s annual compensation is derived, in part, using this Adjusted income measure. Adjusted income is one of the performance metrics utilized in the determination of bonuses under the Pfizer Inc. Executive Annual Incentive Plan that is designed to limit the bonuses payable to the Executive Leadership Team (ELT) for purposes of Internal Revenue Code Section 162(m). Subject to the Section 162(m) limitation, the bonuses are funded from a pool based on the achievement of three financial metrics, including adjusted diluted earnings per share, which is derived from Adjusted income. Since 2011, this metric accounts for 40% of the bonus pool made available to ELT members and other members of senior management and will constitute a factor in determining each of these individual’s bonus.
|
|
Three Months Ended
|
|
|||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
% Incr./
(Decr.)
|
|||||||||
|
Reported net income attributable to Pfizer Inc.
|
$ | 1,794 | $ | 2,222 | (19 | ) | ||||||
|
Purchase accounting adjustments––net of tax
|
1,071 | 1,343 | (20 | ) | ||||||||
|
Acquisition-related costs––net of tax
|
115 | 456 | (75 | ) | ||||||||
|
Discontinued operations––net of tax
|
–– | (10 | ) | (100 | ) | |||||||
|
Certain significant items––net of tax
|
1,452 | 797 | 82 | |||||||||
|
Adjusted income(a)
|
$ | 4,432 | $ | 4,808 | (8 | ) | ||||||
|
(a)
|
The effective tax rate on Adjusted income was 29.1% in the first quarter of 2012, compared with 27.9% in the first quarter of 2011. The increase in the effective tax rate on Adjusted income was primarily due to the change in the jurisdictional mix of earnings and the impact of the expiration of the U.S. research and development tax credit.
|
|
Three Months Ended
|
|
|||||||||||
|
April 1,
2012
|
April 3,
2011
|
% Incr./
(Decr.)
|
||||||||||
|
Earnings per common share––diluted(a):
|
||||||||||||
|
Reported income from continuing operations attributable to Pfizer Inc. common shareholders
|
$ | 0.24 | $ | 0.28 | (14 | ) | ||||||
|
Income from discontinued operations––net of tax
|
— | — | — | |||||||||
|
Reported net income attributable to Pfizer Inc. common shareholders
|
0.24 | 0.28 | (14 | ) | ||||||||
|
Purchase accounting adjustments––net of tax
|
0.14 | 0.17 | (18 | ) | ||||||||
|
Acquisition-related costs––net of tax
|
0.02 | 0.05 | (60 | ) | ||||||||
|
Discontinued operations––net of tax
|
— | — | — | |||||||||
|
Certain significant items––net of tax
|
0.19 | 0.10 | 90 | |||||||||
|
Adjusted net income attributable to Pfizer Inc. common shareholders
|
$ | 0.58 | $ | 0.60 | (3 | ) | ||||||
|
(a)
|
EPS amounts may not add due to rounding.
|
|
Three Months Ended
|
||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
||||||
|
Purchase accounting adjustments:
|
||||||||
|
Amortization, depreciation and other(a)
|
$ | 1,448 | $ | 1,354 | ||||
|
Cost of sales, primarily related to fair value adjustments of
acquired inventory
|
10 | 431 | ||||||
|
Total purchase accounting adjustments, pre-tax
|
1,458 | 1,785 | ||||||
|
Income taxes
|
(387 | ) | (442 | ) | ||||
|
Total purchase accounting adjustments––net of tax
|
1,071 | 1,343 | ||||||
|
Acquisition-related costs:
|
||||||||
|
Transaction costs(b)
|
–– | 10 | ||||||
|
Integration costs(b)
|
100 | 179 | ||||||
|
Restructuring charges(b)
|
(3 | ) | 203 | |||||
|
Additional depreciation––asset restructuring(c)
|
85 | 183 | ||||||
|
Total acquisition-related costs, pre-tax
|
182 | 575 | ||||||
|
Income taxes
|
(67 | ) | (119 | ) | ||||
|
Total acquisition-related costs––net of tax
|
115 | 456 | ||||||
|
Discontinued operations:
|
||||||||
|
Total discontinued operations––net of tax
|
–– | (10 | ) | |||||
|
Certain significant items:
|
||||||||
|
Restructuring charges(d)
|
499 | 502 | ||||||
|
Implementation costs and additional depreciation––asset
restructuring(e)
|
318 | 70 | ||||||
|
Certain legal matters(f)
|
775 | 472 | ||||||
|
Certain asset impairment charges(g)
|
412 | 157 | ||||||
|
Other(h)
|
65 | 7 | ||||||
|
Total certain significant items, pre-tax
|
2,069 | 1,208 | ||||||
|
Income taxes
|
(617 | ) | (411 | ) | ||||
|
Total certain significant items––net of tax
|
1,452 | 797 | ||||||
|
Total purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items––net of tax
|
$ | 2,638 | $ | 2,586 | ||||
|
(a)
|
Included primarily in Amortization of intangible assets.
|
|
(b)
|
Included in Restructuring charges and certain acquisition-related costs (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).
|
|
(c)
|
Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions.
|
|
For the first quarter of 2012, included in Cost of sales ($79 million), Selling, informational and administrative expenses ($1 million) and in Research and development expenses ($5 million). For the first quarter of 2011, included in Cost of sales ($172 million), Selling, informational and administrative expenses ($7 million) and Research and development expenses ($4 million).
|
|
|
(d)
|
Represents restructuring charges incurred for our cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-related costs (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).
|
|
(e)
|
Amounts primarily relate to our cost-reduction and productivity initiatives (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives). For the first quarter of 2012, included in Selling, informational and administrative expenses ($16 million) and Research and development expenses ($302 million). For the first quarter of 2011, included in Research and development expenses.
|
|
(f)
|
Included in Other deductions––net (see Notes to Condensed Consolidated Financial Statements – Note 4. Other Deductions – Net). In 2012, primarily relates to a $450 million charge in connection with an agreement-in-principle to settle a lawsuit by Brigham Young University related to Celebrex and charges for hormone-replacement therapy litigation. In 2011, primarily relates to charges for hormone-replacement therapy litigation.
|
|
(g)
|
Included in Other deductions––net (see Notes to Condensed Consolidated Financial Statements – Note 4. Other Deductions – Net). In 2012, primarily includes intangible asset impairments of approximately $395 million reflecting (i) $297 million of in-process research and development (IPR&D) that targeted autoimmune and inflammatory diseases, (ii) $45 million related to our Consumer Healthcare indefinite-lived brand, Robitussin, and (iii) $53 million of developed technology rights comprising the impairments of two assets. In 2011, relates to IPR&D for the treatment of a certain autoimmune and inflammatory disease. The impairment charges reflect, among other things, the impact of new scientific findings for IPR&D, and an increased competitive environment for Robitussin.
|
|
(h)
|
For the first quarter of 2012, included in Selling, informational and administrative expenses ($8 million) and Other deductions––net ($57 million). For the first quarter of 2011, included in Other deductions––net.
|
|
Three Months Ended
|
|
|||||||||||
|
(millions of dollars)
|
April 1,
2012
|
April 3,
2011
|
Incr./
(Decr.)
|
|||||||||
|
Cash provided by/(used in):
|
||||||||||||
|
Operating activities
|
$ | 2,774 | $ | 4,642 | (1,868 | ) | ||||||
|
Investing activities
|
451 | 725 | (274 | ) | ||||||||
|
Financing activities
|
(3,507 | ) | (6,404 | ) | 2,897 | |||||||
|
Effect of exchange-rate changes on cash and cash equivalents
|
34 | 32 | 2 | |||||||||
|
Net increase/(decrease) in cash and cash equivalents
|
$ | (248 | ) | $ | (1,005 | ) | 757 | |||||
|
|
●
|
net tax payments of $451 million recorded in the first quarter of 2012, compared to net tax refunds of $134 million received in the same period of 2011; and
|
|
|
●
|
the timing of receipts and payments in the ordinary course of business.
|
|
|
●
|
net proceeds from redemption and sales of investments of $1.5 billion in the first quarter of 2012, which were primarily used to finance our acquisitions, compared to net proceeds from redemptions and sales of investments of $4.1 billion in the first quarter of 2011, which were used to finance our acquisition of King,
|
|
|
●
|
cash paid of $782 million, net of cash acquired, for our acquisitions of Alacer Corp. and Ferrosan in the first quarter of 2012 (see Notes to Condensed Consolidated Financial Statements—Note 2A. Acquisitions and Divestitures: Acquisitions), compared to $3.2 billion cash paid, net of cash acquired, for the acquisition of King in the first quarter of 2011.
|
|
|
●
|
net repayments of borrowings of $233 million in the first quarter of 2012, compared to net repayments of borrowings of $3.4 billion in the first quarter of 2011;
|
|
|
●
|
higher purchases of common stock; and
|
|
|
●
|
higher cash dividends paid.
|
|
(millions of dollars)
|
April 1,
2012
|
Dec. 31,
2011
|
||||||
|
Financial assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 2,934 | $ | 3,182 | ||||
|
Short-term investments
|
21,038 | 23,270 | ||||||
|
Long-term investments
|
10,632 | 9,814 | ||||||
|
Total financial assets
|
34,604 | 36,266 | ||||||
|
Debt:
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
5,526 | 4,018 | ||||||
|
Long-term debt
|
33,543 | 34,931 | ||||||
|
Total debt
|
39,069 | 38,949 | ||||||
|
Net financial liabilities
|
$ | (4,465 | ) | $ | (2,683 | ) | ||
|
|
●
|
the working capital requirements of our operations, including our research and development activities;
|
|
|
●
|
investments in our business;
|
|
|
●
|
dividend payments and potential increases in the dividend rate;
|
|
|
●
|
share repurchases, including our plan to repurchase approximately $5 billion of our common stock in 2012;
|
|
|
●
|
the cash requirements associated with our cost-reduction/productivity initiatives;
|
|
|
●
|
paying down outstanding debt;
|
|
|
●
|
contributions to our pension and postretirement plans; and
|
|
|
●
|
business-development activities.
|
|
NAME OF RATING AGENCY
|
Commercial Paper
|
Long-term Debt
|
Date of Last Action
|
|
|
Rating
|
Outlook
|
|||
|
Moody’s
|
P-1
|
A1
|
Stable
|
October 2009
|
|
S&P
|
A1+
|
AA
|
Stable
|
October 2009
|
|
(millions of dollars, except ratios and per common share data)
|
April 1,
2012
|
Dec. 31,
2011
|
||||||
|
Cash and cash equivalents and short-term investments(a)
|
$ | 23,972 | $ | 26,452 | ||||
|
Working capital(b)
|
$ | 27,769 | $ | 28,502 | ||||
|
Ratio of current assets to current liabilities
|
2.02:1
|
2.02:1
|
||||||
|
Shareholders’ equity per common share(c)
|
$ | 11.07 | $ | 10.85 | ||||
|
(a)
|
See Notes to Condensed Consolidated Financial Statements––Note 7. Financial Instruments for a description of assets held and for a description of credit risk related to our financial instruments held.
|
|
(b)
|
Working capital includes assets held for sale of $159 million as of April 1, 2012 and $101 million as of December 31, 2011.
|
|
(c)
|
Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury shares and shares held by our employee benefit trust).
|
|
●
|
the outcome of research and development activities including, without limitation, the ability to meet anticipated clinical trial commencement and completion dates, regulatory submission and approval dates, and launch dates for product candidates;
|
|
●
|
decisions by regulatory authorities regarding whether and when to approve our drug applications, as well as their decisions regarding labeling, ingredients and other matters that could affect the availability or commercial potential of our products;
|
|
●
|
the speed with which regulatory authorizations, pricing approvals and product launches may be achieved;
|
|
●
|
the outcome of post-approval clinical trials, which could result in the loss of marketing approval for a product or changes in the labeling for, and/or increased or new concerns about the safety or efficacy of, a product that could affect its availability or commercial potential;
|
|
●
|
the success of external business-development activities;
|
|
●
|
competitive developments, including the impact on our competitive position of new product entrants, in-line branded products, generic products, private label products and product candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates;
|
|
●
|
the implementation by the FDA of an abbreviated legal pathway to approve biosimilar products, which could subject our biologic products to competition from biosimilar products in the U.S., with attendant competitive pressures, after the expiration of any applicable exclusivity period and patent rights;
|
|
●
|
the ability to meet generic and branded competition after the loss of patent protection for our products or competitor products;
|
|
●
|
the ability to successfully market both new and existing products domestically and internationally;
|
|
●
|
difficulties or delays in manufacturing;
|
|
●
|
trade buying patterns;
|
|
●
|
the impact of existing and future legislation and regulatory provisions on product exclusivity;
|
|
●
|
trends toward managed care and healthcare cost containment;
|
|
●
|
the impact of the U.S. Budget Control Act of 2011 (the Budget Control Act) and the deficit-reduction actions to be taken pursuant to the Budget Control Act in order to achieve the deficit-reduction targets provided for therein, and the impact of any broader deficit-reduction efforts;
|
|
●
|
the impact of U.S. healthcare legislation enacted in 2010—the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act––and of any modification, repeal or invalidation of any of the provisions thereof;
|
|
●
|
U.S. legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs; 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 use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines;
|
|
●
|
legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access, including, in particular, continued government-mandated price reductions for certain biopharmaceutical products in certain European and emerging market countries;
|
|
●
|
the exposure of our operations outside the U.S. to possible capital and exchange controls, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as political unrest and unstable governments and legal systems;
|
|
●
|
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;
|
|
●
|
any significant breakdown, infiltration or interruption of our information technology systems and infrastructure;
|
|
●
|
legal defense costs, insurance expenses, settlement costs, the risk of an adverse decision or settlement and the adequacy of reserves related to product liability, patent protection, government investigations, consumer, commercial, securities, antitrust, environmental and tax issues, ongoing efforts to explore various means for resolving asbestos litigation, and other legal proceedings;
|
|
●
|
our 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, without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside of the U.S. that may result from pending and possible future proposals;
|
|
●
|
any significant issues involving our largest wholesaler customers, which account for a substantial portion of our revenues;
|
|
●
|
the possible impact of the increased presence of counterfeit medicines in the pharmaceutical supply chain on our revenues and on patient confidence in the integrity of our medicines;
|
|
●
|
any significant issues that may arise related to the outsourcing of certain operational and staff functions to third parties, including with regard to quality, timeliness and compliance with applicable legal requirements and industry standards;
|
|
●
|
changes in U.S. generally accepted accounting principles;
|
|
●
|
uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions and recent and possible future changes in global financial markets; and the related risk that our allowance for doubtful accounts may not be adequate;
|
|
●
|
any changes in business, political and economic conditions due to actual or threatened 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;
|
|
●
|
our ability and the ability of Nestlé to satisfy the conditions to closing the sale of our Nutrition operating segment to Nestlé; and
|
|
●
|
the impact of acquisitions, divestitures, restructurings, product recalls and withdrawals and other unusual items, including (i) our ability to realize the projected benefits of our acquisition of King Pharmaceuticals, Inc.; (ii) our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including those related to our research and development organization; and (iii) the impact of the strategic alternative that we decide to pursue for our Animal Health business.
|
|
|
●
|
On April 23, 2012, we entered into an agreement to sell our Nutrition operating segment to Nestlé. The transaction is subject to our ability and Nestlé’s ability to obtain the regulatory clearances required in certain jurisdictions and to satisfy the other conditions to closing the sale. (For further information, see the “Our Operating Environment – Our Business Development Initiatives” section of the MD&A.)
|
|
|
●
|
As discussed above in Part I, Item 4, “Controls and Procedures”, we continue to pursue a multi-year initiative to outsource some transaction-processing activities within certain accounting processes and are migrating to a consistent enterprise resource planning system across the organization. These are enhancements of ongoing activities to support the growth of our financial shared service capabilities and standardize our financial systems. If any difficulties in the migration to or in the operation of the new system were to occur, they could adversely affect our operations, including, among other ways, through a failure to meet demand for our products, or adversely affect our ability to meet our financial reporting obligations.
|
|
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, 2012, through January 29, 2012
|
15,873,778
|
$21.84
|
15,736,500
|
$9,690,457,275
|
|
January 30, 2012, through February 26, 2012
|
26,657,013
|
$21.25
|
26,307,578
|
$9,131,392,084
|
|
February 27, 2012, through
April 1, 2012
|
38,404,486
|
$21.38
|
34,970,614
|
$8,374,857,986
|
|
Total
|
80,935,277
|
$21.43
|
77,014,692
|
|
(a)
|
On February 1, 2011, Pfizer announced that the Board of Directors had authorized a new $5 billion share-purchase plan (the February 2011 Stock Purchase Plan). On December 12, 2011, Pfizer announced that the Board of Directors had authorized an additional $10 billion share-purchase plan (the December 2011 Stock Purchase Plan). Pfizer currently expects to repurchase approximately $5 billion of its common stock in 2012, with the remaining authorized amount available in 2013 and beyond.
|
|
(b)
|
In addition to amounts purchased under the February and December 2011 Stock Purchase Plans, these columns reflect the following transactions during the first fiscal quarter of 2012: (i) the surrender to Pfizer of 3,624,642 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock and restricted stock units issued to employees; (ii) the open market purchase by the trustee of 34,657 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who were granted performance share awards and who deferred receipt of such awards and (iii) the surrender to Pfizer of 261,286 shares of common stock to satisfy tax withholding obligations in connection with the vesting of performance share awards issued to employees.
|
|
1) Exhibit 12
|
-
|
Computation of Ratio of Earnings to Fixed Charges
|
|
2) Exhibit 15
|
-
|
Accountants’ Acknowledgement
|
|
3) Exhibit 31.1
|
-
|
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
4) Exhibit 31.2
|
-
|
Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
5) Exhibit 32.1
|
-
|
Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
6) Exhibit 32.2
|
-
|
Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
7) Exhibit 101:
|
||
|
EX-101.INS
|
XBRL Instance Document
|
|
|
EX-101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
EX-101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
EX-101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
EX-101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
EX-101.DEF
|
XBRL Taxonomy Extension Definition Document
|
|
Pfizer Inc.
|
|
|
(Registrant)
|
|
|
Dated: May 10, 2012
|
/s/ Loretta V. Cangialosi
|
|
Loretta V. Cangialosi, Senior Vice President and
Controller
(Principal Accounting Officer and
Duly Authorized Officer)
|