Pfizer Reports Fourth-Quarter and Full-Year 2010 Results; Provides 2011 Financial Guidance and Updates 2012 Financial Targets

Fourth-Quarter 2010 Revenues of $17.6 Billion; Full-Year 2010 Revenues of $67.8 Billion Fourth-Quarter 2010 Adjusted Diluted EPS(1) of $0.47, Reported Diluted EPS(2) of $0.36; Full-Year 2010 Adjusted Diluted EPS(1) of $2.23, Reported Diluted EPS(2) of $1.02 Achieves Full-Year 2010 Financial Guidance; Provides Full-Year 2011 Financial Guidance Maintains Full-Year 2012 Adjusted Diluted EPS(1) Target; Reduces Full-Year 2012 Revenue Target Announces Significant Increase in Planned Share Repurchases and Significant Decrease in Planned R&D Spending

Monday, January 31, 2011 - 09:30pm
EST

(BUSINESS WIRE)--Pfizer Inc. (NYSE: PFE):

                 
($ in millions, except per share amounts)                
    Fourth-Quarter  

Full-Year

    2010   2009   Change   2010   2009   Change
Reported Revenues   $ 17,561   $ 16,537   6 %   $ 67,809   $ 50,009   36 %
Reported Net Income(2)     2,890   767   277 %   8,257   8,635   (4 %)
Reported Diluted EPS(2)     0.36   0.10   260 %   1.02   1.23   (17 %)
Adjusted Income(1)     3,770   3,825   (1 %)   17,983   14,202   27 %
Adjusted Diluted EPS(1)     0.47   0.49   (4 %)   2.23   2.02   10 %
                         

See end of text prior to tables for notes.

 

Pfizer Inc. (NYSE: PFE) today reported financial results for fourth-quarter and full-year 2010. Since the acquisition of Wyeth was completed on October 15, 2009, fourth-quarter and full-year 2009 results reflect the legacy Wyeth operations from the acquisition date through Pfizer’s domestic and international year-ends (see note 17); results for all periods in 2010 reflect the legacy Wyeth operations. Fourth-quarter 2010 revenues were $17.6 billion, an increase of 6% compared with $16.5 billion in the year-ago quarter. Revenues for fourth-quarter 2010 compared with the year-ago quarter were favorably impacted by $2.3 billion, or 14%, due to legacy Wyeth products, negatively impacted by $1.2 billion, or 7%, due to legacy Pfizer products, and negatively impacted by $70 million, or 1%, due to foreign exchange. For fourth-quarter 2010, U.S. revenues were $7.2 billion, a decrease of 3% compared with the year-ago quarter. International revenues were $10.3 billion, an increase of 13% compared with the prior-year quarter, which reflected 14% operational growth partially offset by a 1% unfavorable impact of foreign exchange. U.S. revenues represented 41% of total revenues in fourth-quarter 2010 compared with 45% in the year-ago quarter, while international revenues represented 59% of total revenues in fourth-quarter 2010 compared with 55% in the year-ago quarter.

For full-year 2010, revenues were $67.8 billion, an increase of 36% compared with $50.0 billion in full-year 2009. Revenues for full-year 2010 compared with full-year 2009 were favorably impacted by $18.1 billion, or 37%, due to legacy Wyeth products, and by $1.1 billion, or 2%, due to foreign exchange, and negatively impacted by $1.4 billion, or 3%, due to legacy Pfizer products. U.S. revenues were $29.0 billion, an increase of 34% compared with full-year 2009. International revenues were $38.8 billion, an increase of 37% compared with full-year 2009, which reflected 33% operational growth and a 4% favorable impact of foreign exchange. U.S. revenues represented 43% and international revenues represented 57% of total revenues for full-year 2010, comparable with full-year 2009.

Business Revenues

Pfizer operates two distinct commercial organizations: Biopharmaceutical and Diversified. Biopharmaceutical includes the Primary Care, Specialty Care, Established Products, Emerging Markets and Oncology customer-focused units, while Diversified includes Animal Health, Consumer Healthcare, Nutrition and Capsugel.

       
   Fourth-Quarter(13)
                      Operational

 

               

 

    Foreign  

 

 

Legacy

($ in millions)

  2010    

2009(13)

 

 

Change

    Exchange  

Total

 

Pfizer

                             
Primary Care(3)   $ 5,886   $ 6,546     (10 %)     --     (10 %)   (11 %)
Specialty Care(4)     4,014     2,950     36 %     (2 %)   38 %   (11 %)
Established Products(5)     2,414     2,792     (14 %)     --     (14 %)   (10 %)
Emerging Markets(6)     2,368     1,887     25 %     2 %   23 %   3 %
Oncology(7)     369     431     (14 %)     (2 %)   (12 %)   (14 %)
                             
Biopharmaceutical     15,051     14,606     3 %     (1 %)   4 %   (9 %)
                             
Animal Health(8)     976     901     8 %     --     8 %   (4 %)
Consumer Healthcare(9)     758     494     53 %     1 %   52 %   N/A  
Nutrition(10)     492     191     158 %     8 %   150 %   N/A  
Capsugel(11)     207     223     (7 %)     (2 %)   (5 %)   (5 %)
                             
Diversified     2,433     1,809     34 %     1 %   33 %   (4 %)
                             
Other(12)     77     122     (37 %)     (12 %)   (25 %)   (25 %)
                             
Total   $ 17,561   $ 16,537     6 %     (1 %)   7 %   (9 %)
                                         

See end of text prior to tables for notes.

N/A – Not applicable

For fourth-quarter 2010, revenues from Biopharmaceutical were $15.1 billion, an increase of 3% compared with $14.6 billion in the year-ago quarter. Operationally, revenues increased $515 million, or 4%, which included $1.6 billion, or 11%, attributable to legacy Wyeth products, primarily Premarin and Pristiq in the Primary Care unit, Enbrel and the Prevnar/Prevenar franchise in the Specialty Care unit, Protonix in the Established Products unit as well as Enbrel and the Prevenar franchise in the Emerging Markets unit, partially offset by a decline of $1.1 billion, or 8%, due to legacy Pfizer products, primarily Lipitor and Norvasc. The impact of foreign exchange on Biopharmaceutical revenues was immaterial.

Within the Biopharmaceutical units, legacy Pfizer operational performance was impacted in fourth-quarter 2010 compared with the year-ago quarter primarily by the loss of exclusivity of certain products and European pricing pressures, among other factors. Legacy Pfizer Primary Care unit revenues in fourth-quarter 2010 were negatively impacted by the loss of exclusivity of Lipitor in Canada and Spain in May 2010 and July 2010, respectively, as well as Aricept in the U.S. in November 2010. Taken together, the loss of exclusivity for these products reduced legacy Pfizer Primary Care revenues by approximately $500 million, or 8%. Additionally, legacy Pfizer Primary Care revenues were negatively impacted by Developed Europe pricing pressures and U.S. healthcare reform and positively impacted by growth from select brands, including Lyrica, Champix and Celebrex, among others, in key international markets, most notably Japan. Legacy Pfizer Specialty Care unit revenues were also negatively impacted by Developed Europe pricing pressures and U.S. healthcare reform as well as an overall decline in certain therapeutic markets. Legacy Pfizer Established Products unit revenues were mainly impacted by the loss of exclusivity of Norvasc in Canada in July 2009. Lastly, legacy Pfizer Emerging Markets unit revenues were negatively impacted by the loss of exclusivity of Lipitor in August 2010 and Viagra in June 2010, both in Brazil, as well as Emerging Europe pricing pressures, but positively impacted by growth in key markets, including China and Brazil.

For fourth-quarter 2010, revenues from Diversified were $2.4 billion, an increase of 34% compared with $1.8 billion in the year-ago quarter. This increase of $624 million was primarily attributable to legacy Wyeth products, principally Advil, Caltrate and Centrum in Consumer Healthcare and infant and toddler Nutrition products. The impact of foreign exchange on Diversified revenues was immaterial.

Reported Net Income(2) and Reported Diluted EPS(2)

For fourth-quarter 2010, Pfizer posted reported net income(2) of $2.9 billion, an increase of 277% compared with $767 million in the prior-year quarter, and reported diluted EPS(2) of $0.36, an increase of 260% compared with $0.10 in the prior-year quarter. For full-year 2010, Pfizer posted reported net income(2) of $8.3 billion, a decline of 4% compared with $8.6 billion in full-year 2009, and reported diluted EPS(2) of $1.02, a decline of 17% compared with $1.23 in full-year 2009. Fourth-quarter 2010 results were favorably impacted by revenues from legacy Wyeth products and substantially lower restructuring charges associated with the Wyeth acquisition, and negatively impacted primarily by lower revenues from legacy Pfizer products, expenses associated with the legacy Wyeth operations and an additional charge for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc. For full-year 2010, results were impacted by the aforementioned items as well as the favorable impact of foreign exchange and the unfavorable impact of impairment charges related to certain intangible assets acquired in connection with the Wyeth acquisition, higher purchase accounting adjustments and integration charges associated with the Wyeth acquisition as well as higher net interest expense primarily due to borrowings used to partially fund the Wyeth acquisition.

Additionally, in fourth-quarter 2010, Pfizer reached a settlement with the U.S. Internal Revenue Service related to issues the Company was appealing regarding the audits of the Pfizer Inc. and Pharmacia tax returns for multiple years. As a result of this settlement, the Company reduced its unrecognized tax benefits by approximately $1.4 billion in tax and approximately $600 million in interest and recorded a corresponding tax benefit to its income tax provision in fourth-quarter 2010, resulting in a favorable impact on net income.

Further, reported diluted EPS(2) in full-year 2010 was impacted by the increased number of shares outstanding in comparison with full-year 2009 resulting from shares issued to partially fund the Wyeth acquisition.

Adjusted Income(1) and Adjusted Diluted EPS(1)

Fourth-quarter 2010 adjusted income(1) was $3.8 billion, comparable with the year-ago quarter, and adjusted diluted EPS(1) was $0.47, a decrease of 4% compared with $0.49 in the year-ago quarter. For full-year 2010, Pfizer posted adjusted income(1) of $18.0 billion, an increase of 27% compared with $14.2 billion in full-year 2009, and adjusted diluted EPS(1) of $2.23, an increase of 10% compared with $2.02 in full-year 2009. Results were favorably impacted by revenues from legacy Wyeth products, and unfavorably impacted by expenses associated with the legacy Wyeth operations as well as lower revenues from legacy Pfizer products and, particularly in full-year 2010, higher net interest expense primarily due to borrowings used to partially fund the acquisition of Wyeth. For full-year 2010, results were favorably impacted by foreign exchange.

In addition, the effective tax rate on adjusted income(1) decreased to approximately 26% in fourth-quarter 2010 compared with approximately 28% in fourth-quarter 2009, and was approximately 30% in both full-year 2010 and 2009. The decrease in the effective tax rate on adjusted income(1) in fourth-quarter 2010 compared with fourth-quarter 2009was primarily due to the extension of the U.S. research and development credit signed into law in December 2010 and the change in the jurisdictional mix of earnings in the respective periods.

Additionally, adjusted diluted EPS(1) in full-year 2010 was impacted by the increased number of shares outstanding in comparison with full-year 2009 resulting from shares issued to partially fund the Wyeth acquisition.

In fourth-quarter 2010, adjusted cost of sales(1) as a percentage of revenues was 21.5% compared with 17.5% in fourth-quarter 2009. This increase primarily reflects the change in the mix of products and businesses as a result of the Wyeth acquisition. Excluding the impact of foreign exchange, adjusted cost of sales(1) as a percentage of revenues was 20.7% in fourth-quarter 2010.

Adjusted SI&A expenses(1) were $5.7 billion in fourth-quarter 2010, an increase of 7% compared with $5.3 billion in the prior-year quarter. This increase was attributable primarily to the legacy Wyeth operations. Foreign exchange decreased fourth-quarter 2010 adjusted SI&A expenses(1) by $15 million compared with the year-ago quarter.

Adjusted R&D expenses(1) were $2.8 billion in fourth-quarter 2010, essentially flat compared with the prior-year period. This was attributable primarily to cost reductions that were offset by legacy Wyeth operations and continued investment in the late-stage development portfolio. Foreign exchange decreased fourth-quarter 2010 adjusted R&D expenses(1) by $9 million compared with the year-ago quarter.

Overall, foreign exchange increased adjusted total costs(14) by $96 million, or 1%, in fourth-quarter 2010 compared with the prior-year.

Executive Commentary

Ian Read, President and Chief Executive Officer, stated, “I am pleased with our solid financial performance again this quarter and this year despite continued challenging market conditions. Pfizer has a strong asset base across various therapeutic areas and geographies in addition to a promising late-stage product pipeline, which I believe positions us well going forward.”

“After evaluating our operating plans and capital allocation opportunities, we have adjusted our 2012 revenue target to exclude the projected contribution from future business development transactions and have reallocated funding to support an attractive, near-term opportunity to significantly increase our share repurchase activity. As announced today, the Board has authorized an additional share repurchase program for up to $5 billion, which increases our total current authorization to $9 billion. During 2011, we anticipate repurchasing approximately $5 billion of our common stock, with the remaining authorized amount available in 2012 and beyond. These repurchases are not expected to constrain our ability to continue dividend increases or to pursue bolt-on acquisitions.”

“We continue to closely evaluate our global research and development function and will accelerate our current strategies to improve innovation and overall productivity. Key steps in this process include greater focus in disease areas of greatest scientific, medical and commercial opportunity, a realigned global R&D footprint to increase our presence in key biomedical innovation hubs, and an increased level of outsourcing for services that do not drive competitive advantage for Pfizer. Furthermore, we plan to enhance internal programs that are designed to strengthen pipeline delivery and differentiated innovation. As a result of these actions, we expect to reduce adjusted R&D expenses(1) to between approximately $6.5 to $7.0 billion in 2012 compared with our previous target of $8.0 to $8.5 billion.”

“We believe that the planned increase in share repurchases and the decrease in research and development spending will serve to provide a greater degree of certainty and a more clearly defined path for us to achieve our 2012 adjusted diluted EPS(1) target of between $2.25 and $2.35.”

Mr. Read concluded, “In addition, during 2011 we expect to complete our ongoing review of the composition of our business portfolio to determine the optimal mix of businesses that we can appropriately fund and manage in order to achieve consistent growth and maximum return on investment. We believe these decisions, taken together, will continue to improve our business profile and provide both near-term and longer-term financial benefit.”

Frank D’Amelio, Chief Financial Officer, stated, “Our continued confidence in the business and our ability to meet our commitments and capitalize on near- to mid-term growth opportunities are clearly reflected in the achievement of our 2010 financial guidance, including our projected cost savings from the Wyeth integration, of which more than $2.0 billion was achieved in 2010, our 11% dividend increase announced in December 2010, our additional share repurchase program and recent business development transactions. Further, our 2011 financial guidance as well as our updated 2012 financial targets reflect our confidence to successfully navigate through challenging market conditions and significant events in the company, most notably the loss of exclusivity of Lipitor in many major markets later this year.”

2011 Financial Guidance(16)

For full-year 2011, Pfizer’s financial guidance, at current exchange rates(15), is summarized below.

     
Reported Revenues   $66.0 to $68.0 billion
Adjusted Cost of Sales(1) as a Percentage of Revenues   19.5% to 20.5%
Adjusted SI&A Expenses(1)   $19.2 to $20.2 billion
Adjusted R&D Expenses(1)   $8.0 to $8.5 billion
Adjusted Other (Income)/Deductions(1)   Approximately $1.0 billion
Effective Tax Rate on Adjusted Income(1)   Approximately 29%
Reported Diluted EPS(2)   $1.09 to $1.24
Adjusted Diluted EPS(1)   $2.16 to $2.26
     

2012 Financial Targets(16)

As previously stated, given the longer-term nature of these targets, they are subject to greater variability and less certainty as a result of potential material impacts related to foreign exchange fluctuations, macroeconomic activity including inflation, and industry-specific challenges including changes to government healthcare policy, among others.

The Company is updating certain elements of its 2012 financial targets and is providing for the first time a target for adjusted SI&A expenses(1). At current exchange rates(15), Pfizer is now targeting reported revenues between $63.0 and $65.5 billion, compared with the previous target of between $65.2 and $67.7 billion. This decrease primarily reflects the elimination of the projected revenue contribution from future business development transactions previously included in the target as well as certain changes in market conditions. Additionally, adjusted R&D expenses(1) are now expected to be between $6.5 and $7.0 billion, compared with the previous target of between $8.0 and $8.5 billion. Driving this decline is the planned reduction in the number of disease areas the Company will focus on based upon where the greatest medical and commercial impact can be achieved as well as a realigned R&D footprint, including a planned exit from the Sandwich, U.K. site, subject to customary requirements, shift of selected resources from Groton, CT to Cambridge, MA and outsourcing of certain functions. Additionally, the Company is planning to enhance its presence in Cambridge, MA to complement research teams in other hubs like San Francisco, New York, La Jolla and Cambridge, U.K. Further, adjusted other (income)/deductions(1) are now expected to be approximately $1.0 billion in deductions, compared with the previous target of between $1.0 and $1.2 billion in deductions, and the effective tax rate on adjusted income(1) is now targeted at approximately 29%, down from approximately 30%. All other elements of the 2012 financial targets remain unchanged, including adjusted operating margin(1) in a range of the high 30%s to low 40%s, reported diluted EPS(2) between $1.58 and $1.73, adjusted diluted EPS(1) between $2.25 and $2.35, and operating cash flow of at least $19.0 billion. In addition, the Company is now providing a target range for adjusted SI&A expenses(1) of between $17.5 and $18.5 billion.

The Company also remains on-track to achieve its cost-reduction target associated with the Wyeth acquisition of approximately $4 to $5 billion, by the end of 2012, at 2008 average foreign exchange rates, in comparison with the 2008 pro-forma adjusted total costs(14) of the legacy Pfizer and legacy Wyeth operations. This cost-reduction target does not include the impact of the planned reduction in R&D spending announced today. In 2010, the Company met its target of achieving more than $2 billion of these cost reductions.

For additional details, please see the attached financial schedules, product revenue tables, supplemental information and disclosure notice.

(1)   "Adjusted Income" and its components and "Adjusted Diluted Earnings Per Share (EPS)" are defined as reported net income(2) and its components and reported diluted EPS(2) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Cost of Sales, Adjusted SI&A expenses, Adjusted R&D expenses and Adjusted Other (Income)/Deductions are income statement line items prepared on the same basis, and therefore, components of the overall adjusted income measure. As described under Adjusted Income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer's Form 10-Q for the fiscal quarter ended October 3, 2010, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors' understanding of our performance is enhanced by disclosing this measure. Reconciliations of fourth-quarter 2010 and 2009 and full-year 2010 and 2009 adjusted income and its components and adjusted diluted EPS to reported net income(2) and its components and reported diluted EPS(2), as well as reconciliations of full-year 2011 guidance and 2012 targets for adjusted income and adjusted diluted EPS to full-year 2011 guidance and 2012 targets for reported net income(2) and reported diluted EPS(2), are provided in the materials accompanying this report. The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. generally accepted accounting principles (GAAP) net income and its components and diluted EPS.
     
(2)   “Reported Net Income” is defined as net income attributable to Pfizer Inc. in accordance with U.S. generally accepted accounting principles. “Reported Diluted EPS” is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.
     
(3)   The Primary Care unit includes revenues from human pharmaceutical products primarily prescribed by primary-care physicians, and may include, but are not limited to, products in the following therapeutic and disease areas: Alzheimer’s disease, anxiety, cardiovascular (excluding pulmonary arterial hypertension), diabetes, pain, genitourinary, obesity, osteoporosis and respiratory. Examples of products in this unit include, but are not limited to, Celebrex, Lipitor, Lyrica, Premarin, Pristiq and Viagra. All revenues for such products are allocated to the Primary Care unit, except those generated in emerging markets(6) and those that are managed by the Established Products(5) unit.
     
(4)   The Specialty Care unit includes revenues from human pharmaceutical products primarily prescribed by physicians who are specialists, and may include, but are not limited to, products in the following therapeutic and disease areas: antibacterials, antifungals, antivirals, bone, inflammation, gastrointestinal, growth hormones, multiple sclerosis, ophthalmology, pulmonary arterial hypertension and psychosis. Examples of products in this unit include, but are not limited to, Enbrel, Genotropin, Geodon, the Prevnar/Prevenar franchise, Xalatan and Zyvox. All revenues for such products are allocated to the Specialty Care unit, except those generated in emerging markets(6) and those that are managed by the Established Products(5) unit.
     
(5)   The Established Products unit generally includes revenues from human prescription pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. In certain situations, products may be transferred to this unit before losing patent protection or marketing exclusivity in order to maximize their value. This unit also excludes revenues generated in emerging markets(6). Examples of products in this unit include, but are not limited to, Arthrotec, Effexor, Medrol, Norvasc, Protonix, Relpax and Zosyn/Tazocin.
     
(6)   The Emerging Markets unit includes revenues from all human prescription pharmaceutical products sold in emerging markets, including, but not limited to, Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe, Russia and Turkey.
     
(7)   The Oncology unit includes revenues from human oncology and oncology-related products. Examples of products in this unit include, but are not limited to, Aromasin, Sutent and Torisel. All revenues for such products are allocated to the Oncology unit, except those generated in emerging markets(6) and those that are managed by the Established Products(5) unit.
     
(8)   Animal Health includes worldwide revenues from products to prevent and treat disease in livestock and companion animals, including vaccines, paraciticides and anti-infectives.
     
(9)   Consumer Healthcare generally includes worldwide revenues from non-prescription medicines and vitamins and may include, but are not limited to, products in the following therapeutic categories: pain management, nutritionals, respiratory and GI-topicals. Examples of products in Consumer Healthcare include, but are not limited to, Advil, Caltrate, Centrum, ChapStick and Robitussin.
     
(10)   Nutrition generally includes revenues from a full line of infant and toddler nutritional products sold outside of North America. Examples of products in Nutrition include, but are not limited to, the S-26 and SMA product lines as well as formula for infants with special nutritional needs.
     
(11)   Capsugel generally includes worldwide revenues from capsule products and services for the pharmaceutical and associated healthcare industries. On October 6, 2010, the Company announced that it is reviewing strategic alternatives for Capsugel, which may include a divestiture.
     
(12)   Includes revenues generated primarily from Pfizer Centersource.
     
(13)   In Biopharmaceutical, revenues from South Korea in 2009 have been reclassified from the Emerging Markets unit to the appropriate developed market units to conform to the current-year presentation, which reflects the fact that the commercial operations of South Korea, effective January 1, 2010, are managed within the appropriate developed market units.
     
(14)   Represents the total of Adjusted Cost of Sales(1), Adjusted SI&A expenses(1) and Adjusted R&D expenses(1).
     
(15)   The current exchange rate assumed in connection with the 2011 financial guidance and 2012 financial targets are the mid-January 2011 exchange rates.
     
(16)   Assumes the completion of the acquisition of all remaining shares of King Pharmaceuticals, Inc., but does not assume the completion of any other business-development transactions not completed as of December 31, 2010. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2010.
     
(17)   In 2009, results of operations reflect the results of the legacy Wyeth operations from the closing of the acquisition on October 15, 2009 through year-end in accordance with Pfizer's international and domestic year-ends. Therefore, the results include approximately two-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s U.S. operations and one-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s international operations.

 

                                         
PFIZER INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(millions, except per common share data)
                                               
          Fourth Quarter     % Incr. /   Full-Year     % Incr. /
          2010    

2009

    (Decr.)   2010     2009     (Decr.)
    Revenues   $ 17,561       $ 16,537       6   $ 67,809       $ 50,009     36
    Costs and expenses:                                        
      Cost of sales (a)     4,282         3,935       9     16,279         8,888     83
      Selling, informational and administrative expenses (a)     5,738         5,367       7     19,614         14,875     32
      Research and development expenses (a)     2,806         2,813       -     9,413         7,845     20
      Amortization of intangible assets     1,432         1,122       28     5,404         2,877     88
      Acquisition-related in-process research and development charges     51         48       6     125         68     84
      Restructuring charges and certain acquisition-related costs     1,123         3,131       (64)     3,214         4,337     (26)
      Other deductions--net     1,300         117       *     4,338         292     *
    Income from continuing operations before provision                                        
      for taxes on income     829         4       *     9,422         10,827     (13)
    (Benefit)/Provision for taxes on income     (2,074 )       (755 )     175     1,124         2,197     (49)
    Income from continuing operations     2,903         759       282     8,298         8,630     (4)
    Discontinued operations--net of tax     (5 )       8       (163)     (9 )       14     (164)
    Net income before allocation to noncontrolling interests     2,898         767       278     8,289         8,644     (4)
    Less: Net income attributable to noncontrolling interests     8         -       *     32         9     256
    Net income attributable to Pfizer Inc.   $ 2,890       $ 767       277   $ 8,257       $ 8,635     (4)
    Earnings per share - basic:                                        
      Income from continuing operations attributable to                                        
      Pfizer Inc. common shareholders   $ 0.36       $ 0.10       260   $ 1.03       $ 1.23     (16)
      Discontinued operations--net of tax     -         -       --     -         -     --
      Net income attributable to Pfizer Inc. common shareholders   $ 0.36       $ 0.10       260   $ 1.03       $ 1.23     (16)
    Earnings per share - diluted:                                        
      Income from continuing operations attributable to                                        
      Pfizer Inc. common shareholders   $ 0.36       $ 0.10       260   $ 1.02       $ 1.23     (17)
      Discontinued operations--net of tax     -         -       --     -         -     --
      Net income attributable to Pfizer Inc. common shareholders   $ 0.36       $ 0.10       260   $ 1.02       $ 1.23     (17)
    Weighted-average shares used to calculate earnings per common share:                                  
      Basic     8,011         7,803             8,036         7,007      
      Diluted     8,048         7,847             8,074         7,045      
                                               
                                               
(a)   Exclusive of amortization of intangible assets, except as discussed in footnote 2 below.
*   Calculation not meaningful.
    Certain amounts and percentages may reflect rounding adjustments.
                                               
1.  

The above financial statements present the three-month and twelve-month periods ended December 31, 2010 and December 31, 2009. Subsidiaries operating outside the United States are included for the three-month and twelve-month periods ended November 30 for each year. Wyeth's results are included in our consolidated financial statements commencing from the acquisition date of October 15, 2009, in accordance with Pfizer's domestic and international year-ends. Therefore, our 2009 results of operations include approximately two-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth's U.S. operations and approximately one-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth's international operations; all periods in 2010 reflect legacy Wyeth operations.

   
   
   
   
   
                                               
   

Cost of sales after the closing of the Wyeth transaction includes the significant impacts of purchase accounting adjustments associated with inventory acquired from Wyeth that was sold subsequent to the acquisition date. In addition, full-year 2010 includes a write-off of certain Wyeth-related inventory.

   
   
                                               
   

Restructuring charges and certain acquisition-related costs includes significant charges related to employee termination and other exit costs recorded in fourth-quarter 2009 as a result of the closing of the Wyeth acquisition.

   
                                               
   

Other deductions-net in 2010 includes impairment charges related to certain intangible assets acquired as part of our acquisition of Wyeth as well as additional charges for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc., and in 2009 includes a gain related to ViiV Healthcare Limited.

   
   
                                               
   

(Benefit)/Provision for taxes on income in 2010 includes a $2.0 billion tax benefit recorded in fourth-quarter as a result of a settlement of certain tax audits covering the years 2002-2005 as well as the tax impact of the additional charges for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc. Amounts in 2009 include tax benefits of approximately $556 million related to the sale of one of our biopharmaceutical companies (Vicuron Pharmaceuticals, Inc.), which were recorded in the fourth quarter of 2009, and tax benefits of approximately $174 million related to the final resolution of a previously disclosed settlement that resulted in the receipt of information that raised our assessment of the likelihood of prevailing on the technical merits of our tax position, which were recorded in the third quarter of 2009.

   
   
   
   
   
                                               
    See Supplemental Information that accompanies these materials for additional details.
                                               
2.  

Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute our products is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrativeexpenses or Research and development expenses, as appropriate.

   
   
   

 

                                               
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND ITS COMPONENTS
AND REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON SHAREHOLDERS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS (a)
(UNAUDITED)
(millions of dollars, except per common share data)
                                                     
                                                     
            Quarter Ended December 31, 2010
                    Purchase   Acquisition-             Certain        
                    Accounting   Related       Discontinued       Significant      
            Reported       Adjustments       Costs(2)       Operations       Items(3)       Adjusted
  Revenues   $ 17,561       $ -       $ -       $ -     $ -       $ 17,561
  Costs and expenses:                                              
      Cost of sales (b)     4,282         (340 )       (159 )       -       (8 )       3,775
      Selling, informational and administrative expenses (b)     5,738         8         (37 )       -       34         5,743
      Research and development expenses (b)     2,806         -         12         -       (18 )       2,800
      Amortization of intangible assets     1,432         (1,400 )       -         -       -         32
      Acquisition-related in-process research and development charges     51         (51 )       -         -       -         -
      Restructuring charges and certain acquisition-related costs     1,123         -         (1,123 )       -       -         -
      Other (income)/deductions--net     1,300         90         -         -       (1,283 )       107
  Income from continuing operations before provision                                              
      for taxes on income     829         1,693         1,307         -       1,275         5,104
  (Benefit)/Provision for taxes on income     (2,074 )       517         397         -       2,486         1,326
  Income from continuing operations     2,903         1,176         910         -       (1,211 )       3,778
  Discontinued operations--net of tax     (5 )       -         -         5       -         -
  Net income before allocation to noncontrolling interests     2,898         1,176         910         5       (1,211 )       3,778
  Less: Net income attributable to noncontrolling interests     8         -         -         -       -         8
  Net income attributable to Pfizer Inc.   $ 2,890       $ 1,176       $ 910       $ 5     $ (1,211 )     $ 3,770
  Earnings per common share - diluted:                                              
      Income from continuing operations attributable to Pfizer Inc.                                          
      common shareholders   $ 0.36       $ 0.15       $ 0.11       $ -     $ (0.15 )     $ 0.47
      Discontinued operations--net of tax     -         -         -         -       -         -
      Net income attributable to Pfizer Inc. common shareholders   $ 0.36       $ 0.15       $ 0.11       $ -     $ (0.15 )     $ 0.47
                                                     
                                                     
                                                     
            Twelve Months Ended December 31, 2010
                    Purchase   Acquisition-             Certain        
                    Accounting   Related       Discontinued       Significant      
            Reported       Adjustments       Costs(2)       Operations       Items(3)       Adjusted
  Revenues   $ 67,809       $       $       $ -     $ (18 )     $ 67,791
  Costs and expenses:                                              
      Cost of sales (b)     16,279         (2,904 )       (526 )       -       (229 )       12,620
      Selling, informational and administrative expenses (b)     19,614         25         (227 )       -       48         19,460
      Research and development expenses (b)     9,413         (23 )       (34 )       -       (18 )       9,338
      Amortization of intangible assets     5,404         (5,280 )               -               124
      Acquisition-related in-process research and development charges     125         (125 )               -               -
      Restructuring charges and certain acquisition-related costs     3,214                 (3,214 )       -               -
      Other (income)/deductions--net     4,338         50         -         -       (3,783 )       605
  Income from continuing operations before provision                                              
      for taxes on income     9,422         8,257         4,001         -       3,964         25,644
  Provision for taxes on income     1,124         2,148         1,092         -       3,265         7,629
  Income from continuing operations     8,298         6,109         2,909         -       699         18,015
  Discontinued operations--net of tax     (9 )       -         -         9       -         -
  Net income before allocation to noncontrolling interests     8,289         6,109         2,909         9       699         18,015
  Less: Net income attributable to noncontrolling interests     32         -         -         -       -         32
  Net income attributable to Pfizer Inc.   $ 8,257       $ 6,109       $ 2,909       $ 9     $ 699       $ 17,983
  Earnings per common share - diluted:                                              
      Income from continuing operations attributable to Pfizer Inc.                                          
      common shareholders   $ 1.02       $ 0.76       $ 0.36       $ -     $ 0.09       $ 2.23
      Discontinued operations--net of tax     -         -         -         -       -         -
      Net income attributable to Pfizer Inc. common shareholders   $ 1.02       $ 0.76       $ 0.36       $ -     $ 0.09       $ 2.23
                                                     
                                                     
  (a)   Adjusted income and its components and adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.
     
                                                     
  (b)   Exclusive of amortization of intangible assets, except as discussed in note 1.
                                                     
  See end of tables for notes.                                              
  Certain amounts may reflect rounding adjustments.

 

                                                 
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND ITS COMPONENTS
AND REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON SHAREHOLDERS
  TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS (a)
(UNAUDITED)
(millions of dollars, except per common share data)
                                                     
                                                     
            Quarter Ended December 31, 2009
                    Purchase   Acquisition-             Certain        
                    Accounting   Related       Discontinued       Significant      
            Reported       Adjustments       Costs(2)       Operations       Items(3)       Adjusted
  Revenues   $ 16,537       $ -       $ -       $ -       $ (17 )     $ 16,520  
  Costs and expenses:                                              
      Cost of sales (b)     3,935         (976 )       (31 )       -         (42 )       2,886  
      Selling, informational and administrative expenses (b)     5,367         21         (37 )       -         (6 )       5,345  
      Research and development expenses (b)     2,813         (15 )       (13 )       -         14         2,799  
      Amortization of intangible assets     1,122         (1,075 )       -         -         -         47  
      Acquisition-related in-process research and development charges     48         (48 )       -         -         -         -  
      Restructuring charges and certain acquisition-related costs     3,131         -         (3,131 )       -         -         -  
      Other (income)/deductions--net     117         (3 )       -         -         (4 )       110  
  Income from continuing operations before provision                                            
      for taxes on income     4         2,096         3,212         -         21         5,333  
  (Benefit)/Provision for taxes on income     (755 )       630         877         -         756         1,508  
  Income from continuing operations     759         1,466         2,335         -         (735 )       3,825  
  Discontinued operations--net of tax     8         -         -         (8 )       -         -  
  Net income before allocation to noncontrolling interests     767         1,466         2,335         (8 )       (735 )       3,825  
  Less: Net income attributable to noncontrolling interests     -         -         -         -         -         -  
  Net income attributable to Pfizer Inc.   $ 767       $ 1,466       $ 2,335       $ (8 )     $ (735 )     $ 3,825  
  Earnings per common share - diluted:                                              
      Income from continuing operations attributable to Pfizer Inc.                                          
      common shareholders   $ 0.10       $ 0.19       $ 0.30       $ -       $ (0.10 )     $ 0.49  
      Discontinued operations--net of tax     -         -         -         -         -         -  
      Net income attributable to Pfizer Inc. common shareholders   $ 0.10       $ 0.19       $ 0.30       $ -       $ (0.10 )     $ 0.49  
                                                     
                                                     
                                                     
                                                     
            Twelve Months Ended December 31, 2009
                    Purchase   Acquisition-             Certain        
                    Accounting   Related       Discontinued       Significant      
            Reported       Adjustments       Costs(2)       Operations       Items(3)       Adjusted
  Revenues   $ 50,009       $ -       $ -       $ -       $ (75 )     $ 49,934  
  Costs and expenses:                                              
      Cost of sales (b)     8,888         (976 )       (31 )       -         (208 )       7,673  
      Selling, informational and administrative expenses (b)     14,875         30         (37 )       -         (201 )       14,667  
      Research and development expenses (b)     7,845         (37 )       (13 )       -         (56 )       7,739  
      Amortization of intangible assets     2,877         (2,731 )       -         -         -         146  
      Acquisition-related in-process research and development charges     68         (68 )       -         -         -         -  
      Restructuring charges and certain acquisition-related costs     4,337         -         (3,945 )       -         (392 )       -  
      Other (income)/deductions--net     292         (5 )       -         -         (735 )       (448 )
  Income from continuing operations before provision                                            
      for taxes on income     10,827         3,787         4,026         -         1,517         20,157  
  Provision for taxes on income     2,197         1,154         1,167         -         1,428         5,946  
  Income from continuing operations     8,630         2,633         2,859         -         89         14,211  
  Discontinued operations--net of tax     14         -         -         (14 )       -         -  
  Net income before allocation to noncontrolling interests     8,644         2,633         2,859         (14 )       89         14,211  
  Less: Net income attributable to noncontrolling interests     9         -         -         -         -         9  
  Net income attributable to Pfizer Inc.   $ 8,635       $ 2,633       $ 2,859       $ (14 )     $ 89       $ 14,202  
  Earnings per common share - diluted:                                              
      Income from continuing operations attributable to Pfizer Inc.                                          
      common shareholders   $ 1.23       $ 0.38       $ 0.40       $ -       $ 0.01       $ 2.02  
      Discontinued operations--net of tax     -         -         -         -         -         -  
      Net income attributable to Pfizer Inc. common shareholders   $ 1.23       $ 0.38       $ 0.40       $ -       $ 0.01       $ 2.02  
                                                     
                                                     
  (a)   Adjusted income and its components and adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.
     
                                                     
  (b)   Exclusive of amortization of intangible assets, except as discussed in note 1.
                                                     
  See end of tables for notes.                                              
  Certain amounts may reflect rounding adjustments.

 

                       
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND ITS COMPONENTS
AND REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON SHAREHOLDERS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS*
(UNAUDITED)
                                     
1)  

Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute our products is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.

   
   
                                     
2)   Acquisition-related costs includes the following:
                                     
                  Fourth Quarter     Full-Year
        (millions of dollars)   2010     2009     2010     2009
                                     
        Transaction costs(a)     $ 10       $ 196       $ 23       $ 768  
        Integration costs(a)     354         327         1,004         569  
        Restructuring charges(a)     759         2,608         2,187         2,608  
        Additional depreciation - asset restructuring(b)     184         81         787         81  
        Total acquisition-related costs -- pre-tax     1,307    

 

  3,212         4,001         4,026  
        Income taxes(c)     (397 )       (877 )       (1,092 )       (1,167 )
        Total acquisition-related costs -- net of tax   $ 910       $ 2,335       $ 2,909       $ 2,859  
                                     
    (a)   Transaction costs include costs directly related to our acquisition of Wyeth, such as banking, legal, accounting and other similar costs. Integration costs primarily represent external, incremental costs directly related to integrating Wyeth and primarily include expenditures for consulting and systems integration. Restructuring charges primarily relate to our acquisition of Wyeth and include employee termination costs, asset impairments and exit costs.
       
       
                                     
         
   

(b)

 

Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions related to our acquisition of Wyeth. Included in Cost of sales($159 million), Selling, informational and administrative expenses($37 million), and Research and development expenses ($12 million income) for the three months ended December 31, 2010. Included in Cost of sales($526 million), Selling, informational and administrative expenses ($227 million) and Research and development expenses ($34 million) for the full year ended December 31, 2010. Included in Cost of sales ($31 million), Selling, informational and administrative expenses($37 million), and Research and development expenses ($13 million) for the three months and full year ended December 31, 2009.

       
       
       
       
       
                                     
    (c)   Included in Provision for taxes on income.
                                     
3)   Certain significant items includes the following:                  
                         
                  Fourth Quarter     Full-Year
        (millions of dollars)   2010     2009     2010     2009
                                     
        Restructuring charges - Cost-reduction initiatives(a)   $ -       $ -       $ -       $ 392  
        Implementation costs - Cost-reduction initiatives(b)     -         -         -         410  
        Certain legal matters(c)     860         124         1,703         294  
        Net interest expense(d)       -         61         -         589  
        Certain asset impairment charges(e)     483         310         2,151         294  
        Inventory write-off(f)       -         -         212         -  
        Gain related to ViiV Healthcare Limited(g)     -         (482 )       -         (482 )
        Other         (68 )       8         (102 )       20  
        Total certain significant items -- pre-tax     1,275         21         3,964         1,517  
        Income taxes(h)         (2,486 )       (756 )       (3,265 )       (1,428 )
        Total certain significant items -- net of tax   $ (1,211 )     $ (735 )     $ 699       $ 89  
                                     
    (a)   Included in Restructuring charges and certain acquisition-related costs.
         
    (b)   Included in Cost of sales ($144 million), Selling, informational and administrative expenses ($182 million), Research and development expenses ($78 million), and Other deductions - net ($6 million) for the full year ended December 31, 2009.
       
                                     
    (c)   Included in Other deductions - net. Includes an additional $620 million charge in fourth-quarter 2010 and $1.3 billion charge for full-year 2010 for asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc.
       
                                     
    (d)   Included in Other deductions - net. Includes interest expense through October 15, 2009, the Wyeth acquisition date, on the senior unsecured notes issued in connection with our acquisition of Wyeth less interest income earned on the proceeds of those notes.
       
                                     
    (e)   Included in Other deductions - net. Includes impairment charges of:
          - $166 million in fourth-quarter 2010 and $1.8 billion for full-year 2010 related to certain intangible assets acquired as part of our acquisition of Wyeth (see Supplemental Information that accompanies these materials); and
         
          - $317 million in fourth-quarter and full-year 2010 primarily related to an intangible asset associated with our product Thelin, recorded as a result of our previously announced decisions to voluntarily withdraw Thelin in regions where it is approved and to discontinue clinical studies worldwide.
         
        Amounts in 2009 primarily represent asset impairment charges associated with certain materials used in our research and development activities that were no longer considered recoverable.
       
                                     
    (f)   Included in Cost of sales (see Supplemental Information that accompanies these materials).
                                     
    (g)   Included in Other deductions - net. Represents a gain related to ViiV Healthcare Limited (ViiV), a joint venture with GlaxoSmithKline plc, which is focused solely on research, development and commercialization of HIV medicines.
       
         
   

(h)

 

Included in (Benefit)/Provision for taxes on income. Includes a tax benefit recorded in fourth-quarter 2010 as a result of a settlement of certain tax audits covering the years 2002 - 2005 as well as the tax impact of the additional charges for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc. (see Supplemental Information that accompanies these materials for additional information). Amounts in 2009 include tax benefits of approximately $556 million related to the sale of one of our biopharmaceutical companies (Vicuron Pharmaceuticals, Inc.), which were recorded in the fourth quarter of 2009, and tax benefits of approximately $174 million related to the final resolution of a previously disclosed settlement that resulted in the receipt of information that raised our assessment of the likelihood of prevailing on the technical merits of our tax position, which was recorded in the third quarter of 2009.

       
       
       
       
       
       
                                     
*   Adjusted income and its components and adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.
   

 

                                 
PFIZER INC.
BUSINESS REVENUES(1),(2)
TWELVE MONTHS 2010 and 2009
(UNAUDITED)
(millions of dollars)
                                     
                                Operational
          2010    

2009(2)

  % Change    

% Foreign
Exchange

    Total %  

Legacy Pfizer
%

Primary Care     $ 23,328     $ 22,576     3     1     2   (3)
Specialty Care       15,021       7,414     103     -     103   (1)
Established Products     10,098       7,790     30     2     28   (11)
Emerging Markets       8,662       6,157     41     6     35   5
Oncology       1,414       1,511     (6)     -     (6)   (14)
    Biopharmaceutical     58,523       45,448     29     2     27   (3)
                                     
Animal Health       3,575       2,764     29     3     26   4
Consumer Healthcare     2,772       494     *     *     *   *
Nutrition       1,867       191     *     *     *   *
Capsugel       752       740     2     -     2   2
    Diversified       8,966       4,189     114     5     109   3
                                     
Other       320       372     (14)     -     (14)   (14)
                                     
TOTAL     $ 67,809     $ 50,009     36     2     34   (3)
                                     

*

 

Calculation not meaningful

                         
                                     

(1)

 

See notes 3-12 in the accompanying earnings release for a description of each business unit and of "Other".

(2)

 

In Biopharmaceutical, revenues from South Korea in 2009 have been reclassified from the Emerging Markets unit to the appropriate developed market units to conform to the current-year presentation, which reflects the fact that the commercial operations of South Korea, effective January 1, 2010, are managed within the appropriate developed market units.

 

 

 

   
       
       
       

 

PFIZER INC.

REVENUES

FOURTH QUARTER 2010 and 2009

(UNAUDITED)

(millions of dollars)

                               
   WORLDWIDE    UNITED STATES    TOTAL INTERNATIONAL(1)
                                                                               
       

 

   

 

   % Change    

 

   

 

   % Change    

 

   

 

   % Change
   

2010

   

2009

   

Total

   Oper.    

2010

   

 

2009

   Total    

2010

   

2009

   Total    Oper.
TOTAL REVENUES  $17,561    $16,537    6%    7%    $7,239    $7,439    (3%)    $10,322    $9,098    13%    14%
TOTAL BIOPHARMACEUTICAL:  $15,051    $14,606    3%    4%    $6,408    $6,663    (4%)    $8,643    $7,943    9%    10%
Lipitor     2,629       3,175     (17 %)     (17 %)       1,408       1,522     (7 %)       1,221       1,653     (26 %)     (25 %)
Enbrel (Outside the U.S. and Canada)***     865       378     129 %     138 %       -       -     -         865       378     129 %     138 %
Lyrica     821       820     -       2 %       351       410     (14 %)       470       410     15 %     18 %

Prevnar / Prevenar 13***

    826       -    

*

      *         530       -    

*

        296       -     *       *  
Celebrex     622       669     (7 %)     (8 %)       404       467     (13 %)       218       202     8 %     5 %
Viagra     499       549     (9 %)     (9 %)       263       265     (1 %)       236       284     (17 %)     (17 %)
Xalatan / Xalacom     462       499     (7 %)     (7 %)       173       162     7 %       289       337     (14 %)     (14 %)
Effexor***     206       520     (60 %)     (60 %)       84       455     (82 %)       122       65     88 %     91 %
Norvasc     386       486     (21 %)     (23 %)       9       15     (40 %)       377       471     (20 %)     (23 %)
Prevnar / Prevenar 7***     223       287     (22 %)     (22 %)       -       144    

*

        223       143     56 %     57 %
Zyvox     300       330     (9 %)     (9 %)       150       175     (14 %)       150       155     (3 %)     (1 %)
Sutent     295       293     1 %     3 %       72       81     (11 %)       223       212     5 %     8 %
Premarin Family***     261       213     23 %     22 %       236       200     18 %       25       13     92 %     85 %
Geodon / Zeldox     264       289     (9 %)     (8 %)       222       239     (7 %)       42       50     (16 %)     (12 %)
Detrol / Detrol LA     255       309     (17 %)     (17 %)       174       211     (18 %)       81       98     (17 %)     (16 %)
Zosyn / Tazocin***     203       184     10 %     11 %       122       138     (12 %)       81       46     76 %     74 %
Genotropin     235       251     (6 %)     (6 %)       53       61     (13 %)       182       190     (4 %)     (3 %)
Vfend     230       243     (5 %)     (5 %)       73       73     -         157       170     (8 %)     (6 %)
Chantix / Champix     233       176     32 %     30 %       78       83     (6 %)       155       93     67 %     62 %
Protonix***     155       68     128 %     126 %       155       68     128 %       -       -     -       -  
Benefix***     169       98     72 %     76 %       75       56     34 %       94       42     124 %     129 %
Zoloft     142       148     (4 %)     (7 %)       17       20     (15 %)       125       128     (2 %)     (7 %)
Caduet     139       156     (11 %)     (12 %)       83       100     (17 %)       56       56     -       (2 %)
Aromasin     122       136     (10 %)     (8 %)       38       42     (10 %)       84       94     (11 %)     (7 %)
Revatio     129       131     (2 %)     -         77       81     (5 %)       52       50     4 %     8 %
Pristiq***     125       82     52 %     51 %       104       77     35 %       21       5     *       280 %
Medrol     114       123     (7 %)     (7 %)       25       35     (29 %)       89       88     1 %     3 %
Aricept**     107       121     (12 %)     (9 %)       -       -     -         107       121     (12 %)    

(9

%)
Zithromax / Zmax     112       131     (15 %)     (17 %)       4       8     (50 %)       108       123     (12 %)     (15 %)
Cardura     101       127     (20 %)     (21 %)       1       3     (67 %)       100       124     (19 %)     (21 %)
Refacto AF/Xyntha***     114       47     143 %     153 %       19       17     12 %       95       30     217 %     233 %
BMP2***     102       81     26 %     26 %       96       78     23 %       6       3     100 %     67 %
Rapamune***     96       57     68 %     70 %       47       36     31 %       49       21     133 %     150 %
Fragmin     83       115     (28 %)     (27 %)       -       31    

*

        83       84     (1 %)     (1 %)
Tygacil***     74       54     37 %     39 %       31       36     (14 %)       43       18     139 %     139 %
Alliance Revenue****     977       1,053     (7 %)     (8 %)       607       716     (15 %)       370       337     10 %     9 %
All Other Biopharmaceutical     2,375       2,207     8 %     7 %       627       558     12 %       1,748       1,649     6 %     6 %
All Other Established Products     2,015       1,856     9 %     8 %       569       501     14 %       1,446       1,355     7 %     6 %
Legacy Pfizer Other Established Products     1,758       1,696     4 %     4 %       564       467     21 %       1,194       1,229     (3 %)     (3 %)
TOTAL DIVERSIFIED:  $2,433    $1,809    34%    33%    $813    $745    9%    $1,620    $1,064    52%    51%
ANIMAL HEALTH***     976       901     8 %     8 %       376       357     5 %       600       544     10 %     10 %
CONSUMER HEALTHCARE***     758       494     53 %     52 %       392       331     18 %       366       163     125 %     121 %
NUTRITION***     492       191     158 %     150 %       -       -     -         492       191     158 %     150 %
CAPSUGEL     207       223     (7 %)     (5 %)       45       57     (21 %)       162       166     (2 %)     1 %
OTHER*****  $77    $122    (37%)    (25%)    $18    $31    (42%)    $59    $91    (35%)    (19%)
                                                                               

*

 

- Calculation not meaningful.

**

 

- Includes direct sales under license agreement with Eisai Co., Ltd.

***

 

- Legacy Wyeth products and operations. Animal Health results also reflect the addition of legacy Wyeth products.

   

Wyeth's results are included in our financial statements commencing from the acquisition date of October 15, 2009, in accordance with Pfizer's domestic and international year-ends. Therefore, our 2009 results include approximately two-and-a-half months of Wyeth's U.S. operations and approximately one-and-a-half months of Wyeth's international operations.

****

 

- Enbrel (in the U.S. and Canada)***, Aricept, Exforge, Rebif and Spiriva.

*****

 

- Includes revenues generated primarily from Pfizer Centresource.

Certain amounts and percentages may reflect rounding adjustments.
         

(1)

 

Total International represents Developed Europe region + Developed Rest of World region + Emerging Markets region. Details for these regions are located on the following page.

 

             

PFIZER INC.
REVENUES
DETAIL OF INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
FOURTH QUARTER 2010 and 2009
(UNAUDITED)
(millions of dollars)

                                 
       DEVELOPED EUROPE(1)    DEVELOPED REST OF WORLD(2)    EMERGING MARKETS(3)
                                                                     
       

 

   

 

   % Change    

 

   

 

   % Change    

 

   

 

   % Change
       

2010

   2009    Total    Oper.    

2010

   2009    Total    Oper.    

2010

   2009    Total    Oper.
TOTAL INTERNATIONAL REVENUES  $4,352    $4,166    4%    11%    $2,690    $2,549    6%    (2%)    $3,280    $2,383    38%    37%
TOTAL INTERNATIONAL BIOPHARMACEUTICAL:  $3,877    $3,719    4%    12%    $2,397    $2,333    3%    (5%)    $2,369    $1,891    25%    23%
Lipitor     661       815     (19 %)     (13 %)       328       610     (46 %)     (51 %)       232       228     2 %     -  
Enbrel (Outside the U.S. and Canada)***     593       279     113 %     128 %       105       32     228 %     200 %       167       67     149 %     151 %
Lyrica     300       300     -       8 %       87       46     89 %     72 %       83       64     30 %     28 %
Prevnar / Prevenar 13***     179       -     *       *         39       -     *       *         78       -     *       *  
Celebrex     48       58     (17 %)     (10 %)       100       82     22 %     15 %       70       62     13 %     10 %
Viagra     103       120     (14 %)     (8 %)       55       47     17 %     6 %       78       117     (33 %)     (34 %)
Xalatan / Xalacom     143       174     (18 %)     (13 %)       94       108     (13 %)     (20 %)       52       55     (5 %)     (4 %)
Effexor***     60       33     82 %     97 %       37       21     76 %     67 %       25       11     127 %     118 %
Norvasc     48       66     (27 %)     (20 %)       217       299     (27 %)     (34 %)       112       106     6 %     5 %
Prevnar / Prevenar 7***     30       68     (56 %)     (51 %)       49       23     113 %     135 %       144       52     177 %     162 %
Zyvox     73       82     (11 %)     (2 %)       35       35     -       (9 %)       42       38     11 %     5 %
Sutent     114       138     (17 %)     (10 %)       40       28     43 %     28 %       69       46     50 %     50 %
Premarin Family***     3       1     200 %     200 %       8       6     33 %     33 %       14       6     133 %     160 %
Geodon / Zeldox     21       28     (25 %)     (21 %)       5       5     -       -         16       17     (6 %)     (6 %)
Detrol / Detrol LA     41       55     (25 %)     (22 %)       26       28     (7 %)     (18 %)       14       15     (7 %)     (7 %)
Zosyn / Tazocin***     18       20     (10 %)     -         4       2     100 %     50 %       59       24     146 %     128 %
Genotropin     98       109     (10 %)     (4 %)       55       53     4 %     (6 %)       29       28     4 %     7 %
Vfend     77       87     (11 %)     (5 %)       38       33     15 %     -         42       50     (16 %)     (12 %)
Chantix / Champix     49       48     2 %     8 %       97       37     162 %     150 %       9       8     13 %     -  
Protonix***     -       -     -       -         -       -     -       -         -       -     -       -  
Benefix***     64       31     106 %     119 %       26       8     225 %     200 %       4       3     33 %     100 %
Zoloft     19       29     (34 %)     (28 %)       73       70     4 %     (6 %)       33       29     14 %     10 %
Caduet     6       6     -       20 %       36       37     (3 %)     (11 %)       14       13     8 %     8 %
Aromasin     54       61     (11 %)     (5 %)       17       17     -       (6 %)       13       16     (19 %)     (13 %)
Revatio     33       35     (6 %)     3 %       10       8     25 %     13 %       9       7     29 %     13 %
Pristiq***     -       -     -       -         14       4     250 %     200 %       7       1     *       *  
Medrol     27       28     (4 %)     -         12       13     (8 %)     (14 %)       50       47     6 %     6 %
Aricept**     58       70     (17 %)     (11 %)       42       39     8 %     3 %       7       12     (42 %)     (33 %)
Zithromax / Zmax     21       30     (30 %)     (23 %)       45       50     (10 %)     (16 %)       42       43     (2 %)     (7 %)
Cardura     35       48     (27 %)     (19 %)       37       49     (24 %)     (31 %)       28       27     4 %     (4 %)
Refacto AF/Xyntha***     87       27     222 %     248 %       6       3     100 %     100 %       2       -     -       -  
BMP2***     6       3     100 %     67 %       -       -     -       -         -       -     -       -  
Rapamune***     17       7     143 %     157 %       4       2     100 %     150 %       28       12     133 %     155 %
Fragmin     41       42     (2 %)     -         20       20     -       -         22       22     -       (5 %)
Tygacil***     20       10     100 %     120 %       2       1     100 %     -         21       7     200 %     150 %
Alliance Revenue****     155       158     (2 %)     5 %       192       160     20 %     11 %       23       19     21 %     10 %
All Other Biopharmaceutical     575       653     (12 %)     (5 %)       442       357     24 %     13 %       731       639     14 %     13 %
    All Other Established Products     422       467     (10 %)     (3 %)       374       312     20 %     11 %       650       576     13 %     11 %
    Legacy Pfizer Other Established Products     341       417     (18 %)     (12 %)       258       257     -       (7 %)       595       555     7 %     6 %
TOTAL INTERNATIONAL DIVERSIFIED:  $441    $390    13%    21%    $282    $204    38%    31%    $897    $470    91%    81%
OTHER INTERNATIONAL*****  $34    $57    (40%)    (40%)    $11    $12    (8%)    (17%)    $14    $22    (36%)    (41%)

 

 

 

           
               
               
               

*

 

- Calculation not meaningful.

 

**

 

- Includes direct sales under license agreement with Eisai Co., Ltd.

***

 

- Legacy Wyeth products and operations. Animal Health results also reflect the addition of legacy Wyeth products.

   

Wyeth's results are included in our financial statements commencing from the acquisition date of October 15, 2009, in accordance with Pfizer's domestic and international year-ends. Therefore, our 2009 results include approximately two-and-a-half months of Wyeth's U.S. operations and approximately one-and-a-half months of Wyeth's international operations.

****

 

- Enbrel (in the U.S. and Canada)***, Aricept, Exforge, Rebif and Spiriva.

*****

 

- Includes revenues generated primarily from Pfizer Centresource.

Certain amounts and percentages may reflect rounding adjustments.
         
         

(1)

 

Developed Europe region includes the following markets: Western Europe and the Scandinavian countries.

(2)

 

Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand, and South Korea.

(3)

 

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, Russia and Turkey. In Biopharmaceutical, revenues from South Korea in 2009 have been reclassified from the Emerging Markets unit to the appropriate developed market units to conform to the current-year presentation, which reflects the fact that the commercial operations of South Korea, effective January 1, 2010, are managed within the appropriate developed market units.

 

 
 
 

 

                                       

PFIZER INC.
REVENUES
TWELVE MONTHS 2010 and 2009
(UNAUDITED)
(millions of dollars)

                                       
   WORLDWIDE    UNITED STATES    TOTAL INTERNATIONAL(1)
                                                                           
   

 

   

 

   % Change    

 

   

 

   % Change    

 

   

 

   % Change
   

2010

   2009    Total    Oper.    

2010

   2009    Total    

2010

   2009    Total    Oper.
TOTAL REVENUES  $67,809    $50,009    36%    34%    $29,046    $21,749    34%    $38,763    $28,260    37%    33%
TOTAL BIOPHARMACEUTICAL:  $58,523    $45,448    29%    27%    $25,962    $20,010    30%    $32,561    $25,438    28%    25%
Lipitor     10,733       11,434     (6 %)     (8 %)       5,329       5,667     (6 %)       5,404       5,767     (6 %)     (10 %)
Enbrel (Outside the U.S. and Canada)***     3,274       378     *       *         -       -     -         3,274       378     *       *  
Lyrica     3,063       2,840     8 %     7 %       1,424       1,504     (5 %)       1,639       1,336     23 %     22 %
Prevnar / Prevenar 13***     2,416       -     *       *         1,761       -    

*

        655       -     *       *  
Celebrex     2,374       2,383     -       (2 %)       1,580       1,697     (7 %)       794       686     16 %     10 %
Viagra     1,928       1,892     2 %     -         992       962     3 %       936       930     1 %     (3 %)
Xalatan / Xalacom     1,749       1,737     1 %     (1 %)       626       576     9 %       1,123       1,161     (3 %)     (6 %)
Effexor***     1,718       520     230 %     227 %       1,226       455     169 %       492       65     *       *  
Norvasc     1,506       1,973     (24 %)     (27 %)       33       64     (48 %)       1,473       1,909     (23 %)     (26 %)
Prevnar / Prevenar 7***     1,253       287     *       *         214       144     49 %       1,039       143     *       *  
Zyvox     1,176       1,141     3 %     2 %       613       634     (3 %)       563       507     11 %     9 %
Sutent     1,066       964     11 %     10 %       270       273     (1 %)       796       691     15 %     14 %
Premarin Family***     1,040       213     *       *         949       200    

*

        91       13     *       *  
Geodon / Zeldox     1,027       1,002     2 %     2 %       864       836     3 %       163       166     (2 %)     (4 %)
Detrol / Detrol LA     1,013       1,154     (12 %)     (13 %)       689       811     (15 %)       324       343     (6 %)     (9 %)
Zosyn / Tazocin***     952       184     *       *         627       138    

*

        325       46     *       *  
Genotropin     885       887     -       (1 %)       209       221     (5 %)       676       666     2 %     -  
Vfend     825       798     3 %     3 %       260       250     4 %       565       548     3 %     2 %
Chantix / Champix     755       700     8 %     5 %       330       386     (15 %)       425       314     35 %     28 %
Protonix***     690       68     *       *         690       68    

*

        -       -     -       -  
Benefix***     643       98     *       *         286       56    

*

        357       42     *       *  
Zoloft     532       516     3 %     (1 %)       71       82     (13 %)       461       434     6 %     2 %
Caduet     527       548     (4 %)     (7 %)       339       394     (14 %)       188       154     22 %     12 %
Aromasin     483       483     -       -         160       163     (2 %)       323       320     1 %     1 %
Revatio     481       450     7 %     7 %       293       293     -         188       157     20 %     18 %
Pristiq***     466       82     *       *         405       77    

*

        61       5     *       *  
Medrol     455       457     -       (1 %)       113       140     (19 %)       342       317     8 %     7 %
Aricept**     417       432     (3 %)     (7 %)       -       -     -         417       432     (3 %)     (7 %)
Zithromax / Zmax     415       430     (3 %)     (7 %)       14       18     (22 %)       401       412     (3 %)     (6 %)
Cardura     413       457     (10 %)     (12 %)       12       7     71 %       401       450     (11 %)     (13 %)
Refacto AF/Xyntha***     404       47     *       *         80       17    

*

        324       30     *       *  
BMP2***     400       81     *       *         382       78    

*

        18       3     *       *  
Rapamune***     388       57     *       *         197       36    

*

        191       21     *       *  
Fragmin     341       359     (5 %)     (8 %)       40       82     (51 %)       301       277     9 %     5 %
Tygacil***     324       54     *       *         164       36    

*

        160       18     *       *  
Alliance Revenue****     4,084       2,925     40 %     38 %       2,818       1,849     52 %       1,266       1,076     18 %     14 %
All Other Biopharmaceutical     8,307       7,417     12 %     10 %       1,902       1,796     6 %       6,405       5,621     14 %     11 %
All Other Established Products     7,086       6,181     15 %     12 %       1,675       1,602     5 %       5,411       4,579     18 %     15 %
Legacy Pfizer Other Established Products     6,109       6,021     1 %     (1 %)       1,648       1,568     5 %       4,461       4,453     -       (3 %)
TOTAL DIVERSIFIED:  $8,966    $4,189    114%    109%    $2,981    $1,646    81%    $5,985    $2,543    135%    126%
ANIMAL HEALTH***     3,575       2,764     29 %     26 %       1,382       1,106     25 %       2,193       1,658     32 %     27 %
CONSUMER HEALTHCARE***     2,772       494     *       *         1,408       331    

*

        1,364       163     *       *  
NUTRITION***     1,867       191     *       *         -       -     -         1,867       191     *       *  
CAPSUGEL     752       740     2 %     2 %       191       209     (9 %)       561       531     6 %     6 %
OTHER*****  $320    $372    (14%)    (14%)    $103    $93    11%    $217    $279    (22%)    (22%)
     

*

 

- Calculation not meaningful.

**

 

- Includes direct sales under license agreement with Eisai Co., Ltd.

***

 

- Legacy Wyeth products and operations. Animal Health results also reflect the addition of legacy Wyeth products.

   

Wyeth's results are included in our financial statements commencing from the acquisition date of October 15, 2009, in accordance with Pfizer's domestic and international year-ends. Therefore, our 2009 results include approximately two-and-a-half months of Wyeth's U.S. operations and approximately one-and-a-half months of Wyeth's international operations.

****

 

- Enbrel (in the U.S. and Canada)***, Aricept, Exforge, Rebif and Spiriva.

*****

 

- Includes revenues generated primarily from Pfizer Centresource.

Certain amounts and percentages may reflect rounding adjustments.
         

(1)

 

Total International represents Developed Europe region + Developed Rest of World region + Emerging Markets region. Details for these regions are located on the following page.

 

                             

PFIZER INC.
REVENUES
DETAIL OF INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
TWELVE MONTHS 2010 and 2009
(UNAUDITED)
(millions of dollars)

                             
   DEVELOPED EUROPE(1)    DEVELOPED REST OF WORLD(2)    EMERGING MARKETS(3)
                                                                                   
   

 

   

 

   % Change    

 

   

 

   % Change    

 

   

 

   % Change
   

2010

   2009    Total    Oper.    

2010

   2009    Total    Oper.    

2010

   2009    Total    Oper.
TOTAL INTERNATIONAL REVENUES  $16,665    $12,892    29%    32%    $10,091    $8,196    23%    12%    $12,007    $7,172    67%    61%
TOTAL INTERNATIONAL BIOPHARMACEUTICAL:  $14,851    $11,611    28%    31%    $9,047    $7,666    18%    7%    $8,663    $6,161    41%    35%
Lipitor     2,648       2,864     (8 %)     (6 %)       1,833       2,060     (11 %)     (22 %)       923       843     9 %     4 %
Enbrel (Outside the U.S. and Canada)***     2,252       279     *       *         393       32     *      

        629       67     *       *  
Lyrica     1,102       966     14 %     17 %       249       153     63 %     45 %       288       217     33 %     28 %
Prevnar / Prevenar 13***     453       -     *       *         62       -     *      

        140       -     *       *  
Celebrex     180       200     (10 %)     (8 %)       345       252     37 %     24 %       269       234     15 %     9 %
Viagra     402       419     (4 %)     (3 %)       198       166     19 %     7 %       336       345     (3 %)     (7 %)
Xalatan / Xalacom     573       598     (4 %)     (2 %)       359       380     (6 %)     (13 %)       191       183     4 %     -  
Effexor***     244       33     *       *         150       21     *      

        98       11     *       *  
Norvasc     202       237     (15 %)     (13 %)       818       1,239     (34 %)     (38 %)       453       433     5 %     2 %
Prevnar / Prevenar 7***     260       68     282 %     276 %       221       23     *      

        558       52     *       *  
Zyvox     288       276     4 %     7 %       128       118     8 %     2 %       147       113     30 %     22 %
Sutent     436       442     (1 %)     1 %       140       90     56 %     42 %       220       159     38 %     35 %
Premarin Family***     11       1     *       *         29       6     *      

        51       6     *       *  
Geodon / Zeldox     87       95     (8 %)     (6 %)       18       14     29 %     14 %       58       57     2 %     (4 %)
Detrol / Detrol LA     170       198     (14 %)     (14 %)       97       90     8 %     (1 %)       57       55     4 %     2 %
Zosyn / Tazocin***     101       20     *       *         16       2     *      

        208       24     *       *  
Genotropin     375       375     -       2 %       188       184     2 %     (5 %)       113       107     6 %     3 %
Vfend     296       297     -       2 %       130       114     14 %     5 %       139       137     1 %     (1 %)
Chantix / Champix     172       157     10 %     11 %       221       125     77 %     59 %       32       32     -       (6 %)
Protonix***     -       -     -       -         -       -     -       -         -       -     -       -  
Benefix***     251       31     *       *         91       8     *      

        15       3     *       *  
Zoloft     85       98     (13 %)     (11 %)       254       221     15 %     7 %       122       115     6 %     2 %
Caduet     21       20     5 %     5 %       115       89     29 %     12 %       52       45     16 %     13 %
Aromasin     200       209     (4 %)     (2 %)       62       57     9 %     2 %       61       54     13 %     11 %
Revatio     127       116     9 %     12 %       34       22     55 %     45 %       27       19     42 %     32 %
Pristiq***     -       -     -       -         41       4     *      

        20       1     *       *  
Medrol     101       104     (3 %)     (1 %)       46       49     (6 %)     (12 %)       195       164     19 %     16 %
Aricept**     230       260     (12 %)     (10 %)       153       129     19 %     5 %       34       43     (21 %)     (21 %)
Zithromax / Zmax     82       116     (29 %)     (28 %)       160       153     5 %     (2 %)       159       143     11 %     7 %
Cardura     149       172     (13 %)     (12 %)       153       180     (15 %)     (20 %)       99       98     1 %     (2 %)
Refacto AF/Xyntha***     296       27     *       *         26       3     *      

        2       -     *       *  
BMP2***     18       3     *       *         -       -     -       -         -       -     -       -  
Rapamune***     58       7     *       *         17       2     *      

        116       12     *       *  
Fragmin     151       139     9 %     9 %       68       61     11 %     -         82       77     6 %     3 %
Tygacil***.     80       10     *       *         5       1     *      

        75       7     *       *  
Alliance Revenue****     554       535     4 %     6 %       634       477     33 %     23 %       78       64     22 %     17 %
All Other Biopharmaceutical     2,196       2,239     (2 %)     -         1,593       1,141     40 %     28 %       2,616       2,241     17 %     12 %
All Other Established Products     1,695       1,549     9 %     12 %       1,382       982     41 %     30 %       2,334       2,048     14 %     10 %
Legacy Pfizer Other Established Products     1,371       1,499     (9 %)     (7 %)       964       927     4 %     (5 %)       2,126       2,027     5 %     1 %
TOTAL INTERNATIONAL DIVERSIFIED:  $1,679    $1,115    51%    53%    $1,010    $486    108%    86%    $3,296    $942    250%    231%
OTHER INTERNATIONAL*****  $135    $166    (19%)    (18%)    $34    $44    (23%)    (20%)    $48    $69    (30%)    (34%)

*

 

- Calculation not meaningful.

**

 

- Includes direct sales under license agreement with Eisai Co., Ltd.

***

 

- Legacy Wyeth products and operations. Animal Health results also reflect the addition of legacy Wyeth products.

   

Wyeth's results are included in our financial statements commencing from the acquisition date of October 15, 2009, in accordance with Pfizer's domestic and international year-ends. Therefore, our 2009 results include approximately two-and-a-half months of Wyeth's U.S. operations and approximately one-and-a-half months of Wyeth's international operations.

****

 

- Enbrel (in the U.S. and Canada)***, Aricept, Exforge, Rebif and Spiriva.

*****

 

- Includes revenues generated primarily from Pfizer Centresource.

Certain amounts and percentages may reflect rounding adjustments.
         
         

(1)

 

Developed Europe region includes the following markets: Western Europe and the Scandinavian countries.

(2)

 

Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand, and South Korea.

(3)

 

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, Russia and Turkey. In Biopharmaceutical, revenues from South Korea in 2009 have been reclassified from the Emerging Markets unit to the appropriate developed market units to conform to the current-year presentation, which reflects the fact that the commercial operations of South Korea, effective January 1, 2010, are managed within the appropriate developed market units.

 

   
   
   

PFIZER INC.

SUPPLEMENTAL INFORMATION

1. Change in Reported Cost of Sales

Reported cost of sales increased 9% in fourth-quarter 2010 and increased 83% in full-year 2010, compared to the same periods in 2009. The fourth-quarter 2010 increase primarily reflects the inclusion of Wyeth manufacturing costs, and the change in the mix of products and businesses as a result of the Wyeth acquisition, for a full quarter in 2010 compared to a partial quarter in 2009. The full-year 2010 increase is primarily a result of the following:

  • higher purchase accounting adjustments associated with the Wyeth acquisition;
  • a $212 million write-off of Wyeth-related inventory in the third quarter of 2010 related to unfinished inventory acquired from Wyeth that became unusable after the acquisition date (which included a purchase accounting fair value adjustment of $104 million);
  • the inclusion of a full year of Wyeth manufacturing costs; and
  • the change in the mix of products and businesses as a result of the Wyeth acquisition.

Foreign exchange had an unfavorable impact of 3% on reported cost of sales in fourth-quarter 2010 and a minimal impact for full-year 2010.

Reported cost of sales as a percentage of revenues increased 0.6 percentage points to 24.4% in fourth-quarter 2010, compared to the same period in 2009, reflecting the aforementioned factors.

2. Change in Reported Selling, Informational & Administrative (SI&A) Expenses and Reported Research & Development (R&D) Expenses

Reported SI&A expenses increased 7% in fourth-quarter 2010 and 32% in full-year 2010, compared to the same periods in 2009. The increases primarily reflect the inclusion of Wyeth operating costs for the entire periods of 2010, compared to partial periods in 2009. Foreign exchange had a minimal impact on reported SI&A expenses in fourth-quarter 2010 and an unfavorable impact of 2% for full-year 2010.

Reported R&D expenses were flat in fourth-quarter 2010, compared to the same period in 2009, primarily due to cost reductions that were offset by legacy Wyeth operations and continued investment in the late-stage development portfolio. For full-year 2010, reported R&D expenses increased 20%, compared to full-year 2009, primarily due to the inclusion of legacy Wyeth operations for a full year in 2010 compared to a partial year in 2009, as well as continued investment in the late-stage development portfolio. Foreign exchange had a minimal impact on reported R&D expenses in both fourth-quarter 2010 and full-year 2010.

3. Other (Income)/Deductions - Net

         
($ in millions)   Fourth Quarter   Full-Year
    2010     2009   2010     2009
Interest income(a)

Interest income

$ (105 )     $ (126 ) $ (402 )     $ (746 )
Interest expense(a)   460         464     1,799         1,233  
Net interest expense   355         338     1,397         487  
Royalty-related income   (184 )       (101 )   (579 )       (243 )
Net gain on asset disposals   (20 )       (106 )   (262 )       (188 )
Legal matters, net(b)   851         104     1,737         234  
Certain asset impairment charges(c)   466         321     2,175         417  
Gain related to ViiV Healthcare Limited(d)   -         (482 )   -         (482 )
Other, net   (168 )       43     (130 )       67  
Other deductions-net $ 1,300       $ 117   $ 4,338       $ 292  

(a)

 

Interest expense increased for the full-year 2010 due to our issuance of $13.5 billion of senior unsecured notes on March 24, 2009 and $10.5 billion of senior unsecured notes on June 3, 2009, primarily related to the acquisition of Wyeth, as well as the addition of legacy Wyeth debt. Interest income decreased in 2010 due to lower interest rates coupled with lower average investment balances.

(b)

 

The fourth-quarter and full-year 2010 periods include additional charges of $620 million and $1.3 billion, respectively, for asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc.

(c)

 

Amounts in 2010 include impairment charges of:

   

• $166 million in fourth-quarter 2010 and $1.8 billion for full-year 2010 related to intangible assets, including certain in-process research and development (“IPR&D”) intangible assets, that were acquired in connection with our acquisition of Wyeth. These impairment charges primarily resulted from our updated estimate of the fair value of these assets which was based upon updated forecasts, compared with their assigned fair values as of the Wyeth acquisition date, October 15, 2009. Our updated forecasts of net cash flows for the impaired assets reflect, among other things, the following: for IPR&D assets, the impact of changes to the development programs, the projected development and regulatory timeframes and the risk associated with these assets; for Brand assets, the current competitive environment and planned investment support; and, for Developed Technology Rights, an increased competitive environment; and

   

• $317 million in fourth-quarter and full-year 2010 primarily related to an intangible asset associated with our product Thelin, recorded as a result of our previously announced decisions to voluntarily withdraw Thelin in regions where it is approved and to discontinue clinical studies worldwide.

(d)

 

Represents a gain related to ViiV Healthcare Limited (ViiV), a joint venture with GlaxoSmithKline plc, which is focused solely on research, development and commercialization of Human Immunodeficiency Virus (HIV) medicines.

     

4. Effective Tax Rate

Reported

The Company recorded tax benefits in fourth-quarter 2010 and 2009.

During the fourth quarter of 2010, we reached a settlement with the U.S. Internal Revenue Service (IRS) related to issues we had appealed with respect to the audits of the Pfizer Inc. tax returns for the years 2002 through 2005, as well as the Pharmacia audit for the year 2003 through the date of merger with Pfizer (April 16, 2003). The IRS concluded its examination of the aforementioned tax years and issued a final Revenue Agent’s Report (RAR). The company has agreed with all of the adjustments and computations contained in the RAR. As a result of settling these audit years, we reduced our unrecognized tax benefits for fourth-quarter and full-year 2010 by approximately $1.4 billion and recorded a corresponding tax benefit. The fourth-quarter and full-year 2010 effective tax rates were also favorably impacted by approximately $600 million related to interest on these unrecognized tax benefits.

For fourth-quarter 2009, the effective tax rate on reported Income from continuing operations before provision for taxes on income was favorably impacted by a tax benefit of $556 million related to the sale of one of our biopharmaceutical companies, Vicuron Pharmaceuticals, Inc., as well as the jurisdictional mix of certain expenses incurred in connection with the Wyeth acquisition.

The effectivetax rate on reported Income from continuing operations before provision for taxes on income for full-year 2010 was 11.9% compared to 20.3% for full-year 2009. The lower tax rate in full-year 2010 is primarily the result of:

  • the aforementioned $1.4 billion reduction in unrecognized tax benefits and $600 million in interest on these unrecognized tax benefits, which were recorded as a result of the favorable tax audit settlement pertaining to prior years;
  • $460 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax authorities; and
  • the tax impact of the charge incurred for asbestos litigation;

partially offset by:

  • higher expenses, incurred as a result of our acquisition of Wyeth, and the mix of jurisdictions in which those expenses were incurred;
  • the write-off of the deferred tax asset of approximately $270 million related to the Medicare Part D subsidy for retiree prescription drug coverage, resulting from changes in the U.S. healthcare legislation enacted in March 2010 concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012; and
  • the non-recurrence of a tax benefit of $174 million that was recorded in the third quarter of 2009 related to the final resolution of a previously disclosed settlement that resulted in the receipt of information that raised our assessment of the likelihood of prevailing on the technical merits of our tax position, and the non-recurrence of the aforementioned $556 million tax benefit that was recorded in the fourth quarter of 2009.

Adjusted

The effective tax rate on adjusted income(1) decreased to 26.0% in fourth-quarter 2010 compared to 28.3% in fourth-quarter 2009, as a result of the extension of the U.S. research and development credit which was signed into law on December 17, 2010 as well as the change in the jurisdictional mix of earnings.

The effective tax rate on adjusted income(1) was 29.8% in full-year 2010 compared to 29.5% in full-year 2009. In addition to the aforementioned factors, the effective tax rate on adjusted income(1) for full-year 2010 was impacted by the write-off of the deferred tax asset of approximately $270 million related to the Medicare Part D subsidy for retiree prescription drug coverage, resulting from changes in the U.S. healthcare legislation enacted in March 2010 concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012, offset by $460 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax authorities.

5. Reconciliation of 2011 Adjusted Income(1) and Adjusted Diluted EPS(1) Guidance to 2011 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Guidance (a)

       
      Full-Year 2011 Guidance
($ in billions, except per share amounts)     Net Income(b)     Diluted EPS(b)

Income/(Expense)

           
Adjusted Income/Diluted EPS(1) Guidance     ~$17.1 - $17.9     ~$2.16 - $2.26
Purchase Accounting Impacts of Transactions Completed as of 12/31/10     (4.7)     (0.59)
Acquisition-Related Costs     (1.9 - 2.2)     (0.25 - 0.28)
Non-Acquisition-Related Restructuring Costs(c)     (1.4 - 1.6)     (0.18 - 0.20)
Reported Net Income Attributable to Pfizer Inc./Diluted EPS Guidance     ~$8.6 - $9.9     ~$1.09 - $1.24

(a)

 

The current exchange rates assumed in connection with the 2011 financial guidance are the mid-January 2011 exchange rates.

(b)

 

Assumes the completion of the acquisition of all remaining shares of King Pharmaceuticals, Inc., but does not assume the completion of any other business-development transactions not completed as of December 31, 2010. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2010.

   
   

(c)

 

Amounts relate to actions to be taken in connection with our planned reduction in R&D spending, including our realigned R&D

footprint. These amounts will be included in Certain Significant Items beginning in the first quarter of 2011.
 

6. Reconciliation of 2012 Adjusted Income(1) and Adjusted Diluted EPS(1) Targets to 2012 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Targets (a)

     
    Full-Year 2012 Targets
($ in billions, except per share amounts)   Net Income(b), (c)     Diluted EPS(b), (c)

Income/(Expense)

         
Adjusted Income/Diluted EPS(1) Targets   ~$17.2 - $17.9     ~$2.25 - $2.35
Purchase Accounting Impacts of Transactions Completed as of 12/31/10   (3.8)     (0.50)
Acquisition-Related Costs   (0.7 - 1.0)     (0.09 - 0.12)
Non-Acquisition-Related Restructuring Costs(d)   (0.3 - 0.4)     (0.03 - 0.05)
Reported Net Income Attributable to Pfizer Inc./Diluted EPS Targets   ~$12.0 - $13.1     ~$1.58 - $1.73

(a)

 

The current exchange rates assumed in connection with the 2012 financial targets are the mid-January 2011 exchange rates.

(b)

 

Assumes the completion of the acquisition of all remaining shares of King Pharmaceuticals, Inc., but does not assume the completion

of any other business development transactions not completed as of December 31, 2010. Also excludes the potential effects of the

resolution of litigation-related matters not substantially resolved as of December 31, 2010.

   
   

(c)

 

Given the longer-term nature of these targets, they are subject to greater variability and less certainty as a result of potential material

impacts related to foreign exchange fluctuations, macroeconomic activity including inflation, and industry-specific challenges including changes to government healthcare policy, among others.
   
   

(d)

 

Amounts relate to actions to be taken in connection with our planned reduction in R&D spending, including our realigned R&D

footprint. These amounts will be included in Certain Significant Items.
   
    _______________
     

(1)

 

“Adjusted income” and “adjusted diluted earnings per share (EPS)” are defined as reported net income attributable to Pfizer Inc. and reported diluted EPS attributable to Pfizer Inc. common shareholders excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. As described under Adjusted Income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer’s Form 10-Q for the fiscal quarter ended October 3, 2010, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors’ understanding of our performance is enhanced by disclosing this measure. The adjusted income and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and diluted EPS.

DISCLOSURE NOTICE: The information contained in this earnings release and the attachments is as of February 1, 2011. The Company assumes no obligation to update forward-looking statements contained in this earnings release or the attachments as a result of new information or future events or developments.

This earnings release and the attachments contain forward-looking information about the Company’s financial results and estimates, business plans and prospects, in-line products and product candidates, and share-repurchase plans and dividend-rate targets that involves substantial risks and uncertainties.You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast” and other words and terms of similar meaning or use future dates in connection with any discussion of future operating or financial performance or business plans and prospects.Among the factors that could cause actual results to differ materially are the following: the success of research and development activities, including, without limitation, the ability to meet anticipated clinical trial completion dates, anticipated regulatory submission and approval dates, and anticipated 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 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 drugcandidates; 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 U.S. healthcare legislation enacted in 2010 – the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act; 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; contingencies related to actual or alleged environmental contamination; claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates; significant breakdown, infiltration, or interruption of our information technology systems and infrastructure; legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent protection, government investigations, consumer, commercial, securities, environmental and tax issues, ongoing efforts to explore various means for resolving asbestos litigation, and other legal proceedings; the Company’s ability to protect its patents and other intellectual property both domestically and internationally; interest rate and foreign currency exchange rate fluctuations; governmental laws and regulations affecting domestic and foreign operations, including, without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside of the U.S. that result from the enactment in August 2010 of the Education Jobs and Medicaid Assistance Act of 2010 and that may result from pending and possible future proposals; 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 lenders, our customers, our suppliers and counterparties to our foreign-exchange and interest-rate agreements of weak global economic conditions and recent and possible future changes in global financial markets; 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; and the impact of acquisitions, divestitures, restructurings, product withdrawals and other unusual items, including our ability to successfully implement our announced plans regarding the Company’s research and development function, including the planned exit from the Company’s Sandwich, U.K. site, subject to works council and union consultations, as well as our ability to realize the projected benefits of our acquisition of Wyeth and of our cost-reduction initiatives, including those related to the Wyeth integration and to our research and development function. A further list and description of risks, uncertainties and other matters can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and in its reports on Forms 10-Q and 8-K.

This earnings release may include discussion of certain clinical studies relating to various in-line products and/or product candidates.These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data.

 

Contact

Pfizer Inc.

Media:
Joan Campion, 212-733-2798
or
Investors:
Suzanne Harnett, 212-733-8009
Jennifer Davis, 212-733-0717