Ian C. Read and Dr. Albert Bourla

A Letter from our Executive Chairman and CEO

To Our Shareholders:

We are pleased to report that 2018 was another strong year for Pfizer. We significantly advanced our pipeline, delivered solid financial results, enhanced shareholder value, and took important steps to position the company for what we expect to be an era of sustained top- and bottom-line growth beginning in 2021 following the impact of Lyrica's upcoming patent expiration in the U.S.

Our Global Footprint

(as of December 31, 2018)

~92,400 Employees
>125 Countries where Pfizer sells products
58 Manufacturing sites

In 2018, revenues increased 2 percent as several of our biggest-selling medicines and vaccines continued to grow, including Ibrance, Eliquis, Xeljanz, and Prevnar 13. We also generated growth in emerging markets and in biosimilars. The growth that we achieved in these areas helped to absorb $1.7 billion in lost revenue because of products that recently lost marketing exclusivity (LOE). We achieved these results while simultaneously investing $8 billion in research and development (R&D) and returning $20.2 billion directly to shareholders through a combination of dividends and share repurchases in 2018.

Patient Impact

At Pfizer, we take great pride in our financial performance because we know what is behind the numbers: our ability to have a demonstrable positive impact on patients. In 2018, we estimate that more than 784 million people around the world used our medicines and vaccines to improve their health, making us one of the most significant contributors of good to humanity.

Our Patient Impact

>65m Babies and elderly patients were protected from disease by our vaccines
>48m Cardiovascular patients took our medicines to help reduce their risk of heart attack or stroke
>3m People used our smoking cessation treatments
>1.2m People were treated with our cancer therapies

We're not stopping there. To reach even more patients, we need to continue to deliver breakthrough medicines, and in 2018 we made significant progress toward doing just that. Our R&D pipeline, which is now stronger than it has ever been, began yielding important new products, including four targeted cancer agents approved in the last four months of the year. Overall, we received seven key approvals during the year, spanning both brand new molecular entities and new indications, allowing us to serve a broader patient population.

Ian Read: Tremendous Contributions to Improving Human Health

Albert Bourla: Breakthroughs that Change Patients' Lives

Advancing Our Pipeline

7 Key product approvals
9 Regulatory submissions
42 Pipeline assets advanced

Preparing for Sustained Growth

After prolonged periods of revenue decline due to significant LOE impacts - and then stability as we began to launch new products - we believe three intersecting factors will create significant opportunities for Pfizer to grow in the years ahead.

  • Macro trends such as an aging population and a rising middle class in emerging markets will result in an increased number of people seeking access to both innovative and established medicines.
  • We see the potential to launch up to 3-5 new products or product line extensions per year over the next five years.
  • We expect to enjoy the benefits of a dramatic abatement in LOEs until the second half of the next decade, after Lyrica loses its marketing exclusivity.

In 2018, we took several actions to prepare Pfizer to capitalize on these opportunities.

In July, we announced that we were reorganizing the company into three businesses to better capitalize on the evolving and unique dynamics of their individual markets. The three businesses, which became effective at the beginning of the company's 2019 fiscal year, are Pfizer Biopharmaceuticals Group, a science-based innovative medicines business that now includes biosimilars and a new Hospital business unit for anti-infectives and sterile injectables; Upjohn, an off-patent branded and generic medicines business based in China that is bringing 20 of our most iconic brands to more than 100 markets around the world; and a Consumer Healthcare business aligned with the growing trend of consumers taking their health into their own hands. To further unlock value for our shareholders, and to allow Pfizer to sharpen its focus on its pharmaceuticals business, we signed an agreement with GlaxoSmithKline (GSK) to form a Consumer Healthcare joint venture. We expect the transaction to close in the second half of 2019, subject to customary closing conditions, including GSK shareholder approval, and required regulatory approvals.

Creating Shareholder Value

$53.6bn In revenue
$20.2bn Returned to shareholders through dividends
and share repurchases
$8.0bn Invested in R&D

As we reorganized our businesses, we also simplified our structure and processes, including initiating a major digital effort to automate and improve operational effectiveness. These efforts also are freeing up capital that can be reinvested - primarily in scientific and commercial innovation but also in other key growth drivers, including business development and manufacturing.

Our focus for business development initiatives continues to be smaller acquisition and licensing opportunities for mid-stage compounds. Pfizer has the financial flexibility to pursue these initiatives as we simultaneously deploy capital in other areas, including shareholder-friendly capital allocation initiatives such as share repurchases. A growing dividend also remains an important part of our investment thesis.

Of course, our business isn't without its challenges. Most significantly, we need to ensure that our innovation and risk-taking are rewarded in the marketplace, while doing all we can to ensure affordable access for patients. We continue to work with governments, policymakers, payers and other players in the healthcare ecosystem to advocate for pro-innovation policies that benefit patients, our company and our industry as a whole.

Being a Responsible Corporate Citizen

110m Announced new commitment to trachoma elimination, including the donation of more than 110 million doses of Zithromax in 10 countries; bringing our cumulative donation to more than 809 million doses since 1999.
$5m Distributed $5m in grants to 10 states in the U.S. most impacted by the opioid crisis.
1.5m Helped more than 250,000 U.S. patients receive more than 1.5 million Pfizer prescriptions for free.

Purpose-Driven Growth

We firmly believe that the biopharmaceutical companies that create meaningful value for patients over the next decade are the ones that will thrive. That's why we are putting a renewed emphasis on Pfizer's purpose: Breakthroughs that change patients' lives. Our purpose defines who we are as a company and serves as a focal point of our culture, driving everything we do and energizing our more than 90,000 colleagues.

When we talk about breakthroughs, we are not talking about just big scientific breakthroughs, but also breakthroughs in the way we work, the way we interact with payers and policymakers, and the way we provide access to patients. Taken together, we believe these breakthroughs will create value for patients, colleagues and shareholders.

Thank you for your continued support of the work we do every day.

Ian C. Read signature

Ian C. Read

Executive Chairman

Ian C. Read signature

Dr. Albert Bourla

Chief Executive Officer

We encourage you to read our 2018 Financial Report, which includes our financial statements as of and for the year ended December 31, 2018. Please also refer to our Annual Report on Form 10-K for the year ended December 31, 2018, including the sections captioned "Risk Factors" and "Forward Looking Information and Factors that May Affect Future Results," for a description of the substantial risks and uncertainties related to the forward looking statements included herein.

Explore Our Annual Review