ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-5315170
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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235 East 42nd Street
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10017-5755
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New York, New York
(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange
on which registered
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Common Stock, $.05 par value
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New York Stock Exchange
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Large accelerated filer
ý
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Portions of the 2013 Annual Report to Shareholders
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Parts I, II and IV
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Portions of the Proxy Statement for the 2014 Annual Meeting of Shareholders
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Part III
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Page
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ITEM 1.
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BUSINESS
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•
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Global Innovative Pharmaceutical business
—
GIP comprises medicines within several therapeutic areas that are generally expected to have market exclusivity beyond 2015. These therapeutic areas include immunology and inflammation, cardiovascular/metabolic, neuroscience and pain, rare diseases and women’s/men’s health.
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•
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Global Vaccines, Oncology and Consumer Healthcare business
—
VOC focuses on the development and commercialization of vaccines and products for oncology and consumer healthcare. Each of the three businesses that comprise this group operates as a separate, global business, with distinct specialization in terms of the science, talent and market approach necessary to deliver value to consumers and patients.
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•
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Global Established Pharmaceutical business
—GEP includes the brands that have lost market exclusivity and, generally, the mature, patent-protected products that are expected to lose exclusivity through 2015 in most major markets and, to a much smaller extent, generic pharmaceuticals. Additionally, GEP includes our sterile injectable products and biosimilar development portfolio, as well as current established product collaborations, such as our existing agreements with Mylan Inc. in Japan, Zhejiang Hisun Pharmaceutical Co. Ltd. in China and Laboratório Teuto Brasileiro S.A. in Brazil.
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•
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Primary Care operating segment
—
included revenues from prescription pharmaceutical products primarily prescribed by primary-care physicians, and included products in the following therapeutic and disease areas: Alzheimer’s disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in this segment in 2013 included
Celebrex
,
Chantix/Champix
,
Eliquis
,
Lyrica
,
Premarin
,
Pristiq
and
Viagra
(outside Canada and South Korea). All revenues for such products were allocated to the Primary Care business unit, except those that were generated in emerging markets and those that were managed by the Established Products business unit.
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•
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Specialty Care and Oncology operating segment
—
was comprised of the Specialty Care business unit and the Oncology business unit.
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•
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Specialty Care
—
included revenues from prescription pharmaceutical products primarily prescribed by physicians who are specialists, and included products in the following therapeutic and disease areas: anti-infectives, endocrine disorders, hemophilia, inflammation, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. Examples of products in this business unit in 2013 included
BeneFIX
,
Enbrel
,
Genotropin
,
Geodon
(outside the U.S.), the
Prevnar
family of products,
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•
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Oncology
—
included revenues from prescription pharmaceutical products addressing oncology and oncology-related illnesses. The products in this business unit in 2013 included
Inlyta
,
Sutent
,
Torisel
,
Xalkori
,
Mylotarg
(in Japan),
Bosulif
(in the U.S. and European Union (EU)) and
Aromasin
(in Japan and South Korea). All revenues for such products were allocated to the Oncology business unit, except those that were generated in emerging markets and those that were managed by the Established Products business unit.
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•
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Established Products and Emerging Markets operating segment
—
was comprised of the Established Products business unit and the Emerging Markets business unit.
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•
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Established Products
—
included revenues from prescription pharmaceutical products that had lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products were transferred to this business unit in the beginning of the fiscal year following loss of patent protection or marketing exclusivity. However, in certain situations, products were transferred to this business unit at a different point than the beginning of the fiscal year following loss of patent protection or marketing exclusivity in order to maximize their value. This business unit also excluded revenues generated in emerging markets. Examples of products in this business unit in 2013 included
Arthrotec
,
Effexor
,
Geodon
(in the U.S.),
Lipitor
,
Medrol
,
Norvasc
,
Protonix
,
Relpax
,
Vfend
(in the U.S. and South Korea),
Xalatan
(in the U.S., Canada, South Korea, developed Europe, Australia and New Zealand),
Zosyn/Tazocin
and
Viagra
(in Canada and South Korea).
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•
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Emerging Markets
—
included revenues from all prescription pharmaceutical products sold in emerging markets, including Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
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•
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Consumer Healthcare operating segment
—
includes worldwide revenues from non-prescription products in the following therapeutic categories: dietary supplements, pain management, respiratory and personal care. In 2013, products marketed by Consumer Healthcare included
Advil
,
Caltrate
,
Centrum
,
ChapStick
,
Emergen-C
,
Preparation H
and
Robitussin
.
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•
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Dietary Supplements:
Centrum
brands (including
Centrum
,
Centrum Silver
,
Centrum Men’s
and
Women’s
,
Centrum Specialist
,
Centrum Flavor Burst
, and
Centrum Kids
),
Caltrate
, and
Emergen-C
;
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•
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Pain Management:
Advil
brands (including
Advil
,
Advil PM
,
Advil Liqui-Gels
,
Advil Film Coated, Children’s Advil
,
Infants’ Advil
and
Advil Migraine)
, and
ThermaCare
;
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•
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Respiratory:
Robitussin
,
Advil Cold & Sinus
,
Advil Congestion Relief
, and
Dimetapp
; and
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•
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Personal Care:
ChapStick
and
Preparation H.
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•
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McKesson, Inc.
—
12%
of our total revenues (and 30% of our total U.S. revenues);
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•
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Cardinal Health, Inc.—
9%
of our total revenues (and 22% of our total U.S. revenues); and
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•
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AmerisourceBergen Corporation—
8%
of our total revenues (and 21% of our total U.S. revenues).
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Drug
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U.S. Basic Product Patent Expiration Year
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Major EU Basic Product Patent Expiration Year
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Japan Basic Product Patent Expiration Year
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Viagra
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2012
(1)
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2013
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2013
(1)
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Enbrel
(2)
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N/A
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2015
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2015
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Celebrex
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2014
(3)
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2014
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2019
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Zyvox
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2015
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2016
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2019
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Lyrica
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2018
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2014
(4)
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2022
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Bosulif
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2019
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2019
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N/A
(5)
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Chantix
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2020
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2021
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2022
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Inlyta
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2020
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2020
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2025
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Xeljanz
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2020
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N/A
(6)
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2025
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Sutent
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2021
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2021
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2024
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Eliquis
(7)
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2023
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2026
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2026
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Prevnar 13
(8)
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2026
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2026
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2026
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Xalkori
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2029
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2025
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2028
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•
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an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries (effective January 1, 2010);
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•
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extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care organizations (effective March 23, 2010);
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•
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expansion of the types of institutions eligible for the “Section 340B discounts” for outpatient drugs provided to hospitals serving a disproportionate share of low-income individuals and meeting the qualification criteria under Section 340B of the Public Health Service Act of 1944 (effective January 1, 2010);
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•
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discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare “coverage gap,” also known as the “doughnut hole” (effective January 1, 2011); and
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•
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a fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs (effective January 1, 2011, with the total fee to be paid each year by the pharmaceutical industry increasing annually through 2018).
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•
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environment-related capital expenditures
—
$14 million; and
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•
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other environment-related expenses
—
$147 million.
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ITEM 1A.
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RISK FACTORS
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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Name
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Age
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Position
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Ian C. Read
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60
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Chairman of the Board and Chief Executive Officer of Pfizer since December 2011. President and Chief Executive Officer from December 2010. Previously, he served as Senior Vice President and Group President of the Worldwide Biopharmaceutical Businesses, which he led from 2006 through December 2010. In that role, he oversaw five global business units—Primary Care, Specialty Care, Oncology, Established Products and Emerging Markets. Mr. Read began his career with Pfizer in 1978 as an operational auditor. He worked in Latin America through 1995, holding positions including Chief Financial Officer, Pfizer Mexico, and Country Manager, Pfizer Brazil. In 1996, he was appointed President of Pfizer’s International Pharmaceuticals Group, with responsibility for Latin America and Canada. He became Executive Vice President, Europe, in 2000, was named a Corporate Vice President in 2001, and assumed responsibility for Canada, in addition to Europe, in 2002. Mr. Read later became accountable for operations in both the Africa/Middle East region and Latin America as well. Director of Kimberly-Clark Corporation. Mr. Read serves on the Boards of Pharmaceutical Research and Manufacturers of America (PhRMA) and the Partnership of New York City. Member of the President’s Export Council and U.S.-China Business Council. Our Director since December 2010.
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Albert Bourla
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52
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Group President, Vaccines, Oncology and Consumer Healthcare since January 2014. President and General Manager of Established Products Business Unit from December 2010 until December 2013. Area President Europe, Africa, Asia and Pacific of Pfizer Animal Health from 2009 until November 2010. Area President Europe, Africa and Middle East of Pfizer Animal Health from 2005 until 2009.
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Frank A. D’Amelio
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56
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Executive Vice President, Business Operations and Chief Financial Officer since December 2010. Senior Vice President and Chief Financial Officer from September 2007 until December 2010. Prior to joining Pfizer, he was Senior Executive Vice President of Integration and Chief Administrative Officer of Alcatel-Lucent from November 2006 until August 2007. Director of Zoetis Inc. and of Humana, Inc. and Chair of the Humana Audit Committee. He is a Director of the Independent College Fund of New Jersey and the Gillen Brewer School.
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Mikael Dolsten
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55
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|
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President of Worldwide Research and Development since December 2010. Senior Vice President; President of Worldwide Research and Development from May 2010 until December 2010. Senior Vice President; President of Pfizer BioTherapeutics Research & Development Group from October 2009 until May 2010. He was Senior Vice President of Wyeth and President, Wyeth Research from June 2008 until October 2009. He was a Private Equity Partner at Orbimed Advisors, LLC from January 2008 until June 2008.
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Geno J. Germano
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53
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Group President, Global Innovative Pharma Business since January 2014. President and General Manager, Pfizer Specialty Care and Oncology from December 2010 until December 2013. President and General Manager, Specialty Care from October 2009 until December 2010. President, U.S. Pharmaceuticals and Women’s Health Care Unit, Wyeth Pharmaceuticals from 2008 through October 2009. President and General Manager, U.S. Pharmaceutical Business Unit, Wyeth Pharmaceuticals from 2007 through 2008. Member of the Board of Trustees for Albany College of Pharmacy and Health Sciences and Member of the Board of Directors of BIO - Biotechnology Industry Organization. Director of Zoetis Inc. from July 2012 until June 2013.
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Name
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Age
|
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Position
|
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Charles H. Hill III
|
|
58
|
|
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Executive Vice President, Worldwide Human Resources since December 2010. Senior Vice President, Human Resources for Worldwide Biopharmaceuticals Businesses from 2008 through December 2010. Vice President, Human Resources, Worldwide Pharmaceutical Operations from 2004 through 2008. Director of Zoetis Inc. from July 2012 until June 2013.
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Rady A. Johnson
|
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52
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Executive Vice President, Chief Compliance and Risk Officer since December 2013. Senior Vice President and Associate General Counsel from October 2006 until December 2013.
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Douglas M. Lankler
|
|
48
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|
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Executive Vice President and General Counsel since December 2013. Corporate Secretary from January 2014 until February 2014. Executive Vice President, Chief Compliance and Risk Officer from February 2011 until December 2013. Executive Vice President, Chief Compliance Officer from December 2010 until February 2011. Senior Vice President and Chief Compliance Officer from January 2010 until December 2010. Senior Vice President, Deputy General Counsel and Chief Compliance Officer from August 2009 until January 2010. Senior Vice President, Associate General Counsel and Chief Compliance Officer from October 2006 until August 2009.
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Freda C. Lewis-Hall
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59
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Executive Vice President, Chief Medical Officer since December 2010. Senior Vice President, Chief Medical Officer from May 2009 until December 2010. Previously, she was Chief Medical Officer and Executive Vice President, Medicines Development at Vertex Pharmaceuticals from June 2008 until May 2009. Dr. Lewis-Hall was Senior Vice President, U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Company from 2003 until May 2008.
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Anthony J. Maddaluna
|
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61
|
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Executive Vice President; President, Pfizer Global Supply since January 2013. President, Pfizer Global Supply from 2011 until December 2012. Senior Vice President, Strategy & Supply Network Transformation from 2009 until December 2010. Vice President, Strategy & Supply Network Transformation from 2008 until 2009. Vice President and Team Leader, Europe from 1998 until 2008 including responsibility for global logistics and strategic planning from 2005 through 2008. Mr. Maddaluna represents Pfizer on the National Association of Manufacturers (NAM) and is a member of the NAM Executive Committee.
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Laurie J. Olson
|
|
50
|
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Executive Vice President, Strategy, Portfolio and Commercial Operations since July 2012. Senior Vice President - Strategy and Portfolio Management from 2011 until July 2012. Senior Vice President - Portfolio Management and Analytics from 2008 until 2010. Since joining Pfizer in 1987 as an Analyst in the Company's marketing research organization, Ms. Olson has served in a variety of marketing leadership positions with increasing responsibility in both the Company’s U.S. and global commercial organizations.
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Sally Susman
|
|
52
|
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Executive Vice President, Corporate Affairs (formerly Policy, External Affairs and Communications) since December 2010. Senior Vice President, Policy, External Affairs and Communications from December 2009 until December 2010. Senior Vice President and Chief Communications Officer from February 2008 until December 2009. Prior to joining Pfizer, Ms. Susman held senior level positions at The Est
é
e Lauder Companies, including Executive Vice President from 2004 to January 2008. Director of WPP plc.
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John D. Young
|
|
49
|
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Group President, Global Established Pharma Business since January 2014. President and General Manager, Pfizer Primary Care from June 2012 until December 2013. Primary Care Business Unit’s Regional President for Europe and Canada from 2009 until June 2012. U.K. Country Manager from 2007 until 2009.
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ITEM 5.
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MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Period
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Total Number of
Shares Purchased
(b)
|
|
Average
Price
Paid per
Share
(b)
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan
(a)
|
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plan
(a)
|
||||||
September 30, 2013 through October 27, 2013
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48,878,919
|
|
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$
|
29.10
|
|
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48,863,364
|
|
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$
|
8,741,255,650
|
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October 28, 2013 through November 30, 2013
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59,109,898
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|
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$
|
31.40
|
|
|
59,029,195
|
|
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$
|
6,887,448,392
|
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December 1, 2013 through December 31, 2013
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44,349,861
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|
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$
|
31.01
|
|
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44,234,299
|
|
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$
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5,515,624,231
|
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Total
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152,338,678
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$
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30.55
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152,126,858
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(a)
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On November 1, 2012, we announced that the Board of Directors had authorized a $10 billion share-purchase plan, which became effective on November 30, 2012 (the November 2012 Stock Purchase Plan) and was exhausted in October 2013. On June 27, 2013, we announced that the Board of Directors had authorized an additional $10 billion share-purchase plan (the June 2013 Stock Purchase Plan), and share purchases commenced thereunder in October 2013. After giving effect to share purchases through year-end 2013, our remaining share-purchase authorization was approximately $5.5 billion at December 31, 2013.
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(b)
|
In addition to amounts purchased under the November 2012 Stock Purchase Plan and June 2013 Stock Purchase Plan, these columns reflect the following transactions during the fourth quarter of 2013: (i) the surrender to Pfizer of 148,886 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees; (ii) the open market purchase by the trustee of 58,504 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who were granted performance share awards and who deferred receipt of such awards; and (iii) the surrender to Pfizer of 4,430 shares of common stock to satisfy tax withholding obligations in connection with the vesting of performance share awards issued to employees.
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ITEM 6.
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SELECTED FINANCIAL DATA
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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ITEM 9A.
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CONTROLS AND PROCEDURES
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ITEM 9B.
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OTHER INFORMATION
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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ITEM 11.
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EXECUTIVE COMPENSATION
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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ITEM 14.
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PRINCIPAL ACCOUNTING FEES AND SERVICES
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ITEM 15.
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EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
•
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Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
|
•
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Consolidated Statements of Income
|
•
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Consolidated Statements of Comprehensive Income
|
•
|
Consolidated Balance Sheets
|
•
|
Consolidated Statements of Equity
|
•
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Consolidated Statements of Cash Flows
|
•
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Notes to Consolidated Financial Statements
|
•
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Quarterly Consolidated Financial Data (Unaudited)
|
3.1
|
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Our Restated Certificate of Incorporation dated April 12, 2004, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended March 28, 2004 (File No. 001-03619).
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3.2
|
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Amendment dated May 1, 2006 to Restated Certificate of Incorporation dated April 12, 2004, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended July 2, 2006 (File No. 001-03619).
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3.3
|
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Our By-laws, as amended December 16, 2013, are incorporated by reference from our Current Report on Form 8-K filed on December 19, 2013 (File No. 001-03619).
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4.1
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Indenture, dated as of January 30, 2001, between us and The Chase Manhattan Bank, is incorporated by reference from our Current Report on Form 8-K filed on January 30, 2001 (File No. 001-03619).
|
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4.2
|
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First Supplemental Indenture, dated as of March 24, 2009, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended June 28, 2009 (File No. 001-03619).
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4.3
|
|
Second Supplemental Indenture, dated as of June 2, 2009, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K filed on June 3, 2009 (File No. 001-03619).
|
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4.4
|
|
Third Supplemental Indenture, dated as of June 3, 2013, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as Trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K filed on June 3, 2013 (File No. 001-03619).
|
|
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4.5
|
|
Indenture, dated as of April 10, 1992, between Wyeth and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s Registration Statement on Form S-3 (File No. 33-57339), filed on January 18, 1995.
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4.6
|
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Supplemental Indenture, dated as of October 13, 1992, between Wyeth and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as Trustee, is incorporated by reference from Wyeth’s Registration Statement on Form S-3 (File No. 33-57339), filed on January 18, 1995.
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|
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|
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10.17
|
|
Amended and Restated Wyeth Supplemental Executive Retirement Plan (effective as of January 1, 2005), together with all material Amendments is incorporated by reference from our 2011 Annual Report on Form 10-K (File No. 001-03619).
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10.18
|
|
Wyeth Directors’ Deferral Plan (as amended through December 15, 2007) is incorporated by reference from Wyeth’s 2007 Annual Report on Form 10-K (File No. 001-01225).
|
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10.19
|
|
The form of Indemnification Agreement with each of our non-employee Directors is incorporated by reference from our 1996 Annual Report on Form 10-K (File No. 001-03619).
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10.20
|
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The form of Indemnification Agreement with each of the Named Executive Officers identified in our 2014 Proxy Statement is incorporated by reference from our 1997 Annual Report on Form 10-K (File No. 001-03619).
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10.21
|
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Letter to Frank A. D’Amelio regarding replacement pension benefit dated August 22, 2007 is incorporated by reference from our Current Report on Form 8-K filed on August 22, 2007 (File No. 001-03619).
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10.22
|
|
Executive Severance Plan is incorporated by referenced from our Current Report on Form 8-K filed on February 20, 2009 (File No. 001-03619).
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10.23
|
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Annual Retainer Unit Award Plan (for Non-Employee Directors) (frozen as of March 1, 2006) as amended, is incorporated by reference from our 2008 Annual Report on Form 10-K (File No. 001-03619).
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*10.24
|
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Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors, as amended.
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10.25
|
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Form of Special Award Letter Agreement is incorporated by reference from our Current Report on Form 8-K filed on October 28, 2009 (File No. 001-03619).
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10.26
|
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Offer Letter to G. Mikael Dolsten, dated April 6, 2009, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended April 3, 2011 (File No. 001-03619).
|
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10.27
|
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Offer Letter to Geno J. Germano, dated April 6, 2009, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended April 3, 2011 (File No. 001-03619).
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10.28
|
|
Warner-Lambert Company 1996 Stock Plan, as amended, is incorporated by reference from Warner-Lambert’s 1999 Annual Report on Form 10-K (File No. 001-03608).
|
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10.29
|
|
Warner-Lambert Company Incentive Compensation Plan, as amended to February 6, 2000, is incorporated by reference from Warner Lambert Company’s 1999 Annual Report on Form 10-K (File No. 001-03608).
|
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10.30
|
|
Warner-Lambert Company Supplemental Pension Income Plan, as amended to February 6, 2000, is incorporated by reference from Warner Lambert Company’s 1999 Annual Report on Form 10-K (File No. 001-03608).
|
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*12
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
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|
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*13
|
|
Portions of the 2013 Financial Report, which, except for those sections incorporated by reference, are furnished solely for the information of the SEC and are not to be deemed “filed.”
|
|
|
|
*21
|
|
Subsidiaries of the Company.
|
|
|
|
*23
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
|
|
|
*24
|
|
Power of Attorney (included as part of signature page).
|
|
|
|
*31.1
|
|
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*31.2
|
|
Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32.1
|
|
Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32.2
|
|
Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*101.INS
|
|
XBRL Instance Document
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Document
|
|
Pfizer Inc.
|
||
|
|
|
|
Dated: February 28, 2014
|
By:
|
|
/
S
/ A
TIBA
D. A
DAMS
|
|
|
|
Atiba D. Adams
Vice President and Corporate Secretary,
Chief Governance Counsel
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ I
AN
C. R
EAD
Ian C. Read
|
|
Chairman, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ F
RANK
A. D’A
MELIO
Frank A. D’Amelio
|
|
Executive Vice President, Business Operations and
Chief Financial Officer (Principal Financial Officer)
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ L
ORETTA
V. C
ANGIALOSI
Loretta V. Cangialosi
|
|
Senior Vice President—Controller
(Principal Accounting Officer)
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ D
ENNIS
A. A
USIELLO
Dennis A. Ausiello
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ W. D
ON
C
ORNWELL
W. Don Cornwell
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ F
RANCES
D. F
ERGUSSON
Frances D. Fergusson
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ H
ELEN
H. H
OBBS
Helen H. Hobbs
|
|
Director
|
|
February 27, 2014
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ C
ONSTANCE
J. H
ORNER
Constance J. Horner
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ S
UZANNE
N
ORA
J
OHNSON
Suzanne Nora Johnson
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ J
AMES
M. K
ILTS
James M. Kilts
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ G
EORGE
A. L
ORCH
George A. Lorch
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ S
HANTANU
N
ARAYEN
Shantanu Narayen
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ S
TEPHEN
W. S
ANGER
Stephen W. Sanger
|
|
Director
|
|
February 27, 2014
|
|
|
|
|
|
/
S
/ M
ARC
T
ESSIER
-L
AVIGNE
Marc Tessier-Lavigne
|
|
Director
|
|
February 27, 2014
|
(a)
|
“Affiliate” shall mean (i) any Person that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee, and (iii) the employees of such entity or Person are eligible to participate in the Plan, as determined by the Committee.
|
(b)
|
“Award” shall mean any cash incentive award granted pursuant to the provisions of the Plan.
|
(c)
|
“Board” shall mean the Board of Directors of the Company.
|
(d)
|
“Cause” shall include, but not be limited to, a termination of employment for significant breach of Company policy, inadequate work performance due to intentional or deliberate misconduct or intentional or deliberate failure to act, destruction of Company property, commission of unlawful acts against or reflecting on the Company, or similar occurrences. The Committee, or its designee the Executive Vice President of Worldwide Human Resources or the Senior Vice President, Total Rewards, or its or his or her respective successors, in its or his or her sole and absolute discretion, shall determine whether a termination of employment is for “Cause.”
|
(e)
|
“CEO” shall mean the Chief Executive Officer of the Company.
|
(f)
|
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
|
(g)
|
“Committee” shall mean the Compensation Committee of the Board or such other persons or committee to which it has delegated any authority, as may be appropriate.
|
(h)
|
“Company” shall mean Pfizer Inc., a Delaware corporation.
|
(i)
|
“EAIP” shall mean the Pfizer Inc Executive Annual Incentive Plan.
|
(j)
|
“Eligible Earnings” shall mean:
|
1)
|
For Group 1 Countries: a Participant’s month-end base salary paid over the course of the Performance Period (as well as any lump-sum payment made in lieu of a merit increase) adjusted for any portion of the year in which the Participant was not eligible for the Plan.
|
2)
|
For Group 2 Countries: a Participant’s base salary as of the immediately preceding December 31
st
unless there is a change in status as a full-time or part-time Employee.
|
3)
|
For Participants in the ELTI Program: a Participant’s local base salary midpoint for each month over the course of the Performance Period adjusted for any portion of the year in which the Participant was not eligible under the Plan, or to reflect a change in salary grade.
|
(k)
|
“ELTI Program” shall mean the Company’s Executive Long-Term Incentive Program.
|
(l)
|
“Employee” shall mean any employee of the Company or any Affiliate. For any and all purposes under this Plan, the term “Employee” shall not include a person hired as an independent contractor, leased employee, consultant or a person otherwise designated by the Committee, the Company or an Affiliate at the time of hire as not eligible to participate in or receive benefits under the Plan or not on the payroll, even if such ineligible person is subsequently determined to be a common law employee of the Company or an Affiliate or otherwise an employee by any governmental or judicial authority. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an Employee shall be considered to have terminated employment or services and to have ceased to be an Employee if his or her employer ceases to be an Affiliate, even if he or she continues to be employed by such employer.
|
(m)
|
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
|
(n)
|
“Executive Leadership Team” shall mean the team of executives of the Company reporting directly to the CEO of the Company, and including the CEO.
|
(o)
|
“Group 1 and Group 2 Countries” shall mean the countries as set forth in Appendix A hereto.
|
(p)
|
“Incentive Pool” shall mean the fund underlying the Plan from which payment of Awards are made.
|
(q)
|
“Incentive Award Opportunity” shall mean the total potential cash compensation opportunity underlying an Award for a Performance Period ranging from zero to two times (0%-200%) a Participant’s Incentive Target Percentage.
|
(r)
|
“Incentive Target Percentage” shall mean the targeted level of compensation underlying an Award granted to a Participant for a Performance Period, expressed as a percentage of the Participant’s Eligible Earnings (for Participants in the ELTI Program, the local base salary midpoint earned during the Performance Period).
|
(s)
|
“Involuntary Termination” shall mean a termination of an Employee’s employment with the Company or an Affiliate by the Company or Affiliate. For purposes of this Plan only, an Involuntary Termination shall include “Terminations Due to Curtailments or Cessations of Operations, Reorganizations, Position Eliminations, or Job Restructurings Due to a Change in Required Competencies or Qualification for Position” and terminations due to failure to return to work” following the expiration of short-term disability benefits because either the employee remains physically or mentally unable to return to work or because his or her position is filled while he or she is on an approved disability leave of absence.
|
(t)
|
“Key Employee” means an Employee treated as a “specified employee” as of his or her Separation from Service under Code Section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code Section 416(i) without regard to paragraph (5) thereof) of the Company or its Affiliates if the Company’s stock is publicly traded on an established securities market or otherwise. Key Employees shall be determined under rules adopted by the Company in accordance with Section 409A. Notwithstanding the foregoing, the Executive Vice President, Worldwide Human Resources or the Senior Vice President, Total Rewards, or the successor or the designee of either, may, under the alternative permissible methods allowable under Section 409A, adopt an alternative identification and effective date for purposes of determining which employees are Key Employees.
|
(u)
|
“Participant” shall mean an Employee who is selected by the Committee or the Board from time to time in their sole discretion to receive an Award under the Plan.
|
(v)
|
“Performance Period” shall mean one calendar year during which any performance goals specified by the Committee with respect to any Awards to be granted under the Plan are to be measured.
|
(w)
|
“Performance-Related Termination” shall mean an involuntary termination of employment because the Employee does not meet the performance or other essential requirements of his or her job. The determination of whether an the Employee’s termination is a Performance-Related Termination shall be made by the Executive Vice President, Worldwide Human Resources, or the Senior Vice President, Total Rewards, or his or her respective successors or the designee of either, or his or her sole and absolute discretion.
|
(x)
|
“Person” shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.
|
(y)
|
“Retirement” shall mean having attained a minimum age of 55 and a minimum of 10 years of service at the time of a Participant’s separation from the Company, unless determined otherwise, and which shall also constitute a Separation from Service for United States Participants, or as determined under local law for all other Participants.
|
(z)
|
“Section 409A” shall mean Section 409A of the Code and the regulations and other guidance issued thereunder by the U.S. Treasury or Internal Revenue Service.
|
(aa)
|
“Senior Leadership Council” shall mean that group of executives designated by the Company as members of the Senior Leadership Council.
|
(bb)
|
“Separation from Service” means a “separation from service” within the meaning of Section 409A.
|
(cc)
|
"Target Incentive Award” shall mean the targeted level of cash compensation underlying an Award granted to a Participant for a Performance Period, calculated in accordance with Section 5 of the Plan.
|
(dd)
|
"Termination Due to Curtailments or Cessations of Operations, Reorganizations, Position Eliminations, or Job Restructurings Due to a Change in Required Competencies or Qualification for Position” shall mean an involuntary termination as the direct result of curtailment or cessation of operations, reorganization or position elimination, or job restructuring due to a change in required competencies or qualification for the position. The determination of whether a curtailment or cessation of operations, reorganization or position elimination, job restructuring or change in competencies or qualifications has occurred is the sole determination of the Executive Vice President, Worldwide Human Resources, or the Senior Vice President, Total Rewards, or the his or her respective successors or the designee of either.
|
(a)
|
Any Employee shall be eligible to be selected as a Participant; however, only those Employees identified as Participants by the Committee or its designee, with respect to a Performance Period shall participate in the Plan for such Performance Period. Any Employee newly hired by the Company after October 1 shall not become eligible to participate in the Plan until the January 1 immediately following his or her hire date, except as waived by the Committee or their designee in their sole discretion. An Employee may only participate in one annual cash incentive plan sponsored by the Company or any Affiliate with respect to a Performance Period. As such, any Employee who is a participant in a sales incentive program or another cash incentive plan with respect to a Performance Period is not eligible to participate in the Plan.
|
(b)
|
Any Employee that is eligible to receive an award under the EAIP for any Performance Period shall (i) participate in this Plan with respect to the determination and funding of the Incentive Pool, and (ii) for the avoidance of doubt, shall only receive one cash incentive award during a Performance Period which shall be subject to the additional terms and conditions set forth in the EAIP plan document and related materials so that such awards remain “performance-based” compensation in accordance with Section 162(m) of the Code. To the extent that there are any conflicts between this Plan and the terms of the EAIP, the EAIP will prevail.
|
(a)
|
Under the Plan, the Committee may grant Awards to Participants from time to time with respect to a Performance Period based upon the achievement of performance objectives over the Performance Period. Award payments are earned based upon the following:
|
1)
|
The initial funding of the Incentive Pool is equal to the sum of the Target Incentive Awards for all Participants for the Performance Period.
|
2)
|
The final funding of the Incentive Pool is determined by the Committee, in its discretion, based on the Company’s performance against pre-set annual goals for the following financial measures: (i) revenue, (ii) adjusted diluted earnings per share (EPS), and (iii) cash flow from operations.
|
3)
|
Once the final pool funding is determined, Incentive Pool dollars are allocated to the business unit, division or function in which a Participant worked during the Performance Period based on the achievement of pre-set annual goals for the business unit, division or function, and as determined by the CEO.
|
4)
|
A Participant’s actual Award is determined based on his or her Target Incentive Award, adjusted by the funding factors stated above and further adjusted to reflect the specific business unit, division or country performance, as well as the Participant’s performance against objectives for the Performance Period, as assessed by the Participant’s manager in accordance with procedures, guidelines and/or metrics established by the Committee, or its designee, from time to time.
|
5)
|
A Participant’s Target Incentive Award is calculated as:
|
i.
|
Group 1 Countries: the sum of the product of a Participant’s month-end Eligible Earnings, multiplied by the Incentive Target Percentage for the Participant’s salary grade in the respective month, for each month the Participant is eligible to participate in the Plan.
|
ii.
|
Group 2 Countries: the product of a Participant’s Eligible Earnings as of the immediately preceding December 31
st
, multiplied by the Incentive Target Percentage in effect on December 31
st
for the Participant’s salary grade, pro-rated for the number of months during the calendar year in which he or she is eligible to participate in the Plan.
|
(b)
|
A Participant’s final Award shall be capped at 200% of the Target Incentive Award.
|
(c)
|
Notwithstanding the foregoing, any Award may also be subject to such other terms and conditions as the Committee shall deem advisable or appropriate from time to time, consistent with the provisions of the Plan as herein set forth, including but not limited to, the pro-ration or adjustment of Target Incentive Awards, Incentive Target Percentages and/or Incentive Award Opportunities, based upon a Participant’s date of hire, re-hire, change in position and/or salary grade (including a change in position or other similar change that causes the Participant to no longer be eligible for the Plan), change in local base salary midpoint, or transfer to a different business unit or division during a Performance Period. In addition, any Awards granted to Participants may contain such other provisions as may be necessary to meet the requirements of the Code and/or related regulations issued thereunder in order to satisfy or comply with relevant law.
|
(a)
|
Voluntary Termination - If a Participant voluntarily terminates his or her employment (not for Retirement) prior to the end of the Performance Period, he or she is ineligible for an Award or any payment with respect to an Award for such Performance Period. If a Participant voluntarily terminates his or her employment after the end of the Performance Period, he or she is eligible for an Award or any payment with respect to an Award for such Performance Period under the applicable provisions of this Plan at the Committee’s discretion.
|
(b)
|
Involuntary Termination - If a Participant’s employment is terminated as the result of an Involuntary Termination, prior to the end of the Performance Period, his or her Target Incentive Award will be pro-rated based on actual days of eligibility, his or her Eligible Earnings and his or her Incentive Target Percentage during the Performance Period, as well as the overall funding percentage of the business unit, division or function where the Participant is working, in the Company’s discretion. The proration factor is the number of days in the Performance Period up to the termination date divided by 365 days. If eligible, such pro-rated Target Incentive Award will be the lesser of the Participant’s (i) pro-rated Target Incentive Award or (ii) pro-rated Target Incentive Award based on the performance of the Company, the Participant’s business unit, division or function and the Participant’s individual performance. Such Award will be paid as soon as administratively possible following the Involuntary Termination unless the Award is paid under the EAIP or to a member of the Senior Leadership Council or Executive Leadership Team in which case it shall be paid as soon as practicable after the Committee’s certification as to the achievement of the performance criteria for the Performance Period but not later than March 15
th
of the year following termination. Payments to members of the Senior Leadership Council or Executive Leadership Team will be made in accordance with Section 6. If a Participant is involuntarily terminated after the end of the Performance Period, he or she is eligible for an Award or any payment with respect to an Award for such Performance Period under the applicable provisions of this Plan.
|
(c)
|
Terminations for Cause or Performance-Related Terminations - If a Participant’s employment is terminated for Cause or constitutes a Performance-Related Termination, he or she is ineligible for an Award whether such involuntary termination occurs before or after the Performance Period, unless otherwise required by local law.
|
(d)
|
Retirement - If a Participant retires during the Performance Period, he or she will be eligible for a prorated Target Incentive Award using the calculation in Section 7(b) above. Such Award will be paid as soon as administratively possible following the Retirement unless the Award is paid under the EAIP or to a member of the Senior Leadership Council or Executive Leadership Team in which case it shall be paid as soon as practicable after the performance criteria has been met but not later than March 15
th
of the year following termination. Payments to members of the Senior Leadership Council or Executive Leadership Team will be made in accordance with Section 6. If a Participant retires after the end of the Performance Period, he or she is eligible for an Award or any payment with respect to an Award for such Performance Period under the applicable provisions of this Plan.
|
(e)
|
Short-Term Disability or Leave of Absence - If a Participant is on short-term disability (STD) or an approved paid leave of absence under the Family & Medical Leave Act (or other similar law) during a Performance Period and has at least 90 days of Eligible Earnings within the Performance Period, he or she is eligible for a Target Incentive Award for such Performance Period. Such Award will be pro-rated to exclude the time the Participant was considered on STD or paid leave, as determined by the Committee or its designee, and will be based on the actual days of eligibility for the Plan. A Participant shall be considered eligible for the Plan during the first 90 days of STD or paid leave. If eligible, such pro-rated Target Incentive Award will be the lesser of the Participant’s (i) pro-rated Target Incentive Award or (ii) pro-rated Target Incentive Award based on the performance of the Company, the Participant’s business unit, division or function and the Participant’s individual performance, within the Company’s discretion. Such Award will be paid in accordance with an Involuntary Termination, if applicable, unless the Award is paid under the EAIP or to a member of the Senior Leadership Council or Executive Leadership Team in which case it shall be paid as soon as practicable after the performance criteria has been met but not later than March 15
th
of the year following termination. Payments to members of the Senior Leadership Council or Executive Leadership
|
(f)
|
Death - If a Participant dies during a Performance Period, in the Committee’s discretion, the pro-rated Target Incentive Award will be paid to the Participant’s estate as soon as administratively possible following the Participant’s death.
|
(a)
|
For Participants in the United States
,
Award payments under the Plan will be treated as taxable income for the year in which the Participant receives the payment. The Company and its Affiliates shall be authorized to withhold appropriate amounts from such payments to satisfy all federal, state and local tax withholding requirements and any other authorized deductions due in respect of an Award payment hereunder and to take such other action as may be deemed necessary in the opinion of the Company or Affiliate to satisfy all obligations for the payment of such taxes.
|
(b)
|
For Participants located outside of the United States, local country rules on taxation and withholding treatment will apply.
|
(c)
|
Awards made to participants eligible under the EAIP are intended to qualify as “performance based compensation” under Section 162(m) of the Code so that they are deductible for United States tax purposes by the Company. Awards made to participants eligible for the EAIP will be governed by the additional terms and conditions included in that plan. With respect to all Awards to participants eligible under the EAIP, to the extent that there are any conflicts between this Plan and the terms of the EAIP, the EAIP will prevail.
|
(a)
|
Awards under this Plan are considered variable compensation and as such are not guaranteed.
|
(b)
|
No Employee shall have the right to be selected to receive an Award under this Plan or, having been so selected, to be selected to receive a future Award. Neither the Award nor any benefits arising out of this Plan shall constitute part of a Participant’s employment or service contract with the Company or any Affiliate and, accordingly, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Company without giving rise to liability on the part of the Company or any Affiliate for severance payments.
|
(c)
|
No Employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.
|
(d)
|
Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment or service contract or confer or be deemed to confer on any Employee or Participant any right to continue in the employ or service of, or to continue any other relationship with, the Company or any Affiliate or limit in any way the right of the Company or any Affiliate to terminate an Employee’s employment or Participant’s service at any time, with or without Cause.
|
(e)
|
Except as otherwise required by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.
|
(f)
|
If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.
|
(g)
|
Awards may be granted and paid to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Participants employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the payment of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.
|
(h)
|
If approved by the Committee in its sole discretion, an Employee’s absence or leave because of military or governmental service, disability or other reason shall not be considered an interruption of employment for any purpose under the Plan; provided, however, that to the extent an Award under this Plan is subject to Section 409A, such absence or leave shall be considered a Separation from Service to the extent provided by Section 409A.
|
Group 1 Countries
|
|
Group 2 Countries
|
||
(Accumulation Of Month-end Salary and Targets)
|
(Dec 31 Salary and Target)
|
|||
AUS
|
AUSTRALIA
|
|
DZA
|
ALGERIA
|
AUT
|
AUSTRIA
|
|
ARG
|
ARGENTINA
|
ZAE
|
AZERBAIJAN
|
|
CMR
|
CAMEROON
|
BLR
|
BELARUS
|
|
CRI
|
COSTA RICA
|
BEL
|
BELGIUM
|
|
IVC
|
COTE D'IVOIRE (IVORY COAST)
|
BIH
|
BOSNIA AND HERZEGOVINA
|
|
ECU
|
ECUADOR
|
BRA
|
BRAZIL
|
|
EGY
|
EGYPT
|
BGR
|
BULGARIA
|
|
GHA
|
GHANA
|
CAN
|
CANADA
|
|
IRN
|
IRAN (ISLAMIC REPUBLIC OF)
|
CHL
|
CHILE
|
|
IRQ
|
IRAQ
|
CHN
|
CHINA
|
|
JOR
|
JORDAN
|
COL
|
COLOMBIA
|
|
KEN
|
KENYA
|
HRV
|
CROATIA
|
|
KWT
|
KUWAIT
|
CZE
|
CZECH REPUBLIC
|
|
LBN
|
LEBANON
|
DNK
|
DENMARK
|
|
LBY
|
LIBYAN ARAB JAMAHIRIYA
|
DOM
|
DOMINICAN REPUBLIC
|
|
MAR
|
MOROCCO
|
EST
|
ESTONIA
|
|
NGA
|
NIGERIA
|
FIN
|
FINLAND
|
|
OMN
|
OMAN
|
FRA
|
FRANCE
|
|
PAN
|
PANAMA
|
GEO
|
GEORGIA
|
|
PRY
|
PARAGUAY
|
DEU
|
GERMANY
|
|
PER
|
PERU
|
GRC
|
GREECE
|
|
QAT
|
QATAR
|
GTM
|
GUATEMALA
|
|
SAU
|
SAUDI ARABIA
|
HND
|
HONDURAS
|
|
SEN
|
SENEGAL
|
HKG
|
HONG KONG
|
|
ZAF
|
SOUTH AFRICA
|
HUN
|
HUNGARY
|
|
SDN
|
SUDAN
|
IND
|
INDIA
|
|
SYR
|
SYRIAN ARAB REPUBLIC
|
IDN
|
INDONESIA
|
|
TUN
|
TUNISIA
|
IRL
|
IRELAND
|
|
ARE
|
UNITED ARAB EMIRATES
|
ISR
|
ISRAEL
|
|
URY
|
URUGUAY
|
ITA
|
ITALY
|
|
YEM
|
YEMEN
|
JPN
|
JAPAN
|
|
|
|
KAZ
|
KAZAKHSTAN
|
|
|
|
KOR
|
KOREA, REPUBLIC OF
|
|
|
|
LVA
|
LATVIA
|
|
|
|
LTU
|
LITHUANIA
|
|
|
|
LUX
|
LUXEMBOURG
|
|
|
|
MYS
|
MALAYSIA
|
|
|
|
MEX
|
MEXICO
|
|
|
|
NLD
|
NETHERLANDS
|
|
|
|
NZL
|
NEW ZEALAND
|
|
|
|
NIC
|
NICARAGUA
|
|
|
|
NOR
|
NORWAY
|
|
|
|
PAK
|
PAKISTAN
|
|
|
|
PHL
|
PHILIPPINES
|
|
|
|
POL
|
POLAND
|
|
|
|
PRT
|
PORTUGAL
|
|
|
|
ROU
|
ROMANIA
|
|
|
|
RUS
|
RUSSIAN FEDERATION
|
|
|
|
SRB
|
SERBIA
|
|
|
|
SGP
|
SINGAPORE
|
|
|
|
SVK
|
SLOVAKIA
|
|
|
|
SVN
|
SLOVENIA
|
|
|
|
ESP
|
SPAIN
|
|
|
|
SWE
|
SWEDEN
|
|
|
|
CHE
|
SWITZERLAND
|
|
|
|
Group 1 Countries
|
|
Group 2 Countries
|
||
(Accumulation Of Month-end Salary and Targets)
|
(Dec 31 Salary and Target)
|
|||
TWN
|
TAIWAN
|
|
|
|
THA
|
THAILAND
|
|
|
|
TUR
|
TURKEY
|
|
|
|
UKR
|
UKRAINE
|
|
|
|
GBR
|
UNITED KINGDOM
|
|
|
|
USA
|
UNITED STATES
|
|
|
|
VEN
|
VENEZUELA
|
|
|
|
VNM
|
VIETNAM
|
|
|
|
(i)
|
any person or persons acting in concert (excluding Wyeth benefit plans) becomes the beneficial owner of securities of Wyeth having at least 20% of the voting power of Wyeth’s then outstanding securities (unless the event causing the 20% threshold to be crossed is an acquisition of voting common securities directly from Wyeth); or
|
(ii)
|
the consummation of any merger or other business combination of Wyeth, sale or lease of Wyeth’s assets, or combination of the foregoing transactions (the “Transactions”), other than a Transaction immediately following which the shareholders of Wyeth who owned shares immediately prior to the Transaction (including any trustee or fiduciary of any Wyeth employee benefit plan) own, by virtue of their prior ownership of Wyeth’s shares, at least 65% of the voting power, directly or indirectly, of (a) the surviving corporation in any such merger or other business combination; (b) the purchaser or lessee of the Wyeth’s assets; or (c) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or
|
(iii)
|
within any 24 month period, the persons who were directors immediately before the beginning of such period (the “
Incumbent Directors
”) shall cease (for any reason other than death) to constitute at least a majority of the Board of Directors or the board of directors of a successor to Wyeth. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board of Directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change in Control or engage in a proxy or other control contest);
|
(i)
|
with respect to a distribution election made by a Participant in accordance with the SESP, at least 12 months after a Valid Notional Rollover of all or a portion of the SESP 409A Account;
|
(ii)
|
with respect to redeferral by a Participant of all or a portion of the ERP 409A Benefit, the SERP 409A Benefit or the SESP 409A Account pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP, the SERP or the SESP, as the case may be, not earlier than five years after the date such ERP 409A Benefit, SERP 409A Benefit or SESP 409A Account would otherwise have been payable;
|
(iii)
|
with respect to a deferral of all or a portion of the ERP 409A Benefit or the SERP 409A Benefit pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP or the SERP, as the case may be, by a Participant who makes a distribution election prior to December 31, 2005 and incurs a Separation from Service during the calendar year 2006, not earlier than January 1, 2007;
|
(iv)
|
with respect to a deferral of all or a portion of the ERP 409A Benefit or the SERP 409A Benefit pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP or the SERP, as the case may be, by a Participant who makes a distribution election in calendar year 2006 and incurs a Separation from Service during the calendar year 2007, not earlier than January 1, 2008;
|
(v)
|
with respect to a deferral of all or a portion of the ERP 409A Benefit or the SERP 409A Benefit pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP or the SERP, as the case may be, by a Participant who makes a distribution election in calendar year 2007 and incurs a Separation from Service during the calendar year 2008, not earlier than January 1, 2009;
|
(vi)
|
with respect to all other Retirement Benefit payments (including all or a portion of the ERP 409A Benefit or the SERP 409A Benefit rolled over to the Plan in a Valid Notional Rollover not in connection with a redeferral), on or after the Participant’s Retirement Date; and
|
(i)
|
with respect to a distribution election made by a Participant in accordance with the SESP, at least 12 months after a Valid Notional Rollover of all or a portion of the SESP 409A Account;
|
(ii)
|
with respect to redeferral by a Participant of all or a portion of the ERP 409A Benefit, the SERP 409A Benefit or the SESP 409A Account pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP, the SERP or the SESP, as the case may be, not earlier than five years after the date such ERP 409A Benefit, SERP 409A Benefit or SESP 409A Account would otherwise have been payable;
|
(iii)
|
with respect to a deferral of all or a portion of the ERP 409A Benefit or the SERP 409A Benefit pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP or the SERP, as the case may be, by a Participant who makes a distribution election prior to December 31, 2005 and incurs a Separation from Service during the calendar year 2006, not earlier than January 1, 2007;
|
(iv)
|
with respect to a deferral of all or a portion of the ERP 409A Benefit or the SERP 409A Benefit pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP or the SERP, as the case may be, by a Participant who makes a distribution election in calendar year 2006 and incurs a Separation from Service during the calendar year 2007, not earlier than January 1, 2008;
|
(v)
|
with respect to a deferral of all or a portion of the ERP 409A Benefit or the SERP 409A Benefit pursuant to a Valid Notional Rollover in accordance with the provisions of the ERP or the SERP, as the case may be, by a Participant who makes a distribution election in calendar year 2007 and incurs a Separation from Service during the calendar year 2008, not earlier than January 1, 2009;
|
(vi)
|
with respect to all other Retirement Benefit payments (including all or a portion of the ERP 409A Benefit or the SERP 409A Benefit rolled over to the Plan in a Valid Notional Rollover not in connection with a redeferral), on or after the Participant’s Retirement date; and
|
(rr)
|
“
Section 409A Compliance
” has the meaning set forth in Section 9.2.
|
2
|
set forth all of the grounds upon which the Claimant’s request for review is based and any facts in support thereof; and
|
3
|
set forth any issues or comments which the Claimant deems pertinent to the appeal.
|
1.
|
the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of ERISA;
|
2.
|
the Company shall be treated as the “grantor” of said trust for purposes of Sections 671 and 677 of the Code; and
|
3.
|
said trust agreeme
nt shall provide that the trust fund assets may be used to satisfy claims of the Company’s general creditors.
|
|
1.
|
Wyeth Supplemental Employee Savings Plan – Section 1.2(r);
|
|
2.
|
Wyeth Supplemental Executive Retirement Plan – Sections 5.7, 6.5, 6.6 and 6.8;
|
|
3.
|
Wyeth Executive Retirement Plan – Sections 5.7, 6.5, 6.6 and 6.8; and
|
|
4.
|
Wyeth Deferred Compensation Plan – Sections 7.4 and 7.6.
|
(i)
|
If the Limitation restricts the amount of compensation that may be received by the director, the dollar value of the Awarded Units (based on the closing price of the Company’s common stock on the date of the annual meeting of shareholders) shall be reduced to comply with the Limitation; provided, however, that the director may elect, before the first day of any calendar year, in a manner that complies with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations thereunder (“Section 409A”), to comply with the Limitation as to amount by reducing the cash compensation payable to such director for such year rather than reducing the dollar value of the Awarded Units to be credited to the director’s account.
|
(ii)
|
If the Limitation prohibits the director from receiving any compensation in the form of Awarded Units, the award specified in paragraph 3(A) (reduced as provided in subparagraph (i) above to comply with the Limitation as to amount), shall not be made. Instead, the dollar value of such Awarded Units (based on the closing price of the Company’s common stock on the date of the annual meeting of shareholders) shall be credited to the director’s account.
|
(iii)
|
Any dollar amounts credited to the director’s account in accordance with subparagraph (ii) above shall be credited with interest at a rate equal to the rate of return for an intermediate treasury index as selected by the Plan Assets Committee, compounded monthly.
|
(iv)
|
If, as permitted by the proviso to subparagraph (i) above, the director elects to reduce his or her cash compensation, such reduced cash compensation will be payable on a quarterly basis.
|
(v)
|
A director subject to the Limitation described in subparagraph (ii) above may not elect to switch the form of investment of any amounts deferred pursuant to subparagraph (ii) above, and no dividends shall be declared with respect thereto, and any election under Section 4(C) is inapplicable to any such amounts.
|
(vi)
|
The dollar value, if any, in excess of the amounts that the director is permitted to receive pursuant to the Limitation may be contributed to one or more charities selected by the Corporate Governance Committee of the Company’s Board of Directors, on the terms approved by such Committee, acting in its sole discretion; provided, that such Committee may consider the director’s recommendation as to the recipient or recipients of such contribution.
|
(i)
|
Timing:
|
i.
|
to receive the lump sum distribution or first annual installment on the last business day of the month following his or her Separation from Service; or
|
ii.
|
to receive the lump sum distribution or first annual installment in the first month of the year following the director’s Separation from Service; and
|
(ii)
|
Form:
|
i.
|
to receive the distribution in a lump sum; or
|
ii.
|
to receive the distribution in installments from two to fifteen.
|
(iii)
|
In the absence of an election, such payments will begin with the first month of the year following the director’s Separation from Service and will be made in five annual installments.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(MILLIONS OF DOLLARS, EXCEPT RATIOS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Determination of earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before provision for taxes on income, noncontrolling interests and cumulative effect of a change in accounting principles
|
|
$
|
15,716
|
|
|
$
|
11,242
|
|
|
$
|
11,481
|
|
|
$
|
8,846
|
|
|
$
|
10,421
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Noncontrolling interests
|
|
44
|
|
|
47
|
|
|
60
|
|
|
46
|
|
|
15
|
|
|||||
Income attributable to Pfizer Inc.
|
|
15,672
|
|
|
11,195
|
|
|
11,421
|
|
|
8,800
|
|
|
10,406
|
|
|||||
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capitalized interest
|
|
(32
|
)
|
|
(41
|
)
|
|
(50
|
)
|
|
(36
|
)
|
|
(34
|
)
|
|||||
Amortization of capitalized interest
|
|
65
|
|
|
69
|
|
|
95
|
|
|
29
|
|
|
29
|
|
|||||
Equity (income)/loss from equity method investments
|
|
(55
|
)
|
|
(99
|
)
|
|
(82
|
)
|
|
(78
|
)
|
|
4
|
|
|||||
Distributed income of equity method investments
|
|
162
|
|
|
85
|
|
|
190
|
|
|
26
|
|
|
—
|
|
|||||
Fixed charges
|
|
1,495
|
|
|
1,627
|
|
|
1,812
|
|
|
1,930
|
|
|
1,358
|
|
|||||
Total earnings as defined
|
|
$
|
17,307
|
|
|
$
|
12,836
|
|
|
$
|
13,386
|
|
|
$
|
10,671
|
|
|
$
|
11,763
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
(a)
|
|
$
|
1,414
|
|
|
$
|
1,522
|
|
|
$
|
1,681
|
|
|
$
|
1,797
|
|
|
$
|
1,232
|
|
Preferred stock dividends
(b)
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|||||
Rents
(c)
|
|
78
|
|
|
101
|
|
|
126
|
|
|
127
|
|
|
119
|
|
|||||
Fixed charges
|
|
1,495
|
|
|
1,627
|
|
|
1,812
|
|
|
1,930
|
|
|
1,358
|
|
|||||
Capitalized interest
|
|
32
|
|
|
41
|
|
|
50
|
|
|
36
|
|
|
34
|
|
|||||
Total fixed charges
|
|
$
|
1,527
|
|
|
$
|
1,668
|
|
|
$
|
1,862
|
|
|
$
|
1,966
|
|
|
$
|
1,392
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
11.3
|
|
|
7.7
|
|
|
7.2
|
|
|
5.4
|
|
|
8.5
|
|
(a)
|
Interest expense includes amortization of debt premium, discount and other debt costs. Interest expense does not include interest related to uncertain tax positions of $222 million for the twelve months ended December 31, 2013; $265 million for 2012; $338 million for 2011; $389 million for 2010; and $337 million for 2009.
|
(b)
|
Preferred stock dividends related to our Series A convertible perpetual preferred stock held by an Employee Stock Ownership Plan Trust.
|
(c)
|
Rents included in the computation consist of one-third of rental expense, which we believe to be a conservative estimate of an interest factor in our leases, which are not material.
|
Pfizer Inc. 2013 Financial Report
|
|
|
|
|
|
|
•
|
Overview of Our Performance, Operating Environment, Strategy and Outlook
. This section, beginning on page 2, provides information about the following: our business; our 2013 performance; our operating environment; our strategy; our business development initiatives, such as acquisitions, dispositions, licensing and collaborations; and our financial guidance for 2014.
|
•
|
Significant Accounting Policies and Application of Critical Accounting Estimates
. This section, beginning on page 12, discusses those accounting policies and estimates that we consider important in understanding Pfizer’s consolidated financial statements. For additional discussion of our accounting policies, see Notes to Consolidated Financial Statements—
Note 1. Basis of Presentation and Significant Accounting Policies
.
|
•
|
Analysis of the Consolidated Statements of Income.
This section begins on page 17, and consists of the following sub-sections:
|
◦
|
Revenues.
This sub-section, beginning on page 17, provides an analysis of our revenues and products for the three years ended December 31, 2013, including an overview of our important biopharmaceutical product developments.
|
◦
|
Costs and Expenses
. This sub-section, beginning on page 29, provides a discussion about our costs and expenses.
|
◦
|
Provision for Taxes on Income.
This sub-section, beginning on page 34, provides a discussion of items impacting our tax provisions.
|
◦
|
Discontinued Operations.
This sub-section, on page 35, provides an analysis of the financial statement impact of our discontinued operations.
|
◦
|
Adjusted Income
. This sub-section, beginning on page 35, provides a discussion of an alternative view of performance used by management.
|
•
|
Analysis of the Consolidated Statements of Comprehensive Income.
This section, on page 40, provides a discussion of changes in certain components of other comprehensive income.
|
•
|
Analysis of the Consolidated Balance Sheets.
This section, beginning on page 41, provides a discussion of changes in certain balance sheet accounts.
|
•
|
Analysis of the Consolidated Statements of Cash Flows.
This section, beginning on page 42, provides an analysis of our consolidated cash flows for the three years ended December 31, 2013.
|
•
|
Analysis of Financial Condition, Liquidity and Capital Resources
. This section, beginning on page 43, provides an analysis of selected measures of our liquidity and of our capital resources as of December 31, 2013 and December 31, 2012, as well as a discussion of our outstanding debt and other commitments that existed as of December 31, 2013. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future activities.
|
•
|
New Accounting Standards
. This section, on page 47, discusses accounting standards that we have recently adopted, as well as those that recently have been issued, but not yet adopted.
|
•
|
Forward-Looking Information and Factors That May Affect Future Results
. This section, beginning on page 47, provides a description of the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements presented in this Financial Review relating to, among other things, our anticipated operating and financial performance, business plans and prospects, in-line products and product candidates, strategic reviews, capital allocation, business-development plans, and plans relating to share repurchases and dividends. Such forward-looking statements are based on management’s current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. Also included in this section are discussions of Financial Risk Management and Legal Proceedings and Contingencies, including tax matters.
|
2013 Financial Report
|
|
1
|
|
|
|
•
|
the continued erosion of branded Lipitor in the U.S., developed Europe and certain other developed markets (approximately
$1.7 billion
);
|
•
|
the loss of exclusivity for Geodon in March 2012 in the U.S. (approximately
$130 million
);
|
•
|
other product losses of exclusivity (approximately
$1.3 billion
);
|
•
|
the ongoing expiration of the Spiriva collaboration in certain countries (approximately
$475 million
);
|
2
|
|
2013 Financial Report
|
|
|
|
•
|
decreased government purchases of the Prevnar family of products and Enbrel in certain emerging markets (approximately
$160 million
); and
|
•
|
lower revenues from generic atorvastatin (approximately
$145 million
),
|
•
|
the growth of certain products, including Lyrica, Inlyta, Celebrex and Xalkori in developed markets and Xeljanz in the U.S. (approximately
$1.1 billion
);
|
•
|
the overall growth in the rest of the Emerging Markets business unit (approximately
$751 million
), excluding the aforementioned decrease in the government purchases of the Prevnar family of products and Enbrel;
|
•
|
the overall growth in the Consumer Healthcare business unit (approximately
$153 million
); and
|
•
|
revenues from the transitional manufacturing and supply agreements with Zoetis (approximately
$132 million
).
|
•
|
patent litigation settlement income recorded in 2013 (approximately $1.3 billion, pre-tax) (see also the “Costs and Expenses––Other (Income)/Deductions––Net” section of this Financial Review and Notes to Consolidated Financial Statements––
Note 4. Other (Income)/Deductions––Net
);
|
•
|
lower net charges for other legal matters (down approximately $2.2 billion, pre-tax) (see also the “Costs and Expenses––Other (Income)/Deductions––Net” section of this Financial Review and Notes to Consolidated Financial Statements––
Note 4. Other (Income)/Deductions––Net
);
|
•
|
additional benefits generated from our global cost-reduction/productivity initiatives, partially offset by spending to support new product launches;
|
•
|
a gain recorded in 2013 (approximately $459 million, pre-tax) associated with the transfer of certain product rights to our equity-method investment in China, Hisun Pfizer Pharmaceuticals Company Limited (Hisun Pfizer) (see also the “Our Business Development Initiatives” section of this Financial Review and Notes to Consolidated Financial Statements––
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments
); and
|
•
|
lower amortization of intangible assets (down approximately $510 million, pre-tax),
|
•
|
lower revenues, as discussed above;
|
•
|
higher asset impairments and related charges (up approximately $211 million, pre-tax) (see also the “Costs and Expenses––Other (Income)/Deductions––Net” section of this Financial Review and Notes to Consolidated Financial Statements––
Note 4. Other (Income)/Deductions––Net
); and
|
•
|
a higher effective tax rate, primarily due to a decrease in tax benefits related to certain audit settlements in multiple jurisdictions covering various periods and a change in the jurisdictional mix of earnings (see also the “Provision for Taxes on Income” section of this Financial Review and Notes to Consolidated Financial Statements––
Note 5. Tax Matters
).
|
2013 Financial Report
|
|
3
|
|
|
|
•
|
Lipitor has lost exclusivity in all major markets. Lipitor revenues were $2.3 billion in 2013, $3.9 billion in 2012 and $9.6 billion in 2011. We lost exclusivity for Lipitor in the U.S. in November 2011. The entry of multi-source generic competition in the U.S. began in May 2012, with attendant increased competitive pressures. Lipitor lost exclusivity in Japan in June 2011, Australia in April 2012 and most of developed Europe in March and May 2012 and now faces multi-source generic competition in those markets.
|
•
|
Spiriva—Our collaboration with Boehringer Ingelheim (BI) for Spiriva expires on a country-by-country basis between 2012 and 2016. In the U.S. and certain European countries, the co-promotion agreements for Spiriva entered their final year in 2013, which resulted in a decline in Pfizer’s share of Spiriva revenues per the terms of those agreements. Additionally, in Australia, Canada and certain other European markets, the co-promotion agreements for Spiriva expired in 2013, which resulted in no additional revenues after the expiration date. We expect to experience a graduated decline in revenues from Spiriva through 2016 as agreements for other markets enter their final year and subsequently expire. Pfizer Alliance revenues related to Spiriva were $689 million in 2013, $1.2 billion in 2012 and $1.4 billion in 2011.
|
•
|
Aricept—Our rights to Aricept in Japan returned to Eisai Co., Ltd. in December 2012. The Aricept 23mg tablet lost exclusivity in the U.S. in July 2013.
|
•
|
Enbrel—Our U.S. and Canada co-promotion agreement with Amgen Inc. for Enbrel expired on October 31, 2013. While we are entitled to royalties for 36 months thereafter, we expect that those royalties will be significantly less than our previous share of Enbrel profits from U.S. and Canada sales. In addition, while our share of the profits from this co-promotion agreement previously was included in
Revenues
, our royalties after October 31, 2013 are and will be included in
Other (income)/deductions
––
net
, in our consolidated statements of income. Outside the U.S. and Canada, we continue to have the exclusive rights to market Enbrel. Enbrel revenues in the U.S. and Canada were $1.4 billion in 2013, $1.5 billion in 2012 and $1.3 billion in 2011.
|
•
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Rebif—Our collaboration agreement with EMD Serono Inc. to co-promote Rebif in the U.S. will expire at the end of 2015. Rebif revenues were $401 million in 2013, $399 million in 2012 and $320 million in 2011.
|
•
|
We lost exclusivity for Detrol LA and Rapamune in the U.S. in January 2014. Revenues for Detrol/Detrol LA and Rapamune in the U.S. were $576 million in 2013, $671 million in 2012 and $745 million in 2011.
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•
|
We expect to lose exclusivity for various other products in various markets in 2014, including Zyvox in Canada, Celebrex in developed Europe and Viagra in Japan and Australia. For Lyrica, regulatory exclusivity in the EU extends until 2014.
|
4
|
|
2013 Financial Report
|
|
|
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•
|
an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries (effective January 1, 2010);
|
•
|
extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care organizations (effective March 23, 2010);
|
•
|
expansion of the types of institutions eligible for the “Section 340B discounts” for outpatient drugs provided to hospitals serving a disproportionate share of low-income individuals and meeting the qualification criteria under Section 340B of the Public Health Service Act of 1944 (effective January 1, 2010);
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•
|
discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare “coverage gap,” also known as the “doughnut hole” (effective January 1, 2011); and
|
•
|
a fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs (effective January 1, 2011, with the total fee to be paid each year by the pharmaceutical industry increasing annually through 2018).
|
•
|
$458 million recorded as a reduction to
Revenues,
related to the higher, extended and expanded rebate provisions and the Medicare “coverage gap” discount provision; and
|
•
|
$280 million recorded in
Selling, informational and administrative expenses
, related to the fee payable to the federal government referred to above.
|
•
|
$593 million recorded as a reduction to
Revenues,
related to the higher, extended and expanded rebate provisions and the Medicare “coverage gap” discount provision; and
|
•
|
$336 million recorded in
Selling, informational and administrative expenses
, related to the fee payable to the federal government referred to above.
|
•
|
$648 million recorded as a reduction to
Revenues,
related to the higher, extended and expanded rebate provisions and the Medicare “coverage gap” discount provision; and
|
•
|
$248 million recorded in
Selling, informational and administrative expenses
, related to the fee payable to the federal government referred to above.
|
•
|
Expansion of Healthcare Coverage
—The financial impact of U.S. healthcare reform may be affected by certain additional developments over the next few years, including pending implementation guidance relating to the U.S. Healthcare Legislation and certain healthcare reform proposals. As of May 2013, the Congressional Budget Office estimates that the ACA will result in the coverage of 25 million previously uninsured individuals by 2017. Expanding insurance coverage is expected to result in a negligible change in overall pharmaceutical industry sales, as the uninsured are principally young and relatively healthy and it is expected that a significant percentage may be covered by Medicaid (under which sales of pharmaceutical products are subject to substantial rebates and, in many states, to formulary restrictions limiting access to brand-name drugs, including ours), and the restrictive benefit designs discourage the use of branded drugs. At the same time, the rebates, discounts, taxes and other costs associated with the ACA are a significant cost to the industry.
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•
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Biotechnology Products—
The U.S. Healthcare Legislation also created a framework for the approval of biosimilars (also known as follow-on biologics) following the expiration of 12 years of exclusivity for the innovator biologic, with a potential six-month pediatric extension.
|
2013 Financial Report
|
|
5
|
|
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•
|
Budget Control Act of 2011
—In August 2011, the federal Budget Control Act of 2011 (the Budget Control Act) was enacted in the U.S. The Budget Control Act includes provisions to raise the U.S. Treasury Department's borrowing limit, known as the debt ceiling, and provisions to reduce the federal deficit by $2.4 trillion between 2012 and 2021. Deficit-reduction targets included $900 billion of discretionary spending reductions associated with the Department of Health and Human Services and various agencies charged with national security, but those discretionary spending reductions do not include programs such as Medicare and Medicaid or direct changes to pharmaceutical pricing, rebates or discounts. The Office of Management and Budget (OMB) was responsible for identifying the remaining $1.5 trillion of deficit reductions, which were divided evenly between defense and non-defense spending. The Budget Control Act spending reductions to date have not had a material adverse impact on our results of operations.
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•
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Sustainable Growth Rate Replacement
—The Medicare physician payment formula known as the Sustainable Growth Rate (SGR) is routinely overridden by Congressional action because it would lead to dramatic decreases in physician payment. Congress issued a bi-partisan proposal to repeal the SGR and replace it with a new payment model. The proposed fee-for-service system would provide a modest annual payment rate increase until 2018, while allowing physicians and healthcare professionals to earn performance-based incentive payments after 2018. This form of SGR replacement is estimated by the Congressional Budget Office to cost the federal government approximately $130 billion over 10 years. The source of those funds has yet to be determined, but could include additional taxes on and/or rebate requirements applicable to the pharmaceutical industry, including Pfizer. Congress is considering a bill and is working to identify the means to pay for it prior to March 31, 2014, when the current SGR will expire.
|
•
|
Federal Debt Ceiling
—After the U.S. federal debt ceiling was reached on May 19, 2013 and measures taken by the U.S. Treasury Department to enable the U.S. federal government to continue meeting its financial obligations were nearly exhausted, Congress enacted legislation on October 16, 2013 that suspended the debt ceiling through February 7, 2014 and preserved the ability of the U.S. Treasury Department to use “extraordinary measures” to avoid a default on U.S. federal government debt for a short period of time thereafter. In February 2014, Congress enacted legislation that further suspends the debt ceiling until March 15, 2015, effectively ensuring the U.S. federal government’s ability to satisfy its financial obligations until that date, including under Medicare, Medicaid and other publicly funded or subsidized health programs that have a direct impact on our results of operations.
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6
|
|
2013 Financial Report
|
|
|
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•
|
We believe that patients, experiencing the effects of the challenging economic environment, including high unemployment levels, and increases in co-pays, sometimes switch to generic products, delay treatments, skip doses or use less effective treatments to reduce their costs. Challenging economic conditions in the U.S. also have increased the number of patients in the Medicaid program (and the number will continue to grow as a result of the Medicaid coverage expansion effective in some states in 2014), under which sales of pharmaceuticals are subject to substantial rebates and, in many states, to formulary restrictions limiting access to brand-name drugs, including ours. In addition, we continue to experience pricing pressure in various markets around the world, including in developed European markets, Japan and in a number of emerging markets, with government-mandated reductions in prices for certain biopharmaceutical products and government-imposed access restrictions in certain countries. Furthermore, some government agencies and third-party payers use health technology assessments in ways that, at times, lead to lower prices for and restricted access to new medicines.
|
•
|
We continue to monitor developments regarding government and government agency receivables in several European markets where economic conditions remain challenging and uncertain. For further information about our
Accounts Receivable
, see the “Analysis of Financial Condition, Liquidity and Capital Resources” section of this Financial Review.
|
•
|
Significant portions of our revenues and earnings, as well as our substantial international net assets, are exposed to changes in foreign exchange rates. We seek to manage our foreign exchange risk in part through operational means, including managing same-currency revenues in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk also is managed through the use of derivative financial instruments and foreign currency debt. As we operate in multiple foreign currencies, including the euro, the Japanese yen, the Chinese renminbi, the U.K. pound, the Canadian dollar and approximately 100 other currencies, changes in those currencies relative to the U.S. dollar will impact our revenues and expenses. If the U.S. dollar were to weaken against another currency, assuming all other variables remained constant, our revenues would increase, having a positive impact on earnings, and our overall expenses would increase, having a negative impact on earnings. Conversely, if the U.S. dollar were to strengthen against another currency, assuming all other variables remained constant, our revenues would decrease,
|
2013 Financial Report
|
|
7
|
|
|
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•
|
Global Innovative Pharmaceutical business
––GIP comprises medicines within several therapeutic areas that are generally expected to have market exclusivity beyond 2015. These therapeutic areas include immunology and inflammation, cardiovascular/metabolic, neuroscience and pain, rare diseases and women's/men's health.
|
•
|
Global Vaccines, Oncology and Consumer Healthcare business
––
VOC focuses on the development and commercialization of vaccines and products for oncology and consumer healthcare. Each of the three businesses that comprise this group operates as a separate, global business, with distinct specialization in terms of the science, talent and market approach necessary to deliver value to consumers and patients.
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•
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Global Established Pharmaceutical business
––GEP includes the brands that have lost market exclusivity and, generally, the mature, patent-protected products that are expected to lose exclusivity through 2015 in most major markets and, to a much smaller extent, generic pharmaceuticals. Additionally, GEP includes our sterile injectable products and biosimilar development portfolio, as well as current established product collaborations, such as our existing agreements with Mylan Inc. in Japan, Zhejiang Hisun Pharmaceuticals Co., Ltd. in China and Laboratório Teuto Brasileiro S.A. in Brazil.
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8
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
9
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•
|
Collaboration with Eli Lilly & Company (Lilly)
––In October 2013, we entered into a collaboration agreement with Lilly to jointly develop and globally commercialize Pfizer's tanezumab, which provides that Pfizer and Lilly will equally share product-development expenses as well as potential revenues and certain product-related costs. The tanezumab program currently is subject to a partial clinical hold by the FDA pending submission of nonclinical data to the FDA. We anticipate submitting that data by the end of 2014. Under the agreement with Lilly, we are eligible to receive certain payments from Lilly upon the achievement of specified clinical, regulatory and commercial milestones, including an upfront payment of $200 million that is contingent upon the parties continuing in the collaboration after receipt of the FDA’s response to the submission of the nonclinical data. Both Pfizer and Lilly have the right to terminate the agreement under certain conditions.
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•
|
ViiV Healthcare Limited (ViiV)
––On August 12, 2013, the FDA approved Tivicay (dolutegravir), a product for the treatment of HIV-1 infection, developed by ViiV, an equity-method investee. This approval, in accordance with the agreement between GlaxoSmithKline plc and Pfizer, triggered a reduction in our interest in ViiV from 13.5% to 12.6% and an increase in GlaxoSmithKline plc's equity interest in ViiV from 76.5% to 77.4% effective October 1, 2013. As a result, in 2013, we recognized a loss of approximately $32 million in
Other (income)/deductions
––
net
. We continue to account for our investment in ViiV under the equity method due to the significant influence that we continue to have through our board representation and minority veto rights.
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•
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Animal Health/Zoetis
––On June 24, 2013, we completed the full disposition of our Animal Health business. The full disposition was completed through a series of steps, including the formation of Zoetis, an initial public offering (IPO) of an approximate 19.8% interest in Zoetis and an exchange offer for the remaining 80.2% interest. For additional information, see Notes to Consolidated Financial Statements––
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures.
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•
|
Collaboration with Merck & Co., Inc. (Merck)
––On April 29, 2013, we announced that we entered into a worldwide, except Japan, collaboration agreement with Merck for the development and commercialization of Pfizer's ertugliflozin (PF-04971729), an investigational oral sodium glucose cotransporter (SGLT2) inhibitor currently in Phase 3 development for the treatment of type 2 diabetes.
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•
|
Hisun Pfizer Pharmaceuticals Company Limited (Hisun Pfizer)
––On September 6, 2012, we and Zhejiang Hisun Pharmaceuticals Co., Ltd. formed a new company, Hisun Pfizer, to develop, manufacture, market and sell pharmaceutical products, primarily branded generic products, predominately in China. On January 1, 2013, we contributed assets constituting a business to this 49%-owned equity-method investment and recognized a pre-tax gain of approximately $459 million in
Other (income)/deductions––net.
For additional information, see Notes to Consolidated Financial Statements––
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
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•
|
Nutrition Business
––On November 30, 2012, we completed the sale of our Nutrition business to Nestlé for $11.85 billion in cash. For additional information, see Notes to Consolidated Financial Statements—
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
.
|
•
|
NextWave Pharmaceuticals Incorporated (NextWave)
––On November 27, 2012, we completed our acquisition of NextWave, a privately held, specialty pharmaceutical company. As a result of the acquisition, we now hold exclusive North American rights to Quillivant XR™ (methylphenidate hydrochloride), the first once-daily liquid medication approved in the U.S. for the treatment of attention deficit hyperactivity disorder. The total consideration for the acquisition was approximately $442 million, which consisted of upfront payments to NextWave's shareholders of approximately $278 million and contingent consideration with an estimated acquisition-date fair value of approximately $164 million. In 2013, as a result of lowered commercial forecasts, the fair value of the contingent consideration decreased and we recognized a pre-tax gain of approximately $114 million in
Other (income)/deductions––net
. For additional information, see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions
.
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•
|
Nexium Over-The-Counter Rights
––In August 2012, we entered into an agreement with AstraZeneca for the exclusive, global, OTC rights for Nexium, a leading prescription drug currently approved to treat the symptoms of gastroesophageal reflux disease. We made an upfront payment of $250 million to AstraZeneca, and AstraZeneca is eligible to receive milestone payments of up to $550 million based on product launches and level of sales as well as royalty payments based on sales. In August 2013, the European Commission granted a Marketing Authorization for 'Nexium Control' OTC, with non-prescription status in all EU member states for the short-term treatment of reflux symptoms (including heartburn and acid regurgitation in adults). A new drug application submission for Nexium OTC in the U.S. in a 20mg delayed-release capsule was accepted for review by the FDA in the first half of 2013.
|
10
|
|
2013 Financial Report
|
|
|
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•
|
Biocon Alliance
––On March 12, 2012, Biocon and Pfizer concluded their October 18, 2010 alliance to commercialize Biocon’s biosimilar versions of insulin and insulin analog products. The companies agreed that, due to the individual priorities for their respective biosimilars businesses, each company would move forward independently.
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•
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Alacer Corp. (Alacer)
––On February 26, 2012, we completed our acquisition of Alacer, a company that manufactured, marketed and distributed Emergen-C, a line of effervescent, powdered drink mix vitamin supplements. For additional information, see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions
.
|
•
|
Ferrosan Holding A/S (Ferrosan)
––On December 1, 2011, we completed our acquisition of the consumer healthcare business of Ferrosan, a Danish company engaged in the sale of science-based consumer healthcare products, including dietary supplements and lifestyle products, primarily in the Nordic region and the emerging markets of Russia and Central and Eastern Europe. For additional information, see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions
.
|
•
|
Excaliard Pharmaceuticals, Inc. (Excaliard)
––On November 30, 2011, we completed our acquisition of Excaliard, a privately owned biopharmaceutical company. Excaliard‘s lead compound, EXC-001, a Phase 2 compound, is an antisense oligonucleotide designed to interrupt the process of skin fibrosis by inhibiting expression of connective tissue growth factor (CTGF). The total consideration for the acquisition was approximately $174 million. For additional information, see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions
.
|
•
|
GlycoMimetics, Inc. (GlycoMimetics)
––In October 2011, we entered into an agreement with GlycoMimetics for their investigational compound GMI-1070. GMI-1070 is a pan-selectin antagonist in development for the treatment of vaso-occlusive crisis associated with sickle cell disease. GMI-1070 has received Orphan Drug and Fast Track status from the FDA. Under the terms of the agreement, Pfizer received an exclusive worldwide license to GMI-1070 for vaso-occlusive crisis associated with sickle cell disease and for other diseases for which the drug candidate may be developed. GlycoMimetics was responsible for completion of the Phase 2 trial under Pfizer’s oversight, and Pfizer is responsible for all further development and commercialization. GlycoMimetics is entitled to payments up to approximately $340 million, including an upfront payment as well as development, regulatory and commercial milestones. GlycoMimetics is also eligible for royalties on any sales.
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•
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Icagen, Inc. (Icagen)
––On September 20, 2011, we completed our cash tender offer for the outstanding shares of Icagen, resulting in an approximate 70% ownership of the outstanding shares of Icagen, a biopharmaceutical company focused on discovery, development and commercialization of novel, orally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, we acquired all of the remaining shares of Icagen. For additional information, see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions
.
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•
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Capsugel
––On August 1, 2011, we sold our Capsugel business for approximately $2.4 billion in cash. For additional information, see Notes to Consolidated Financial Statements—
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
.
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•
|
King Pharmaceuticals, Inc. (King)
––On January 31, 2011 (the acquisition date), we completed a tender offer for the outstanding shares of common stock of King and acquired approximately 92.5% of the outstanding shares for approximately $3.3 billion in cash. On February 28, 2011, we acquired the remaining shares of King for approximately $300 million in cash. As a result, the total fair value of consideration transferred for King was approximately $3.6 billion in cash ($3.2 billion, net of cash acquired). For additional information, see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions.
|
The following table provides our financial guidance for 2014
(a), (b)
:
|
|
Adjusted revenues
|
$49.2 to $51.2 billion
|
Adjusted cost of sales as a percentage of adjusted revenues
|
19.0% to 20.0%
|
Adjusted selling, informational and administrative expenses
|
$13.5 to $14.5 billion
|
Adjusted research and development expenses
|
$6.4 to $6.9 billion
|
Adjusted other (income)/deductions
|
Approximately $100 million
|
Effective tax rate on adjusted income
|
Approximately 27.0%
|
Reported diluted Earnings per Share (EPS)
|
$1.57 to $1.72
|
Adjusted diluted EPS
|
$2.20 to $2.30
|
(a)
|
Does not assume the completion of any business-development transactions not completed as of December 31, 2013, including any one-time upfront payments associated with such transactions. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2013.
|
(b)
|
For an understanding of Adjusted income and its components and Adjusted diluted EPS (all of which are non-GAAP financial measures), see the "Adjusted Income" section of this Financial Review.
|
2013 Financial Report
|
|
11
|
|
|
|
The following table provides a reconciliation of 2014 Adjusted income and Adjusted diluted EPS guidance to the 2014 Reported net income attributable to Pfizer Inc. and Reported diluted EPS attributable to Pfizer Inc. common shareholders guidance:
|
||||
|
|
Full-Year 2014 Guidance
|
||
(BILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
|
|
Net Income
(a)
|
|
Diluted EPS
(a)
|
Adjusted income/diluted EPS
(b)
guidance
|
|
$14.1 - $14.8
|
|
$2.20 - $2.30
|
Purchase accounting impacts of transactions completed as of December 31, 2013
|
|
(2.8)
|
|
(0.43)
|
Restructuring and implementation costs and other
|
|
(1.0 - 1.3)
|
|
(0.15 - 0.20)
|
Reported net income attributable to Pfizer Inc./diluted EPS guidance
|
|
$10.0 - $11.0
|
|
$1.57 - $1.72
|
(a)
|
Does not assume the completion of any business-development transactions not completed as of December 31, 2013, including any one-time upfront payments associated with such transactions. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2013.
|
(b)
|
For an understanding of Adjusted income and Adjusted diluted EPS (which are non-GAAP financial measures), see the “Adjusted Income” section of this Financial Review.
|
•
|
For Medicaid, Medicare and performance-based contract rebates, we use our experience ratio of rebates paid and actual prescriptions written during prior quarters, which may be adjusted to better match our current experience or our expected future experience.
|
12
|
|
2013 Financial Report
|
|
|
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•
|
Outside the U.S., the majority of our pharmaceutical rebates, discounts and price reductions (collectively, sales allowances) are contractual or legislatively mandated and our estimates are based on actual invoiced sales within each period, which reduces the risk of variations in the estimation process. In certain European countries, rebates are calculated on the government’s total unbudgeted pharmaceutical spending or on specific product sales thresholds, and we apply an estimated allocation factor against our actual invoiced sales to project the expected level of reimbursement. We obtain third-party information that helps us monitor the adequacy of these accruals.
|
•
|
For chargebacks, we closely approximate actual as we settle these deductions generally within two to five weeks after incurring the liability.
|
•
|
For sales returns, we perform calculations in each market that incorporate the following, as appropriate: local returns policies and practices; returns as a percentage of sales; an understanding of the reasons for past returns; estimated shelf life by product; an estimate of the amount of time between shipment and return or lag time; and any other factors that could impact the estimate of future returns, such as loss of exclusivity, product recalls or a changing competitive environment.
|
•
|
For sales incentives, we use our historical experience with similar incentives programs to predict customer behavior.
|
•
|
A significant adverse change in legal factors or in the business climate that could affect the value of the asset. For example, a successful challenge of our patent rights would likely result in generic competition earlier than expected.
|
•
|
A significant adverse change in the extent or manner in which an asset is used. For example, restrictions imposed by the FDA or other regulatory authorities could affect our ability to manufacture or sell a product.
|
•
|
A projection or forecast that demonstrates losses or reduced profits associated with an asset. This could result, for example, from a change in a government reimbursement program that results in an inability to sustain projected product revenues and profitability. This also could result from the introduction of a competitor’s product that results in a significant loss of market share or the inability to achieve the previously projected revenue growth, as well as the lack of acceptance of a product by patients, physicians and payers. For in-process research and development (IPR&D) projects, this could result from, among other things, a change in outlook based on clinical trial data, a delay in the projected launch date or additional expenditures to commercialize the product.
|
•
|
In
2013
,
$803 million
, reflecting (i)
$394 million
of developed technology rights (for use in the development of bone and cartilage) acquired in connection with our acquisition of Wyeth; (ii)
$227 million
related to IPR&D compounds; (iii)
$109 million
of indefinite lived brands, primarily related to our biopharmaceutical indefinite-lived brand, Xanax/Xanax XR; and (iv) $73 million of other finite-lived intangible assets, related to platform technology, that no longer have an alternative future use. The intangible asset impairment charges for 2013 reflect, among other things, updated commercial forecasts and, with regard to IPR&D, also reflect the impact of new scientific findings and delayed launch dates. The intangible asset impairment charges for 2013 are associated with the following: Specialty Care (
$394 million
); Established Products (
$201 million
); Worldwide Research and Development (
$140 million
); Primary Care (
$54 million
); and Consumer Healthcare (
$14 million
).
|
•
|
In
2012
,
$835 million
, reflecting (i)
$393 million
of IPR&D assets, primarily related to compounds that targeted autoimmune and inflammatory diseases (full write-off) and, to a lesser extent, compounds related to pain treatment; (ii)
$175 million
related to our
Consumer Healthcare indefinite-lived brand assets, primarily Robitussin, a cough suppressant; (iii)
$242 million
related to developed technology rights, a charge composed of impairments of various products, none of which individually exceeded $45 million; and (iv) $25 million of finite-lived brands. The intangible asset impairment charges for
2012
reflect, among other things, the impact of new scientific findings, updated commercial forecasts, changes in pricing, an increased competitive environment and litigation uncertainties regarding intellectual property. The impairment charges in
2012
are associated with the following: Worldwide Research and Development (
$303 million
); Consumer Healthcare (
$200 million
); Primary Care (
$137 million
); Established Products (
$83 million
); Specialty Care (
$56 million
); and Emerging Markets (
$56 million
).
|
2013 Financial Report
|
|
13
|
|
|
|
•
|
In 2011, $834 million, the majority of which relates to intangible assets that were acquired as part of our acquisition of Wyeth. These impairment charges reflect (i) $458 million of IPR&D assets, primarily related to two compounds for the treatment of certain autoimmune and inflammatory diseases; (ii) $193 million related to our biopharmaceutical indefinite-lived brand, Xanax/Xanax XR; and (iii) $183 million related to developed technology rights comprising the impairment of five assets. The intangible asset impairment charges for 2011 reflect, among other things, the impact of new scientific findings and an increased competitive environment. The impairment charges in 2011 are associated with the following: Worldwide Research and Development ($394 million); Established Products ($193 million); Specialty Care ($135 million); Primary Care ($56 million); and Oncology ($56 million).
|
•
|
One of our indefinite-lived biopharmaceutical brands, Xanax/Xanax XR, was written down to its fair value of $1.2 billion at the end of the third quarter of 2013. This asset continues to be at risk for future impairment. Any negative change in the undiscounted cash flows, discount rate and/or tax rate could result in an impairment charge. Xanax/Xanax XR, which was launched in the mid-1980s and acquired in 2003, must continue to remain competitive against its generic challengers or the associated asset may become impaired again. We re-considered and confirmed the classification of this asset as indefinite-lived at the time of the impairment. We will continue to closely monitor this asset.
|
•
|
The market approach is a historical approach to estimating fair value and relies primarily on external information. Within the market approach are two methods that we may use:
|
◦
|
Guideline public company method—this method employs market multiples derived from market prices of stocks of companies that are engaged in the same or similar lines of business and that are actively traded on a free and open market and the application of the identified multiples to the corresponding measure of our reporting unit’s financial performance.
|
◦
|
Guideline transaction method—this method relies on pricing multiples derived from transactions of significant interests in companies engaged in the same or similar lines of business and the application of the identified multiples to the corresponding measure of our reporting unit’s financial performance.
|
•
|
The income approach is a forward-looking approach to estimating fair value and relies primarily on internal forecasts. Within the income approach, the method that we use is the discounted cash flow method. We start with a forecast of all the expected net cash flows associated with the reporting unit, which includes the application of a terminal value, and then we apply a reporting unit-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of technological risk and competitive, legal and/or regulatory forces on the projections, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.
|
14
|
|
2013 Financial Report
|
|
|
|
•
|
When we estimate the fair value of our five biopharmaceutical reporting units as in effect prior to our January 1, 2014 reorganization we rely solely on the income approach. We use the income approach exclusively as many of our products are sold in multiple reporting units and as one reporting unit is geographic-based while the others are product and/or customer-based. Further, the projected cash flows from a single product may reside in up to three reporting units at different points in future years and the discounted cash flow method would reflect the movement of products among reporting units. As such, the use of the comparable guideline company method is not practical or reliable. For the income approach, we use the discounted cash flow method.
|
•
|
When we estimate the fair value of our Consumer Healthcare reporting unit, we use a combination of approaches and methods. We use the income approach and the market approach, which we weight equally in our analysis. We weight them equally as we have equal confidence in the appropriateness of the approaches for this reporting unit. For the income approach, we use the discounted cash flow method and for the market approach, we use both the guideline public company method and the guideline transaction method, which we weight equally to arrive at our market approach value.
|
(a)
|
For additional assumptions associated with our benefit plans, see Notes to Consolidated Financial Statements—
Note 11B. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Actuarial Assumptions.
|
2013 Financial Report
|
|
15
|
|
|
|
16
|
|
2013 Financial Report
|
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
2012
|
|
2011
|
|
13/12
|
|
12/11
|
||||||||
Revenues
|
|
$
|
51,584
|
|
|
$
|
54,657
|
|
|
$
|
61,035
|
|
|
(6
|
)
|
|
(10
|
)
|
Cost of sales
|
|
9,586
|
|
|
9,821
|
|
|
12,500
|
|
|
(2
|
)
|
|
(21
|
)
|
|||
% of revenues
|
|
18.6
|
%
|
|
18.0
|
%
|
|
20.5
|
%
|
|
|
|
|
|||||
Selling, informational and administrative expenses
|
|
14,355
|
|
|
15,171
|
|
|
17,581
|
|
|
(5
|
)
|
|
(14
|
)
|
|||
% of revenues
|
|
27.8
|
%
|
|
27.8
|
%
|
|
28.8
|
%
|
|
|
|
|
|||||
Research and development expenses
|
|
6,678
|
|
|
7,482
|
|
|
8,681
|
|
|
(11
|
)
|
|
(14
|
)
|
|||
% of revenues
|
|
12.9
|
%
|
|
13.7
|
%
|
|
14.2
|
%
|
|
|
|
|
|||||
Amortization of intangible assets
|
|
4,599
|
|
|
5,109
|
|
|
5,465
|
|
|
(10
|
)
|
|
(7
|
)
|
|||
% of revenues
|
|
8.9
|
%
|
|
9.3
|
%
|
|
9.0
|
%
|
|
|
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
1,182
|
|
|
1,810
|
|
|
2,841
|
|
|
(35
|
)
|
|
(36
|
)
|
|||
% of revenues
|
|
2.3
|
%
|
|
3.3
|
%
|
|
4.7
|
%
|
|
|
|
|
|||||
Other (income)/deductions—net
|
|
(532
|
)
|
|
4,022
|
|
|
2,486
|
|
|
*
|
|
|
62
|
|
|||
Income from continuing operations before provision for taxes on income
|
|
15,716
|
|
|
11,242
|
|
|
11,481
|
|
|
40
|
|
|
(2
|
)
|
|||
% of revenues
|
|
30.5
|
%
|
|
20.6
|
%
|
|
18.8
|
%
|
|
|
|
|
|||||
Provision for taxes on income
|
|
4,306
|
|
|
2,221
|
|
|
3,621
|
|
|
94
|
|
|
(39
|
)
|
|||
Effective tax rate
|
|
27.4
|
%
|
|
19.8
|
%
|
|
31.5
|
%
|
|
|
|
|
|||||
Income from continuing operations
|
|
11,410
|
|
|
9,021
|
|
|
7,860
|
|
|
26
|
|
|
15
|
|
|||
% of revenues
|
|
22.1
|
%
|
|
16.5
|
%
|
|
12.9
|
%
|
|
|
|
|
|||||
Discontinued operations—net of tax
|
|
10,662
|
|
|
5,577
|
|
|
2,189
|
|
|
91
|
|
|
*
|
|
|||
Net income before allocation to noncontrolling interests
|
|
22,072
|
|
|
14,598
|
|
|
10,049
|
|
|
51
|
|
|
45
|
|
|||
% of revenues
|
|
42.8
|
%
|
|
26.7
|
%
|
|
16.5
|
%
|
|
|
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
69
|
|
|
28
|
|
|
40
|
|
|
146
|
|
|
(30
|
)
|
|||
Net income attributable to Pfizer Inc.
|
|
$
|
22,003
|
|
|
$
|
14,570
|
|
|
$
|
10,009
|
|
|
51
|
|
|
46
|
|
% of revenues
|
|
42.7
|
%
|
|
26.7
|
%
|
|
16.4
|
%
|
|
|
|
|
*
|
Calculation not meaningful.
|
•
|
the continued erosion of branded Lipitor in the U.S., developed Europe and certain other developed markets (approximately
$1.7 billion
);
|
•
|
the loss of exclusivity for Geodon in March 2012 in the U.S. (approximately
$130 million
);
|
•
|
other product losses of exclusivity (approximately
$1.3 billion
);
|
•
|
the ongoing expiration of the Spiriva collaboration in certain countries (approximately
$475 million
);
|
•
|
decreased government purchases of the Prevnar family of products and Enbrel in certain emerging markets (approximately
$160 million
); and
|
•
|
lower revenues from generic atorvastatin (approximately
$145 million
),
|
•
|
the growth of certain products, including Lyrica, Inlyta, Celebrex and Xalkori in developed markets and Xeljanz in the U.S. (approximately
$1.1 billion
);
|
•
|
the overall growth in the rest of the Emerging Markets business unit (approximately
$751 million
), excluding the aforementioned decrease in the government purchases of the Prevnar family of products and Enbrel;
|
•
|
the overall growth in the Consumer Healthcare business unit (approximately
$153 million
); and
|
•
|
revenues from the transitional manufacturing and supply agreements with Zoetis (approximately
$132 million
).
|
2013 Financial Report
|
|
17
|
|
|
|
•
|
erosion of branded Lipitor in the U.S., developed Europe and certain other markets (approximately
$5.6 billion
);
|
•
|
the loss of exclusivity for Geodon in March 2012 in the U.S (approximately $645 million); and
|
•
|
other product losses of exclusivity (approximately
$1.4 billion
),
|
•
|
the growth of certain products, including Lyrica, Enbrel, Benefix, Inlyta, Celebrex, Xalkori and Zyvox (approximately
$1.3 billion
) in developed markets;
|
•
|
the overall growth of the Emerging Markets business unit (approximately
$1.2 billion
); and
|
•
|
the overall growth in the Consumer Healthcare business unit (approximately
$241 million
).
|
(a)
|
Rebates are product-specific and, therefore, for any given year are impacted by the mix of products sold.
|
(b)
|
Performance-based contract rebates include contract rebates with managed care customers within the U.S., including health maintenance organizations and pharmacy benefit managers, who receive rebates based on the achievement of contracted performance terms and claims under these contracts. Outside of the U.S., performance-based contract rebates include rebates to wholesalers/distributors based on achievement of contracted performance for specific products or sales milestones.
|
(c)
|
Chargebacks primarily represent reimbursements to wholesalers for honoring contracted prices to third parties.
|
(d)
|
Sales allowances primarily represent pharmaceutical rebates, discounts and price reductions that are contractual or legislatively mandated outside of the U.S.
|
18
|
|
2013 Financial Report
|
|
|
|
•
|
the impact of decreased Medicaid rebates for certain products that have lost exclusivity;
|
•
|
lower Medicaid utilization trends; and
|
•
|
a decrease in sales chargebacks for certain products that have lost exclusivity,
|
•
|
an increase in Medicare rebates due to higher volume;
|
•
|
an increase in chargebacks for our branded products as a result of increasing competitive pressures;
|
•
|
an increase in performance-based contract rebates in a number of European markets and China as a result of competitive factors and contract arrangements; and
|
•
|
changes in product mix.
|
The following table provides worldwide revenues by operating segment, business unit and geographic area:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Worldwide
|
|
U.S.
|
|
International
|
|
Worldwide
|
|
U.S.
|
|
International
|
||||||||||||||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
(a)
|
|
|
2013
|
|
|
2012
|
|
|
2011
(a)
|
|
|
2013
|
|
|
2012
|
|
|
2011
(a)
|
|
|
13/12
|
|
|
12/11
|
|
|
13/12
|
|
|
12/11
|
|
|
13/12
|
|
|
12/11
|
|
|||||||||
Biopharmaceutical revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Primary Care Operating Segment
|
|
$
|
13,272
|
|
|
$
|
15,558
|
|
|
$
|
22,670
|
|
|
$
|
8,352
|
|
|
$
|
8,191
|
|
|
$
|
12,819
|
|
|
$
|
4,920
|
|
|
$
|
7,367
|
|
|
$
|
9,851
|
|
|
(15
|
)
|
|
(31
|
)
|
|
2
|
|
|
(36
|
)
|
|
(33
|
)
|
|
(25
|
)
|
Specialty Care
|
|
13,288
|
|
|
14,151
|
|
|
15,245
|
|
|
5,652
|
|
|
6,206
|
|
|
6,870
|
|
|
7,636
|
|
|
7,945
|
|
|
8,375
|
|
|
(6
|
)
|
|
(7
|
)
|
|
(9
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|||||||||
Oncology
|
|
1,646
|
|
|
1,310
|
|
|
1,323
|
|
|
738
|
|
|
573
|
|
|
391
|
|
|
908
|
|
|
737
|
|
|
932
|
|
|
26
|
|
|
(1
|
)
|
|
29
|
|
|
47
|
|
|
23
|
|
|
(21
|
)
|
|||||||||
SC&O Operating Segment
|
|
14,934
|
|
|
15,461
|
|
|
16,568
|
|
|
6,390
|
|
|
6,779
|
|
|
7,261
|
|
|
8,544
|
|
|
8,682
|
|
|
9,307
|
|
|
(3
|
)
|
|
(7
|
)
|
|
(6
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|
(7
|
)
|
|||||||||
Emerging Markets
|
|
10,215
|
|
|
9,960
|
|
|
9,295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,215
|
|
|
9,960
|
|
|
9,295
|
|
|
3
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
7
|
|
|||||||||
Established Products
|
|
9,457
|
|
|
10,235
|
|
|
9,214
|
|
|
3,828
|
|
|
4,738
|
|
|
3,627
|
|
|
5,629
|
|
|
5,497
|
|
|
5,587
|
|
|
(8
|
)
|
|
11
|
|
|
(19
|
)
|
|
31
|
|
|
2
|
|
|
(2
|
)
|
|||||||||
EP&EM Operating Segment
|
|
19,672
|
|
|
20,195
|
|
|
18,509
|
|
|
3,828
|
|
|
4,738
|
|
|
3,627
|
|
|
15,844
|
|
|
15,457
|
|
|
14,882
|
|
|
(3
|
)
|
|
9
|
|
|
(19
|
)
|
|
31
|
|
|
3
|
|
|
4
|
|
|||||||||
|
|
47,878
|
|
|
51,214
|
|
|
57,747
|
|
|
18,570
|
|
|
19,708
|
|
|
23,707
|
|
|
29,308
|
|
|
31,506
|
|
|
34,040
|
|
|
(7
|
)
|
|
(11
|
)
|
|
(6
|
)
|
|
(17
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|||||||||
Consumer Healthcare
|
|
3,342
|
|
|
3,212
|
|
|
3,028
|
|
|
1,580
|
|
|
1,526
|
|
|
1,490
|
|
|
1,762
|
|
|
1,686
|
|
|
1,538
|
|
|
4
|
|
|
6
|
|
|
4
|
|
|
2
|
|
|
5
|
|
|
10
|
|
|||||||||
Other
(b)
|
|
364
|
|
|
231
|
|
|
260
|
|
|
124
|
|
|
79
|
|
|
78
|
|
|
240
|
|
|
152
|
|
|
182
|
|
|
58
|
|
|
(11
|
)
|
|
57
|
|
|
1
|
|
|
58
|
|
|
(16
|
)
|
|||||||||
Total Revenues
|
|
$
|
51,584
|
|
|
$
|
54,657
|
|
|
$
|
61,035
|
|
|
$
|
20,274
|
|
|
$
|
21,313
|
|
|
$
|
25,275
|
|
|
$
|
31,310
|
|
|
$
|
33,344
|
|
|
$
|
35,760
|
|
|
(6
|
)
|
|
(10
|
)
|
|
(5
|
)
|
|
(16
|
)
|
|
(6
|
)
|
|
(7
|
)
|
(a)
|
For 2011, includes King commencing on the acquisition date of January 31, 2011.
|
(b)
|
Represents revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and includes, in 2013, the revenues related to our transitional manufacturing and supply agreements with Zoetis.
|
2013 Financial Report
|
|
19
|
|
|
|
•
|
in the U.S., revenues from biopharmaceutical products decreased
6%
in
2013
, compared to
2012
, reflecting, among other things:
|
◦
|
lower revenues from Lipitor, Revatio and Geodon, all due to loss of exclusivity (down approximately
$875 million
in 2013);
|
◦
|
lower Alliance revenues from Spiriva, reflecting the final-year terms of our Spiriva co-promotion agreement in the U.S. (down approximately
$320 million
in 2013), and Enbrel, reflecting the expiration of the co-promotion agreement in the U.S. and Canada in October 2013 (down approximately $82 million);
|
◦
|
lower revenues from generic atorvastatin (down approximately
$145 million
in 2013);
|
◦
|
lower revenues from Prevnar, due to decreased government purchases (down approximately
$84 million
in 2013); and
|
◦
|
lower revenues from Zosyn (down approximately
$45 million
in 2013),
|
◦
|
the strong performance of certain other biopharmaceutical products, including Lyrica, Celebrex, Xeljanz, Inlyta and Xalkori (up approximately
$715 million
in 2013).
|
•
|
in our international markets, revenues from biopharmaceutical products decreased
7%
in
2013
, compared to
2012
. Operationally, revenues decreased
3%
in 2013, compared to 2012, reflecting, among other things:
|
◦
|
lower revenues for Lipitor and Xalatan/Xalacom (down approximately
$1.4 billion
in 2013) due to the loss of exclusivity of Lipitor in developed Europe, Japan and Australia, and Xalatan/Xalacom in the majority of European markets and in Australia; lower revenues for Viagra (down approximately
$108 million
in 2013) primarily due to loss of exclusivity in most major markets in Europe; and lower revenues for Aricept (direct sales) (down approximately
$88 million
in 2013) due to the loss of exclusivity in certain markets; and
|
◦
|
lower Alliance revenues (down approximately
$493 million
in 2013), primarily due to the loss of exclusivity of Aricept in many major European markets, the return of our rights to Aricept in Japan to Eisai Co., Ltd., and lower revenues for Spiriva in certain European countries, Canada and Australia (where the Spiriva collaboration has terminated),
|
◦
|
higher revenues for Lyrica, and new product growth from Inlyta and Xalkori, (collectively, approximately
$506 million
in 2013).
|
•
|
the loss of exclusivity of Lipitor and the resulting shift in the reporting of Lipitor revenues in developed Europe and Australia to the Established Products unit beginning January 1, 2013, as well as the loss of exclusivity of certain other products in various markets, including Viagra in most major European markets in June 2013 and Lyrica in Canada in February 2013;
|
•
|
the termination of the co-promotion agreement for Aricept in Japan in December 2012; and
|
•
|
in the U.S. and certain European countries, the co-promotion collaboration for Spiriva is in its final year, which per the terms of the collaboration agreement, has resulted in a decline in Pfizer's share of Spiriva revenues; and in Australia, Canada and certain other European countries, the Spiriva collaboration has terminated,
|
•
|
the strong operational performance of Celebrex, Chantix and Pristiq in the U.S., as well as Lyrica in developed markets and the launch in February 2013 of Eliquis.
|
•
|
Specialty Care unit revenues
decreased
6%
in
2013
, compared to
2012
, reflecting a
decrease
in operational revenues of
4%
in
2013
, primarily due to:
|
◦
|
the loss of exclusivity and the resulting shift in the reporting of Geodon and Revatio revenues in the U.S. and Xalabrands revenues in developed Europe and Australia to the Established Products unit beginning January 1, 2013; and
|
◦
|
the expiration of the co-promotion agreement for Enbrel in the U.S. and Canada on October 31, 2013, as a result of which for a 36-month period thereafter, we are entitled to royalty payments that are expected to be significantly less than the share of Enbrel profits
|
20
|
|
2013 Financial Report
|
|
|
|
◦
|
the growth of Enbrel outside of the U.S., as well as Xeljanz and the hemophilia portfolio (BeneFIX and ReFacto AF/Xyntha) in the U.S.
|
•
|
Oncology unit revenues
increased
26%
in
2013
, compared to
2012
, reflecting higher operational revenues of
29%
in
2013
due to:
|
◦
|
the recent launches of new products, most notably Inlyta and Xalkori in several major markets,
|
◦
|
the decline in Sutent revenues in the EU and Japan, due to increased competition and cost-containment measures in those markets, as well as some conversion from Sutent to Inlyta in Japan due to a broader label for Inlyta in Japan, which overlaps with the Sutent indication.
|
•
|
Established Products unit revenues
decreased
8%
in
2013
, compared to
2012
, reflecting a
decrease
in operational revenues of
5%
in
2013
, primarily due to:
|
◦
|
the continued erosion of branded Lipitor in the U.S. and Japan due to generic competition and additional generic competition for Metaxalone/Skelaxin in the U.S.,
|
◦
|
revenues from products in certain markets that were shifted to the Established Products unit from other business units beginning January 1, 2013, including Lipitor, Caduet and Xalabrands in developed Europe and Australia and Geodon in the U.S.; and
|
◦
|
the contribution from the collaboration with Mylan Inc. to market generic drugs in Japan.
|
•
|
Emerging Markets unit revenues
increased
3%
in
2013
, compared to
2012
, due to
higher
operational revenues of
6%
in
2013
, primarily due to:
|
◦
|
volume growth in China, most notably Lipitor, Norvasc and Sulperazon,
|
◦
|
the impact of the transfer of certain product rights to our equity-method investment in China in the first quarter of 2013; and
|
◦
|
decreased government purchases of Prevenar and Enbrel, as well as government cost-containment measures, in certain emerging markets.
|
•
|
a decrease in operational revenues of approximately $7.2 billion due to the loss of exclusivity of various products in certain markets, including a decrease in operational revenues from branded Lipitor of $5.6 billion, Geodon of $645 million and Xalatan of $413 million; and
|
•
|
a decrease in operational Alliance revenues of approximately $118 million, reflecting the loss of exclusivity for Aricept in certain markets ($209 million), the final-year terms of our collaboration agreements in certain European markets for Spiriva ($251 million) partially offset by growth in other products generating alliance revenues,
|
2013 Financial Report
|
|
21
|
|
|
|
•
|
an increase in operational revenues of approximately $1.4 billion in developed markets for certain biopharmaceutical products, particularly Lyrica, Enbrel, generic atorvastatin, Celebrex, Inlyta and Benefix; and
|
•
|
an increase in operational revenues of approximately $1.2 billion due to growth in the Emerging Markets unit related to various products, including Enbrel and Prevnar.
|
•
|
in the U.S., revenues from biopharmaceutical products decreased $4.0 billion or 17% in 2012, compared to 2011, primarily reflecting, among other things:
|
◦
|
lower revenues from Lipitor, Geodon, Caduet, Xalatan and Aromasin, all due to loss of exclusivity (down approximately $5.1 billion in 2012); and
|
◦
|
lower revenues from Effexor, Zosyn and Detrol/Detrol LA (down approximately $331 million in 2012),
|
◦
|
the strong performance of certain other biopharmaceutical products, including generic atorvastatin, Celebrex, Enbrel, Lyrica and Viagra (up approximately $841 million in 2012); and
|
◦
|
lower reductions related to Medicare rebates (down approximately $669 million in 2012).
|
•
|
in our international markets, revenues from biopharmaceutical products decreased 7% in 2012, compared to 2011. Operationally, revenues decreased 4% in 2012, compared to 2011, reflecting among other things:
|
◦
|
the loss of exclusivity of Lipitor in most of developed Europe (down approximately $1.2 billion in 2012);
|
◦
|
lower revenues from Xalatan/Xalacom, Aricept and Aromasin, all due to loss of exclusivity in certain markets (down approximately $754 million in 2012);
|
◦
|
lower revenues for Spiriva in certain European countries, Canada and Australia (reflecting the final-year terms of our Spiriva collaboration agreements relating to those countries) (down approximately $258 million in 2012); and
|
◦
|
lower revenues for Norvasc and Effexor (down approximately $221 million in 2012),
|
◦
|
the strong operational growth of Lyrica, the Prevnar family of products and Enbrel (up approximately $815 million in 2012).
|
•
|
the loss of exclusivity of Lipitor in most major markets, as well as the resulting shift in the reporting of U.S. and Japan Lipitor revenues to the Established Products unit beginning January 1, 2012. These factors impacted Primary Care operational revenues by approximately $7.0 billion, or 31%, in 2012,
|
•
|
the strong operational growth of Lyrica in developed markets (approximately $488 million) and Celebrex and Viagra in the U.S. (approximately $280 million).
|
•
|
Specialty Care unit revenues decreased 7% compared to 2011, reflecting a decrease in operational revenues of 5%, primarily due to:
|
◦
|
a decline in the Prevnar family of products in the U.S. and developed Europe (approximately $54 million), as the pediatric catch-up dose opportunity declined significantly in 2012 compared to 2011, with fewer children eligible to receive the catch-up dose; and
|
◦
|
the losses of exclusivity of Vfend and Xalatan in the U.S. in February and March 2011, respectively, and the resulting shift in the reporting of Vfend and Xalatan U.S. revenues to the Established Products unit beginning January 1, 2012, as well as the loss of exclusivity of Xalatan and Xalacom in the majority of European markets in January 2012, and Geodon in the U.S. in March 2012. Collectively, these developments reduced Specialty Care unit revenues by $1.2 billion, or 8%, in comparison with 2011,
|
22
|
|
2013 Financial Report
|
|
|
|
◦
|
the growth of Benefix, Rebif, ReFacto/Xyntha, Enbrel and Zyvox (approximately $579 million).
|
•
|
Oncology unit revenues decreased 1%, compared to 2011, primarily due to:
|
◦
|
the unfavorable impact of foreign exchange of 3%; and
|
◦
|
the unfavorable impact of the loss of exclusivity of Aromasin in the majority of European markets in the second half of 2011 and the resulting shift in the reporting of such revenues to the Established Products unit beginning January 1, 2012. This loss of exclusivity reduced Oncology unit revenues by $230 million, or 17%, in comparison with 2011,
|
◦
|
the launches of Inlyta and Xalkori in the U.S. and certain other developed markets (approximately $148 million); and
|
◦
|
the growth of Sutent, primarily in the U.S. and emerging markets (approximately $93 million).
|
•
|
Established Products unit revenues increased 11% compared to 2011, reflecting higher operational revenues of 13%, primarily due to:
|
◦
|
the shift in the reporting of branded Lipitor revenues in the U.S. and Japan from the Primary Care unit, totaling $1.4 billion, to the Established Products unit beginning January 1, 2012;
|
◦
|
recent launches of generic versions of certain Pfizer branded primary care and specialty care products; and
|
◦
|
contributions from the sales of the authorized generic version of Lipitor in the U.S. by Watson Pharmaceuticals, Inc. (Watson) (The agreement with Watson was terminated by mutual consent in January 2013),
|
◦
|
revenue declines for Effexor, Norvasc and Zosyn (approximately $518 million);
|
◦
|
the entry of multi-source generic competition in the U.S. for donepezil (Aricept) in May 2011;
|
◦
|
the continuing decline of revenues of certain products that previously lost exclusivity; and
|
◦
|
the impact of ongoing pricing pressures, primarily in South Korea and developed Europe.
|
•
|
Emerging Markets unit revenues increased 7% compared to 2011, due to higher operational revenues of 13%, primarily due to volume growth in China, Brazil and Russia, as a result of more targeted promotional efforts for key innovative and established products, including Lipitor, Norvasc and Lyrica. The operational increase in Emerging Markets unit revenues was partially offset by the unfavorable impact of foreign exchange of 6% in 2012.
|
•
|
strong growth for Centrum as a result of several recent product launches;
|
•
|
increased promotional activities for various products in key markets; and
|
•
|
the growth of Emergen-C in the U.S. due to expanded distribution and promotional activities,
|
•
|
declines in sales of respiratory and other products in certain international markets due to unfavorable seasonal conditions compared to 2012.
|
2013 Financial Report
|
|
23
|
|
|
|
The following table provides revenue information for several of our major biopharmaceutical products:
|
|
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
PRODUCT
|
PRIMARY INDICATIONS
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||||
Lyrica
|
|
Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia and neuropathic pain due to spinal cord injury
|
|
$
|
4,595
|
|
|
$
|
4,158
|
|
|
$
|
3,693
|
|
|
11
|
|
|
13
|
|
Prevnar family
|
|
Vaccine for prevention of pneumococcal disease
|
|
3,974
|
|
|
4,117
|
|
|
4,145
|
|
|
(3
|
)
|
|
(1
|
)
|
|||
Enbrel (Outside the U.S. and Canada)
|
|
Rheumatoid, juvenile rheumatoid and psoriatic arthritis, plaque psoriasis and ankylosing spondylitis
|
|
3,774
|
|
|
3,737
|
|
|
3,666
|
|
|
1
|
|
|
2
|
|
|||
Celebrex
|
|
Arthritis pain and inflammation, acute pain
|
|
2,918
|
|
|
2,719
|
|
|
2,523
|
|
|
7
|
|
|
8
|
|
|||
Lipitor
|
|
Reduction of LDL cholesterol
|
|
2,315
|
|
|
3,948
|
|
|
9,577
|
|
|
(41
|
)
|
|
(59
|
)
|
|||
Viagra
|
|
Erectile dysfunction
|
|
1,881
|
|
|
2,051
|
|
|
1,981
|
|
|
(8
|
)
|
|
4
|
|
|||
Zyvox
|
|
Bacterial infections
|
|
1,353
|
|
|
1,345
|
|
|
1,283
|
|
|
1
|
|
|
5
|
|
|||
Norvasc
|
|
Hypertension
|
|
1,229
|
|
|
1,349
|
|
|
1,445
|
|
|
(9
|
)
|
|
(7
|
)
|
|||
Sutent
|
|
Advanced and/or metastatic renal cell carcinoma (mRCC), refractory gastrointestinal stromal tumors (GIST) and advanced pancreatic neuroendocrine tumor
|
|
1,204
|
|
|
1,236
|
|
|
1,187
|
|
|
(3
|
)
|
|
4
|
|
|||
Premarin family
|
|
Menopause
|
|
1,092
|
|
|
1,073
|
|
|
1,013
|
|
|
2
|
|
|
6
|
|
|||
BeneFIX
|
|
Hemophilia
|
|
832
|
|
|
775
|
|
|
693
|
|
|
7
|
|
|
12
|
|
|||
Vfend
|
|
Fungal infections
|
|
775
|
|
|
754
|
|
|
747
|
|
|
3
|
|
|
1
|
|
|||
Genotropin
|
|
Replacement of human growth hormone
|
|
772
|
|
|
832
|
|
|
889
|
|
|
(7
|
)
|
|
(6
|
)
|
|||
Pristiq
|
|
Depression
|
|
698
|
|
|
630
|
|
|
577
|
|
|
11
|
|
|
9
|
|
|||
Chantix/Champix
|
|
An aid to smoking cessation treatment
|
|
648
|
|
|
670
|
|
|
720
|
|
|
(3
|
)
|
|
(7
|
)
|
|||
Refacto AF/Xyntha
|
|
Hemophilia
|
|
602
|
|
|
584
|
|
|
506
|
|
|
3
|
|
|
15
|
|
|||
Xalatan/Xalacom
|
|
Glaucoma and ocular hypertension
|
|
589
|
|
|
806
|
|
|
1,250
|
|
|
(27
|
)
|
|
(36
|
)
|
|||
Detrol/Detrol LA
|
|
Overactive bladder
|
|
562
|
|
|
761
|
|
|
883
|
|
|
(26
|
)
|
|
(14
|
)
|
|||
Zoloft
|
|
Depression and certain anxiety disorders
|
|
469
|
|
|
541
|
|
|
573
|
|
|
(13
|
)
|
|
(6
|
)
|
|||
Medrol
|
|
Inflammation
|
|
464
|
|
|
523
|
|
|
510
|
|
|
(11
|
)
|
|
3
|
|
|||
Effexor
|
|
Depression and certain anxiety disorders
|
|
440
|
|
|
425
|
|
|
678
|
|
|
4
|
|
|
(37
|
)
|
|||
Zosyn/Tazocin
|
|
Antibiotic
|
|
395
|
|
|
484
|
|
|
636
|
|
|
(18
|
)
|
|
(24
|
)
|
|||
Zithromax/Zmax
|
|
Bacterial infections
|
|
387
|
|
|
435
|
|
|
453
|
|
|
(11
|
)
|
|
(4
|
)
|
|||
Fragmin
|
|
Anticoagulant
|
|
359
|
|
|
381
|
|
|
382
|
|
|
(6
|
)
|
|
—
|
|
|||
Relpax
|
|
Treats the symptoms of migraine headache
|
|
359
|
|
|
368
|
|
|
341
|
|
|
(2
|
)
|
|
8
|
|
|||
Tygacil
|
|
Antibiotic
|
|
358
|
|
|
335
|
|
|
298
|
|
|
7
|
|
|
12
|
|
|||
Rapamune
|
|
Immunosuppressant
|
|
350
|
|
|
346
|
|
|
372
|
|
|
1
|
|
|
(7
|
)
|
|||
Inlyta
|
|
Advanced renal cell carcinoma (RCC)
|
|
319
|
|
|
100
|
|
|
—
|
|
|
*
|
|
|
*
|
|
|||
Sulperazon
|
|
Antibiotic
|
|
309
|
|
|
262
|
|
|
218
|
|
|
18
|
|
|
20
|
|
|||
Revatio
|
|
Pulmonary arterial hypertension (PAH)
|
|
307
|
|
|
534
|
|
|
535
|
|
|
(43
|
)
|
|
—
|
|
|||
Cardura
|
|
Hypertension/Benign prostatic hyperplasia
|
|
296
|
|
|
338
|
|
|
380
|
|
|
(12
|
)
|
|
(11
|
)
|
|||
Xalkori
|
|
Anaplastic lymphoma kinase positive non-small cell lung cancer
|
|
282
|
|
|
123
|
|
|
16
|
|
|
129
|
|
|
*
|
|
|||
Xanax/Xanax XR
|
|
Anxiety disorders
|
|
276
|
|
|
274
|
|
|
306
|
|
|
1
|
|
|
(10
|
)
|
|||
Diflucan
|
|
Fungal infections
|
|
242
|
|
|
259
|
|
|
265
|
|
|
(7
|
)
|
|
(2
|
)
|
|||
Toviaz
|
|
Overactive bladder
|
|
236
|
|
|
207
|
|
|
187
|
|
|
14
|
|
|
11
|
|
|||
Aricept
(a)
|
|
Alzheimer's disease
|
|
235
|
|
|
326
|
|
|
450
|
|
|
(28
|
)
|
|
(28
|
)
|
|||
Inspra
|
|
High blood pressure
|
|
233
|
|
|
214
|
|
|
195
|
|
|
9
|
|
|
10
|
|
|||
Caduet
|
|
Reduction of LDL cholesterol and hypertension
|
|
223
|
|
|
258
|
|
|
538
|
|
|
(14
|
)
|
|
(52
|
)
|
|||
Somavert
|
|
Acromegaly
|
|
217
|
|
|
197
|
|
|
183
|
|
|
10
|
|
|
8
|
|
|||
Neurontin
|
|
Seizures
|
|
216
|
|
|
235
|
|
|
289
|
|
|
(8
|
)
|
|
(19
|
)
|
|||
Unasyn
|
|
Injectable antibacterial
|
|
212
|
|
|
228
|
|
|
231
|
|
|
(7
|
)
|
|
(1
|
)
|
|||
BMP2
|
|
Development of bone and cartilage
|
|
209
|
|
|
263
|
|
|
340
|
|
|
(21
|
)
|
|
(23
|
)
|
|||
Geodon
|
|
Bipolar disorder
|
|
194
|
|
|
353
|
|
|
1,022
|
|
|
(45
|
)
|
|
(65
|
)
|
|||
Depo-Provera
|
|
Contraceptive
|
|
191
|
|
|
148
|
|
|
139
|
|
|
29
|
|
|
6
|
|
|||
Aromasin
|
|
Breast cancer
|
|
185
|
|
|
210
|
|
|
361
|
|
|
(12
|
)
|
|
(42
|
)
|
|||
Xeljanz
|
|
Rheumatoid arthritis
|
|
114
|
|
|
6
|
|
|
—
|
|
|
*
|
|
|
*
|
|
|||
Alliance revenues
(b)
|
|
Various
|
|
2,628
|
|
|
3,492
|
|
|
3,630
|
|
|
(25
|
)
|
|
(4
|
)
|
|||
All other
|
|
Various
|
|
7,360
|
|
|
7,804
|
|
|
7,441
|
|
|
(6
|
)
|
|
5
|
|
(a)
|
Represents direct sales under license agreement with Eisai Co., Ltd.
|
(b)
|
Includes Enbrel (in the U.S. and Canada through October 31, 2013), Spiriva, Rebif, Aricept and Eliquis.
|
*
|
Calculation not meaningful.
|
24
|
|
2013 Financial Report
|
|
|
|
•
|
Lyrica
is indicated in the U.S. for three neuropathic pain conditions, fibromyalgia and adjunctive therapy for adult patients with partial onset seizures. In certain countries outside the U.S., indications include neuropathic pain (peripheral and central), fibromyalgia, adjunctive treatment of epilepsy and generalized anxiety disorder. Worldwide revenues for Lyrica
increased
11%
in
2013
compared to
2012
.
|
•
|
Prevnar
family of products consists of Prevnar 13/Prevenar 13 and Prevnar/Prevenar (7-valent),
our pneumococcal conjugate vaccines for the prevention of various syndromes of pneumococcal disease. Overall, worldwide revenues for the Prevnar family of products
decreased
3%
in
2013
, compared to
2012
.
|
•
|
Enbrel
, for the treatment of moderate-to-severe rheumatoid arthritis, polyarticular juvenile rheumatoid arthritis, psoriatic arthritis, plaque psoriasis and ankylosing spondylitis, a type of arthritis affecting the spine, recorded an increase in worldwide revenues, excluding the U.S. and Canada, of
1%
in
2013
, compared to
2012
. Results were favorably impacted by the overall growth in the anti-tumor necrosis factor (TNF) biologic market and strong performance in European markets. Results were unfavorably impacted 3% by foreign exchange and by decreased government purchases in Brazil.
|
•
|
Celebrex
, indicated for the treatment of the signs and symptoms of osteoarthritis and rheumatoid arthritis worldwide and for the management of acute pain in adults in the U.S., Japan and certain other markets, recorded an increase in worldwide revenues of
7%
in
2013
, compared to
2012
, primarily due to strong performance in the U.S.
|
•
|
Lipitor
is for the treatment of elevated LDL-cholesterol levels in the blood. Lipitor has lost exclusivity and faces generic competition in all major markets. Branded Lipitor recorded worldwide revenues of
$2.3 billion
, or a decrease of
41%
, in
2013
, compared to
2012
, due to:
|
2013 Financial Report
|
|
25
|
|
|
|
◦
|
the impact of loss of exclusivity;
|
◦
|
the continuing impact of an intensely competitive lipid-lowering market with competition from generics and branded products worldwide; and
|
◦
|
the increased payer pressure worldwide, including the need for flexible rebate policies.
|
◦
|
in the U.S., revenues
decreased
54%
in
2013
, compared to
2012
; and
|
◦
|
in our international markets, revenues
decreased
38%
in
2013
, compared to
2012
. Foreign exchange had an unfavorable impact on international revenues of 3% in
2013
, compared to
2012
.
|
•
|
Viagra
is
indicated for the treatment for erectile dysfunction. Viagra worldwide revenues
decreased
8%
in
2013
, compared to
2012
, primarily due to a decrease in international revenues. International revenues
decreased
18%
in
2013
, compared to
2012
, primarily due to the entry of generics in developed Europe. In emerging markets, the decrease was primarily due to the impact of both herbal and generic competition. Loss of exclusivity for Viagra in major European markets occurred in late-June 2013 and reduced revenues by approximately $108 million, in comparison with
2012
. Revenues in the U.S. were essentially
flat
in
2013
, compared to
2012
.
|
•
|
Zyvox
is the world’s best-selling branded agent among those used to treat serious Gram-positive pathogens, including methicillin-resistant staphylococcus-aureus. Zyvox worldwide revenues
increased
1%
in
2013
, compared to
2012
. The increase in
2013
was primarily due to increased demand in both the U.S. and Europe, partly offset by the unfavorable impact of foreign exchange of 2%.
|
•
|
Norvasc
is indicated for the treatment of hypertension. Norvasc worldwide revenues
decreased
9%
in
2013
, compared to
2012
, and reflects, among other factors, the unfavorable impact of foreign exchange of 6%.
|
•
|
Sutent
is indicated for the treatment of advanced renal cell carcinoma, including metastatic renal cell carcinoma (mRCC); gastrointestinal stromal tumors after disease progression on, or intolerance to, imatinib mesylate; and advanced pancreatic neuroendocrine tumor. Sutent worldwide revenues
decreased
3%
in
2013
, compared to
2012
, as a result of increased competition and cost-containment measures in developed Europe and Japan, as well as some conversion from Sutent to Inlyta in Japan as a result of the broader label for Inlyta in Japan, which overlaps with the Sutent indication, and the unfavorable impact of foreign exchange of 2%, partially offset by price increases in the U.S. and increases in uptake in key emerging markets, most notably Russia, China and the Levant (a group of countries bordering the Eastern Mediterranean).
|
•
|
Our
Premarin
family of products helps women address moderate-to-severe menopausal symptoms. Premarin worldwide revenues
increased
2%
in
2013
, compared to
2012
. Revenues in the U.S. were favorably impacted by two price increases and growth in Premarin Vaginal Cream prescription volume, and unfavorably impacted by prescription volume declines for Premarin Family Oral brands.
|
•
|
BeneFIX and ReFacto AF/Xyntha
are hemophilia products using state-of-the-art manufacturing that assist patients with their lifelong bleeding disorders. BeneFIX recorded an increase in worldwide revenues of
7%
in
2013
, compared to
2012
, primarily due to greater consumption and price increases in the U.S., as well as the launch of 3000 IU SKU in Europe and continued product uptake in Japan.
|
•
|
Pristiq
is approved for the treatment of major depressive disorder in the U.S. and in various other countries. Pristiq has also been approved for treatment of moderate-to-severe vasomotor symptoms (VMS) associated with menopause in Thailand, Mexico, the Philippines and Ecuador. Pristiq recorded an increase in worldwide revenues of
11%
in
2013
, compared to
2012
, primarily due to prescription growth in the emerging markets, Canada and Australia, as well as a price increase in the U.S.
|
•
|
Chantix/Champix
is an aid to smoking-cessation in adults 18 years of age and older. Worldwide revenues
decreased
3%
in
2013
, compared to
2012
. Revenues in the U.S.
increased
10%
in
2013
, compared to
2012
, primarily due to price increases in January and July 2013. International revenues
decreased
15%
in
2013
, compared to
2012
, primarily due to an overall market decline across several key markets as a result of a challenging macro-economic environment, as well as the lingering impact from previous negative media exposure and the unfavorable impact of foreign exchange of 5%.
|
•
|
Inlyta
, for the treatment of patients with advanced renal cell carcinoma (RCC) after failure of a prior systemic treatment, is approved in 59 countries, including the U.S., EU, Switzerland, Japan, Canada, Australia, South Korea and some emerging markets, including Russia, Mexico and Turkey (exact indications vary by region). Inlyta recorded worldwide revenues of
$319 million
in
2013
.
|
•
|
Xalkori,
for the treatment of patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) that is anaplastic lymphoma kinase (ALK)-positive, is now approved in more than 70 countries, including the U.S., EU (conditional), Japan, South Korea, Canada, Australia and Switzerland, as well as in many emerging markets, including China, Russia, Mexico, India and Turkey. Xalkori recorded worldwide revenues of
$282 million
in
2013
.
|
•
|
Xeljanz
was approved in the U.S. in November 2012 and in various other countries in 2013 for the treatment of adult patients with moderately to severely active rheumatoid arthritis. Xeljanz recorded worldwide revenues of
$114 million
in
2013
, virtually all in the U.S.
|
•
|
Alliance revenues
worldwide
decreased
25%
in
2013
, compared to
2012
, mainly due to:
|
◦
|
the near-term expiration of the co-promotion collaboration for Spiriva in the U.S. and certain European countries combined with the expiration of the collaboration in Australia, Canada and certain other European countries, which resulted in declines of $517 million in
2013
, compared to
2012
, in Pfizer's share of Spiriva's revenues;
|
26
|
|
2013 Financial Report
|
|
|
|
◦
|
the loss of exclusivity for Aricept 5mg and 10mg tablets in the U.S. in November 2010 and the entry of multi-source generic competition in the U.S. in May 2011, as well as the loss of exclusivity in many major European markets in February 2012 and the termination of the co-promotion agreement for Aricept in Japan in December 2012, which resulted in a decrease in Pfizer's share of Aricept revenues of $309 million in
2013
, compared to
2012
; and
|
◦
|
the expiration of the co-promotion agreement for Enbrel in the U.S. and Canada in October 2013,
|
◦
|
the strong performance of Enbrel in the U.S. prior to the expiration of the co-promotion agreement.
|
•
|
Embeda
—In November 2013, we announced that the FDA had approved a prior approval supplement for an update to the Embeda manufacturing process. This update addressed the pre-specified stability requirement that led to the voluntary recall of Embeda from the market in March 2011. We anticipate returning Embeda to the market in the second quarter of 2014.
|
RECENT FDA APPROVALS
|
||
PRODUCT
|
INDICATION
|
DATE APPROVED
|
Duavee (Conjugated Estrogens/Bazedoxifene)
(a)
|
Treatment of moderate-to-severe vasomotor symptoms associated with menopause and prevention of postmenopausal osteoporosis in women with a uterus
|
October 2013
|
(a)
|
The FDA approved the 0.45mg/20mg dose of Duavee for these indications. We received a "complete response" letter from the FDA with regard to the 0.625mg/20mg dose for these indications, and for an indication for the treatment of vulvar and vaginal atrophy.
|
2013 Financial Report
|
|
27
|
|
|
|
PENDING U.S. NEW DRUG APPLICATIONS (NDA) AND SUPPLEMENTAL FILINGS
|
||
PRODUCT
|
INDICATION
|
DATE FILED*
|
Eliquis (Apixaban)
(a)
|
Treatment of deep vein thrombosis (DVT) and pulmonary embolism (PE), and for the reduction in the risk of recurrent DVT and PE
|
December 2013
|
Eliquis (Apixaban)
(a)
|
Prevention of DVT, which may lead to PE in adult patients who have undergone hip or knee replacement surgery
|
July 2013
|
Tafamidis meglumine
(b)
|
Treatment of transthyretin familial amyloid polyneuropathy (TTR-FAP)
|
February 2012
|
Genotropin Mark VII Multidose Disposable Device (Somatropin rDNA Origin)
(c)
|
Replacement of human growth hormone deficiency
|
December 2009
|
Celebrex (Celecoxib)
(d)
|
Chronic pain
|
October 2009
|
Remoxy (Oxycodone Hydrochloride)
(e)
|
Management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time
|
August 2008
|
Viviant (Bazedoxifene)
(f)
|
Osteoporosis treatment and prevention
|
August 2006
|
*
|
The dates set forth in this column are the dates on which the FDA accepted our submissions.
|
(a)
|
This indication for Eliquis (apixaban) was developed in collaboration with BMS.
|
(b)
|
In May 2012, the FDA's Peripheral and Central Nervous System Drugs Advisory Committee voted that the tafamidis meglumine data provide substantial evidence of efficacy for a surrogate endpoint that is reasonably likely to predict a clinical benefit. In June 2012, the FDA issued a “complete response” letter with respect to the tafamidis NDA. The FDA has requested the completion of a second efficacy study, and also has asked for additional information on the data within the current tafamidis NDA. We continue to work with the FDA to define a path forward.
|
(c)
|
After receiving a “complete response” letter from the FDA for the Genotropin Mark VII multidose disposable device submission, we submitted our response in August 2010. In April 2011, we received a second “complete response” letter from the FDA, and we submitted our response in July 2013. In February 2014, we received a third "complete response" letter from the FDA, and we are working with the FDA to determine next steps.
|
(d)
|
In June 2010, we received a “complete response” letter from the FDA for the Celebrex chronic pain supplemental NDA. The supplemental NDA remains pending while we await the completion of the PRECISION trial, anticipated in 2015, which will inform our next steps. The PRECISION trial is designed to assess the relative long-term cardiovascular safety of Celebrex compared to prescription doses of ibuprofen and naproxen in the treatment of arthritis pain.
|
(e)
|
In 2005, King entered into an agreement with Pain Therapeutics, Inc. (PT) to develop and commercialize Remoxy. In August 2008, the FDA accepted the NDA for Remoxy that had been submitted by King and PT. In December 2008, the FDA issued a “complete response” letter. In March 2009, King exercised its right under the agreement with PT to assume sole control and responsibility for the development of Remoxy. In December 2010, King resubmitted the NDA for Remoxy with the FDA. In June 2011, we and PT announced that a “complete response” letter had been received from the FDA with regard to the resubmission of the NDA. Having achieved technical milestones related to manufacturing and following guidance received from the FDA earlier in 2013, we announced in October 2013 that we will proceed with the additional clinical studies and other actions required to address the "complete response" letter received in June 2011. These new clinical studies will include, in part, a pivotal bioequivalence study with the modified Remoxy formulation to bridge to the clinical data related to the original Remoxy formulation, and an abuse-potential study with the modified formulation. As previously disclosed, the "complete response" submission is not expected to occur prior to mid-2015.
|
(f)
|
Two “approvable” letters were received by Wyeth in April and December 2007 from the FDA for Viviant (bazedoxifene), for the prevention of post-menopausal osteoporosis, that set forth the additional requirements for approval. In May 2008, Wyeth received an “approvable” letter from the FDA for the treatment of post-menopausal osteoporosis. The FDA is seeking additional data, and we have been systematically working through these requirements and seeking to address the FDA's concerns. In February 2008, the FDA advised Wyeth that it expects to convene an advisory committee to review the pending NDAs for both the treatment and prevention indications after we submit our response to the “approvable” letters. In view of the recent approval of Duavee by the FDA, we are reassessing the next steps regarding our NDAs for Viviant. In April 2009, Wyeth received approval in the EU for CONBRIZA (the EU trade name for Viviant) for the treatment of post-menopausal osteoporosis in women at increased risk of fracture.
|
REGULATORY APPROVALS AND FILINGS IN THE EU AND JAPAN
|
|||
PRODUCT
|
DESCRIPTION OF EVENT
|
DATE APPROVED
|
DATE FILED*
|
Bosulif (Bosutinib)
|
Application filed in Japan for treatment of previously treated chronic myelogenous leukemia
|
—
|
December 2013
|
Eliquis (Apixaban)
(a)
|
Application filed in the EU for treatment of DVT and PE, and for the reduction in the risk of recurrent DVT and PE
|
—
|
November 2013
|
Vyndaqel (Tafamidis meglumine)
|
Approval in Japan as a treatment to delay the peripheral neurological impairment of transthyretin familial amyloid polyneuropathy (TTR-FAP)
|
September 2013
|
—
|
Prevenar 13 Adult
|
Application filed in Japan for prevention of pneumococcal pneumonia and invasive disease caused by Streptococcus pneumoniae serotypes (1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F and 23F) in adults 65 years of age and older
|
—
|
July 2013
|
Prevenar 13 Infant
|
Approval in Japan for prevention of invasive disease caused by Streptococcus pneumoniae serotypes (1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F and 23F) in infants and young children
|
June 2013
|
__
|
Bosulif (Bosutinib)
|
Conditional marketing authorization in the EU for treatment of previously treated chronic myelogenous leukemia
|
March 2013
|
—
|
Xeljanz (Tofacitinib)
|
Approval in Japan for treatment of rheumatoid arthritis with inadequate response to existing therapies
|
March 2013
|
—
|
Lyrica (Pregabalin)
|
Approval in Japan for treatment of neuropathic pain
|
February 2013
|
—
|
Conjugated Estrogens/Bazedoxifene
|
Application filed in the EU for treatment of symptoms associated with menopause and osteoporosis
|
—
|
July 2012
|
28
|
|
2013 Financial Report
|
|
|
|
*
|
For applications in the EU, the dates set forth in this column are the dates on which the European Medicines Agency (EMA) validated our submissions.
|
(a)
|
This indication for Eliquis (apixaban) was developed in collaboration with BMS.
|
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT
|
|
CANDIDATE
|
INDICATION
|
ALO-02
|
A Mu-type opioid receptor agonist for the management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time
|
Bococizumab (RN316) (PF-04950615)
|
A monoclonal antibody that inhibits PCSK9 for the treatment of hyperlipidemia and prevention of cardiovascular events
|
Dacomitinib
|
A pan-HER tyrosine kinase inhibitor for the first-line treatment of patients with advanced non-small cell lung cancer with EGFR activating mutations, which is being developed in collaboration with SFJ Pharmaceuticals Group
|
Ertugliflozin (PF-04971729)
|
An oral SGLT2 inhibitor for the treatment of type 2 diabetes, which is being developed in collaboration with Merck & Co., Inc.
|
Inotuzumab ozogamicin
|
An antibody drug conjugate, consisting of an anti-CD22 monotherapy antibody linked to a cytotoxic agent, calicheamycin, for the treatment of acute lymphoblastic leukemia
|
MnB rLP2086
(PF-05212366)
|
A prophylactic vaccine for prevention of
Neisseria meningitidis
serogroup B invasive disease in adolescents and young adults (ages 11-25)
|
Palbociclib (PD-0332991)
(a)
|
An oral and selective reversible inhibitor of the CDK 4 and 6 kinases for the treatment of patients with estrogen receptor-positive, human epidermal growth factor receptor 2-negative advanced breast cancer, recurrent advanced breast cancer and, in collaboration with the German Breast Group, high-risk early breast cancer
|
PF-05280014
|
A potential biosimilar to Trastuzumab. Trastuzumab is a monoclonal antibody that binds and inhibits HER2 for the treatment of HER2-positive breast cancer and gastric cancer
|
Tanezumab
(b)
|
An anti-nerve growth factor monoclonal antibody for the treatment of pain (on clinical hold)
|
(b)
|
The tanezumab program is under a partial clinical hold by the FDA pending our submission of additional nonclinical data. We anticipate submitting that data to the FDA by the end of 2014. Subject to the removal of the partial clinical hold, we are planning to continue development of tanezumab for the treatment of osteoarthritis, chronic low back pain and cancer pain. In October 2013, we entered into a collaboration agreement with Eli Lilly and Company to jointly develop and globally commercialize tanezumab for those indications.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Cost of sales
|
|
$
|
9,586
|
|
|
$
|
9,821
|
|
|
$
|
12,500
|
|
|
(2
|
)
|
|
(21
|
)
|
As a percentage of
Revenues
|
|
18.6
|
%
|
|
18.0
|
%
|
|
20.5
|
%
|
|
|
|
|
|
2013 Financial Report
|
|
29
|
|
|
|
•
|
lower purchase accounting charges, primarily reflecting the fair value adjustments to acquired inventory from Wyeth and King that was subsequently sold;
|
•
|
lower costs related to our cost-reduction and productivity initiatives and acquisition-related costs, as well as the benefits generated from the ongoing productivity initiatives to streamline the manufacturing network;
|
•
|
reduced manufacturing volumes related to products that lost exclusivity in various markets; and
|
•
|
the favorable impact of foreign exchange of 3%,
|
•
|
an unfavorable shift in geographic, product and business mix due to products that lost exclusivity in various markets.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Selling, informational and administrative expenses
|
|
$
|
14,355
|
|
|
$
|
15,171
|
|
|
$
|
17,581
|
|
|
(5
|
)
|
|
(14
|
)
|
As a percentage of
Revenues
|
|
27.8
|
%
|
|
27.8
|
%
|
|
28.8
|
%
|
|
|
|
|
•
|
savings generated from a reduction in marketing functions, partly in response to product losses of exclusivity and more streamlined corporate support functions; and
|
•
|
the favorable impact of foreign exchange of 1%,
|
•
|
increased spending in support of several new product launches.
|
•
|
savings generated from a reduction in the field force and a decrease in promotional spending, both partly in response to product losses of exclusivity;
|
•
|
more streamlined corporate support functions; and
|
•
|
the favorable impact of foreign exchange of 2%,
|
•
|
costs associated with the separation of Zoetis employees, net assets and operations from Pfizer.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Research and development expenses
|
|
$
|
6,678
|
|
|
$
|
7,482
|
|
|
$
|
8,681
|
|
|
(11
|
)
|
|
(14
|
)
|
As a percentage of
Revenues
|
|
12.9
|
%
|
|
13.7
|
%
|
|
14.2
|
%
|
|
|
|
|
•
|
the non-recurrence of a $250 million payment to AstraZeneca in 2012 to obtain the exclusive, global, OTC rights to Nexium; and
|
•
|
lower charges related to implementing our cost-reduction and productivity initiatives.
|
•
|
savings generated by the discontinuation of certain therapeutic areas and R&D programs in connection with our previously announced cost-reduction and productivity initiatives; and
|
•
|
lower charges related to implementing our cost-reduction and productivity initiatives,
|
30
|
|
2013 Financial Report
|
|
|
|
•
|
a $250 million payment to AstraZeneca to obtain the exclusive, global, OTC rights to Nexium.
|
The following table provides information by operating segment about our research and development (R&D) expenses (see also Notes to Consolidated Financial Statements––
Note 18. Segment, Geographic and Other Revenue Information
):
|
||||||||||||||||||
|
|
R&D Expenses
|
||||||||||||||||
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Primary Care
(a)
|
|
$
|
969
|
|
|
$
|
1,009
|
|
|
$
|
1,307
|
|
|
(4
|
)
|
|
(23
|
)
|
Specialty Care and Oncology
(a)
|
|
1,403
|
|
|
1,401
|
|
|
1,561
|
|
|
—
|
|
|
(10
|
)
|
|||
Established Products and Emerging Markets
(a)
|
|
408
|
|
|
401
|
|
|
441
|
|
|
2
|
|
|
(9
|
)
|
|||
Consumer Healthcare
(a), (b)
|
|
113
|
|
|
358
|
|
|
88
|
|
|
(68
|
)
|
|
307
|
|
|||
Worldwide Research and Development/Pfizer Medical
(c)
|
|
2,821
|
|
|
2,839
|
|
|
3,337
|
|
|
(1
|
)
|
|
(15
|
)
|
|||
Corporate and Other
(d)
|
|
964
|
|
|
1,474
|
|
|
1,947
|
|
|
(35
|
)
|
|
(24
|
)
|
|||
Total
Research and Development Expenses
|
|
$
|
6,678
|
|
|
$
|
7,482
|
|
|
$
|
8,681
|
|
|
(11
|
)
|
|
(14
|
)
|
(a)
|
Our operating segments, in addition to their sales and marketing responsibilities, are responsible for certain development activities. Generally, these responsibilities relate to additional indications for in-line products and IPR&D projects that have achieved proof-of-concept. R&D spending may include upfront and milestone payments for intellectual property rights.
|
(b)
|
The decrease in 2013 relates to the non-recurrence of a $250 million payment to AstraZeneca in 2012 to obtain the exclusive, global OTC rights to Nexium.
|
(c)
|
Worldwide Research and Development is generally responsible for research projects until proof-of-concept is achieved, and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. Worldwide Research and Development is also responsible for all regulatory submissions and interactions with regulatory agencies, including all safety event activities. Pfizer Medical is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, partnerships with global public health and medical associations, regulatory inspection readiness reviews, internal audits of Pfizer-sponsored clinical trials and internal regulatory compliance processes. The decrease in 2012 compared to 2011 results from cost savings associated with the R&D productivity initiative announced on February 1, 2011 (see the “Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this Financial Review).
|
(d)
|
Corporate and other includes unallocated costs, primarily facility costs, information technology, share-based compensation, and restructuring related costs. The decrease in 2013 primarily reflects lower charges relating to implementing our cost-reduction and productivity initiatives, and to a lesser extent efficiencies gained from these efforts, and in 2012, primarily results from cost savings associated with the R&D productivity initiative announced on February 1, 2011, and to a lesser extent, from lower charges relating to implementing our cost-reduction and productivity initiatives (see the “Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this Financial Review).
|
2013 Financial Report
|
|
31
|
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Costs associated with acquisitions and cost-reduction/productivity initiatives
(a)
|
|
$
|
1,704
|
|
|
$
|
2,775
|
|
|
$
|
4,415
|
|
|
(39
|
)
|
|
(37
|
)
|
(a)
|
Comprises
Restructuring charges and certain acquisition-related costs
as well as costs associated with our cost-reduction/productivity initiatives included in
Cost of sales
,
Selling, informational and administrative expenses
and/or
Research and development expenses
, as appropriate.
|
•
|
In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the combined company (which may include charges related to employees, assets and activities that will not continue in the combined company); and
|
•
|
In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems.
|
32
|
|
2013 Financial Report
|
|
|
|
•
|
The closing of duplicative facilities and other site rationalization actions Company-wide, including research and development facilities, manufacturing plants, sales offices and other corporate facilities. Among the more significant actions are the following:
|
◦
|
Manufacturing: After the acquisition of Wyeth, our manufacturing sites totaled 59. Other acquisitions have added eight manufacturing sites, and we have subsequently exited 11 sites, resulting in 56 sites supporting continuing operations as of
December 31, 2013
. Our plant network strategy is expected to result in the exit of a further eight sites over the next several years. These site counts exclude five Nutrition business-related manufacturing sites as the Nutrition business was sold in 2012, and exclude 24 Zoetis sites as the disposition of the remaining 80.2% interest in Zoetis common stock was completed on June 24, 2013. See Notes to Consolidated Financial Statements—
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
for more information.
|
◦
|
Research and Development: After the acquisition of Wyeth, we operated in 20 R&D sites and announced that we would close a number of sites. We have completed a number of site closures, including our Sandwich, U.K. research and development facility, except for a small presence. In addition, in 2011, we rationalized several other sites to reduce and optimize the overall R&D footprint. We disposed of our toxicology site in Catania, Italy; exited our R&D sites in Aberdeen and Gosport, U.K.; and disposed of a vacant site in St. Louis, MO. We still maintain laboratories in St. Louis, MO that focus on the area of biologics. We are presently marketing for sale, lease or sale/lease-back, either a portion of or all of certain of our R&D campuses. Locations with R&D operations are in the U.S., Europe, Canada and China, with five major research sites in addition to a number of specialized units. We also re-prioritized our commitments to disease areas and have discontinued certain therapeutic areas and R&D programs as part of our R&D productivity initiative. Our research primarily focuses on five high-priority areas that have a mix of small and large molecules—immunology and inflammation; oncology; cardiovascular and metabolic diseases; neuroscience and pain; and vaccines. Other areas of focus include rare diseases and biosimilars.
|
•
|
Workforce Reductions: Across all areas of our business, we reduced our workforce and completed other organizational changes, primarily in the U.S. field force, manufacturing, R&D and corporate functions. We identified areas for a reduction in workforce across all of our businesses. From 2009, when the workforce was approximately 130,000, through the end of 2012, we achieved a reduction of 38,500, and by the end of 2013, we achieved a reduction of 52,300. In 2013, the workforce declined by 13,800, from 91,500 to 77,700, primarily due to the full disposition of Zoetis, which resulted in a workforce reduction of approximately 9,300. The aforementioned workforce reductions include the impact of acquisitions and divestitures subsequent to the Wyeth acquisition.
|
•
|
The increased use of shared services and centers of excellence.
|
•
|
Procurement savings.
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|||
Other (income)/deductions—net
|
|
$
|
(532
|
)
|
|
$
|
4,022
|
|
|
$
|
2,486
|
|
|
(113
|
)
|
|
62
|
2013 Financial Report
|
|
33
|
|
|
|
•
|
patent litigation settlement income of $1.3 billion recorded in 2013 (for additional information, see Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
);
|
•
|
lower net charges for other legal matters in 2013 (down approximately $2.2 billion) (for additional information, see Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
);
|
•
|
a gain of approximately $459 million recorded in 2013 associated with the transfer of certain product rights to our equity-method investment in China (for additional information, see Notes to Consolidated Financial Statements—
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments
); and
|
•
|
higher net gains on asset disposals (up approximately $268 million) (for additional information, see Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
),
|
•
|
higher asset impairments and related charges (up approximately $211 million) (for additional information, see Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
).
|
•
|
charges for litigation-related matters that were approximately $1.4 billion higher in 2012 than in 2011, primarily due to a $491 million charge related to the resolution of an investigation by the U.S. Department of Justice into Wyeth's historical promotional practices in connection with Rapamune, a $450 million settlement of a lawsuit by Brigham Young University related to Celebrex, and charges related to Chantix litigation (for additional information, see Notes to Consolidated Financial Statements—
Note 17. Commitments and Contingencies
); and
|
•
|
royalty-related income that was approximately $92 million lower in 2012 than in 2011.
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
12/11
|
|
|||
Provision for taxes on income
|
|
$
|
4,306
|
|
|
$
|
2,221
|
|
|
$
|
3,621
|
|
|
94
|
|
(39
|
)
|
Effective tax rate on continuing operations
|
|
27.4
|
%
|
|
19.8
|
%
|
|
31.5
|
%
|
|
|
|
|
•
|
the unfavorable tax rate associated with patent litigation settlement income of $1.3 billion recorded in 2013;
|
•
|
the non-deductibility of the $292 million of goodwill derecognized and the jurisdictional mix of the other intangible assets divested as part of the transfer of certain product rights to our equity-method investment in China (Hisun Pfizer); and
|
•
|
the non-deductibility of the $223 million loss on an option to acquire the remaining interest in Teuto, a 40%-owned generics company in Brazil, since we expect to retain the investment indefinitely, and the non-deductibility of a $32 million impairment charge related to our equity-method investment in Teuto,
|
•
|
the change in the jurisdictional mix of earnings; and
|
•
|
the extension of the U.S. R&D tax credit (resulting in the full-year benefit of the 2012 and 2013 U.S. R&D tax credit being recorded in 2013).
|
34
|
|
2013 Financial Report
|
|
|
|
•
|
an increase, of approximately $1.1 billion in tax benefits, related to certain audit settlements in multiple jurisdictions and the expiration of certain statutes of limitations covering various periods,
|
•
|
the impact of the expiration of the U.S. R&D tax credit on December 31, 2011; and
|
•
|
the non-deductibility of the 2012 legal charge related to Rapamune (see the "Other (income)/deductions—Net" section of this Financial Review).
|
The following table provides the components of
Discontinued operations
—
net of tax
:
|
||||||||||||
|
|
Year Ended December 31,
(a)
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Revenues
|
|
$
|
2,201
|
|
|
$
|
6,587
|
|
|
$
|
6,897
|
|
Pre-tax income from discontinued operations
(a)
|
|
408
|
|
|
1,253
|
|
|
1,310
|
|
|||
Provision for taxes on income
(b)
|
|
100
|
|
|
459
|
|
|
425
|
|
|||
Income from discontinued operations––net of tax
|
|
308
|
|
|
794
|
|
|
885
|
|
|||
Pre-tax gain on sale of discontinued operations
|
|
10,446
|
|
|
7,123
|
|
|
1,688
|
|
|||
Provision for taxes on income
(c)
|
|
92
|
|
|
2,340
|
|
|
384
|
|
|||
Gain on disposal of discontinued operations––net of tax
|
|
10,354
|
|
|
4,783
|
|
|
1,304
|
|
|||
Discontinued operations—net of tax
|
|
$
|
10,662
|
|
|
$
|
5,577
|
|
|
$
|
2,189
|
|
(a)
|
Includes (i) the Animal Health (Zoetis) business through June 24, 2013, the date of disposal, (ii) the Nutrition business through November 30, 2012, the date of disposal and (iii) the Capsugel business through August 1, 2011, the date of disposal.
|
(b)
|
Includes a deferred tax benefit of
$23 million
for
2013
and
$23 million
for
2012
, and a deferred tax expense of
$28 million
for
2011
, which is net of a deferred tax expense of
$42 million
in
2012
and includes a deferred tax expense of
$6 million
in
2011
related to investments in certain foreign subsidiaries, resulting from our intention not to hold these subsidiaries indefinitely.
|
(c)
|
For 2013, primarily reflects income tax expense of
$122 million
resulting from certain legal entity reorganizations. For
2012
and
2011
, includes a deferred tax expense of
$1.4 billion
for
2012
and
$190 million
for
2011
, which includes a deferred tax expense of
$2.2 billion
for
2012
and
$190 million
for
2011
on certain current-year funds earned outside the U.S. that will not be indefinitely reinvested overseas. For
2012
, also includes a deferred tax benefit reflecting the reversal of net deferred tax liabilities associated with the divested Nutrition assets.
|
2013 Financial Report
|
|
35
|
|
|
|
•
|
senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income basis;
|
•
|
our annual budgets are prepared on an Adjusted income basis; and
|
•
|
senior management’s annual compensation is derived, in part, using this Adjusted income measure. Adjusted income is the performance metric utilized in the determination of bonuses under the Pfizer Inc. Executive Annual Incentive Plan that is designed to limit the bonuses payable to the Executive Leadership Team (ELT) for purposes of Internal Revenue Code Section 162(m). Subject to the Section 162(m) limitation, the bonuses are funded from a pool based on the performance measured by three financial metrics, including adjusted diluted earnings per share, which is derived from Adjusted income. This metric accounts for 40% of the bonus pool. The pool applies to the bonus plans for virtually all bonus-eligible, non-sales-force employees worldwide, including the ELT members and other members of senior management.
|
36
|
|
2013 Financial Report
|
|
|
|
The following table provides a reconciliation of
Net income attributable to Pfizer Inc.
, as reported under U.S. GAAP, and Non-GAAP Adjusted income:
|
||||||||||||||||||
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
GAAP Reported net income attributable to Pfizer Inc.
|
|
$
|
22,003
|
|
|
$
|
14,570
|
|
|
$
|
10,009
|
|
|
51
|
|
|
46
|
|
Purchase accounting adjustments—net of tax
|
|
3,146
|
|
|
3,562
|
|
|
4,946
|
|
|
(12
|
)
|
|
(28
|
)
|
|||
Acquisition-related costs—net of tax
|
|
383
|
|
|
743
|
|
|
1,415
|
|
|
(48
|
)
|
|
(47
|
)
|
|||
Discontinued operations—net of tax
|
|
(10,623
|
)
|
|
(5,577
|
)
|
|
(2,189
|
)
|
|
90
|
|
|
*
|
|
|||
Certain significant items—net of tax
|
|
379
|
|
|
2,451
|
|
|
2,964
|
|
|
(85
|
)
|
|
(17
|
)
|
|||
Non-GAAP Adjusted income
(a)
|
|
$
|
15,288
|
|
|
$
|
15,749
|
|
|
$
|
17,145
|
|
|
(3
|
)
|
|
(8
|
)
|
(a)
|
The effective tax rate on Non-GAAP Adjusted income was 27.5% in
2013
, 28.7% in
2012
and 29.3% in
2011
. The effective tax rate for 2013 compared with 2012 was favorably impacted by the increase in tax benefits related to audit settlements with foreign jurisdictions and the expiration of certain statutes of limitations in multiple jurisdictions covering various periods, as well as the extension of the U.S. R&D tax credit that was signed into law in January 2013. The effective tax rate for 2012 compared with 2011 reflects the impact of the change in the jurisdictional mix of earnings, the expiration of the U.S. R&D tax credit on December 31, 2011 and the favorable impact of the resolution of certain prior-period tax positions in 2012 with various foreign tax authorities and the expiration of certain statutes of limitations.
|
*
|
Calculation not meaningful.
|
2013 Financial Report
|
|
37
|
|
|
|
The following table provides a reconciliation of Reported diluted EPS, as reported under U.S. GAAP, and Non-GAAP Adjusted diluted EPS:
|
||||||||||||||||||
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Earnings per common share—diluted
|
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP Reported income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
1.65
|
|
|
$
|
1.20
|
|
|
$
|
0.99
|
|
|
38
|
|
|
21
|
|
Income from discontinued operations—net of tax
|
|
1.54
|
|
|
0.74
|
|
|
0.28
|
|
|
108
|
|
|
*
|
|
|||
GAAP Reported net income attributable to Pfizer Inc. common shareholders
|
|
3.19
|
|
|
1.94
|
|
|
1.27
|
|
|
64
|
|
|
53
|
|
|||
Purchase accounting adjustments—net of tax
|
|
0.46
|
|
|
0.47
|
|
|
0.63
|
|
|
(2
|
)
|
|
(25
|
)
|
|||
Acquisition-related costs—net of tax
|
|
0.06
|
|
|
0.10
|
|
|
0.18
|
|
|
(40
|
)
|
|
(44
|
)
|
|||
Discontinued operations—net of tax
|
|
(1.54
|
)
|
|
(0.74
|
)
|
|
(0.28
|
)
|
|
(108
|
)
|
|
*
|
|
|||
Certain significant items—net of tax
|
|
0.05
|
|
|
0.33
|
|
|
0.38
|
|
|
(85
|
)
|
|
(13
|
)
|
|||
Non-GAAP Adjusted income attributable to Pfizer Inc. common shareholders
(a)
|
|
$
|
2.22
|
|
|
$
|
2.10
|
|
|
$
|
2.18
|
|
|
6
|
|
|
(4
|
)
|
(a)
|
Reported and Adjusted diluted earnings per share in all periods presented were significantly impacted by the decrease in the number of shares outstanding, due to the Company's ongoing share repurchase program and in 2013, the impact of the Zoetis exchange offer.
|
*
|
Calculation not meaningful.
|
38
|
|
2013 Financial Report
|
|
|
|
Adjusted income, as shown above, excludes the following items:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Purchase accounting adjustments
|
|
|
|
|
|
|
||||||
Amortization, depreciation and other
(a)
|
|
$
|
4,367
|
|
|
$
|
4,904
|
|
|
$
|
5,475
|
|
Cost of sales
(b)
|
|
(23
|
)
|
|
1
|
|
|
1,197
|
|
|||
Total purchase accounting adjustments—pre-tax
|
|
4,344
|
|
|
4,905
|
|
|
6,672
|
|
|||
Income taxes
(c)
|
|
(1,198
|
)
|
|
(1,343
|
)
|
|
(1,726
|
)
|
|||
Total purchase accounting adjustments—net of tax
|
|
3,146
|
|
|
3,562
|
|
|
4,946
|
|
|||
|
|
|
|
|
|
|
||||||
Acquisition-related costs
|
|
|
|
|
|
|
||||||
Restructuring charges
(d)
|
|
108
|
|
|
291
|
|
|
577
|
|
|||
Transaction costs
(d)
|
|
—
|
|
|
1
|
|
|
30
|
|
|||
Integration costs
(d)
|
|
144
|
|
|
381
|
|
|
693
|
|
|||
Additional depreciation—asset restructuring
(e)
|
|
124
|
|
|
273
|
|
|
613
|
|
|||
Total acquisition-related costs—pre-tax
|
|
376
|
|
|
946
|
|
|
1,913
|
|
|||
Income taxes
(f)
|
|
7
|
|
|
(203
|
)
|
|
(498
|
)
|
|||
Total acquisition-related costs—net of tax
|
|
383
|
|
|
743
|
|
|
1,415
|
|
|||
|
|
|
|
|
|
|
||||||
Discontinued operations
|
|
|
|
|
|
|
||||||
Discontinued operations—net of tax
(g)
|
|
(10,662
|
)
|
|
(5,577
|
)
|
|
(2,189
|
)
|
|||
Discontinued operations—net of tax, attributable to noncontrolling interests
|
|
39
|
|
|
—
|
|
|
—
|
|
|||
Total discontinued operations—net of tax, attributable to Pfizer Inc.
|
|
(10,623
|
)
|
|
(5,577
|
)
|
|
(2,189
|
)
|
|||
|
|
|
|
|
|
|
||||||
Certain significant items
|
|
|
|
|
|
|
||||||
Restructuring charges
(h)
|
|
930
|
|
|
1,137
|
|
|
1,541
|
|
|||
Implementation costs and additional depreciation—asset restructuring
(i)
|
|
398
|
|
|
692
|
|
|
961
|
|
|||
Patent litigation settlement income
(j)
|
|
(1,342
|
)
|
|
—
|
|
|
—
|
|
|||
Other legal matters, net
(k)
|
|
21
|
|
|
2,191
|
|
|
822
|
|
|||
Gain associated with the transfer of certain product rights to an equity-method investment
(k)
|
|
(459
|
)
|
|
—
|
|
|
—
|
|
|||
Certain asset impairments and related charges
(l)
|
|
1,059
|
|
|
875
|
|
|
827
|
|
|||
Costs associated with the Zoetis IPO
(m)
|
|
18
|
|
|
125
|
|
|
35
|
|
|||
Income associated with the transitional manufacturing and supply agreements with Zoetis
(n)
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|||
Other
(l)
|
|
83
|
|
|
19
|
|
|
69
|
|
|||
Total certain significant items—pre-tax
|
|
692
|
|
|
5,039
|
|
|
4,255
|
|
|||
Income taxes
(o)
|
|
(313
|
)
|
|
(2,588
|
)
|
|
(1,291
|
)
|
|||
Total certain significant items—net of tax
|
|
379
|
|
|
2,451
|
|
|
2,964
|
|
|||
Total purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items—net of tax, attributable to Pfizer Inc.
|
|
$
|
(6,715
|
)
|
|
$
|
1,179
|
|
|
$
|
7,136
|
|
(a)
|
Included primarily in
Amortization of intangible assets
(see Notes to Consolidated Financial Statements—
Note 10. Goodwill and Other Intangible Assets
).
|
(b)
|
For 2011, primarily related to fair value adjustments of acquired inventory.
|
(c)
|
Included in
Provision for taxes on income.
Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate.
|
(d)
|
Included in
Restructuring charges and certain acquisition-related costs
(see Notes to Consolidated Financial Statements—
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
).
|
(e)
|
Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions. For 2013, included in
Cost of sales
($116 million) and
Selling informational and administrative expenses
($8 million). For 2012, included in
Cost of sales
($258 million),
Selling informational and administrative expenses
($9 million) and
Research and development expenses
($6 million). For 2011, included in
Cost of sales
($549 million),
Selling, informational and administrative expenses
($42 million) and
Research and development expenses
($22 million).
|
(f)
|
Included in
Provision for taxes on income.
Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The amount in 2013 also includes the unfavorable impact of the remeasurement of certain deferred tax liabilities resulting from plant network restructuring activities.
|
(g)
|
Included in
Discontinued operations––net of tax
and relates to Zoetis, our former Animal Health business, through June 24, 2013, the date of disposal, to our former Nutrition business through November 30, 2012, the date of disposal, and to our former Capsugel business through August 1, 2011, the date of disposal (see Notes to Consolidated Financial Statements—
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
)
.
|
2013 Financial Report
|
|
39
|
|
|
|
(h)
|
Primarily represents restructuring charges related to our cost-reduction and productivity initiatives. Included in
Restructuring charges and certain acquisition-related costs
(see Notes to Consolidated Financial Statements—
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
).
|
(i)
|
Amounts primarily relate to our cost-reduction/productivity initiatives (see Notes to Consolidated Financial Statements—
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
). For 2013, included in
Selling, informational and administrative expenses
($156 million),
Research and development expenses
($127 million) and
Cost of sales
($115 million). For 2012, included in
Research and development expenses
($521 million),
Selling, informational and administrative expenses
($141 million) and
Cost of sales
($30 million). For 2011, included in
Cost of sales
($251 million),
Selling, informational and administrative expenses
($55 million) and
Research and development expenses
($655 million).
|
(j)
|
In 2013, reflects income from a litigation settlement with Teva Pharmaceutical Industries Ltd. and Sun Pharmaceutical Industries Ltd. for patent-infringement damages resulting from their "at-risk" launches of generic Protonix in the U.S. Included in
Other (income)/deductions—net
(see the "Other (Income)/Deductions—Net" section of this Financial Review and Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
)
.
|
(k)
|
Included in
Other (income)/deductions—net
(see the “Other (Income)/Deductions—Net” section of this Financial Review and Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
)
.
|
(l)
|
Substantially all included in
Other (income)/deductions—net
(see the “Other (Income)/Deductions—Net” section of this Financial Review and Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
)
.
|
(m)
|
Costs incurred in connection with the initial public offering of an approximate 19.8% ownership interest in Zoetis. Includes expenditures for banking, legal, accounting and similar services. For 2013 and 2012, included in
Other (income)/deductions—net
(see the "Other (Income)/Deductions—Net" section of this Financial Review and Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net
)
.
For 2011, substantially all included in
Other (income)/deductions—net
.
|
(n)
|
Included in
Revenues
($132 million) and in
Cost of sales
($116 million) for 2013.
|
(o)
|
Included in
Provision for taxes on income.
Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The amount in 2013 was favorably impacted by U.S. tax benefits of approximately $430 million, representing tax and interest, resulting from a settlement with the U.S. Internal Revenue Service (IRS) with respect to audits of the Wyeth tax returns for the years 2006 through date of acquisition and unfavorably impacted by (i) the tax rate associated with the patent litigation settlement income, (ii) the non-deductibility of goodwill derecognized and the jurisdictional mix of the other intangible assets divested as part of the transfer of certain product rights to Pfizer's 49%-owned equity-method investment in China, and (iii) the non-deductibility of the loss on an option to acquire the remaining interest in Laboratório Teuto Brasileiro S.A. (Teuto), a 40%-owned generics company in Brazil, since we expect to retain the investment indefinitely, and the non-deductibility of an impairment charge related to our equity method investment in Teuto. The amount in 2012 was favorably impacted by U.S. tax benefits of approximately $1.1 billion, representing tax and interest, resulting from a settlement with the IRS with respect to audits for multiple tax years (see Notes to Consolidated Financial Statements—
Note 5A. Tax Matters: Taxes on Income from Continuing Operations
).
|
40
|
|
2013 Financial Report
|
|
|
|
•
|
For
Accounts receivable, less allowance for doubtful accounts,
the change also reflects the timing of collections in the normal course of business as well as reductions in revenues of certain products.
|
•
|
For
Inventories,
the change also reflects increases in pharmaceutical and consumer inventory in the normal course of business.
|
•
|
For
Assets of discontinued operations and other assets held for sale
and
Liabilities of discontinued operations,
the change also reflects the impact of the full disposition of our Animal Health business (Zoetis). For additional information, see Notes to Consolidated Financial Statements—
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures.
|
•
|
For
Long-term investments
, the change also reflects an increase associated with the transfer of certain product rights to our equity-method investment in China. For additional information, see Notes to Consolidated Financial Statements—
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments
.
|
•
|
For
Property, plant and equipment, less accumulated depreciation,
the change also reflects depreciation partially offset by capital additions. In addition, there were some minor asset impairments and disposals.
|
•
|
For
Goodwill
, the change also reflects goodwill derecognized as part of the transfer of certain product rights, which constituted a business, to our equity-method investment in China. For additional information, see Notes to Consolidated Financial Statements—
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments
and
Note 10A. Goodwill and Other Intangible Assets: Goodwill
.
|
•
|
For
Identifiable intangible assets, less accumulated amortization
, the change also reflects amortization, asset impairment charges and the transfer of certain product rights to our equity-method investment in China, slightly offset by some minor intangible asset acquisitions. For additional information, see Notes to Consolidated Financial Statements—
Note 10B. Goodwill and Other Intangible Assets: Other Intangible Assets
. For additional information about the asset impairment charges, see Notes to Consolidated Financial Statements—
Note 4. Other (Income)/Deductions—Net.
For additional information about the transfer of certain product rights, see Notes to Consolidated Financial Statements—
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments
.
|
•
|
For
Accounts payable
, the change also reflects the timing of payments in the normal course of business.
|
•
|
For
Other current liabilities
, the change also reflects a decrease in our legal accruals, including those related to the Quigley product liability claims, reflecting payments made, and, to a much lesser extent, decreases in our restructuring accruals, VAT payables, and accrued interest, all in the normal course of business.
|
•
|
For
Long-term debt
, the change also reflects the completion of a public offering of
$4.0 billion
aggregate principal amount of senior unsecured notes, the
$2.4 billion
repayment, at maturity, of our
3.625%
senior unsecured notes that were due June 2013, the redemption in December 2013 of the aggregate principal amount of
$1.8 billion
of our 5.50% senior unsecured notes that were due February 2014, and reclassifications to
Short-term borrowings, including current portion of long-term debt.
|
2013 Financial Report
|
|
41
|
|
|
|
•
|
For
Pension benefit obligations, net
and
Postretirement benefit obligations, net
, the change also reflects, among other things, significant reductions due to changes in the assumed discount rates used for measuring the obligations and favorable plan asset performance during the year, for plans with assets. For additional information, see Notes to Consolidated Financial Statements—
Note 11. Pension and Postretirement Benefit Plans and Defined Contribution Plans.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
13/12
|
|
|
12/11
|
|
|||
Cash provided by/(used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
|
$
|
17,765
|
|
|
$
|
16,746
|
|
|
$
|
20,240
|
|
|
6
|
|
|
(17
|
)
|
Investing activities
|
|
(10,625
|
)
|
|
6,154
|
|
|
1,843
|
|
|
*
|
|
|
*
|
|
|||
Financing activities
|
|
(14,975
|
)
|
|
(15,999
|
)
|
|
(20,607
|
)
|
|
(6
|
)
|
|
(22
|
)
|
|||
Effect of exchange-rate changes on cash and cash equivalents
|
|
(63
|
)
|
|
(2
|
)
|
|
(29
|
)
|
|
*
|
|
|
(93
|
)
|
|||
Net increase/(decrease) in
Cash and cash equivalents
|
|
$
|
(7,898
|
)
|
|
$
|
6,899
|
|
|
$
|
1,447
|
|
|
*
|
|
|
*
|
|
*
|
Calculation not meaningful.
|
•
|
the loss of exclusivity of Lipitor, as well as certain other products, resulting in lower revenues and associated expenses (see also "Our Operating Environment—Intellectual Property Rights and Collaboration/Licensing Rights" section of this Financial Review), partially offset by spending reductions resulting from our company-wide cost-reduction initiatives;
|
•
|
payments made in connection with certain legal matters; and
|
•
|
the timing of other receipts and payments in the ordinary course of business.
|
•
|
the nonrecurrence of net proceeds received on November 30, 2012 from the sale of our Nutrition business of $11.85 billion (see Notes to Consolidated Financial Statements––
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
); and
|
•
|
net purchases of investments of $9.4 billion in 2013, compared to net purchases of investments of $3.4 billion in 2012,
|
•
|
cash paid of $1.1 billion, net of cash acquired, for our acquisitions of Alacer, Ferrosan and NextWave in 2012 (see Notes to Consolidated Financial Statements––
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions)
.
|
42
|
|
2013 Financial Report
|
|
|
|
•
|
net proceeds from the sale of our Nutrition business of $11.85 billion in 2012 compared to net proceeds from the sale of our Capsugel business of $2.4 billion in 2011 (see Notes to Consolidated Financial Statements––
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
); and
|
•
|
cash paid of $1.1 billion, net of cash acquired, for our acquisitions of Alacer, Ferrosan and NextWave in 2012 (see Notes to Consolidated Financial Statements––
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions
), compared to $3.3 billion cash paid, net of cash acquired, in 2011, for our acquisitions of King, Icagen and Excaliard,
|
•
|
net purchases of investments of $3.4 billion in 2012, compared to net proceeds from redemptions and sales of investments of $4.1 billion in 2011, which were primarily used to finance our acquisition of King.
|
•
|
net proceeds from borrowings of $6.0 billion in 2013, compared to net repayments of borrowings of $1.7 billion in 2012; and
|
•
|
proceeds from the exercise of stock options of $1.8 billion in 2013 compared to $0.6 billion in 2012,
|
•
|
purchases of common stock of $16.3 billion in 2013, compared to $8.2 billion in 2012.
|
•
|
net repayments of borrowings of $1.7 billion in 2012, compared to net repayments of borrowings of $5.5 billion in 2011;
|
•
|
purchases of common stock of $8.2 billion in 2012, compared to $9.0 billion in 2011; and
|
•
|
increased proceeds from the exercise of stock options,
|
•
|
higher cash dividends paid.
|
•
|
sold Zoetis common stock for Pfizer common stock valued at $11.4 billion;
|
•
|
exchanged Zoetis common stock for the retirement of Pfizer commercial paper issued in 2013 for $2.5 billion;
|
•
|
exchanged Zoetis senior notes for the retirement of Pfizer commercial paper issued in 2012 for $1.0 billion;
|
•
|
transferred certain product rights, valued at $1.2 billion, to an equity-method investment (Hisun Pfizer); and
|
•
|
contributed an investment, valued at $447 million, in connection with the resolution of a legal matter (Quigley).
|
•
|
the working capital requirements of our operations, including our research and development activities;
|
2013 Financial Report
|
|
43
|
|
|
|
•
|
investments in our business;
|
•
|
dividend payments and potential increases in the dividend rate;
|
•
|
share repurchases;
|
•
|
the cash requirements associated with our cost-reduction/productivity initiatives;
|
•
|
paying down outstanding debt;
|
•
|
contributions to our pension and postretirement plans; and
|
•
|
business-development activities.
|
(a)
|
See Notes to Consolidated Financial Statements––
Note 7. Financial Instruments
for a description of certain assets held and for a description of credit risk related to our financial instruments held.
|
(b)
|
Net financial assets increased during 2013 as net cash provided by operating activities, the net impact of the Zoetis transactions and the proceeds from the exercise of stock options, among other things, more than offset share purchases and dividend payments. For additional information, see the “Analysis of the Consolidated Statements of Cash Flows
”
section of this Financial Review.
|
(c)
|
Working capital includes net assets held for sale of $55 million as of
December 31, 2013
and $4.5 billion (Zoetis) as of
December 31, 2012
.
|
(d)
|
Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury shares).
|
44
|
|
2013 Financial Report
|
|
|
|
The following table provides the current ratings assigned by these rating agencies to our commercial paper and senior unsecured non-credit-enhanced long-term debt:
|
|||||||
NAME OF RATING AGENCY
|
|
Pfizer
Commercial Paper
|
|
Pfizer
Long-Term Debt
|
|
Date of Last Action
|
|
|
Rating
|
|
Rating
|
Outlook
|
|
||
Moody’s
|
|
P-1
|
|
A1
|
Stable
|
|
October 2013
|
S&P
|
|
A-1+
|
|
AA
|
Stable
|
|
May 2013
|
2013 Financial Report
|
|
45
|
|
|
|
Payments due under contractual obligations as of December 31, 2013, mature as follows:
|
||||||||||||||||||||
|
|
|
|
Years
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Total
|
|
|
2014
|
|
|
2015-2016
|
|
|
2017-2018
|
|
|
Thereafter
|
|
|||||
Long-term debt, including current portion
(a)
|
|
$
|
32,522
|
|
|
$
|
2,060
|
|
|
$
|
7,452
|
|
|
$
|
5,073
|
|
|
$
|
17,937
|
|
Interest payments on long-term debt obligations
(b)
|
|
17,320
|
|
|
1,368
|
|
|
2,492
|
|
|
2,119
|
|
|
11,341
|
|
|||||
Other long-term liabilities
(c)
|
|
4,654
|
|
|
451
|
|
|
829
|
|
|
858
|
|
|
2,516
|
|
|||||
Lease commitments
(d)
|
|
1,476
|
|
|
210
|
|
|
306
|
|
|
181
|
|
|
779
|
|
|||||
Purchase obligations and other
(e)
|
|
3,376
|
|
|
1,265
|
|
|
1,417
|
|
|
641
|
|
|
53
|
|
|||||
Uncertain tax positions
(f)
|
|
98
|
|
|
98
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(a)
|
Long-term debt consists of senior unsecured notes, including fixed and floating rate, foreign currency denominated, and other notes.
|
(b)
|
Our calculations of expected interest payments incorporate only current period assumptions for interest rates, foreign currency translation rates and hedging strategies (see Notes to Consolidated Financial Statements—
Note 7. Financial Instruments
), and assume that interest is accrued through the maturity date or expiration of the related instrument.
|
(c)
|
Includes expected payments relating to our unfunded U.S. supplemental (non-qualified) pension plans, postretirement plans and deferred compensation plans. Excludes amounts relating to our U.S. qualified pension plans and international pension plans, all of which have a substantial amount of plan assets, because the required funding obligations are not expected to be material and/or because such liabilities do not necessarily reflect future cash payments, as the impact of changes in economic conditions on the fair value of the pension plan assets and/or liabilities can be significant; however, we currently anticipate contributing approximately $311 million to these plans in 2014. Also excludes $3.7 billion of liabilities related to legal matters, employee terminations and the fair value of derivative financial instruments and other, most of which do not represent contractual obligations. See also our liquidity discussion above in this "Analysis of Financial Condition, Liquidity and Capital Resources" section, as well as the Notes to Consolidated Financial Statements—
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives, Note 7A. Financial Instruments: Selected Financial Assets and Liabilities, Note 11E. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Cash Flows,
and
Note 17. Commitments and Contingencies.
|
(d)
|
Includes operating and capital lease obligations.
|
(e)
|
Includes agreements to purchase goods and services that are enforceable and legally binding and includes amounts relating to advertising, information technology services, employee benefit administration services, and potential milestone payments deemed reasonably likely to occur.
|
(f)
|
Includes amounts reflected in
Income taxes payable
only. We are unable to predict the timing of tax settlements related to our noncurrent obligations for uncertain tax positions as tax audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject to negotiation or litigation.
|
46
|
|
2013 Financial Report
|
|
|
|
•
|
the outcome of research and development activities including, without limitation, the ability to meet anticipated clinical trial commencement and completion dates, regulatory submission and approval dates, and launch dates for product candidates, as well as the possibility of unfavorable clinical trial results, including unfavorable new clinical data and additional analyses of existing clinical data;
|
•
|
decisions by regulatory authorities regarding whether and when to approve our drug applications, as well as their decisions regarding labeling, ingredients and other matters that could affect the availability or commercial potential of our products;
|
•
|
the speed with which regulatory authorizations, pricing approvals and product launches may be achieved;
|
•
|
the outcome of post-approval clinical trials, which could result in the loss of marketing approval for a product or changes in the labeling for, and/or increased or new concerns about the safety or efficacy of, a product that could affect its availability or commercial potential;
|
•
|
the success of external business-development activities;
|
•
|
competitive developments, including the impact on our competitive position of new product entrants, in-line branded products, generic products, private label products and product candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates;
|
2013 Financial Report
|
|
47
|
|
|
|
•
|
the implementation by the FDA of an abbreviated legal pathway to approve biosimilar products, which could subject our biologic products to competition from biosimilar products in the U.S., with attendant competitive pressures, after the expiration of any applicable exclusivity period and patent rights;
|
•
|
the ability to meet generic and branded competition after the loss of patent protection for our products or competitor products;
|
•
|
the ability to successfully market both new and existing products domestically and internationally;
|
•
|
difficulties or delays in manufacturing;
|
•
|
trade buying patterns;
|
•
|
the impact of existing and future legislation and regulatory provisions on product exclusivity;
|
•
|
trends toward managed care and healthcare cost containment;
|
•
|
the impact of the U.S. Budget Control Act of 2011 (the Budget Control Act) and the deficit-reduction actions to be taken pursuant to the Budget Control Act in order to achieve the deficit-reduction targets provided for therein, and the impact of any broader deficit-reduction efforts;
|
•
|
the impact of U.S. healthcare legislation enacted in 2010—the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act––and of any modification or repeal of any of the provisions thereof;
|
•
|
U.S. federal or state legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs; the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries; direct-to-consumer advertising and interactions with healthcare professionals; and the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines;
|
•
|
legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access, including, in particular, continued government-mandated price reductions for certain biopharmaceutical products in certain European and emerging market countries;
|
•
|
the exposure of our operations outside the U.S. to possible capital and exchange controls, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as political unrest and unstable governments and legal systems;
|
•
|
contingencies related to actual or alleged environmental contamination;
|
•
|
claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates;
|
•
|
any significant breakdown, infiltration or interruption of our information technology systems and infrastructure;
|
•
|
legal defense costs, insurance expenses, settlement costs, the risk of an adverse decision or settlement and the adequacy of reserves related to product liability, patent protection, government investigations, consumer, commercial, securities, antitrust, environmental and tax issues, ongoing efforts to explore various means for resolving asbestos litigation, and other legal proceedings;
|
•
|
our ability to protect our patents and other intellectual property, both domestically and internationally;
|
•
|
interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates;
|
•
|
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 the U.S. that may result from pending and possible future proposals;
|
•
|
any significant issues involving our largest wholesaler customers, which account for a substantial portion of our revenues;
|
•
|
the possible impact of the increased presence of counterfeit medicines in the pharmaceutical supply chain on our revenues and on patient confidence in the integrity of our medicines;
|
•
|
any significant issues that may arise related to the outsourcing of certain operational and staff functions to third parties, including with regard to quality, timeliness and compliance with applicable legal requirements and industry standards;
|
•
|
changes in U.S. generally accepted accounting principles;
|
•
|
uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions and recent and possible future changes in global financial markets; and the related risk that our allowance for doubtful accounts may not be adequate;
|
•
|
any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. and other parts of the world, and related U.S. military action overseas;
|
•
|
growth in costs and expenses;
|
•
|
changes in our product, segment and geographic mix; and
|
•
|
the impact of acquisitions, divestitures, restructurings, internal reorganizations, product recalls and withdrawals and other unusual items, including our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including
|
48
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
49
|
|
|
|
50
|
|
2013 Financial Report
|
|
|
|
|
Ian Read
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
Frank D’Amelio
|
|
Loretta Cangialosi
|
Principal Financial Officer
|
|
Principal Accounting Officer
|
|
|
|
February 28, 2014
|
|
|
2013 Financial Report
|
|
51
|
|
|
W. Don Cornwell
|
Chair, Audit Committee
|
|
February 28, 2014
|
52
|
|
2013 Financial Report
|
|
KPMG LLP
|
New York, New York
|
|
February 28, 2014
|
2013 Financial Report
|
|
53
|
|
KPMG LLP
|
New York, New York
|
|
February 28, 2014
|
54
|
|
2013 Financial Report
|
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Revenues
|
|
$
|
51,584
|
|
|
$
|
54,657
|
|
|
$
|
61,035
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||
Cost of sales
(a)
|
|
9,586
|
|
|
9,821
|
|
|
12,500
|
|
|||
Selling, informational and administrative expenses
(a)
|
|
14,355
|
|
|
15,171
|
|
|
17,581
|
|
|||
Research and development expenses
(a)
|
|
6,678
|
|
|
7,482
|
|
|
8,681
|
|
|||
Amortization of intangible assets
|
|
4,599
|
|
|
5,109
|
|
|
5,465
|
|
|||
Restructuring charges and certain acquisition-related costs
|
|
1,182
|
|
|
1,810
|
|
|
2,841
|
|
|||
Other (income)/deductions––net
|
|
(532
|
)
|
|
4,022
|
|
|
2,486
|
|
|||
Income from continuing operations before provision for taxes on income
|
|
15,716
|
|
|
11,242
|
|
|
11,481
|
|
|||
Provision for taxes on income
|
|
4,306
|
|
|
2,221
|
|
|
3,621
|
|
|||
Income from continuing operations
|
|
11,410
|
|
|
9,021
|
|
|
7,860
|
|
|||
Discontinued operations:
|
|
|
|
|
|
|
||||||
Income from discontinued operations––net of tax
|
|
308
|
|
|
794
|
|
|
885
|
|
|||
Gain on disposal of discontinued operations––net of tax
|
|
10,354
|
|
|
4,783
|
|
|
1,304
|
|
|||
Discontinued operations––net of tax
|
|
10,662
|
|
|
5,577
|
|
|
2,189
|
|
|||
Net income before allocation to noncontrolling interests
|
|
22,072
|
|
|
14,598
|
|
|
10,049
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
69
|
|
|
28
|
|
|
40
|
|
|||
Net income attributable to Pfizer Inc.
|
|
$
|
22,003
|
|
|
$
|
14,570
|
|
|
$
|
10,009
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share––basic
:
|
|
|
|
|
|
|
|
|
|
|||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
1.67
|
|
|
$
|
1.21
|
|
|
$
|
1.00
|
|
Discontinued operations––net of tax
|
|
1.56
|
|
|
0.75
|
|
|
0.28
|
|
|||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
3.23
|
|
|
$
|
1.96
|
|
|
$
|
1.28
|
|
Earnings per common share––diluted
:
|
|
|
|
|
|
|
|
|
|
|||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
1.65
|
|
|
$
|
1.20
|
|
|
$
|
0.99
|
|
Discontinued operations––net of tax
|
|
1.54
|
|
|
0.74
|
|
|
0.28
|
|
|||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
3.19
|
|
|
$
|
1.94
|
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
||||||
Weighted-average shares––basic
|
|
6,813
|
|
|
7,442
|
|
|
7,817
|
|
|||
Weighted-average shares––diluted
|
|
6,895
|
|
|
7,508
|
|
|
7,870
|
|
|||
|
|
|
|
|
|
|
||||||
Cash dividends paid per common share
|
|
$
|
0.96
|
|
|
$
|
0.88
|
|
|
$
|
0.80
|
|
(a)
|
Exclusive of amortization of intangible assets, except as disclosed in
Note 1K. Basis of Presentation and Significant Accounting Policies: Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets.
|
2013 Financial Report
|
|
55
|
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Net income before allocation to noncontrolling interests
|
|
$
|
22,072
|
|
|
$
|
14,598
|
|
|
$
|
10,049
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments
|
|
$
|
(535
|
)
|
|
$
|
(811
|
)
|
|
$
|
796
|
|
Reclassification adjustments
(a)
|
|
144
|
|
|
(207
|
)
|
|
(127
|
)
|
|||
|
|
(391
|
)
|
|
(1,018
|
)
|
|
669
|
|
|||
Unrealized holding gains/(losses) on derivative financial instruments
|
|
488
|
|
|
745
|
|
|
(726
|
)
|
|||
Reclassification adjustments for realized (gains)/losses
(b)
|
|
(94
|
)
|
|
(616
|
)
|
|
537
|
|
|||
|
|
394
|
|
|
129
|
|
|
(189
|
)
|
|||
Unrealized holding gains on available-for-sale securities
|
|
151
|
|
|
74
|
|
|
81
|
|
|||
Reclassification adjustments for realized (gains)/losses
(b)
|
|
(237
|
)
|
|
356
|
|
|
(283
|
)
|
|||
|
|
(86
|
)
|
|
430
|
|
|
(202
|
)
|
|||
Benefit plans: actuarial gains/(losses), net
|
|
3,714
|
|
|
(2,136
|
)
|
|
(2,246
|
)
|
|||
Reclassification adjustments related to amortization
(c)
|
|
581
|
|
|
473
|
|
|
284
|
|
|||
Reclassification adjustments related to settlements, net
(c)
|
|
175
|
|
|
221
|
|
|
140
|
|
|||
Other
|
|
48
|
|
|
22
|
|
|
(98
|
)
|
|||
|
|
4,518
|
|
|
(1,420
|
)
|
|
(1,920
|
)
|
|||
Benefit plans: prior service credits and other
|
|
151
|
|
|
25
|
|
|
106
|
|
|||
Reclassification adjustments related to amortization
(c)
|
|
(58
|
)
|
|
(69
|
)
|
|
(69
|
)
|
|||
Reclassification adjustments related to curtailments, net
(c)
|
|
1
|
|
|
(130
|
)
|
|
(91
|
)
|
|||
Other
|
|
(8
|
)
|
|
(3
|
)
|
|
3
|
|
|||
|
|
86
|
|
|
(177
|
)
|
|
(51
|
)
|
|||
Other comprehensive income/(loss), before tax
|
|
4,521
|
|
|
(2,056
|
)
|
|
(1,693
|
)
|
|||
Tax provision/(benefit) on other comprehensive income/(loss)
(d)
|
|
1,928
|
|
|
(225
|
)
|
|
(959
|
)
|
|||
Other comprehensive income/(loss) before allocation to noncontrolling interests
|
|
$
|
2,593
|
|
|
$
|
(1,831
|
)
|
|
$
|
(734
|
)
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||
Comprehensive income before allocation to noncontrolling interests
|
|
$
|
24,665
|
|
|
$
|
12,767
|
|
|
$
|
9,315
|
|
Less: Comprehensive income/(loss) attributable to noncontrolling interests
|
|
7
|
|
|
21
|
|
|
(5
|
)
|
|||
Comprehensive income attributable to Pfizer Inc.
|
|
$
|
24,658
|
|
|
$
|
12,746
|
|
|
$
|
9,320
|
|
(a)
|
Reclassified into
Gain on disposal of discontinued operations—net of tax
in the consolidated statements of income.
|
(b)
|
Reclassified into
Other (income)/deductions—net
in the consolidated statements of income.
|
(c)
|
Generally reclassified, as part of net periodic pension cost, into
Cost of sales, Selling, informational and administrative expenses,
and/or
Research and development expenses
, as appropriate, in the consolidated statements of income. For additional information, see
Note 11. Pension and Postretirement Benefit Plans and Defined Contribution Plans
.
|
(d)
|
See
Note 5E. Tax Matters: Taxes on Items of Other Comprehensive Income/(Loss).
|
56
|
|
2013 Financial Report
|
|
|
|
As of December 31,
|
||||||
(MILLIONS, EXCEPT PREFERRED STOCK ISSUED AND PER COMMON SHARE DATA)
|
|
2013
|
|
|
2012
|
|
||
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
2,183
|
|
|
$
|
10,081
|
|
Short-term investments
|
|
30,225
|
|
|
22,318
|
|
||
Accounts receivable, less allowance for doubtful accounts: 2013—$478; 2012—$324
|
|
9,357
|
|
|
10,675
|
|
||
Inventories
|
|
6,166
|
|
|
6,076
|
|
||
Current deferred tax assets and other current tax assets
|
|
4,624
|
|
|
6,170
|
|
||
Other current assets
|
|
3,613
|
|
|
3,567
|
|
||
Assets of discontinued operations and other assets held for sale
|
|
76
|
|
|
5,944
|
|
||
Total current assets
|
|
56,244
|
|
|
64,831
|
|
||
Long-term investments
|
|
16,406
|
|
|
14,149
|
|
||
Property, plant and equipment, less accumulated depreciation
|
|
12,397
|
|
|
13,213
|
|
||
Goodwill
|
|
42,519
|
|
|
43,661
|
|
||
Identifiable intangible assets, less accumulated amortization
|
|
39,385
|
|
|
45,146
|
|
||
Noncurrent deferred tax assets and other noncurrent tax assets
|
|
1,554
|
|
|
1,565
|
|
||
Other noncurrent assets
|
|
3,596
|
|
|
3,233
|
|
||
Total assets
|
|
$
|
172,101
|
|
|
$
|
185,798
|
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
|
|
||
Short-term borrowings, including current portion of long-term debt: 2013—$2,060; 2012—$2,449
|
|
$
|
6,027
|
|
|
$
|
6,424
|
|
Accounts payable
|
|
3,234
|
|
|
2,921
|
|
||
Dividends payable
|
|
1,663
|
|
|
1,733
|
|
||
Income taxes payable
|
|
678
|
|
|
979
|
|
||
Accrued compensation and related items
|
|
1,792
|
|
|
1,875
|
|
||
Other current liabilities
|
|
9,951
|
|
|
13,812
|
|
||
Liabilities of discontinued operations
|
|
21
|
|
|
1,442
|
|
||
Total current liabilities
|
|
23,366
|
|
|
29,186
|
|
||
|
|
|
|
|
||||
Long-term debt
|
|
30,462
|
|
|
31,036
|
|
||
Pension benefit obligations, net
|
|
4,635
|
|
|
7,782
|
|
||
Postretirement benefit obligations, net
|
|
2,668
|
|
|
3,491
|
|
||
Noncurrent deferred tax liabilities
|
|
25,590
|
|
|
21,193
|
|
||
Other taxes payable
|
|
3,993
|
|
|
6,581
|
|
||
Other noncurrent liabilities
|
|
4,767
|
|
|
4,851
|
|
||
Total liabilities
|
|
95,481
|
|
|
104,120
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Preferred stock, no par value, at stated value; 27 shares authorized; issued: 2013—829; 2012—967
|
|
33
|
|
|
39
|
|
||
Common stock, $0.05 par value; 12,000 shares authorized; issued: 2013—9,051; 2012—8,956
|
|
453
|
|
|
448
|
|
||
Additional paid-in capital
|
|
77,283
|
|
|
72,608
|
|
||
Treasury stock, shares at cost: 2013—2,652; 2012—1,680
|
|
(67,923
|
)
|
|
(40,122
|
)
|
||
Retained earnings
|
|
69,732
|
|
|
54,240
|
|
||
Accumulated other comprehensive loss
|
|
(3,271
|
)
|
|
(5,953
|
)
|
||
Total Pfizer Inc. shareholders’ equity
|
|
76,307
|
|
|
81,260
|
|
||
Equity attributable to noncontrolling interests
|
|
313
|
|
|
418
|
|
||
Total equity
|
|
76,620
|
|
|
81,678
|
|
||
Total liabilities and equity
|
|
$
|
172,101
|
|
|
$
|
185,798
|
|
2013 Financial Report
|
|
57
|
|
|
|
|
|
PFIZER INC. SHAREHOLDERS
|
|
|
|||||||||||||||||||||||||||||||||||||||||
Preferred Stock
|
|
Common Stock
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
(MILLIONS, EXCEPT PREFERRED SHARES)
|
|
Shares
|
|
|
Stated Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Add’l
Paid-In
Capital
|
|
|
Shares
|
|
|
Cost
|
|
|
Retained Earnings
|
|
|
Accum.
Other
Comp. Loss
|
|
|
Share -
holders’
Equity
|
|
|
Non-controlling Interests
|
|
|
Total
Equity
|
|
|||||||||
Balance, January 1, 2011
|
|
1,279
|
|
|
$
|
52
|
|
|
8,876
|
|
|
$
|
444
|
|
|
$
|
70,760
|
|
|
(864
|
)
|
|
$
|
(22,719
|
)
|
|
$
|
42,716
|
|
|
$
|
(3,440
|
)
|
|
$
|
87,813
|
|
|
$
|
452
|
|
|
$
|
88,265
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,009
|
|
|
|
|
10,009
|
|
|
40
|
|
|
10,049
|
|
|||||||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(689
|
)
|
|
(689
|
)
|
|
(45
|
)
|
|
(734
|
)
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,512
|
)
|
|
|
|
(6,512
|
)
|
|
|
|
(6,512
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
(3
|
)
|
|
|
|
(3
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
|
(19
|
)
|
|||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
23
|
|
|
1
|
|
|
594
|
|
|
(5
|
)
|
|
(90
|
)
|
|
|
|
|
|
505
|
|
|
|
|
505
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(459
|
)
|
|
(9,000
|
)
|
|
|
|
|
|
(9,000
|
)
|
|
|
|
(9,000
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(167
|
)
|
|
(7
|
)
|
|
|
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
(8
|
)
|
||||||||||||||
Other
|
|
|
|
|
|
3
|
|
|
—
|
|
|
71
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
|
|
75
|
|
|
3
|
|
|
78
|
|
||||||||||||
Balance, December 31, 2011
|
|
1,112
|
|
|
45
|
|
|
8,902
|
|
|
445
|
|
|
71,423
|
|
|
(1,327
|
)
|
|
(31,804
|
)
|
|
46,210
|
|
|
(4,129
|
)
|
|
82,190
|
|
|
431
|
|
|
82,621
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,570
|
|
|
|
|
14,570
|
|
|
28
|
|
|
14,598
|
|
|||||||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,824
|
)
|
|
(1,824
|
)
|
|
(7
|
)
|
|
(1,831
|
)
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,537
|
)
|
|
|
|
(6,537
|
)
|
|
|
|
(6,537
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
(3
|
)
|
|
|
|
(3
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
(9
|
)
|
|||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
52
|
|
|
3
|
|
|
1,150
|
|
|
(4
|
)
|
|
(97
|
)
|
|
|
|
|
|
1,056
|
|
|
|
|
1,056
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(349
|
)
|
|
(8,228
|
)
|
|
|
|
|
|
(8,228
|
)
|
|
|
|
(8,228
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(145
|
)
|
|
(6
|
)
|
|
|
|
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
(8
|
)
|
||||||||||||||
Other
|
|
|
|
|
|
2
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
|
|
44
|
|
|
(25
|
)
|
|
19
|
|
||||||||||||
Balance, December 31, 2012
|
|
967
|
|
|
39
|
|
|
8,956
|
|
|
448
|
|
|
72,608
|
|
|
(1,680
|
)
|
|
(40,122
|
)
|
|
54,240
|
|
|
(5,953
|
)
|
|
81,260
|
|
|
418
|
|
|
81,678
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,003
|
|
|
|
|
22,003
|
|
|
69
|
|
|
22,072
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,655
|
|
|
2,655
|
|
|
(62
|
)
|
|
2,593
|
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,509
|
)
|
|
|
|
(6,509
|
)
|
|
|
|
(6,509
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(121
|
)
|
|
(121
|
)
|
|||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
95
|
|
|
5
|
|
|
2,390
|
|
|
(4
|
)
|
|
(99
|
)
|
|
|
|
|
|
2,296
|
|
|
|
|
2,296
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(563
|
)
|
|
(16,290
|
)
|
|
|
|
|
|
(16,290
|
)
|
|
|
|
(16,290
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(138
|
)
|
|
(6
|
)
|
|
|
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
(11
|
)
|
||||||||||||||
Sale of 19.8% of subsidiary through an IPO
(a)
|
|
|
|
|
|
|
|
|
|
2,297
|
|
|
|
|
|
|
|
|
27
|
|
|
2,324
|
|
|
155
|
|
|
2,479
|
|
||||||||||||||||
Acquisition of common stock in exchange offer
(a)
|
|
|
|
|
|
|
|
|
|
|
|
(405
|
)
|
|
(11,408
|
)
|
|
|
|
|
|
(11,408
|
)
|
|
|
|
(11,408
|
)
|
|||||||||||||||||
Deconsolidation of subsidiary sold
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(145
|
)
|
|
(145
|
)
|
|||||||||||||||||||
Other
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
|
|
(11
|
)
|
|
(1
|
)
|
|
(12
|
)
|
||||||||||||
Balance, December 31, 2013
|
|
829
|
|
|
$
|
33
|
|
|
9,051
|
|
|
$
|
453
|
|
|
$
|
77,283
|
|
|
(2,652
|
)
|
|
$
|
(67,923
|
)
|
|
$
|
69,732
|
|
|
$
|
(3,271
|
)
|
|
$
|
76,307
|
|
|
$
|
313
|
|
|
$
|
76,620
|
|
(a)
|
Relates to Zoetis (our former Animal Health subsidiary). See
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
.
|
58
|
|
2013 Financial Report
|
|
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Activities
|
|
|
|
|
|
|
||||||
Net income before allocation to noncontrolling interests
|
|
$
|
22,072
|
|
|
$
|
14,598
|
|
|
$
|
10,049
|
|
Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
|
6,410
|
|
|
7,655
|
|
|
9,026
|
|
|||
Asset write-offs, impairments and related charges
|
|
1,368
|
|
|
1,299
|
|
|
1,198
|
|
|||
Gain on disposal of discontinued operations
|
|
(10,446
|
)
|
|
(7,123
|
)
|
|
(1,688
|
)
|
|||
Gain associated with the transfer of certain product rights to an equity-method investment
|
|
(459
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred taxes from continuing operations
|
|
1,726
|
|
|
786
|
|
|
236
|
|
|||
Deferred taxes from discontinued operations
|
|
(23
|
)
|
|
1,412
|
|
|
218
|
|
|||
Share-based compensation expense
|
|
523
|
|
|
481
|
|
|
419
|
|
|||
Benefit plan contributions (in excess of)/less than expense
|
|
310
|
|
|
135
|
|
|
(1,769
|
)
|
|||
Other non-cash adjustments, net
|
|
(324
|
)
|
|
(130
|
)
|
|
18
|
|
|||
Other changes in assets and liabilities, net of acquisitions and divestitures:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
940
|
|
|
367
|
|
|
140
|
|
|||
Inventories
|
|
(538
|
)
|
|
(631
|
)
|
|
1,084
|
|
|||
Other assets
|
|
(822
|
)
|
|
(434
|
)
|
|
186
|
|
|||
Accounts payable
|
|
382
|
|
|
579
|
|
|
(367
|
)
|
|||
Other liabilities
|
|
(3,184
|
)
|
|
(2,738
|
)
|
|
1,508
|
|
|||
Other tax accounts, net
|
|
(170
|
)
|
|
490
|
|
|
(18
|
)
|
|||
Net cash provided by operating activities
|
|
17,765
|
|
|
16,746
|
|
|
20,240
|
|
|||
|
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
|
|
|
||||
Purchases of property, plant and equipment
|
|
(1,206
|
)
|
|
(1,327
|
)
|
|
(1,660
|
)
|
|||
Purchases of short-term investments
|
|
(42,761
|
)
|
|
(24,018
|
)
|
|
(18,447
|
)
|
|||
Proceeds from redemptions and sales of short-term investments
|
|
41,127
|
|
|
25,302
|
|
|
14,176
|
|
|||
Net (purchases of)/proceeds from redemptions and sales of short-term investments with original maturities of 90 days or less)
|
|
(4,277
|
)
|
|
1,459
|
|
|
10,874
|
|
|||
Purchases of long-term investments
|
|
(11,020
|
)
|
|
(11,145
|
)
|
|
(4,620
|
)
|
|||
Proceeds from redemptions and sales of long-term investments
|
|
7,555
|
|
|
4,990
|
|
|
2,147
|
|
|||
Acquisitions of businesses, net of cash acquired
|
|
(15
|
)
|
|
(1,050
|
)
|
|
(3,282
|
)
|
|||
Acquisitions of intangible assets
|
|
(259
|
)
|
|
(92
|
)
|
|
(222
|
)
|
|||
Proceeds from sale of businesses
|
|
—
|
|
|
11,850
|
|
|
2,376
|
|
|||
Other investing activities
|
|
231
|
|
|
185
|
|
|
501
|
|
|||
Net cash provided by/(used in) investing activities
|
|
(10,625
|
)
|
|
6,154
|
|
|
1,843
|
|
|||
|
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
|
|
|
||||
Proceeds from short-term borrowings
|
|
4,323
|
|
|
7,995
|
|
|
12,810
|
|
|||
Principal payments on short-term borrowings
|
|
(4,234
|
)
|
|
(8,177
|
)
|
|
(13,276
|
)
|
|||
Net proceeds from/(payments on) short-term borrowings with original maturities of 90 days or less
|
|
3,475
|
|
|
(30
|
)
|
|
1,910
|
|
|||
Proceeds from issuance of long-term debt
(a)
|
|
6,618
|
|
|
—
|
|
|
—
|
|
|||
Principal payments on long-term debt
|
|
(4,146
|
)
|
|
(1,513
|
)
|
|
(6,986
|
)
|
|||
Purchases of common stock
|
|
(16,290
|
)
|
|
(8,228
|
)
|
|
(9,000
|
)
|
|||
Cash dividends paid
|
|
(6,580
|
)
|
|
(6,534
|
)
|
|
(6,234
|
)
|
|||
Proceeds from exercise of stock options
|
|
1,750
|
|
|
568
|
|
|
153
|
|
|||
Other financing activities
|
|
109
|
|
|
(80
|
)
|
|
16
|
|
|||
Net cash used in financing activities
|
|
(14,975
|
)
|
|
(15,999
|
)
|
|
(20,607
|
)
|
|||
Effect of exchange-rate changes on cash and cash equivalents
|
|
(63
|
)
|
|
(2
|
)
|
|
(29
|
)
|
|||
Net increase/(decrease) in cash and cash equivalents
|
|
(7,898
|
)
|
|
6,899
|
|
|
1,447
|
|
|||
Cash and cash equivalents, beginning
|
|
10,081
|
|
|
3,182
|
|
|
1,735
|
|
|||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents, end
|
|
$
|
2,183
|
|
|
$
|
10,081
|
|
|
$
|
3,182
|
|
|
|
|
|
|
|
|
||||||
- Continued -
|
||||||||||||
|
|
|
2013 Financial Report
|
|
59
|
|
|
|
|
|
||||||||||
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
|
|
|
||||||
Sale of subsidiary common stock (Zoetis) for Pfizer common stock
(b)
|
|
$
|
11,408
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Exchange of subsidiary common stock (Zoetis) for the retirement of Pfizer commercial paper issued in 2013
(b)
|
|
2,479
|
|
|
—
|
|
|
—
|
|
|||
Exchange of subsidiary senior notes (Zoetis) for the retirement of Pfizer commercial paper issued in 2012
(b)
|
|
992
|
|
|
—
|
|
|
—
|
|
|||
Transfer of certain product rights to an equity-method investment (Hisun Pfizer)
(c)
|
|
1,233
|
|
|
—
|
|
|
—
|
|
|||
Contribution of an investment in connection with the resolution of a legal matter (Quigley)
(d)
|
|
447
|
|
|
—
|
|
|
—
|
|
|||
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
||||
Income taxes
|
|
$
|
2,874
|
|
|
$
|
2,409
|
|
|
$
|
2,927
|
|
Interest
|
|
1,729
|
|
|
1,873
|
|
|
2,085
|
|
(a)
|
Includes
$2.6 billion
from the issuance of senior notes by Zoetis (our former Animal Health subsidiary), net of the
$1.0 billion
non-cash exchange of Zoetis senior notes for the retirement of Pfizer commercial paper issued in 2012. See
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
.
|
(b)
|
Relates to Zoetis (our former Animal Health subsidiary). See
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
.
|
(c)
|
See
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments
.
|
(d)
|
See Note 17A5. Commitments and Contingencies: Legal Proceedings––Certain Matters Resolved During 2013.
|
60
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
61
|
|
|
|
•
|
Income approach, which is based on the present value of a future stream of net cash flows.
|
•
|
Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
|
•
|
Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.
|
•
|
Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).
|
•
|
Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable (Level 2 inputs).
|
•
|
Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).
|
62
|
|
2013 Financial Report
|
|
|
|
•
|
In the U.S., we record provisions for pharmaceutical Medicaid, Medicare and performance-based contract rebates based upon our experience ratio of rebates paid and actual prescriptions written during prior quarters. We apply the experience ratio to the respective period’s sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historical trends are as current as practicable. In addition, to account for the impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (together, U.S. Healthcare Legislation), we also consider the increase in minimum rebate and extension of Medicaid prescription drug rebates for drugs dispensed to enrollees. We estimate discounts on branded prescription drug sales to Medicare Part D participants in the Medicare “coverage gap,” also known as the “doughnut hole,” based on historical experience of beneficiary prescriptions and consideration of the utilization that is expected to result from the discount in the coverage gap. We evaluate this estimate regularly to ensure that the historical trends and future expectations are as current as practicable. For performance-based contract rebates, we also consider current contract terms, such as changes in formulary status and discount rates.
|
•
|
Outside the U.S., the majority of our pharmaceutical rebates, discounts and price reductions (collectively, sales allowances) are contractual or legislatively mandated and our estimates are based on actual invoiced sales within each period, which reduces the risk of variations in the estimation process. In certain European countries, rebates are calculated on the government’s total unbudgeted pharmaceutical spending or on specific product sales thresholds, and we apply an estimated allocation factor against our actual invoiced sales to project the expected level of reimbursement. We obtain third-party information that helps us to monitor the adequacy of these accruals.
|
•
|
Provisions for pharmaceutical chargebacks (primarily reimbursements to wholesalers for honoring contracted prices to third parties) closely approximate actual as we settle these deductions generally within two to five weeks of incurring the liability.
|
•
|
Provisions for pharmaceutical returns are based on a calculation for each market that incorporates the following, as appropriate: local returns policies and practices; returns as a percentage of sales; an understanding of the reasons for past returns; estimated shelf life by product; an estimate of the amount of time between shipment and return or lag time; and any other factors that could impact the estimate of future returns, such as loss of exclusivity, product recalls or a changing competitive environment. Generally, returned products are destroyed, and customers are refunded the sales price in the form of a credit.
|
•
|
We record sales incentives as a reduction of revenues at the time the related revenues are recorded or when the incentive is offered, whichever is later. We estimate the cost of our sales incentives based on our historical experience with similar incentives programs.
|
2013 Financial Report
|
|
63
|
|
|
|
•
|
Goodwill
—Goodwill represents the excess of the consideration transferred for an acquired business over the assigned values of its net assets. Goodwill is not amortized.
|
•
|
Identifiable intangible assets, less accumulated amortization
—These acquired assets are recorded at cost. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets with indefinite lives that are associated with marketed products are not amortized until a useful life can be determined. Intangible assets associated with IPR&D projects are not amortized until approval is obtained in a major market, typically either the U.S. or the European Union (EU), or in a series of other countries, subject to certain specified conditions and management judgment. The useful life of an amortizing asset generally is determined by identifying the period in which substantially all of the cash flows are expected to be generated.
|
•
|
Property, plant and equipment, less accumulated depreciation
—These assets are recorded at cost and are increased by the cost of any significant improvements after purchase. Property, plant and equipment assets, other than land and construction in progress, are depreciated on a straight-line basis over the estimated useful life of the individual assets. Depreciation begins when the asset is ready for its intended use. For tax purposes, accelerated depreciation methods are used as allowed by tax laws.
|
•
|
For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate.
|
•
|
For indefinite-lived intangible assets, such as Brands and IPR&D assets, when necessary, we determine the fair value of the asset and record an impairment loss, if any, for the excess of book value over fair value. In addition, in all cases of an impairment review other than for IPR&D assets, we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate.
|
•
|
For goodwill, when necessary, we determine the fair value of each reporting unit and compare that value to its book value. If the carrying amount is found to be greater, we then determine the implied fair value of goodwill by subtracting the fair value of all the identifiable net assets other than goodwill from the fair value of the reporting unit and record an impairment loss, if any, for the excess of the book value of goodwill over the implied fair value.
|
64
|
|
2013 Financial Report
|
|
|
|
•
|
Trading securities are carried at fair value, with changes in fair value reported in
Other (income)/deductions—net.
|
•
|
Available-for-sale debt and equity securities are carried at fair value, with changes in unrealized gains and losses reported in
Other comprehensive income/(loss)
until realized.
|
•
|
Held-to-maturity debt securities are carried at amortized cost.
|
•
|
Private equity securities are carried at equity-method or cost. For private equity investments where we have significant influence over the financial and operating policies of the investee, we use the equity-method of accounting. Under the equity method, we record our share of the investee's income and expenses, in
Other (income)/deductions—net
. The excess of the cost of the investment over our share of the equity of the investee as of the acquisition date is allocated to the identifiable assets of the investee, with any remaining excess amount allocated to goodwill. Such investments are initially recorded at cost, which typically does not include amounts of contingent consideration.
|
2013 Financial Report
|
|
65
|
|
|
|
66
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
67
|
|
|
|
(a)
|
Includes animal health-related assets and liabilities. In 2013, we disposed of our Animal Health business. For additional information, see Notes to Consolidated Financial Statements—
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures.
|
(b)
|
Goodwill recorded as of the acquisition date totaled
$720 million
for our
three
biopharmaceutical operating segments and
$45 million
for our Animal Health operating segment. (Since the acquisition of King, we have revised our operating segments and disposed of our Animal Health business.)
|
•
|
the expected synergies and other benefits that we believed would result from combining the operations of King with the operations of Pfizer;
|
•
|
any intangible assets that did not qualify for separate recognition, as well as future, yet unidentified projects and products; and
|
•
|
the value of the going-concern element of King’s existing businesses (the higher rate of return on the assembled collection of net assets versus if Pfizer had acquired all of the net assets separately).
|
The following table provides supplemental pro forma information:
|
||||
|
|
Unaudited Pro Forma
Consolidated Results
(a)
|
||
|
|
Year Ended December 31,
|
|
|
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
|
|
2011
|
|
|
Revenues
|
|
$
|
61,122
|
|
Net income attributable to Pfizer Inc.
|
|
10,228
|
|
|
Diluted earnings per share attributable to Pfizer Inc. common shareholders
|
|
1.30
|
|
(a)
|
The pro forma information for December 31, 2011 assumes that the acquisition of King occurred on January 1, 2010.
|
68
|
|
2013 Financial Report
|
|
|
|
•
|
Elimination of King's historical intangible asset amortization expense (approximately
$6 million
in 2011).
|
•
|
Additional amortization expense (approximately
$15 million
in 2011) related to the fair value of identifiable intangible assets acquired.
|
•
|
Additional depreciation expense (approximately
$3 million
in 2011) related to the fair value adjustment to property, plant and equipment acquired.
|
•
|
Adjustment related to the fair value adjustments to acquisition-date inventory estimated to have been sold (elimination of
$160 million
charge in 2011).
|
•
|
Adjustment for acquisition-related costs directly attributable to the acquisition (elimination of
$224 million
of charges in 2011, reflecting charges incurred by both King and Pfizer).
|
•
|
our former Nutrition operating segment and certain prenatal vitamins previously commercialized by the Pfizer Consumer Healthcare operating segment; and
|
2013 Financial Report
|
|
69
|
|
|
|
•
|
other associated amounts, such as direct manufacturing costs, enabling support functions and other costs not charged to the business, purchase-accounting impacts, acquisition-related costs, impairment charges, restructuring charges and implementation costs associated with our cost reduction/productivity initiatives, all of which are reported outside our operating segment results.
|
The following table provides the components of
Discontinued operations—net of tax
:
|
||||||||||||
|
|
Year Ended December 31,
(a)
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Revenues
|
|
$
|
2,201
|
|
|
$
|
6,587
|
|
|
$
|
6,897
|
|
Pre-tax income from discontinued operations
(a)
|
|
408
|
|
|
1,253
|
|
|
1,310
|
|
|||
Provision for taxes on income
(b)
|
|
100
|
|
|
459
|
|
|
425
|
|
|||
Income from discontinued operations––net of tax
|
|
308
|
|
|
794
|
|
|
885
|
|
|||
Pre-tax gain on sale of discontinued operations
|
|
10,446
|
|
|
7,123
|
|
|
1,688
|
|
|||
Provision for taxes on income
(c)
|
|
92
|
|
|
2,340
|
|
|
384
|
|
|||
Gain on disposal of discontinued operations––net of tax
|
|
10,354
|
|
|
4,783
|
|
|
1,304
|
|
|||
Discontinued operations––net of tax
|
|
$
|
10,662
|
|
|
$
|
5,577
|
|
|
$
|
2,189
|
|
(a)
|
Includes (i) the Animal Health (Zoetis) business through June 24, 2013, the date of disposal, (ii) the Nutrition business through November 30, 2012, the date of disposal and (iii) the Capsugel business through August 1, 2011, the date of disposal.
|
(b)
|
Includes a deferred tax benefit of
$23 million
for
2013
and
$23 million
for
2012
, and a deferred tax expense of
$28 million
for
2011
, which is net of a deferred tax expense of
$42 million
in
2012
, and includes a deferred tax expense of
$6 million
in
2011
related to investments in certain foreign subsidiaries, resulting from our intention not to hold these subsidiaries indefinitely.
|
(c)
|
For 2013, primarily reflects income tax expense of
$122 million
resulting from certain legal entity reorganizations. For
2012
and
2011
, includes a deferred tax expense of
$1.4 billion
for
2012
and
$190 million
for
2011
, which includes a deferred tax expense of
$2.2 billion
for
2012
and
$190 million
for
2011
on certain current-year funds earned outside the U.S. that will not be indefinitely reinvested overseas. For
2012
, also includes a deferred tax benefit reflecting the reversal of net deferred tax liabilities associated with the divested Nutrition assets.
|
70
|
|
2013 Financial Report
|
|
|
|
The following table provides the components of
Assets of discontinued operations and other assets held for sale
and
Liabilities of discontinued operations
:
|
||||||||
|
|
As of December 31,
(a)
|
||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
308
|
|
Accounts receivable, less allowance for doubtful accounts
|
|
—
|
|
|
922
|
|
||
Inventories
|
|
—
|
|
|
1,137
|
|
||
Other current assets
|
|
—
|
|
|
242
|
|
||
Property, plant and equipment, less accumulated depreciation
|
|
76
|
|
|
1,318
|
|
||
Goodwill
|
|
—
|
|
|
1,011
|
|
||
Identifiable intangible assets, less accumulated amortization
|
|
—
|
|
|
867
|
|
||
Other noncurrent assets
|
|
—
|
|
|
139
|
|
||
Assets of discontinued operations and other assets held for sale
|
|
$
|
76
|
|
|
$
|
5,944
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
21
|
|
|
$
|
874
|
|
Other liabilities
|
|
—
|
|
|
568
|
|
||
Liabilities of discontinued operations
|
|
$
|
21
|
|
|
$
|
1,442
|
|
(a)
|
In 2012, virtually all relates to Zoetis (our former Animal Health business).
|
(a)
|
Represents sales to our partners of products manufactured by us.
|
(b)
|
Substantially all relate to amounts earned from our partners under co-promotion agreements. The decline in 2013 reflects declines in Enbrel (as a result of the expiration of our co-promotion agreement on October 31, 2013 in the U.S. and Canada) and Spiriva (as a result of the near-term expiration of the co-promotion collaboration in the U.S. and certain European countries, combined with the expiration of the collaboration in Australia, Canada and certain other European countries).
|
(c)
|
Primarily relates to royalties earned by our partners and cost of sales associated with inventory purchased from our partners.
|
(d)
|
Represents net reimbursements to our partners for selling, informational and administrative expenses incurred.
|
(e)
|
Primarily relates to net reimbursements, as well as upfront payments and pre-approval milestone payments earned by our partners. The upfront and milestone payments were as follows:
$67 million
in 2013,
$44 million
in 2012 and
$210 million
in 2011.
|
(f)
|
In 2013, includes royalties earned on sales of Enbrel in the U.S. and Canada after October 31, 2013. On that date, our co-promotion agreement for Enbrel in the U.S. and Canada expired, and we became entitled to royalties for a 36-month period.
|
2013 Financial Report
|
|
71
|
|
|
|
•
|
On August 12, 2013, the FDA approved Tivicay (dolutegravir), a product for the treatment of HIV-1 infection, developed by ViiV, an equity-method investee. This approval, in accordance with the agreement between GlaxoSmithKline plc and Pfizer, triggered a reduction in our interest in ViiV from
13.5%
to
12.6%
and an increase in GlaxoSmithKline plc's equity interest in ViiV from
76.5%
to
77.4%
effective October 1, 2013. As a result, in 2013, we recognized a loss of approximately
$32 million
in
Other (income)/ deductions
––
net
.
|
•
|
On October 31, 2012, ViiV acquired the remaining
50%
of Shionogi-ViiV Healthcare LLC, its equity-method investee, from Shionogi & Co., Ltd. (Shionogi) in consideration for a
10%
interest in ViiV (newly issued shares) and contingent consideration in the form of future royalties. As a result of this transaction, ViiV recorded a gain associated with the step-up on the 50% interest previously held by ViiV. Also, Pfizer's equity interest in ViiV was reduced from
15%
to
13.5%
and GlaxoSmithKline plc's equity interest was reduced from
85%
to
76.5%
. As a result of the above, in 2012 we recognized a gain of
$44 million
, which was recorded in
Other (income)/deductions
––
net
.
|
72
|
|
2013 Financial Report
|
|
|
|
•
|
In 2013, we recorded a loss of
$223 million
related to the net call/put option and an impairment loss of
$32 million
related to our equity method investment, both of which were recorded in
Other (income)/deductions
––
net
.
|
•
|
In 2012, we made a performance-based milestone payment to Teuto of
$91.5 million
, which was recorded as an additional investment in Teuto.
|
•
|
In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the combined company (which may include charges related to employees, assets and activities that will not continue in the combined company); and
|
•
|
In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems.
|
(a)
|
From the beginning of our cost-reduction/productivity initiatives in
2005
through
December 31, 2013
,
Employee terminations
represent the expected reduction of the workforce by approximately
65,100
employees, mainly in manufacturing, sales and research, of which approximately
56,500
employees have been terminated as of
December 31, 2013
. In
2013
, substantially all employee termination costs represent additional costs with respect to approximately
2,900
employees.
|
•
|
Primary Care operating segment (
$255 million
), Specialty Care and Oncology operating segment (
$138 million
), Established Products and Emerging Markets operating segment (
$98 million
), Consumer Healthcare operating segment (
$5 million
), research and development operations (
$13 million
), manufacturing operations (
$356 million
) and Corporate (
$173 million
).
|
2013 Financial Report
|
|
73
|
|
|
|
•
|
Primary Care operating segment (
$295 million
), Specialty Care and Oncology operating segment (
$174 million
), Established Products and Emerging Markets operating segment (
$125 million
), Consumer Healthcare operating segment (
$46 million
), research and development operations (
$6 million
income), manufacturing operations (
$281 million
) and Corporate (
$513 million
).
|
•
|
Primary Care operating segment (
$593 million
), Specialty Care and Oncology operating segment (
$220 million
), Established Products and Emerging Markets operating segment (
$110 million
), Consumer Healthcare operating segment (
$8 million
), research and development operations (
$490 million
), manufacturing operations (
$277 million
) and Corporate (
$420 million
).
|
(b)
|
Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services.
|
(c)
|
I
ntegration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes.
|
(d)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
(e)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.
|
(a)
|
Includes adjustments for foreign currency translation.
|
(b)
|
Included in
Other current liabilities
(
$1.2 billion
) and
Other noncurrent liabilities
(
$720 million
).
|
(c)
|
Included in
Other current liabilities
(
$1.0 billion
) and
Other noncurrent liabilities
(
$767 million
).
|
(a)
|
The fair value amount is presented as of the date of impairment, as these assets are not measured at fair value on a recurring basis. See also
Note 1E.
Basis of Presentation and Significant Accounting Policies: Fair Value
.
|
(b)
|
Reflects property, plant and equipment and other long-lived held-for-sale assets written down to their fair value, less costs to sell of
$4 million
(a net of
$112 million
) in
2013
. Fair value was determined primarily using a market approach, with various inputs, such as recent sales transactions.
|
74
|
|
2013 Financial Report
|
|
|
|
The following table provides components of
Other (income)/deductions––net
:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Interest income
(a)
|
|
$
|
(403
|
)
|
|
$
|
(382
|
)
|
|
$
|
(456
|
)
|
Interest expense
(a)
|
|
1,414
|
|
|
1,522
|
|
|
1,681
|
|
|||
Net interest expense
|
|
1,011
|
|
|
1,140
|
|
|
1,225
|
|
|||
Royalty-related income
(b)
|
|
(523
|
)
|
|
(451
|
)
|
|
(543
|
)
|
|||
Patent litigation settlement income
(c)
|
|
(1,342
|
)
|
|
—
|
|
|
—
|
|
|||
Other legal matters, net
(d)
|
|
35
|
|
|
2,220
|
|
|
784
|
|
|||
Gain associated with the transfer of certain product rights to an equity-method investment
(e)
|
|
(459
|
)
|
|
—
|
|
|
—
|
|
|||
Net gains on asset disposals
(f)
|
|
(320
|
)
|
|
(52
|
)
|
|
(40
|
)
|
|||
Certain asset impairments and related charges
(g)
|
|
1,101
|
|
|
890
|
|
|
885
|
|
|||
Costs associated with the Zoetis IPO
(h)
|
|
18
|
|
|
125
|
|
|
33
|
|
|||
Other, net
|
|
(53
|
)
|
|
150
|
|
|
142
|
|
|||
Other (income)/deductions––net
|
|
$
|
(532
|
)
|
|
$
|
4,022
|
|
|
$
|
2,486
|
|
(a)
|
2013 v. 2012
––
Interest income increased due to higher investment balances. Interest expense decreased due to lower outstanding debt, refinancings at lower rates, and the benefit of the effective conversion of some fixed-rate liabilities to floating-rate liabilities. 2012 v. 2011
––
Interest income decreased due to lower average cash balances and lower interest rates earned on investments. Interest expense decreased due to lower debt balances and the effective conversion of some fixed-rate liabilities to floating-rate liabilities. Capitalized interest expense totaled $
32 million
in
2013
, $
41 million
in
2012
and $
50 million
in
2011
.
|
(b)
|
Royalty-related income increased in 2013 due to royalties earned on sales of Enbrel in the U.S. and Canada after October 31, 2013. On that date, our co-promotion agreement for Enbrel in the U.S. and Canada expired, and we became entitled to royalties for a 36-month period. In 2012, the decrease primarily reflects the expiration of certain royalty agreements.
|
(c)
|
In 2013, reflects income from a litigation settlement with Teva Pharmaceutical Industries Ltd. (Teva) and Sun Pharmaceutical Industries Ltd. (Sun) for patent-infringement damages resulting from their "at-risk" launches of generic Protonix in the U.S. As of December 31, 2013, the remaining receivables from Teva are included in
Other current assets
(
$512 million
).
For additional information, see
Note 17A5. Commitments and Contingencies: Legal Proceedings––Certain Matters Resolved During 2013.
|
(d)
|
In
2012
, primarily includes a $
491 million
charge relating to the resolution of an investigation by the U.S. Department of Justice into Wyeth's historical promotional practices in connection with Rapamune, a
$450 million
settlement of a lawsuit by Brigham Young University related to Celebrex, and charges related to hormone-replacement therapy litigation and Chantix litigation. In
2011
, primarily includes charges related to hormone-replacement therapy litigation. For additional information, see
Note 17. Commitments and Contingencies.
|
(e)
|
In 2013, represents the gain associated with the transfer of certain product rights to Hisun Pfizer, our equity-method investment in China. For additional information, see
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
|
(f)
|
Net gains include realized gains and losses on sales of available-for-sale securities. Gross realized gains were $
529 million
in
2013
, $
214 million
in
2012
and $
907 million
in
2011
. Gross realized losses were $
310 million
in
2013
, $
535 million
in
2012
and $
603 million
in
2011
. Proceeds, primarily from the sale of available-for-sale securities, were $
15.2 billion
in
2013
, $
19.0 billion
in
2012
and $
10.2 billion
in
2011
. Also included are the net gains and losses from derivative financial instruments used to hedge the foreign exchange component of the divested available-for-sale securities in the amounts of
$137 million
loss in 2013,
$351 million
gain in 2012 and
$264 million
loss in 2011. In 2013, also includes a gain of
$125 million
on the sale of a portion of our in-licensed generic sterile injectibles portfolio.
|
(g)
|
In 2013, includes intangible asset impairment charges of
$803 million
, reflecting (i)
$394 million
of developed technology rights (for use in the development of bone and cartilage) acquired in connection with our acquisition of Wyeth, (ii)
$227 million
related to IPR&D compounds; (iii)
$109 million
of indefinite-lived brands, primarily related to our biopharmaceutical indefinite-lived brand; Xanax/Xanax XR; and (iv)
$73 million
of other finite-lived intangible assets, related to platform technology, that no longer have an alternative future use. The intangible asset impairment charges for 2013 reflect, among other things, updated commercial forecasts and, with regard to IPR&D, also reflect the impact of new scientific findings and delayed launch dates. The intangible asset impairment charges for 2013 are associated with the following: Specialty Care (
$394 million
); Established Products (
$201 million
); Worldwide Research and Development (
$140 million
); Primary Care (
$54 million
); and Consumer Healthcare (
$14 million
). In addition, 2013 includes a loss of
$223 million
related to an option to acquire the remaining interest in Teuto, a
40%
-owned generics company in Brazil (an equity-method investment), an impairment charge of approximately
$43 million
for certain private company investments and an impairment charge of
$32 million
related to the aforementioned equity-method investment in Brazil, Teuto.
|
2013 Financial Report
|
|
75
|
|
|
|
(h)
|
Costs incurred in connection with the IPO of an approximate
19.8%
ownership interest in Zoetis. Includes expenditures for banking, legal, accounting and similar services. For additional information, see
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures.
|
(a)
|
The fair value amount is presented as of the date of impairment, as these assets are not measured at fair value on a recurring basis. See also
Note 1E.
Basis of Presentation and Significant Accounting Policies: Fair Value
.
|
(b)
|
Reflects intangible assets written down to their fair value in 2013. Fair value was determined using the income approach, specifically the multi-period excess earnings method, also known as the discounted cash flow method. We started with a forecast of all the expected net cash flows associated with the asset and then we applied an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of competitive, legal and/or regulatory forces on the product and the impact of technological risk associated with IPR&D assets; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.
|
The following table provides the components of
Income from continuing operations before provision for taxes on income
:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
United States
|
|
$
|
(1,678
|
)
|
|
$
|
(5,148
|
)
|
|
$
|
(2,655
|
)
|
International
|
|
17,394
|
|
|
16,390
|
|
|
14,136
|
|
|||
Income from continuing operations before provision for taxes on income
(
a), (b)
|
|
$
|
15,716
|
|
|
$
|
11,242
|
|
|
$
|
11,481
|
|
(a)
|
2013
v.
2012
––
The decrease in the domestic loss was primarily due to income from a litigation settlement in the second quarter of 2013 with Teva and Sun for patent-infringement damages resulting from their “at-risk” launches of generic Protonix in the U.S., lower charges related to other legal matters, lower restructuring charges and other costs associated with acquisitions and cost-reduction/productivity initiatives, partially offset by lower revenues. The increase in international income is primarily related to the gain associated with the transfer of certain product rights to Pfizer’s equity-method investment in China (Hisun Pfizer) in 2013, lower charges related to other legal matters, lower restructuring charges and other costs associated with acquisitions and cost-reduction/productivity Initiatives and lower amortization of intangible assets, partially offset by lower revenues and higher asset impairments and related charges. For additional information about the litigation settlement with Teva and Sun, see
Note 17A5. Commitments and Contingencies: Legal Proceedings––Certain Matters Resolved During 2013.
For additional information about Hisun Pfizer, see
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
|
(b)
|
2012
v.
2011
––
The increase in the domestic loss was primarily due to the reduction in revenues resulting from the loss of exclusivity of Lipitor, Geodon and certain other biopharmaceutical products; certain legal settlements and related charges, primarily associated with Rapamune, Celebrex, hormone-replacement therapy and Chantix; higher costs associated with the separation of Zoetis; and the payment to AstraZeneca to obtain the exclusive global OTC rights to Nexium, partially offset by lower acquisition-related costs. The increase in international income was due to lower amortization of intangible assets and charges resulting from fair value adjustments to inventory sold during the period, lower restructuring charges and other costs associated with acquisitions and cost-reduction/productivity initiatives, partially offset by the reduction in revenues resulting from the loss of exclusivity of Lipitor, Geodon and certain other biopharmaceutical products.
|
76
|
|
2013 Financial Report
|
|
|
|
The following table provides the components of
Provision for taxes on income
based on the location of the taxing authorities:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
United States
|
|
|
|
|
|
|
||||||
Current income taxes:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
142
|
|
|
$
|
(941
|
)
|
|
$
|
1,162
|
|
State and local
|
|
(106
|
)
|
|
(54
|
)
|
|
177
|
|
|||
Deferred income taxes:
|
|
|
|
|
|
|
||||||
Federal
|
|
2,124
|
|
|
869
|
|
|
380
|
|
|||
State and local
|
|
(33
|
)
|
|
(339
|
)
|
|
(232
|
)
|
|||
Total U.S. tax provision/(benefit)
|
|
2,127
|
|
|
(465
|
)
|
|
1,487
|
|
|||
International
|
|
|
|
|
|
|
||||||
Current income taxes
|
|
2,544
|
|
|
2,430
|
|
|
2,046
|
|
|||
Deferred income taxes
|
|
(365
|
)
|
|
256
|
|
|
88
|
|
|||
Total international tax provision
|
|
2,179
|
|
|
2,686
|
|
|
2,134
|
|
|||
Provision for taxes on income
|
|
$
|
4,306
|
|
|
$
|
2,221
|
|
|
$
|
3,621
|
|
•
|
U.S. tax expense of approximately
$2.3 billion
as a result of providing U.S. deferred income taxes on certain funds earned outside the U.S. that will not be indefinitely reinvested overseas, virtually all of which were earned in the current year (see
Note 5C. Tax Matters: Deferred Taxes
);
|
•
|
U.S. tax benefits of approximately
$430 million
, representing tax and interest, resulting from a multi-year settlement with the U.S. Internal Revenue Service (IRS) with respect to audits of the Wyeth tax returns for the years 2006 through date of acquisition, and international tax benefits of approximately
$470 million
, representing tax and interest, resulting from the resolution of certain tax positions pertaining to prior years with various foreign tax authorities, and from the expiration of certain statutes of limitations;
|
•
|
The unfavorable tax rate associated with the
$1.3 billion
of patent litigation settlement income;
|
•
|
The non-deductibility of the
$292 million
of goodwill derecognized and the jurisdictional mix of the other intangible assets divested as part of the transfer of certain product rights to our equity-method investment in China;
|
•
|
The non-deductibility of the
$223 million
loss on an option to acquire the remaining interest in Teuto, a
40%
-owned generics company in Brazil, since we expect to retain the investment indefinitely, and the non-deductibility of a
$32 million
impairment charge related to our equity-method investment in Teuto;
|
•
|
The extension of the U.S. R&D tax credit (resulting in the full-year benefit of the 2012 and 2013 U.S. R&D tax credit being recorded in 2013); and
|
•
|
The non-deductibility of a
$280 million
fee payable to the federal government as a result of the U.S. Healthcare Legislation.
|
•
|
U.S. tax expense of approximately
$2.2 billion
as a result of providing U.S. deferred income taxes on certain current-year funds earned outside the U.S. that will not be indefinitely reinvested overseas (see
Note 5C. Tax Matters: Deferred Taxes
);
|
•
|
U.S. tax benefits of approximately
$1.1 billion
, representing tax and interest, resulting from a multi-year settlement with the IRS with respect to audits of the Pfizer Inc. tax returns for the years 2006 through 2008, and international tax benefits of approximately
$310 million
, representing tax and interest, resulting from the resolution of certain tax positions pertaining to prior years with various foreign tax authorities, and from the expiration of certain statutes of limitations;
|
•
|
The non-deductibility of a
$336 million
fee payable to the federal government as a result of the U.S. Healthcare Legislation;
|
•
|
The non-deductibility of the
$491 million
legal charge associated with Rapamune litigation (see also
Note 4. Other (Income)/Deductions
––
Net
); and
|
•
|
The expiration of the U.S. R&D tax credit on December 31, 2011.
|
•
|
U.S. tax expense of approximately
$2.1 billion
as a result of providing U.S. deferred income taxes on certain current-year funds earned outside the U.S. that will not be indefinitely reinvested overseas (see
Note 5C. Tax Matters: Deferred Taxes
);
|
•
|
International tax benefits of approximately
$267 million
, representing tax and interest, resulting from the resolution of certain prior-period tax positions with various foreign tax authorities and from the expiration of certain statutes of limitations, and U.S. tax benefits of approximately
$80 million
, representing tax and interest, resulting from the settlement of certain audits with the IRS; and
|
•
|
The non-deductibility of a
$248 million
fee payable to the federal government as a result of the U.S. Healthcare Legislation.
|
2013 Financial Report
|
|
77
|
|
|
|
The reconciliation of the U.S. statutory income tax rate to our effective tax rate for
Income from continuing operations
follows:
|
|||||||||
|
|
Year Ended December 31,
|
|||||||
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
U.S. statutory income tax rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Taxation of non-U.S. operations
(a), (b), (c)
|
|
(2.5
|
)
|
|
(3.5
|
)
|
|
(2.2
|
)
|
Tax settlements and resolution of certain tax positions
(d)
|
|
(5.7
|
)
|
|
(12.8
|
)
|
|
(3.0
|
)
|
U.S. Healthcare Legislation
(d)
|
|
0.6
|
|
|
1.0
|
|
|
0.8
|
|
U.S. R&D tax credit and manufacturing deduction
(d)
|
|
(0.8
|
)
|
|
(0.3
|
)
|
|
(0.9
|
)
|
Certain legal settlements and charges
(d)
|
|
(0.2
|
)
|
|
1.5
|
|
|
—
|
|
Sales of biopharmaceutical companies
|
|
—
|
|
|
—
|
|
|
0.2
|
|
All other––net
|
|
1.0
|
|
|
(1.1
|
)
|
|
1.6
|
|
Effective tax rate for income from continuing operations
|
|
27.4
|
%
|
|
19.8
|
%
|
|
31.5
|
%
|
(a)
|
For taxation of non-U.S. operations, this rate impact reflects the income tax rates and relative earnings in the locations where we do business outside the U.S., together with the cost of repatriation decisions, as well as changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions”. Specifically: (i) the jurisdictional location of earnings is a significant component of our effective tax rate each year as tax rates outside the U.S. are generally lower than the U.S. statutory income tax rate, and the rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of such earnings as compared to our total earnings; (ii) the cost of repatriation decisions, and other U.S. tax implications of our foreign operations, is a significant component of our effective tax rate each year and generally offsets some of the reduction to our effective tax rate each year resulting from the jurisdictional location of earnings; and (iii) the impact of changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions” is a component of our effective tax rate each year that can result in either an increase or decrease to our effective tax rate. The jurisdictional mix of earnings, which includes the impact of the location of earnings as well as repatriation costs, can vary as a result of the repatriation decisions, as a result of operating fluctuations in the normal course of business and as a result of the extent and location of other income and expense items, such as restructuring charges, asset impairments and gains and losses on strategic business decisions. See also
Note 5A. Tax Matters: Taxes on Income from Continuing Operations
for the components of pre-tax income and
Provision for taxes on income,
which is based on the location of the taxing authorities, and for information about settlements and other items impacting
Provision for taxes on income
.
|
(b)
|
In all periods presented, the reduction in our effective tax rate resulting from the jurisdictional location of earnings is largely due to generally lower tax rates, as well as manufacturing and other incentives associated with our subsidiaries in Puerto Rico and Singapore. We benefit from a Puerto Rican incentive grant that expires in 2029. Under the grant, we are partially exempt from income, property and municipal taxes. In Singapore, we benefit from incentive tax rates effective through 2031 on income from manufacturing and other operations.
|
(d)
|
For a discussion about tax settlements and resolution of certain tax positions, the impact of U.S. Healthcare Legislation, the U.S. R&D tax credit and the impact of certain legal settlements and charges, see
Note 5A. Tax Matters: Taxes on Income from Continuing Operations
. The extension of the U.S. R&D tax credit in January 2013 resulted in the full-year benefit of the 2012 and 2013 U.S. R&D tax credit being recorded in 2013.
|
78
|
|
2013 Financial Report
|
|
|
|
The components of our deferred tax assets and liabilities, shown before jurisdictional netting, follow:
|
||||||||||||||||
|
|
2013 Deferred Tax
|
|
2012 Deferred Tax
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
Assets
|
|
(Liabilities)
|
|
Assets
|
|
(Liabilities)
|
||||||||
Prepaid/deferred items
|
|
$
|
1,668
|
|
|
$
|
(134
|
)
|
|
$
|
1,762
|
|
|
$
|
(113
|
)
|
Inventories
|
|
277
|
|
|
(216
|
)
|
|
315
|
|
|
(195
|
)
|
||||
Intangible assets
|
|
1,137
|
|
|
(9,647
|
)
|
|
1,602
|
|
|
(12,585
|
)
|
||||
Property, plant and equipment
|
|
376
|
|
|
(1,916
|
)
|
|
480
|
|
|
(1,307
|
)
|
||||
Employee benefits
|
|
3,154
|
|
|
(77
|
)
|
|
4,890
|
|
|
(391
|
)
|
||||
Restructurings and other charges
|
|
453
|
|
|
(396
|
)
|
|
734
|
|
|
(329
|
)
|
||||
Legal and product liability reserves
|
|
904
|
|
|
—
|
|
|
1,909
|
|
|
—
|
|
||||
Net operating loss/credit carryforwards
(a)
|
|
2,043
|
|
|
—
|
|
|
3,664
|
|
|
—
|
|
||||
Unremitted earnings
(b)
|
|
—
|
|
|
(19,399
|
)
|
|
—
|
|
|
(17,077
|
)
|
||||
State and local tax adjustments
|
|
297
|
|
|
—
|
|
|
385
|
|
|
—
|
|
||||
All other
|
|
249
|
|
|
(448
|
)
|
|
722
|
|
|
(496
|
)
|
||||
|
|
10,558
|
|
|
(32,233
|
)
|
|
16,463
|
|
|
(32,493
|
)
|
||||
Valuation allowances
|
|
(1,288
|
)
|
|
—
|
|
|
(1,033
|
)
|
|
—
|
|
||||
Total deferred taxes
|
|
$
|
9,270
|
|
|
$
|
(32,233
|
)
|
|
$
|
15,430
|
|
|
$
|
(32,493
|
)
|
Net deferred tax liability
(c), (d)
|
|
|
|
$
|
(22,963
|
)
|
|
|
|
$
|
(17,063
|
)
|
(a)
|
The amount in 2013 is shown after reduction for unrecognized tax benefits of
$2.3 billion
, where we have net operating loss carryforwards, similar tax losses, and/or tax credit carryforwards that are available, under the tax law of the applicable jurisdiction, to settle any additional income taxes that would result from the disallowance of a tax position. For additional information, see "Adoption of New Accounting Standard" in
Note 5D. Tax Matters: Tax Contingencies.
|
(b)
|
The increase in 2013 reflects additional accruals for certain funds earned outside the U.S. that will not be indefinitely reinvested overseas, virtually all of which were earned in the current year. For additional information, see
Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
|
(c)
|
2013 v. 2012
––
The net deferred tax liability position increased, reflecting an increase in noncurrent deferred tax liabilities related to unremitted earnings, as well as a decrease in deferred tax assets related to net operating loss and credit carryforwards as a result of the adoption of a new accounting standard, a decrease in current deferred tax assets related to product liability reserves due to settlements, and the decrease in noncurrent deferred tax assets related to employee benefits, partially offset by the reduction in noncurrent deferred tax liabilities resulting from the amortization of identifiable intangible assets. For additional information, see
Note 5D. Tax Matters: Tax Contingencies.
|
(d)
|
In
2013
, included in
Current deferred tax assets and other current tax assets
(
$2.1 billion
),
Noncurrent deferred tax assets and other noncurrent tax assets
(
$569 million
),
Other current liabilities
(
$52 million
) and
Noncurrent deferred tax liabilities
(
$25.6 billion
). In
2012
, included in
Current deferred tax assets and other current tax assets
(
$3.5 billion
),
Noncurrent deferred tax assets and other noncurrent tax assets
(
$611 million
) and
Noncurrent deferred tax liabilities
(
$21.2 billion
).
|
2013 Financial Report
|
|
79
|
|
|
|
•
|
Tax assets associated with uncertain tax positions primarily represent our estimate of the potential tax benefits in one tax jurisdiction that could result from the payment of income taxes in another tax jurisdiction. These potential benefits generally result from cooperative efforts among taxing authorities, as required by tax treaties to minimize double taxation, commonly referred to as the competent authority process and from foreign tax credits that would be generated upon settlement of an uncertain tax position. The recoverability of these assets, which we believe to be more likely than not, is dependent upon the actual payment of taxes in one tax jurisdiction and, in some cases, the successful petition for recovery in another tax jurisdiction. As of December 31, 2013 and 2012, we had approximately
$1.7 billion
and
$1.3 billion
, respectively, in assets associated with uncertain tax positions. In 2013, these amounts were included in
Noncurrent deferred tax assets and other noncurrent tax assets
(
$926 million
) and
Noncurrent deferred tax liabilities
(
$766 million
). In 2012, these amounts were included in
Noncurrent deferred tax assets and other noncurrent tax assets
(
$887 million
) and
Noncurrent deferred tax liabilities
(
$446 million
).
|
•
|
Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in our financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. These unrecognized tax benefits relate primarily to issues common among multinational corporations. Substantially all of these unrecognized tax benefits, if recognized, would impact our effective income tax rate.
|
(a)
|
The amount in 2011 primarily relates to the acquisition of King. See also
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions.
|
(b)
|
Primarily relates to the sales of our Nutrition and Animal Health (Zoetis) businesses. See also
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures.
|
(c)
|
Primarily included in
Provision for taxes on income.
|
(d)
|
Primarily related to effectively settling certain issues with the U.S. and foreign tax authorities. See also
Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
|
(e)
|
Primarily related to cash payments.
|
(f)
|
Includes decreases as a result of a lapse of applicable statutes of limitations.
|
(g)
|
In 2013, included in
Income taxes payable
(
$51 million
),
Current deferred tax assets and other current tax assets
(
$63 million
),
Noncurrent deferred tax assets and other noncurrent tax assets
(
$241 million
),
Noncurrent deferred tax liabilities
(
$2.3 billion
) and
Other taxes payable
(
$3.4 billion
). In 2012, included in
Income taxes payable
(
$36 million
),
Current deferred tax assets and other current tax assets
(
$30 million
),
Noncurrent deferred tax assets and other noncurrent tax assets
(
$169 million
),
Noncurrent deferred tax liabilities
(
$231 million
) and
Other taxes payable
(
$5.8 billion
).
|
•
|
Interest related to our unrecognized tax benefits is recorded in accordance with the laws of each jurisdiction and is recorded in
Provision for taxes on income
in our consolidated statements of income. In
2013
, we recorded net interest income of
$16 million
primarily as a result of settling certain issues with the U.S. and various foreign tax authorities; in
2012
, we recorded net interest income of
$120 million
primarily as a result of settling certain issues with the U.S. and various foreign tax authorities; and in
2011
, we recorded net interest expense of
$203 million
. Gross accrued interest totaled
$621 million
as of
December 31, 2013
(reflecting a decrease of approximately
$120 million
as a result of cash payments) and
$766 million
as of
December 31, 2012
(reflecting a decrease of approximately
$63 million
as a result of cash payments). In
2013
, these amounts were included in
Income taxes payable
(
$14 million
) and
Current deferred tax assets and other current tax assets
(
$12 million
) and
Other taxes payable
(
$595 million
). In
2012
, these amounts were included in
Current deferred tax assets and
|
80
|
|
2013 Financial Report
|
|
|
|
•
|
With respect to Pfizer Inc., tax years 2009-2010 are currently under audit. Tax years 2011-2013 are open, but not under audit. All other tax years are closed.
|
•
|
With respect to Wyeth, the audit for tax years 2006 through the Wyeth acquisition date (October 15, 2009) has been effectively settled in 2013. All other tax years are closed.
|
•
|
With respect to King, the audit for tax years 2009 and 2010 has been effectively settled in 2013. The tax year January 1, 2011 through the date of acquisition (January 31, 2011) is open, but not under audit. All other tax years are closed. The open tax year for King is not material to Pfizer Inc.
|
(a)
|
Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.
|
2013 Financial Report
|
|
81
|
|
|
|
The following table provides the changes, net of tax, in
Accumulated other comprehensive income/(loss)
:
|
||||||||||||||||||||||||
|
|
Net Unrealized Gain/(Losses)
|
|
Benefit Plans
|
|
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Foreign Currency Translation Adjustments
|
|
|
Derivative Financial Instruments
|
|
|
Available-For-Sale Securities
|
|
|
Actuarial Gains/(Losses)
|
|
|
Prior Service (Costs)/ Credits and Other
|
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
||||||
Balance, January 1, 2011
|
|
$
|
169
|
|
|
$
|
(79
|
)
|
|
$
|
28
|
|
|
$
|
(3,947
|
)
|
|
$
|
389
|
|
|
$
|
(3,440
|
)
|
Other comprehensive income/(loss)
(a)
|
|
775
|
|
|
(104
|
)
|
|
(160
|
)
|
|
(1,173
|
)
|
|
(27
|
)
|
|
(689
|
)
|
||||||
Balance, December 31, 2011
|
|
944
|
|
|
(183
|
)
|
|
(132
|
)
|
|
(5,120
|
)
|
|
362
|
|
|
(4,129
|
)
|
||||||
Other comprehensive income/(loss)
(a)
|
|
(1,121
|
)
|
|
22
|
|
|
368
|
|
|
(990
|
)
|
|
(103
|
)
|
|
(1,824
|
)
|
||||||
Balance, December 31, 2012
|
|
(177
|
)
|
|
(161
|
)
|
|
236
|
|
|
(6,110
|
)
|
|
259
|
|
|
(5,953
|
)
|
||||||
Other comprehensive income/(loss)
(a)
|
|
(440
|
)
|
|
240
|
|
|
(86
|
)
|
|
2,887
|
|
|
54
|
|
|
2,655
|
|
||||||
Sale of 19.8% of subsidiary through an IPO
(b)
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||||
Balance, December 31, 2013
|
|
$
|
(590
|
)
|
|
$
|
79
|
|
|
$
|
150
|
|
|
$
|
(3,223
|
)
|
|
$
|
313
|
|
|
$
|
(3,271
|
)
|
(a)
|
Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests of
$62 million
loss in
2013
,
$7 million
loss in
2012
and
$45 million
loss in
2011
.
|
82
|
|
2013 Financial Report
|
|
|
|
The following table provides additional information about certain of our financial assets and liabilities:
|
||||||||
|
|
As of December 31,
|
||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
||
Selected financial assets measured at fair value on a recurring basis
(a)
|
|
|
|
|
||||
Trading securities
(b)
|
|
$
|
126
|
|
|
$
|
142
|
|
Available-for-sale debt securities
(c)
|
|
34,899
|
|
|
32,584
|
|
||
Available-for-sale money market funds
(d)
|
|
945
|
|
|
1,727
|
|
||
Available-for-sale equity securities, excluding money market funds
(c)
|
|
356
|
|
|
263
|
|
||
Derivative financial instruments in receivable positions
(e)
:
|
|
|
|
|
||||
Interest rate swaps
|
|
468
|
|
|
1,036
|
|
||
Foreign currency swaps
|
|
871
|
|
|
194
|
|
||
Foreign currency forward-exchange contracts
|
|
172
|
|
|
152
|
|
||
|
|
37,837
|
|
|
36,098
|
|
||
Other selected financial assets
|
|
|
|
|
|
|
||
Held-to-maturity debt securities, carried at amortized cost
(c), (f)
|
|
9,139
|
|
|
1,459
|
|
||
Private equity securities, carried at equity method or at cost
(f), (g)
|
|
2,270
|
|
|
1,239
|
|
||
|
|
11,409
|
|
|
2,698
|
|
||
Total selected financial assets
|
|
$
|
49,246
|
|
|
$
|
38,796
|
|
Financial liabilities measured at fair value on a recurring basis
(a)
|
|
|
|
|
|
|
||
Derivative financial instruments in a liability position
(h)
:
|
|
|
|
|
|
|
||
Interest rate swaps
|
|
$
|
301
|
|
|
$
|
33
|
|
Foreign currency swaps
|
|
110
|
|
|
428
|
|
||
Foreign currency forward-exchange contracts
|
|
219
|
|
|
243
|
|
||
|
|
630
|
|
|
704
|
|
||
Other financial liabilities
(i)
|
|
|
|
|
|
|
||
Short-term borrowings, carried at historical proceeds, as adjusted
(f)
|
|
6,027
|
|
|
6,424
|
|
||
Long-term debt, carried at historical proceeds, as adjusted
(j), (k)
|
|
30,462
|
|
|
31,036
|
|
||
|
|
36,489
|
|
|
37,460
|
|
||
Total selected financial liabilities
|
|
$
|
37,119
|
|
|
$
|
38,164
|
|
(a)
|
We use a market approach in valuing financial instruments on a recurring basis. For additional information, see
Note 1E.
Basis of Presentation and Significant Accounting Policies: Fair Value
. All of our financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except less than
1%
that use Level 1 or Level 3 inputs.
|
(b)
|
Trading securities are held in trust for legacy business acquisition severance benefits.
|
(c)
|
Gross unrealized gains and losses are not significant.
|
(d)
|
Includes
$408 million
as of
December 31, 2012
of money market funds held in trust in connection with the asbestos litigation involving Quigley Company, Inc., (Quigley), then a wholly owned subsidiary. In the fourth quarter of 2013, the amended reorganization plan for Quigley became effective. For information about the disposition of the money market fund investment in connection with the amended reorganization plan for Quigley becoming effective, see
Note 17A5. Commitments and Contingencies: Certain Matters Resolved in 2013.
|
(e)
|
Designated as hedging instruments, except for certain contracts used as offsets; namely, interest rate swaps with fair values of
$38 million
, foreign currency swaps with fair values of
$30 million
and foreign currency forward-exchange contracts with fair values of
$66 million
as of
December 31, 2013
; and, foreign currency forward-exchange contracts with fair values of
$102 million
as of
December 31, 2012
.
|
(f)
|
The differences between the estimated fair values and carrying values of held-to-maturity debt securities, private equity securities at cost and short-term borrowings not measured at fair value on a recurring basis were not significant as of
December 31, 2013
or
December 31, 2012
. The fair value measurements of our held-to-maturity debt securities and our short-term borrowings are based on Level 2 inputs, using a market approach. The fair value measurements of our private equity securities at cost are based on Level 3 inputs.
|
(g)
|
Our private equity securities represent investments in the life sciences sector. The increase in 2013 primarily reflects an increased investment in our equity-method investment in China. For additional information, see
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
|
(h)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency swaps with fair values of
$76 million
and foreign currency forward-exchange contracts with fair values of
$77 million
as of
December 31, 2013
; and foreign currency forward-exchange contracts with fair values of
$141 million
and foreign currency swaps with fair values of
$129 million
as of
December 31, 2012
.
|
(i)
|
Some carrying amounts may include adjustments for discount or premium amortization or for the effect of hedging the interest rate fair value risk associated with certain financial liabilities by interest rate swaps.
|
(j)
|
Includes foreign currency debt with fair values of
$651 million
as of
December 31, 2013
and
$809 million
as of
December 31, 2012
, which are used as hedging instruments.
|
(k)
|
The fair value of our long-term debt (not including the current portion of long-term debt) is
$35.1 billion
as of
December 31, 2013
and
$37.5 billion
as of
December 31, 2012
. The fair value measurements for our long-term debt are based on Level 2 inputs, using a market approach. Generally, the difference
|
2013 Financial Report
|
|
83
|
|
|
|
•
|
Trading equity securities—quoted market prices.
|
•
|
Trading debt securities—observable market interest rates.
|
•
|
Available-for-sale debt securities—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate yield curves.
|
•
|
Available-for-sale money market funds—observable Net Asset Value prices.
|
•
|
Available-for-sale equity securities, excluding money market funds—third-party pricing services that principally use a composite of observable prices.
|
•
|
Derivative financial instruments (assets and liabilities)—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data. Where applicable, these models discount future cash flow amounts using market-based observable inputs, including interest rate yield curves, and forward and spot prices for currencies. The credit risk impact to our derivative financial instruments was not significant.
|
•
|
Held-to-maturity debt securities—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate yield curves.
|
•
|
Private equity securities, excluding equity-method investments—application of the implied volatility associated with an observable biotech index to the carrying amount of our portfolio.
|
•
|
Short-term borrowings and long-term debt—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and our own credit rating.
|
(a)
|
As of
December 31, 2013
, derivative instruments at fair value include interest rate swaps (
$90 million
), foreign currency swaps (
$24 million
) and foreign currency forward-exchange contracts (
$172 million
) and, as of
December 31, 2012
, include foreign currency swaps (
$144 million
) and foreign currency forward-exchange contracts (
$152 million
).
|
(b)
|
As of
December 31, 2013
, derivative instruments at fair value include interest rate swaps (
$378 million
) and foreign currency swaps (
$847 million
) and, as of
December 31, 2012
, include interest rate swaps (
$1.0 billion
) and foreign currency swaps (
$50 million
).
|
(c)
|
At
December 31, 2013
, derivative instruments at fair value include foreign currency swaps (
$84 million
) and foreign currency forward-exchange contracts (
$219 million
) and, as of
December 31, 2012
, include foreign currency swaps (
$87 million
) and foreign currency forward-exchange contracts (
$243 million
).
|
(d)
|
At
December 31, 2013
, derivative instruments at fair value include interest rate swaps (
$301 million
) and foreign currency swaps (
$26 million
) and, as of
December 31, 2012
, include interest rate swaps (
$33 million
) and foreign currency swaps (
$341 million
).
|
84
|
|
2013 Financial Report
|
|
|
|
The following table provides the contractual maturities of the available-for-sale and held-to-maturity debt securities:
|
||||||||||||||||||||
|
|
Years
|
|
|
|
|||||||||||||||
|
|
|
|
|
Over 1
|
|
|
Over 5
|
|
|
|
|
December 31,
2013 |
|
||||||
(MILLIONS OF DOLLARS)
|
|
Within 1
|
|
|
to 5
|
|
|
to 10
|
|
|
Over 10
|
|
|
Total
|
|
|||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Western European, Scandinavian and other government debt
(a)
|
|
$
|
10,253
|
|
|
$
|
2,380
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,633
|
|
Corporate debt
(b)
|
|
3,997
|
|
|
4,822
|
|
|
1,236
|
|
|
302
|
|
|
10,357
|
|
|||||
Reverse repurchase agreements
(c)
|
|
3,519
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,519
|
|
|||||
Federal Home Loan Mortgage Corporation and Federal National Mortgage Association asset-backed securities
|
|
—
|
|
|
2,593
|
|
|
10
|
|
|
303
|
|
|
2,906
|
|
|||||
Western European, Scandinavian and other government agency debt
(a)
|
|
1,686
|
|
|
453
|
|
|
—
|
|
|
—
|
|
|
2,139
|
|
|||||
Supranational debt
(a)
|
|
1,006
|
|
|
1,009
|
|
|
—
|
|
|
—
|
|
|
2,015
|
|
|||||
Government National Mortgage Association and other U.S. government guaranteed asset-backed securities
|
|
705
|
|
|
159
|
|
|
—
|
|
|
41
|
|
|
905
|
|
|||||
U.S. government debt
|
|
185
|
|
|
222
|
|
|
18
|
|
|
—
|
|
|
425
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Held-to-maturity debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Western European, Scandinavian and other government debt
(a)
|
|
5,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,909
|
|
|||||
Western European, Scandinavian and other government agency debt, certificates of deposit and other
(a)
|
|
3,113
|
|
|
117
|
|
|
—
|
|
|
—
|
|
|
3,230
|
|
|||||
Total debt securities
|
|
$
|
30,373
|
|
|
$
|
11,755
|
|
|
$
|
1,264
|
|
|
$
|
646
|
|
|
$
|
44,038
|
|
(a)
|
All issued by above-investment-grade governments, government agencies or supranational entities, as applicable.
|
(b)
|
Largely issued by above-investment-grade institutions in the financial services sector.
|
(c)
|
Involving U.S. securities.
|
2013 Financial Report
|
|
85
|
|
|
|
The following table provides the components of our senior unsecured long-term debt:
|
||||||||||
|
|
|
|
As of December 31,
|
||||||
(MILLIONS OF DOLLARS)
|
|
Maturity Date
|
|
2013
|
|
|
2012
|
|
||
6.20%
(a)
|
|
March 2019
|
|
$
|
3,234
|
|
|
$
|
3,327
|
|
5.35%
(a)
|
|
March 2015
|
|
3,037
|
|
|
3,065
|
|
||
4.75% euro
(b)
|
|
June 2016
|
|
2,752
|
|
|
2,638
|
|
||
5.75% euro
(b)
|
|
June 2021
|
|
2,748
|
|
|
2,634
|
|
||
7.20%
(a)
|
|
March 2039
|
|
2,603
|
|
|
2,903
|
|
||
6.50%
U.K
. pound
(b)
|
|
June 2038
|
|
2,459
|
|
|
2,407
|
|
||
5.95%
|
|
April 2037
|
|
2,085
|
|
|
2,086
|
|
||
4.55% euro
|
|
May 2017
|
|
1,390
|
|
|
1,384
|
|
||
5.50%
|
|
February 2016
|
|
1,033
|
|
|
1,048
|
|
||
5.50%
(c)
|
|
February 2014
|
|
—
|
|
|
1,832
|
|
||
4.75% euro
(d)
|
|
December 2014
|
|
—
|
|
|
1,284
|
|
||
Notes and other debt with a weighted-average interest rate of 5.47%
(e)
|
|
2021–2043
|
|
4,810
|
|
|
3,403
|
|
||
Notes and other debt with a weighted-average interest rate of 4.70%
(f)
|
|
2016–2018
|
|
3,683
|
|
|
2,254
|
|
||
Foreign currency notes and other foreign currency debt with a weighted-
average interest rate of 3.02%
(g)
|
|
2015-2016
|
|
628
|
|
|
771
|
|
||
Long-term debt
|
|
|
|
$
|
30,462
|
|
|
$
|
31,036
|
|
Current portion of long-term debt (not included above)
|
|
|
|
$
|
2,060
|
|
|
$
|
2,449
|
|
(a)
|
Instrument is callable by us at any time at the greater of
100%
of the principal amount or the sum of the present values of the remaining scheduled payments of principal and interest discounted at the U.S. Treasury rate plus
0.50%
plus, in each case, accrued and unpaid interest.
|
(b)
|
Instrument is callable by us at any time at the greater of
100%
of the principal amount or the sum of the present values of the remaining scheduled payments of principal and interest discounted at a comparable government bond rate plus
0.20%
plus, in each case, accrued and unpaid interest.
|
(c)
|
At December 31, 2013, the note was called.
|
(d)
|
At December 31, 2013, the note has been reclassified to
Current portion of long-term debt.
|
(e)
|
Contains debt issuances with a weighted-average maturity of approximately
24 years
.
|
(f)
|
Contains debt issuances with a weighted-average maturity of approximately
4 years
.
|
(g)
|
Contains debt issuances with a weighted-average maturity of approximately
2 years
.
|
The following table provides the maturity schedule of our
Long-term debt
outstanding as of December 31, 2013:
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
After 2018
|
|
|
Total
|
|
||||||
Maturities
|
|
$
|
3,040
|
|
|
$
|
4,412
|
|
|
$
|
2,660
|
|
|
$
|
2,413
|
|
|
$
|
17,937
|
|
|
$
|
30,462
|
|
86
|
|
2013 Financial Report
|
|
|
|
•
|
We record in
Other comprehensive income/(loss)
the effective portion of the gains or losses on foreign currency forward-exchange contracts and foreign currency swaps that are designated as cash flow hedges and reclassify those amounts, as appropriate, into earnings in the same period or periods during which the hedged transaction affects earnings.
|
•
|
We recognize the gains and losses on forward-exchange contracts and foreign currency swaps that are used to offset the same foreign currency assets or liabilities immediately into earnings along with the earnings impact of the items they generally offset. These contracts essentially take the opposite currency position of that reflected in the month-end balance sheet to counterbalance the effect of any currency movement.
|
•
|
We recognize the gain and loss impact on foreign currency swaps designated as hedges of our net investments in earnings in three ways: over time—for the periodic net swap payments; immediately—to the extent of any change in the difference between the foreign exchange spot rate and forward rate; and upon sale or substantial liquidation of our net investments—to the extent of change in the foreign exchange spot rates.
|
•
|
We record in
Other comprehensive income/(loss)
the foreign exchange gains and losses related to foreign exchange-denominated debt designated as a hedge of our net investments in foreign subsidiaries and reclassify those amounts into earnings upon the sale or substantial liquidation of our net investments.
|
•
|
We recognize the gains and losses on interest rate swaps that are designated as fair value hedges in earnings upon the recognition of the change in fair value of the hedged risk. We recognize the offsetting earnings impact of fixed-rate debt attributable to the hedged risk also in earnings.
|
2013 Financial Report
|
|
87
|
|
|
|
The following table provides information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:
|
||||||||||||||||||||||||
|
|
Amount of
Gains/(Losses)
Recognized in OID
(a), (b), (c)
|
|
Amount of Gains/(Losses)
Recognized in OCI
(Effective Portion)
(a), (d)
|
|
Amount of Gains/(Losses)
Reclassified from
OCI into OID
(Effective Portion)
(a), (d)
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Dec 31,
2013 |
|
|
Dec 31,
2012 |
|
|
Dec 31,
2013 |
|
|
Dec 31,
2012 |
|
|
Dec 31,
2013 |
|
|
Dec 31,
2012 |
|
||||||
Derivative Financial Instruments in Cash Flow Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency swaps
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
554
|
|
|
$
|
703
|
|
|
$
|
220
|
|
|
$
|
257
|
|
Foreign currency forward-exchange contracts
|
|
—
|
|
|
—
|
|
|
(66
|
)
|
|
42
|
|
|
(126
|
)
|
|
359
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency swaps
|
|
(3
|
)
|
|
(4
|
)
|
|
156
|
|
|
200
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency forward-exchange contracts
|
|
(3
|
)
|
|
—
|
|
|
(1
|
)
|
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments Not Designated as Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward-exchange contracts
|
|
56
|
|
|
(61
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency swaps
|
|
(18
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency long-term debt
|
|
—
|
|
|
—
|
|
|
133
|
|
|
88
|
|
|
—
|
|
|
—
|
|
||||||
All other net
|
|
(1
|
)
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
$
|
31
|
|
|
$
|
(65
|
)
|
|
$
|
776
|
|
|
$
|
1,033
|
|
|
$
|
94
|
|
|
$
|
616
|
|
(a)
|
OID = Other (income)/deductions—net,
included in
Other (income)/deductions—net
in the consolidated statements of income
.
OCI = Other comprehensive income/(loss), included in the
consolidated statements of comprehensive income
.
|
(b)
|
Also includes gains and losses attributable to derivative instruments designated and qualifying as fair value hedges as well as the offsetting gains and losses attributable to the hedged items in such hedging relationships.
|
(c)
|
There was no significant ineffectiveness for any period presented.
|
(d)
|
Amounts presented represent the effective portion of the gain or loss. For derivative financial instruments in cash flow hedge relationships, the effective portion is included in
Other comprehensive income/(loss)––Unrealized holding gains/(losses) on derivative financial instruments
. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in
Other comprehensive income/(loss)––Foreign currency translation adjustments.
|
88
|
|
2013 Financial Report
|
|
|
|
The following table provides the components of
Inventories
:
|
||||||||
|
|
As of December 31,
|
||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
||
Finished goods
|
|
$
|
2,216
|
|
|
$
|
2,254
|
|
Work-in-process
|
|
3,445
|
|
|
3,374
|
|
||
Raw materials and supplies
|
|
505
|
|
|
448
|
|
||
Inventories
|
|
$
|
6,166
|
|
|
$
|
6,076
|
|
Noncurrent inventories not included above
(a)
|
|
$
|
463
|
|
|
$
|
612
|
|
(a)
|
Included in
Other noncurrent assets
. There are no recoverability issues associated with these amounts.
|
The following table provides the components of
Property, plant and equipment
:
|
|||||||||||
|
|
Useful Lives
|
|
|
As of December 31,
|
||||||
(MILLIONS OF DOLLARS)
|
|
(Years)
|
|
|
2013
|
|
|
2012
|
|
||
Land
|
|
—
|
|
|
$
|
557
|
|
|
$
|
566
|
|
Buildings
|
|
33-50
|
|
|
10,055
|
|
|
10,643
|
|
||
Machinery and equipment
|
|
8-20
|
|
|
10,050
|
|
|
9,939
|
|
||
Furniture, fixtures and other
|
|
3-12 1/2
|
|
|
3,914
|
|
|
3,860
|
|
||
Construction in progress
|
|
—
|
|
|
1,102
|
|
|
957
|
|
||
|
|
|
|
25,678
|
|
|
25,965
|
|
|||
Less: Accumulated depreciation
|
|
|
|
13,281
|
|
|
12,752
|
|
|||
Property, plant and equipment
(a)
|
|
|
|
$
|
12,397
|
|
|
$
|
13,213
|
|
(a)
|
The decrease in total property, plant and equipment is primarily due to depreciation, disposals, impairments and the impact of foreign exchange, partially offset by capital additions.
|
The following table provides the components of and changes in the carrying amount of
Goodwill
:
|
||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Primary
Care
|
|
|
Specialty
Care and
Oncology
|
|
|
Established
Products and
Emerging
Markets
|
|
|
Consumer Healthcare
|
|
|
Total
|
|
|||||
Balance, January 1, 2012
|
|
$
|
6,229
|
|
|
$
|
17,097
|
|
|
$
|
18,746
|
|
|
$
|
2,497
|
|
|
$
|
44,569
|
|
Additions
(a)
|
|
—
|
|
|
—
|
|
|
91
|
|
|
514
|
|
|
605
|
|
|||||
Other
(b)
|
|
(77
|
)
|
|
(212
|
)
|
|
(234
|
)
|
|
(990
|
)
|
|
(1,513
|
)
|
|||||
Balance, December 31, 2012
|
|
6,152
|
|
|
16,885
|
|
|
18,603
|
|
|
2,021
|
|
|
43,661
|
|
|||||
Derecognition
(c)
|
|
—
|
|
|
—
|
|
|
(292
|
)
|
|
—
|
|
|
(292
|
)
|
|||||
Other
(b)
|
|
(122
|
)
|
|
(341
|
)
|
|
(378
|
)
|
|
(9
|
)
|
|
(850
|
)
|
|||||
Balance, December 31, 2013
|
|
$
|
6,030
|
|
|
$
|
16,544
|
|
|
$
|
17,933
|
|
|
$
|
2,012
|
|
|
$
|
42,519
|
|
(a)
|
Related to our acquisitions of Ferrosan, Alacer and NextWave (see
Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisitions)
.
|
(b)
|
Primarily reflects the impact of foreign exchange.
|
(c)
|
Reflects the goodwill derecognized as part of the transfer of certain product rights, which constituted a business, to our equity-method investment in China. For additional information, see
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
|
2013 Financial Report
|
|
89
|
|
|
|
The following table provides the components of
Identifiable intangible assets
:
|
||||||||||||||||||||||||
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Identifiable
Intangible
Assets, less
Accumulated
Amortization
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Identifiable
Intangible
Assets, less
Accumulated
Amortization
|
|
||||||
Finite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology rights
|
|
$
|
72,038
|
|
|
$
|
(41,541
|
)
|
|
$
|
30,497
|
|
|
$
|
72,349
|
|
|
$
|
(36,895
|
)
|
|
$
|
35,454
|
|
Brands
|
|
1,743
|
|
|
(773
|
)
|
|
970
|
|
|
1,657
|
|
|
(693
|
)
|
|
964
|
|
||||||
License agreements and other
|
|
896
|
|
|
(805
|
)
|
|
91
|
|
|
914
|
|
|
(642
|
)
|
|
272
|
|
||||||
|
|
74,677
|
|
|
(43,119
|
)
|
|
31,558
|
|
|
74,920
|
|
|
(38,230
|
)
|
|
36,690
|
|
||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Brands
|
|
7,381
|
|
|
—
|
|
|
7,381
|
|
|
7,786
|
|
|
—
|
|
|
7,786
|
|
||||||
In-process research and development
|
|
443
|
|
|
—
|
|
|
443
|
|
|
669
|
|
|
—
|
|
|
669
|
|
||||||
Other
|
|
3
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
|
|
7,827
|
|
|
—
|
|
|
7,827
|
|
|
8,456
|
|
|
—
|
|
|
8,456
|
|
||||||
Identifiable intangible assets
(a)
|
|
$
|
82,504
|
|
|
$
|
(43,119
|
)
|
|
$
|
39,385
|
|
|
$
|
83,376
|
|
|
$
|
(38,230
|
)
|
|
$
|
45,146
|
|
(a)
|
The decrease is primarily related to amortization, asset impairment charges and the transfer of certain product rights to our equity-method investment in China. For additional information about the asset impairment charges, see
Note 4. Other (income)/deductions—net.
For additional information about the transfer of certain product rights, see
Note 2D. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Equity-Method Investments.
|
•
|
Developed technology rights: Specialty Care (
68%
); Established Products (
19%
); Primary Care (
12%
); and Oncology (
1%
);
|
•
|
Brands, finite-lived: Consumer Healthcare (
75%
); and Established Products (
25%
);
|
•
|
Brands, indefinite-lived: Consumer Healthcare (
69%
); and Established Products (
31%
); and
|
•
|
IPR&D: Worldwide Research and Development (
43%
); Specialty Care (
43%
); Established Products (
7%
); and Primary Care (
7%
).
|
90
|
|
2013 Financial Report
|
|
|
|
The following table provides the annual amortization expense expected for the years 2014 through 2018:
|
||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|||||
Amortization expense
|
|
$
|
4,099
|
|
|
$
|
3,699
|
|
|
$
|
3,451
|
|
|
$
|
3,334
|
|
|
$
|
3,219
|
|
2013 Financial Report
|
|
91
|
|
|
|
The following table provides the annual cost (including costs reported as part of discontinued operations) and changes in
Other comprehensive income/(loss)
for our benefit plans:
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
|
|
U.S.
Qualified
(a)
|
|
U.S.
Supplemental
(Non-Qualified)
(b)
|
|
International
(c)
|
|
Postretirement
Plans
(d)
|
||||||||||||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
||||||||||||
Service cost
|
|
$
|
301
|
|
|
$
|
357
|
|
|
$
|
351
|
|
|
$
|
26
|
|
|
$
|
35
|
|
|
$
|
36
|
|
|
$
|
216
|
|
|
$
|
215
|
|
|
$
|
243
|
|
|
$
|
61
|
|
|
$
|
68
|
|
|
$
|
68
|
|
Interest cost
|
|
666
|
|
|
697
|
|
|
734
|
|
|
67
|
|
|
62
|
|
|
72
|
|
|
378
|
|
|
406
|
|
|
443
|
|
|
166
|
|
|
182
|
|
|
195
|
|
||||||||||||
Expected return on plan assets
|
|
(999
|
)
|
|
(983
|
)
|
|
(871
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(407
|
)
|
|
(424
|
)
|
|
(437
|
)
|
|
(55
|
)
|
|
(46
|
)
|
|
(35
|
)
|
||||||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Actuarial losses
|
|
355
|
|
|
306
|
|
|
145
|
|
|
51
|
|
|
41
|
|
|
36
|
|
|
129
|
|
|
93
|
|
|
86
|
|
|
46
|
|
|
33
|
|
|
17
|
|
||||||||||||
Prior service credits
|
|
(7
|
)
|
|
(10
|
)
|
|
(8
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
(5
|
)
|
|
(44
|
)
|
|
(49
|
)
|
|
(53
|
)
|
||||||||||||
Curtailments
|
|
—
|
|
|
(62
|
)
|
|
(4
|
)
|
|
—
|
|
|
(9
|
)
|
|
(1
|
)
|
|
(20
|
)
|
|
(16
|
)
|
|
(14
|
)
|
|
(11
|
)
|
|
(65
|
)
|
|
(68
|
)
|
||||||||||||
Settlements
|
|
113
|
|
|
145
|
|
|
99
|
|
|
40
|
|
|
33
|
|
|
24
|
|
|
22
|
|
|
7
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||||
Special termination benefits
|
|
—
|
|
|
8
|
|
|
23
|
|
|
—
|
|
|
30
|
|
|
26
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
6
|
|
|
3
|
|
||||||||||||
Net periodic benefit costs reported in
Income
|
|
429
|
|
|
458
|
|
|
469
|
|
|
182
|
|
|
189
|
|
|
190
|
|
|
317
|
|
|
279
|
|
|
335
|
|
|
163
|
|
|
129
|
|
|
127
|
|
||||||||||||
(Income)/cost reported in
Other comprehensive income/(loss)
|
|
(3,044
|
)
|
|
461
|
|
|
1,879
|
|
|
(255
|
)
|
|
110
|
|
|
36
|
|
|
(569
|
)
|
|
759
|
|
|
(365
|
)
|
|
(736
|
)
|
|
267
|
|
|
421
|
|
||||||||||||
(Income)/cost recognized in
Comprehensive income
|
|
$
|
(2,615
|
)
|
|
$
|
919
|
|
|
$
|
2,348
|
|
|
$
|
(73
|
)
|
|
$
|
299
|
|
|
$
|
226
|
|
|
$
|
(252
|
)
|
|
$
|
1,038
|
|
|
$
|
(30
|
)
|
|
$
|
(573
|
)
|
|
$
|
396
|
|
|
$
|
548
|
|
(a)
|
2013 v. 2012
––
The decrease in net periodic benefit cost for our U.S. qualified plans was primarily driven by (i) lower service cost resulting from cost reduction initiatives, (ii) lower settlements and (iii) higher expected return on plan assets resulting from an increased plan asset base partially offset by the curtailment gain in the second quarter of 2012 resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico. Also, the decrease in the discount rate resulted in lower interest costs, as well as an increase in the amounts amortized for actuarial losses. 2012 v. 2011
––
The decrease in net periodic benefit cost for our U.S. qualified plans was primarily driven by (i) higher expected return on plan assets (resulting from contributions made to the plan in 2011 that increased the plan asset base), (ii) lower interest costs, (iii) a decrease in special termination benefits, and (iv) higher curtailments resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico largely offset by higher settlements and an increase in the amounts amortized for actuarial losses (resulting from a decrease in the discount rate and lower than expected actual returns in 2011).
|
(b)
|
2013 v. 2012
––
The decrease in net periodic benefit cost for our U.S. supplemental (non-qualified) pension plans was primarily driven by special termination benefits in 2012, partially offset by an increase in the amounts amortized for actuarial losses resulting from a decrease in the discount rate, and the curtailment gain in the second quarter of 2012 resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico. 2012 v. 2011
––
The net periodic benefit cost for our U.S. supplemental (non-qualified) pension plans was largely unchanged as the curtailment gain resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico was more than offset by higher settlement activity.
|
(c)
|
2013 v. 2012
––
The increase in net periodic benefit costs for our international pension plans was primarily driven by (i) an increase in the amounts amortized for actuarial losses resulting from changes in assumptions, (ii) lower expected return on plan assets driven by lower expected rate of return in certain significant plans, (iii) higher settlements and (iv) 2012 curtailment gains, partially offset by lower interest costs resulting from the decrease in discount rates. 2012 v. 2011
––
The decrease in net periodic benefit costs for our international pension plans was primarily driven by restructuring activities in the U.K. and Ireland in 2011. Also, the decrease in discount rates resulted in lower interest costs, as well as an increase in the amounts amortized for actuarial losses.
|
(d)
|
2013 v. 2012
––
The increase in net periodic benefit cost for our postretirement plans was primarily driven by 2012 curtailment gains, partially offset by higher expected return on plan assets and 2012 special termination benefits. Also, the decrease in the discount rate resulted in lower interest costs, as well as an increase in the amounts amortized for actuarial losses. 2012 v. 2011
––
The net periodic benefit cost for our postretirement plans was largely unchanged, as an increase in amounts amortized for actuarial plan losses was partially offset by higher expected return on plan assets.
|
92
|
|
2013 Financial Report
|
|
|
|
The following table provides the weighted-average actuarial assumptions of our benefit plans:
|
|||||||||
(PERCENTAGES)
|
|
2013
|
|
2012
|
|
2011
|
|||
Weighted-average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|||
Discount rate:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
5.2
|
%
|
|
4.3
|
%
|
|
5.1
|
%
|
U.S. non-qualified pension plans
|
|
4.8
|
%
|
|
3.9
|
%
|
|
5.0
|
%
|
International pension plans
|
|
3.9
|
%
|
|
3.8
|
%
|
|
4.7
|
%
|
Postretirement plans
|
|
5.1
|
%
|
|
4.1
|
%
|
|
4.8
|
%
|
Rate of compensation increase:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
2.8
|
%
|
|
2.8
|
%
|
|
3.5
|
%
|
U.S. non-qualified pension plans
|
|
2.8
|
%
|
|
2.8
|
%
|
|
3.5
|
%
|
International pension plans
|
|
2.9
|
%
|
|
3.1
|
%
|
|
3.3
|
%
|
Weighted-average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|||
Discount rate:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
4.3
|
%
|
|
5.1
|
%
|
|
5.9
|
%
|
U.S. non-qualified pension plans
|
|
3.9
|
%
|
|
5.0
|
%
|
|
5.8
|
%
|
International pension plans
|
|
3.8
|
%
|
|
4.7
|
%
|
|
4.8
|
%
|
Postretirement plans
|
|
4.1
|
%
|
|
4.8
|
%
|
|
5.6
|
%
|
Expected return on plan assets:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
8.5
|
%
|
|
8.5
|
%
|
|
8.5
|
%
|
International pension plans
|
|
5.6
|
%
|
|
5.9
|
%
|
|
6.0
|
%
|
Postretirement plans
|
|
8.5
|
%
|
|
8.5
|
%
|
|
8.5
|
%
|
Rate of compensation increase:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
2.8
|
%
|
|
3.5
|
%
|
|
4.0
|
%
|
U.S. non-qualified pension plans
|
|
2.8
|
%
|
|
3.5
|
%
|
|
4.0
|
%
|
International pension plans
|
|
3.1
|
%
|
|
3.3
|
%
|
|
3.5
|
%
|
2013 Financial Report
|
|
93
|
|
|
|
The following table provides the effects as of December 31, 2013 of a one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits:
|
||||||||
(MILLIONS OF DOLLARS)
|
|
Increase
|
|
|
Decrease
|
|
||
Effect on total service and interest cost components
|
|
$
|
15
|
|
|
$
|
(14
|
)
|
Effect on postretirement benefit obligation
|
|
248
|
|
|
(222
|
)
|
The following table provides an analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans (including those reported as part of discontinued operations):
|
||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
|
|
||||||||||||||||||||||||||
|
|
U.S. Qualified
(a)
|
|
U.S. Supplemental
(Non-Qualified)
(b)
|
|
International
(c)
|
|
Postretirement
Plans
(d)
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||||||
Change in benefit obligation
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Benefit obligation, beginning
|
|
$
|
16,268
|
|
|
$
|
14,835
|
|
|
$
|
1,549
|
|
|
$
|
1,431
|
|
|
$
|
10,227
|
|
|
$
|
8,891
|
|
|
$
|
4,165
|
|
|
$
|
3,900
|
|
Service cost
|
|
301
|
|
|
357
|
|
|
26
|
|
|
35
|
|
|
216
|
|
|
215
|
|
|
61
|
|
|
68
|
|
||||||||
Interest cost
|
|
666
|
|
|
697
|
|
|
67
|
|
|
62
|
|
|
378
|
|
|
406
|
|
|
166
|
|
|
182
|
|
||||||||
Employee contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
9
|
|
|
69
|
|
|
58
|
|
||||||||
Plan amendments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
(152
|
)
|
|
(24
|
)
|
||||||||
Changes in actuarial assumptions and other
|
|
(2,257
|
)
|
|
1,926
|
|
|
(165
|
)
|
|
252
|
|
|
229
|
|
|
1,232
|
|
|
(540
|
)
|
|
259
|
|
||||||||
Foreign exchange impact
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66
|
)
|
|
(80
|
)
|
|
(9
|
)
|
|
1
|
|
||||||||
Acquisitions/divestitures, net
|
|
—
|
|
|
(1
|
)
|
|
37
|
|
|
1
|
|
|
(63
|
)
|
|
71
|
|
|
—
|
|
|
—
|
|
||||||||
Curtailments
|
|
(8
|
)
|
|
(605
|
)
|
|
(1
|
)
|
|
(80
|
)
|
|
(64
|
)
|
|
(101
|
)
|
|
(8
|
)
|
|
(11
|
)
|
||||||||
Settlements
|
|
(444
|
)
|
|
(485
|
)
|
|
(105
|
)
|
|
(121
|
)
|
|
(156
|
)
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
||||||||
Special termination benefits
|
|
—
|
|
|
8
|
|
|
—
|
|
|
30
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
6
|
|
||||||||
Benefits paid
|
|
(550
|
)
|
|
(464
|
)
|
|
(67
|
)
|
|
(61
|
)
|
|
(400
|
)
|
|
(387
|
)
|
|
(314
|
)
|
|
(274
|
)
|
||||||||
Benefit obligation, ending
(e)
|
|
13,976
|
|
|
16,268
|
|
|
1,341
|
|
|
1,549
|
|
|
10,316
|
|
|
10,227
|
|
|
3,438
|
|
|
4,165
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fair value of plan assets, beginning
|
|
12,540
|
|
|
12,005
|
|
|
—
|
|
|
—
|
|
|
7,589
|
|
|
6,953
|
|
|
644
|
|
|
422
|
|
||||||||
Actual gain on plan assets
|
|
1,318
|
|
|
1,464
|
|
|
—
|
|
|
—
|
|
|
976
|
|
|
668
|
|
|
98
|
|
|
85
|
|
||||||||
Company contributions
|
|
5
|
|
|
20
|
|
|
172
|
|
|
182
|
|
|
380
|
|
|
383
|
|
|
244
|
|
|
353
|
|
||||||||
Employee contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
9
|
|
|
69
|
|
|
58
|
|
||||||||
Foreign exchange impact
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
||||||||
Acquisitions/divestitures, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
31
|
|
|
—
|
|
|
—
|
|
||||||||
Settlements
|
|
(444
|
)
|
|
(485
|
)
|
|
(105
|
)
|
|
(121
|
)
|
|
(156
|
)
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
||||||||
Benefits paid
|
|
(550
|
)
|
|
(464
|
)
|
|
(67
|
)
|
|
(61
|
)
|
|
(400
|
)
|
|
(387
|
)
|
|
(314
|
)
|
|
(274
|
)
|
||||||||
Fair value of plan assets, ending
|
|
12,869
|
|
|
12,540
|
|
|
—
|
|
|
—
|
|
|
8,250
|
|
|
7,589
|
|
|
741
|
|
|
644
|
|
||||||||
Funded status—Plan assets less than benefit obligation
|
|
$
|
(1,107
|
)
|
|
$
|
(3,728
|
)
|
|
$
|
(1,341
|
)
|
|
$
|
(1,549
|
)
|
|
$
|
(2,066
|
)
|
|
$
|
(2,638
|
)
|
|
$
|
(2,697
|
)
|
|
$
|
(3,521
|
)
|
(a)
|
The favorable change in the funded status of our U.S. qualified plans is primarily due to the plan gains resulting from the increase in the discount rate and an increase in plan assets. The curtailments in 2012 resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico had a favorable impact on the 2012 funded status.
|
(b)
|
Our U.S. supplemental (non-qualified) plans are generally not funded and these obligations, which are substantially greater than the annual cash outlay for these liabilities, will be paid from cash generated from operations.
|
(c)
|
The favorable change in the funded status of our international plans is primarily due to an increase in plan assets partially offset by plan losses resulting from changes in actuarial assumptions. Outside the U.S., in general, we fund our defined benefit plans to the extent that tax or other incentives exist or the law requires.
|
(d)
|
The favorable change in the funded status of our postretirement plans is primarily due to the plan gains resulting from the increase in the discount rate and the impact of a decision to move participants to Medicare Advantage effective January 1, 2015.
|
(e)
|
For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the benefit obligation is the accumulated postretirement benefit obligation (ABO). The ABO for all of our U.S. qualified pension plans was
$13.7 billion
in
2013
and
$15.9 billion
in
2012
. The
|
94
|
|
2013 Financial Report
|
|
|
|
The following table provides information as to how the funded status is recognized in our consolidated balance sheets:
|
||||||||||||||||||||||||||||||||
|
|
As of December 31,
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
|
|
||||||||||||||||||||||||||
|
|
U.S. Qualified
|
|
U.S. Supplemental
(Non-Qualified) |
|
International
|
|
Postretirement
Plans |
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||||||
Noncurrent assets
(a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
318
|
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
(b)
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|
(162
|
)
|
|
(46
|
)
|
|
(95
|
)
|
|
(29
|
)
|
|
(30
|
)
|
||||||||
Noncurrent liabilities
(c)
|
|
(1,107
|
)
|
|
(3,728
|
)
|
|
(1,190
|
)
|
|
(1,387
|
)
|
|
(2,338
|
)
|
|
(2,667
|
)
|
|
(2,668
|
)
|
|
(3,491
|
)
|
||||||||
Funded status
|
|
$
|
(1,107
|
)
|
|
$
|
(3,728
|
)
|
|
$
|
(1,341
|
)
|
|
$
|
(1,549
|
)
|
|
$
|
(2,066
|
)
|
|
$
|
(2,638
|
)
|
|
$
|
(2,697
|
)
|
|
$
|
(3,521
|
)
|
(a)
|
Included primarily in
Other noncurrent assets
.
|
(b)
|
Included in
Accrued compensation and related items
and
Liabilities of discontinued operations
, as appropriate.
|
(c)
|
Included in
Pension benefit obligations, net
and
Postretirement benefit obligations
,
net,
as appropriate.
|
(a)
|
The accumulated actuarial losses primarily represent the impact of changes in discount rates and other assumptions that result in cumulative changes in our projected benefit obligations as well as the cumulative difference between the expected return and actual return on plan assets. These accumulated actuarial losses are recognized in
Accumulated other comprehensive loss
and are amortized into net periodic benefit costs primarily over the average remaining service period for active participants, using the corridor approach. The average amortization periods utilized are
9.6
years for our U.S. qualified plans,
9.5
years for our U.S. supplemental (non-qualified) plans,
18.2
years for our international plans and
10.8
years for our postretirement plans.
|
2013 Financial Report
|
|
95
|
|
|
|
The following table provides the components of plan assets (including those reported as part of
Liabilities of discontinued operations
):
|
||||||||||||||||||||||||||||||||
|
|
|
|
Fair Value
(a)
|
|
|
|
Fair Value
(a)
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
As of December 31, 2013
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
As of December 31, 2012
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||
U.S. qualified pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
368
|
|
|
$
|
—
|
|
|
$
|
368
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Global equity securities
|
|
4,335
|
|
|
4,328
|
|
|
7
|
|
|
—
|
|
|
3,536
|
|
|
3,519
|
|
|
17
|
|
|
—
|
|
||||||||
Equity commingled funds
|
|
2,294
|
|
|
—
|
|
|
2,294
|
|
|
—
|
|
|
2,215
|
|
|
—
|
|
|
2,215
|
|
|
—
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed income commingled funds
|
|
675
|
|
|
—
|
|
|
675
|
|
|
—
|
|
|
943
|
|
|
—
|
|
|
943
|
|
|
—
|
|
||||||||
Government bonds
|
|
971
|
|
|
—
|
|
|
971
|
|
|
—
|
|
|
1,093
|
|
|
—
|
|
|
1,093
|
|
|
—
|
|
||||||||
Corporate debt securities
|
|
2,306
|
|
|
—
|
|
|
2,306
|
|
|
—
|
|
|
2,414
|
|
|
—
|
|
|
2,411
|
|
|
3
|
|
||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Private equity funds
|
|
822
|
|
|
—
|
|
|
—
|
|
|
822
|
|
|
866
|
|
|
—
|
|
|
—
|
|
|
866
|
|
||||||||
Insurance contracts
|
|
281
|
|
|
—
|
|
|
281
|
|
|
—
|
|
|
348
|
|
|
—
|
|
|
348
|
|
|
—
|
|
||||||||
Other
|
|
825
|
|
|
—
|
|
|
—
|
|
|
825
|
|
|
757
|
|
|
—
|
|
|
—
|
|
|
757
|
|
||||||||
Total
|
|
12,869
|
|
|
4,328
|
|
|
6,894
|
|
|
1,647
|
|
|
12,540
|
|
|
3,519
|
|
|
7,395
|
|
|
1,626
|
|
||||||||
International pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
|
229
|
|
|
—
|
|
|
229
|
|
|
—
|
|
|
299
|
|
|
—
|
|
|
299
|
|
|
—
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Global equity securities
|
|
1,833
|
|
|
1,832
|
|
|
1
|
|
|
—
|
|
|
1,723
|
|
|
1,638
|
|
|
85
|
|
|
—
|
|
||||||||
Equity commingled funds
|
|
2,446
|
|
|
—
|
|
|
2,446
|
|
|
—
|
|
|
2,194
|
|
|
—
|
|
|
2,194
|
|
|
—
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed income commingled funds
|
|
967
|
|
|
—
|
|
|
967
|
|
|
—
|
|
|
825
|
|
|
—
|
|
|
825
|
|
|
—
|
|
||||||||
Government bonds
|
|
812
|
|
|
—
|
|
|
812
|
|
|
—
|
|
|
914
|
|
|
—
|
|
|
914
|
|
|
—
|
|
||||||||
Corporate debt securities
|
|
615
|
|
|
—
|
|
|
615
|
|
|
—
|
|
|
613
|
|
|
—
|
|
|
613
|
|
|
—
|
|
||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Private equity funds
|
|
54
|
|
|
—
|
|
|
10
|
|
|
44
|
|
|
110
|
|
|
—
|
|
|
14
|
|
|
96
|
|
||||||||
Insurance contracts
|
|
421
|
|
|
—
|
|
|
121
|
|
|
300
|
|
|
465
|
|
|
—
|
|
|
117
|
|
|
348
|
|
||||||||
Other
|
|
873
|
|
|
—
|
|
|
353
|
|
|
520
|
|
|
446
|
|
|
—
|
|
|
57
|
|
|
389
|
|
||||||||
Total
|
|
8,250
|
|
|
1,832
|
|
|
5,554
|
|
|
864
|
|
|
7,589
|
|
|
1,638
|
|
|
5,118
|
|
|
833
|
|
||||||||
U.S. postretirement plans
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
|
29
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Global equity securities
|
|
105
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
79
|
|
|
—
|
|
|
—
|
|
||||||||
Equity commingled funds
|
|
56
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed income commingled funds
|
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
||||||||
Government bonds
|
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||||||
Corporate debt securities
|
|
56
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Insurance contracts
|
|
415
|
|
|
—
|
|
|
415
|
|
|
—
|
|
|
350
|
|
|
—
|
|
|
350
|
|
|
—
|
|
||||||||
Other
|
|
40
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
37
|
|
|
—
|
|
||||||||
Total
|
|
$
|
741
|
|
|
$
|
105
|
|
|
$
|
636
|
|
|
$
|
—
|
|
|
$
|
644
|
|
|
$
|
79
|
|
|
$
|
565
|
|
|
$
|
—
|
|
(a)
|
Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see
Note 1E. Basis of Presentation and Significant Accounting Policies: Fair Value
).
|
(b)
|
Reflects postretirement plan assets, which support a portion of our U.S. retiree medical plans.
|
96
|
|
2013 Financial Report
|
|
|
|
The following table provides an analysis of the changes in our more significant investments valued using significant unobservable inputs (including those reported as part of
Liabilities of discontinued operations
):
|
||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
U.S. Qualified Pension Plans
|
|
International Pension Plans
|
||||||||||||||||||||||||||||
|
|
Private Equity Funds
|
|
Other
|
|
Insurance Contracts
|
|
Other
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||||||
Fair value, beginning
|
|
$
|
866
|
|
|
$
|
920
|
|
|
$
|
757
|
|
|
$
|
656
|
|
|
$
|
348
|
|
|
$
|
366
|
|
|
$
|
389
|
|
|
$
|
348
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Assets held, ending
|
|
75
|
|
|
4
|
|
|
29
|
|
|
61
|
|
|
15
|
|
|
8
|
|
|
8
|
|
|
(14
|
)
|
||||||||
Assets sold during the period
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||||
Purchases, sales and settlements, net
|
|
(119
|
)
|
|
(58
|
)
|
|
45
|
|
|
40
|
|
|
(41
|
)
|
|
(5
|
)
|
|
63
|
|
|
50
|
|
||||||||
Transfer into/(out of) Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(5
|
)
|
|
58
|
|
|
—
|
|
||||||||
Exchange rate changes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(16
|
)
|
|
2
|
|
|
—
|
|
||||||||
Fair value, ending
|
|
$
|
822
|
|
|
$
|
866
|
|
|
$
|
825
|
|
|
$
|
757
|
|
|
$
|
300
|
|
|
$
|
348
|
|
|
$
|
520
|
|
|
$
|
389
|
|
•
|
Cash and cash equivalents, Equity commingled funds, Fixed-income commingled funds––observable prices.
|
•
|
Global equity securities—quoted market prices.
|
•
|
Government bonds, Corporate debt securities—observable market prices.
|
•
|
Other investments—principally unobservable inputs that are significant to the estimation of fair value. These unobservable inputs could include, for example, the investment managers’ assumptions about earnings multiples and future cash flows.
|
2013 Financial Report
|
|
97
|
|
|
|
The following table provides the expected future cash flow information related to our benefit plans:
|
||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
U.S. Qualified
|
|
U.S. Supplemental
(Non-Qualified)
|
|
International
|
|
Postretirement Plans
|
|
|||||||
Expected employer contributions:
|
|
|
|
|
|
|
|
|
||||||||
2014
|
|
$
|
6
|
|
|
$
|
150
|
|
|
$
|
305
|
|
|
$
|
246
|
|
Expected benefit payments:
|
|
|
|
|
|
|
|
|
||||||||
2014
|
|
$
|
828
|
|
|
$
|
150
|
|
|
$
|
390
|
|
|
$
|
286
|
|
2015
|
|
792
|
|
|
123
|
|
|
398
|
|
|
285
|
|
||||
2016
|
|
803
|
|
|
107
|
|
|
410
|
|
|
293
|
|
||||
2017
|
|
868
|
|
|
110
|
|
|
418
|
|
|
303
|
|
||||
2018
|
|
958
|
|
|
124
|
|
|
429
|
|
|
311
|
|
||||
2019–2023
|
|
4,579
|
|
|
490
|
|
|
2,314
|
|
|
1,661
|
|
98
|
|
2013 Financial Report
|
|
|
|
•
|
We purchased approximately
563 million
shares of our common stock for approximately
$16.3 billion
under our publicly announced share-purchase plans. In 2012, we purchased approximately
349 million
shares of our common stock for approximately
$8.2 billion
under our publicly announced share-purchase plans. In 2011, we purchased approximately
459 million
shares of our common stock for approximately
$9.0 billion
under our publicly announced share-purchase plans. After giving effect to share purchases through year-end 2013, our remaining share-purchase authorization is approximately
$5.5 billion
at
December 31, 2013
.
|
•
|
We exchanged all of our remaining interest in Zoetis for approximately
405.117 million
shares of our common stock, valued at
$11.4 billion
. The common stock received in the exchange transaction was recorded in
Treasury stock
. For additional information, see
Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Divestitures
.
|
2013 Financial Report
|
|
99
|
|
|
|
(a)
|
Determined using a constant dividend yield during the expected term of the option.
|
(b)
|
Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
|
(c)
|
Determined using implied volatility, after consideration of historical volatility.
|
(d)
|
Determined using historical exercise and post-vesting termination patterns.
|
100
|
|
2013 Financial Report
|
|
|
|
The following table summarizes all stock option activity during 2013:
|
|||||||||||||
|
|
Shares
(Thousands)
|
|
|
Weighted-Average
Exercise Price
Per Share
|
|
|
Weighted-Average
Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
(a)
(Millions)
|
|
||
Outstanding, December 31, 2012
|
|
382,955
|
|
|
$
|
24.00
|
|
|
|
|
|
||
Granted
|
|
45,013
|
|
|
27.37
|
|
|
|
|
|
|||
Exercised
|
|
(80,132
|
)
|
|
21.86
|
|
|
|
|
|
|||
Forfeited
|
|
(5,904
|
)
|
|
21.93
|
|
|
|
|
|
|||
Expired
|
|
(42,279
|
)
|
|
29.62
|
|
|
|
|
|
|||
Outstanding, December 31, 2013
(b)
|
|
299,653
|
|
|
$
|
24.33
|
|
|
5.3
|
|
$
|
2,166
|
|
Vested and expected to vest
(c)
, December 31, 2013
|
|
293,371
|
|
|
24.32
|
|
|
5.2
|
|
2,129
|
|
||
Exercisable, December 31, 2013
|
|
163,061
|
|
|
$
|
26.06
|
|
|
2.9
|
|
$
|
1,023
|
|
(a)
|
Market price of underlying Pfizer common stock less exercise price.
|
(b)
|
Includes approximately
42 million
stock options which expired on February 25, 2014 at a grant price of
$37.15
, which were granted under the 2001 Stock Plan. These options will not be added back into the amount available for grants under the 2004 Stock Plan. However, expired or forfeited share-based payments under the 2004 Stock Plan will be added back to the amount available for grants.
|
(c)
|
The number of options expected to vest takes into account an estimate of expected forfeitures.
|
2013 Financial Report
|
|
101
|
|
|
|
The following table provides data related to all PPS activity:
|
||||||||
(MILLIONS OF DOLLARS)
|
|
Year Ended December 31,
|
||||||
2013
|
|
|
2012
|
|
||||
Total fair value of shares vested
|
|
$
|
—
|
|
|
$
|
—
|
|
Total compensation cost related to nonvested PPS awards not yet recognized, pre-tax
|
|
$
|
107
|
|
|
$
|
33
|
|
Weighted-average period over which PPS cost is expected to be recognized (years)
|
|
2.0
|
|
|
2.2
|
|
(a)
|
Determined using a constant dividend yield during the expected term of the TSRU.
|
(b)
|
Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
|
(c)
|
Determined using implied volatility, after consideration of historical volatility.
|
(a)
|
Vested and non-vested shares outstanding, but not paid as of December 31, 2013 are
34,499
with a weighted-average grant price of
$20.54
. The weighted-average contractual term to settlement is
3.2 years
.
|
The following table provides data related to all TSRU activity:
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER TSRU AMOUNTS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
Weighted-average grant date fair value per TSRU
|
|
$
|
5.14
|
|
|
$
|
4.48
|
|
|
$
|
4.75
|
|
Total compensation cost related to nonvested TSRU grants not yet recognized, pre-tax
|
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
32
|
|
Weighted-average period over which TSRU cost is expected to be recognized (years)
|
|
1.6
|
|
|
1.7
|
|
|
1.7
|
|
102
|
|
2013 Financial Report
|
|
|
|
The following table provides data related to all PSA activity:
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
2012
|
|
2011
|
||||||
Total fair value of shares vested
|
|
$
|
40
|
|
|
$
|
13
|
|
|
$
|
4
|
|
Total compensation cost related to nonvested PSA grants not yet recognized, pre-tax
|
|
$
|
25
|
|
|
$
|
27
|
|
|
$
|
25
|
|
Weighted-average period over which PSA cost is expected to be recognized (years)
|
|
1.7
|
|
|
1.7
|
|
|
1.9
|
|
2013 Financial Report
|
|
103
|
|
|
|
The following table provides the detailed calculation of
Earnings per common share (EPS):
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(IN MILLIONS)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|||
EPS Numerator––Basic
|
|
|
|
|
|
|
|
|||||
Income from continuing operations
|
|
$
|
11,410
|
|
|
$
|
9,021
|
|
|
$
|
7,860
|
|
Less: Net income attributable to noncontrolling interests
|
|
30
|
|
|
28
|
|
|
40
|
|
|||
Income from continuing operations attributable to Pfizer Inc.
|
|
11,380
|
|
|
8,993
|
|
|
7,820
|
|
|||
Less: Preferred stock dividends––net of tax
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
11,378
|
|
|
8,991
|
|
|
7,818
|
|
|||
Discontinued operations––net of tax
|
|
10,662
|
|
|
5,577
|
|
|
2,189
|
|
|||
Less: Discontinued operations––net of tax, attributable to noncontrolling interests
|
|
39
|
|
|
—
|
|
|
—
|
|
|||
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders
|
|
10,623
|
|
|
5,577
|
|
|
2,189
|
|
|||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
22,001
|
|
|
$
|
14,568
|
|
|
$
|
10,007
|
|
EPS Numerator––Diluted
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
$
|
11,380
|
|
|
$
|
8,993
|
|
|
$
|
7,820
|
|
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
10,623
|
|
|
5,577
|
|
|
2,189
|
|
|||
Net income attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
$
|
22,003
|
|
|
$
|
14,570
|
|
|
$
|
10,009
|
|
EPS Denominator
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of common shares outstanding––Basic
|
|
6,813
|
|
|
7,442
|
|
|
7,817
|
|
|||
Common-share equivalents: stock options, stock issuable under employee compensation plans and convertible preferred stock
|
|
82
|
|
|
66
|
|
|
53
|
|
|||
Weighted-average number of common shares outstanding––Diluted
|
|
6,895
|
|
|
7,508
|
|
|
7,870
|
|
|||
Stock options that had exercise prices greater than the average market price of our common stock issuable under employee compensation plans
(a)
|
|
43
|
|
|
177
|
|
|
272
|
|
(a)
|
These common stock equivalents were outstanding for the years ended
December 31, 2013
,
2012
and
2011
, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
|
The future minimum rental commitments under non-cancelable operating leases follow:
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
After 2018
|
|
||||||
Lease commitments
|
|
$
|
204
|
|
|
$
|
168
|
|
|
$
|
130
|
|
|
$
|
98
|
|
|
$
|
80
|
|
|
$
|
771
|
|
104
|
|
2013 Financial Report
|
|
|
|
•
|
Patent litigation, which typically involves challenges to the coverage and/or validity of our patents on various products, processes or dosage forms. We are the plaintiff in the vast majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in a loss of patent protection for the drug at issue, a significant loss of revenues from that drug and impairments of any associated assets.
|
•
|
Product liability and other product-related litigation, which can include personal injury, consumer, off-label promotion, securities-law, antitrust and breach of contract claims, among others, often involves highly complex issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual, provable injury and other matters.
|
•
|
Commercial and other matters, which can include merger-related and product-pricing claims and environmental claims and proceedings, can involve complexities that will vary from matter to matter.
|
•
|
Government investigations, which often are related to the extensive regulation of pharmaceutical companies by national, state and local government agencies in the U.S. and in other countries.
|
2013 Financial Report
|
|
105
|
|
|
|
106
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
107
|
|
|
|
•
|
Personal Injury Actions
|
•
|
Antitrust Actions
|
108
|
|
2013 Financial Report
|
|
|
|
•
|
Off-Label Promotion Actions
|
•
|
Personal Injury Actions
|
•
|
Antitrust Action
|
•
|
Whistleblower Action
|
2013 Financial Report
|
|
109
|
|
|
|
•
|
Antitrust Actions
|
•
|
Personal Injury Actions
|
110
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
111
|
|
|
|
112
|
|
2013 Financial Report
|
|
|
|
2013 Financial Report
|
|
113
|
|
|
|
•
|
Primary Care operating segment––included revenues and earnings, as defined by management, from prescription pharmaceutical products primarily prescribed by primary-care physicians, and included products in the following therapeutic and disease areas: Alzheimer’s disease, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, genitourinary, major depressive disorder, pain, respiratory and smoking cessation. Examples of products in this unit in 2013 included Celebrex, Chantix/Champix, Eliquis, Lyrica, Premarin, Pristiq and Viagra (outside Canada and South Korea). All revenues and earnings for such products were allocated to the Primary Care unit, except those generated in Emerging Markets and those that were managed by the Established Products unit.
|
•
|
Specialty Care and Oncology operating segment––comprised the Specialty Care business unit and the Oncology business unit.
|
◦
|
Specialty Care––included revenues and earnings, as defined by management, from prescription pharmaceutical products primarily prescribed by physicians who are specialists, and included products in the following therapeutic and disease areas: anti-infectives, endocrine disorders, hemophilia, inflammation, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. Examples of products in this unit in 2013 included BeneFIX, Enbrel, Genotropin, Geodon (outside the U.S.), the Prevnar family of products, ReFacto AF, Revatio (outside the U.S.), Tygacil, Vfend (outside the U.S. and South Korea), Vyndaqel, Xalatan (outside the U.S., Canada, South Korea, developed Europe, Australia and New Zealand), Xeljanz, Xyntha and Zyvox. All revenues and earnings for such products were allocated to the Specialty Care unit, except those generated in Emerging Markets and those that were managed by the Established Products unit.
|
◦
|
Oncology––included revenues and earnings, as defined by management, from prescription pharmaceutical products addressing oncology and oncology-related illnesses. The products in this unit in 2013 included Inlyta, Sutent, Torisel, Xalkori, Mylotarg (in Japan), Bosulif (in the U.S. and EU) and Aromasin (in Japan and South Korea). All revenues and earnings for such products were allocated to the Oncology unit, except those generated in Emerging Markets and those that were managed by the Established Products unit.
|
•
|
Established Products and Emerging Markets operating segment––comprised the Established Products business unit and the Emerging Markets business unit.
|
◦
|
Established Products––included revenues and earnings, as defined by management, from prescription pharmaceutical products that had lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products were transferred to this unit in the beginning of the fiscal year following loss of patent protection or marketing exclusivity. However, in certain situations, products were transferred to this unit at a different point than the beginning of the fiscal year following loss of patent protection or marketing exclusivity in order to maximize their value. This unit also excluded revenues and earnings generated in Emerging Markets. Examples of products in this unit in 2013 included Arthrotec, Effexor, Geodon (in the U.S.), Lipitor, Medrol, Norvasc, Protonix, Relpax, Vfend (in the U.S. and South Korea), Xalatan (in the U.S., Canada, South Korea, developed Europe, Australia and New Zealand), Zosyn/Tazocin and Viagra (in Canada and South Korea).
|
◦
|
Emerging Markets––included revenues and earnings, as defined by management, from all prescription pharmaceutical products sold in Emerging Markets, including Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
|
•
|
Consumer Healthcare operating segment–– includes worldwide revenues and earnings, as defined by management, from non-prescription products in the following therapeutic categories: dietary supplements, pain management, respiratory and personal care. Products marketed by Consumer Healthcare include Advil, Caltrate, Centrum, ChapStick, Emergen-C, Preparation H and Robitussin.
|
•
|
Worldwide Research and Development, which is generally responsible for research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. Worldwide Research and Development is also responsible for facilitating all regulatory submissions and interactions with regulatory agencies, including all safety-event activities.
|
•
|
Pfizer Medical, which is responsible for the provision of medical information to healthcare providers, patients and other parties, transparency and disclosure activities, clinical trial results publication, grants for healthcare quality improvement and medical education, partnerships with global public health and medical associations, regulatory inspection readiness reviews, internal audits of Pfizer-sponsored clinical trials and internal regulatory compliance processes.
|
•
|
Corporate, representing platform functions (such as worldwide technology, finance, global real estate operations, human resources, legal, compliance, worldwide procurement, and worldwide public affairs and policy), interest income and expense and certain compensation and other corporate costs. Other unallocated costs represent overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
|
•
|
Certain transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) acquisition-related activities, where we incur costs for restructuring, integration, implementation and executing the transaction; and (iii) certain significant items, which include non-
|
114
|
|
2013 Financial Report
|
|
|
|
(a)
|
Income from continuing operations before provision for taxes on income.
|
(b)
|
Certain production facilities are shared. Depreciation is allocated based on estimates of physical production. Amounts here relate solely to the depreciation and amortization associated with continuing operations.
|
(c)
|
For 2011, includes King commencing on the acquisition date of January 31, 2011.
|
(d)
|
Revenues and Earnings from the Primary Care segment decreased for
2013
as compared to the prior year, and Earnings as a percentage of revenues for 2013 also declined, primarily due to the loss of exclusivity of Lipitor in developed Europe and Australia; the subsequent shift in the reporting of Lipitor in those major markets to the Established Products business unit; the losses of exclusivity of certain other products in various markets; lower Alliance revenues from Spiriva due to the ongoing expiration of the Spiriva collaboration in certain countries; and the termination of the co-promotion agreement for Aricept in Japan in December 2012. Revenues and Earnings from the Primary Care segment decreased for
2012
as compared to 2011, and Earnings as a percentage of revenues also declined, primarily due to the loss of exclusivity of Lipitor in most major markets, and the subsequent shift in the reporting of Lipitor in those major markets to the Established Products business unit.
|
(e)
|
Revenues and Earnings from the Established Products and Emerging Markets segment decreased in
2013
as compared to the prior year, primarily due to the continued erosion of branded Lipitor in the U.S. and Japan, partially offset by the addition of products in certain markets that shifted to the Established Products unit from other business units beginning January 1, 2013 and strong volume growth in China. Revenues and Earnings from the Established Products and Emerging Markets segment increased in
2012
as compared to 2011, primarily due to additional products losing exclusivity and moving to the Established Products unit and increased operational sales in emerging markets, partially offset by unfavorable foreign exchange. Earnings as a percentage of revenue in 2012 increased due to the change in the mix of products.
|
(f)
|
Other business activities includes the revenues and operating results of Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales operation, and the R&D costs managed by our Worldwide Research and Development organization and our Pfizer Medical organization.
|
(g)
|
Purchase accounting adjustments include certain charges related to the fair value adjustments to inventory, intangible assets and property, plant and equipment.
|
(h)
|
Acquisition-related costs can include costs associated with acquiring, integrating and restructuring newly acquired businesses, such as transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring. For additional information, see
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
.
|
(i)
|
Certain significant items are substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis.
|
2013 Financial Report
|
|
115
|
|
|
|
(j)
|
Includes overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
|
The following table provides revenues by geographic area:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
(a)
|
|
|||
United States
|
|
$
|
20,274
|
|
|
$
|
21,313
|
|
|
$
|
25,277
|
|
Developed Europe
(b)
|
|
11,739
|
|
|
12,545
|
|
|
15,221
|
|
|||
Developed Rest of World
(c)
|
|
8,346
|
|
|
9,956
|
|
|
10,422
|
|
|||
Emerging Markets
(d)
|
|
11,225
|
|
|
10,843
|
|
|
10,115
|
|
|||
Revenues
|
|
$
|
51,584
|
|
|
$
|
54,657
|
|
|
$
|
61,035
|
|
(a)
|
For 2011, includes King commencing on the acquisition date of January 31, 2011.
|
(b)
|
Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries. Revenues denominated in euros were
$8.9 billion
in
2013
,
$9.4 billion
in
2012
and
$11.4 billion
in
2011
.
|
(c)
|
Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.
|
(d)
|
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
|
(a)
|
Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries.
|
(b)
|
Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand, and South Korea.
|
(c)
|
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
|
116
|
|
2013 Financial Report
|
|
|
|
The following table provides revenues by product:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2013
|
|
|
2012
|
|
|
2011
(a)
|
|
|||
Revenues from biopharmaceutical products:
|
|
|
|
|
|
|
||||||
Lyrica
|
|
$
|
4,595
|
|
|
$
|
4,158
|
|
|
$
|
3,693
|
|
Prevnar family
|
|
3,974
|
|
|
4,117
|
|
|
4,145
|
|
|||
Enbrel (Outside the U.S. and Canada)
|
|
3,774
|
|
|
3,737
|
|
|
3,666
|
|
|||
Celebrex
|
|
2,918
|
|
|
2,719
|
|
|
2,523
|
|
|||
Lipitor
(b)
|
|
2,315
|
|
|
3,948
|
|
|
9,577
|
|
|||
Viagra
|
|
1,881
|
|
|
2,051
|
|
|
1,981
|
|
|||
Zyvox
|
|
1,353
|
|
|
1,345
|
|
|
1,283
|
|
|||
Norvasc
|
|
1,229
|
|
|
1,349
|
|
|
1,445
|
|
|||
Sutent
|
|
1,204
|
|
|
1,236
|
|
|
1,187
|
|
|||
Premarin family
|
|
1,092
|
|
|
1,073
|
|
|
1,013
|
|
|||
BeneFIX
|
|
832
|
|
|
775
|
|
|
693
|
|
|||
Vfend
|
|
775
|
|
|
754
|
|
|
747
|
|
|||
Genotropin
|
|
772
|
|
|
832
|
|
|
889
|
|
|||
Pristiq
|
|
698
|
|
|
630
|
|
|
577
|
|
|||
Chantix/Champix
|
|
648
|
|
|
670
|
|
|
720
|
|
|||
Refacto AF/Xyntha
|
|
602
|
|
|
584
|
|
|
506
|
|
|||
Xalatan/Xalacom
|
|
589
|
|
|
806
|
|
|
1,250
|
|
|||
Detrol/Detrol LA
|
|
562
|
|
|
761
|
|
|
883
|
|
|||
Zoloft
|
|
469
|
|
|
541
|
|
|
573
|
|
|||
Medrol
|
|
464
|
|
|
523
|
|
|
510
|
|
|||
Effexor
|
|
440
|
|
|
425
|
|
|
678
|
|
|||
Zosyn/Tazocin
|
|
395
|
|
|
484
|
|
|
636
|
|
|||
Zithromax/Zmax
|
|
387
|
|
|
435
|
|
|
453
|
|
|||
Fragmin
|
|
359
|
|
|
381
|
|
|
382
|
|
|||
Relpax
|
|
359
|
|
|
368
|
|
|
341
|
|
|||
Tygacil
|
|
358
|
|
|
335
|
|
|
298
|
|
|||
Rapamune
|
|
350
|
|
|
346
|
|
|
372
|
|
|||
Inlyta
|
|
319
|
|
|
100
|
|
|
—
|
|
|||
Sulperazon
|
|
309
|
|
|
262
|
|
|
218
|
|
|||
Revatio
|
|
307
|
|
|
534
|
|
|
535
|
|
|||
Cardura
|
|
296
|
|
|
338
|
|
|
380
|
|
|||
Xalkori
|
|
282
|
|
|
123
|
|
|
16
|
|
|||
Xanax/Xanax XR
|
|
276
|
|
|
274
|
|
|
306
|
|
|||
Diflucan
|
|
242
|
|
|
259
|
|
|
265
|
|
|||
Toviaz
|
|
236
|
|
|
207
|
|
|
187
|
|
|||
Aricept
(c)
|
|
235
|
|
|
326
|
|
|
450
|
|
|||
Inspra
|
|
233
|
|
|
214
|
|
|
195
|
|
|||
Caduet
|
|
223
|
|
|
258
|
|
|
538
|
|
|||
Somavert
|
|
217
|
|
|
197
|
|
|
183
|
|
|||
Neurontin
|
|
216
|
|
|
235
|
|
|
289
|
|
|||
Unasyn
|
|
212
|
|
|
228
|
|
|
231
|
|
|||
BMP2
|
|
209
|
|
|
263
|
|
|
340
|
|
|||
Geodon
|
|
194
|
|
|
353
|
|
|
1,022
|
|
|||
Depo-Provera
|
|
191
|
|
|
148
|
|
|
139
|
|
|||
Aromasin
|
|
185
|
|
|
210
|
|
|
361
|
|
|||
Xeljanz
|
|
114
|
|
|
6
|
|
|
—
|
|
|||
Alliance revenues
(d)
|
|
2,628
|
|
|
3,492
|
|
|
3,630
|
|
|||
All other biopharmaceutical products
|
|
7,360
|
|
|
7,804
|
|
|
7,441
|
|
|||
Total revenues from biopharmaceutical products
|
|
47,878
|
|
|
51,214
|
|
|
57,747
|
|
|||
Other revenues:
|
|
|
|
|
|
|
||||||
Consumer Healthcare
|
|
3,342
|
|
|
3,212
|
|
|
3,028
|
|
|||
Other
(e)
|
|
364
|
|
|
231
|
|
|
260
|
|
|||
Revenues
|
|
$
|
51,584
|
|
|
$
|
54,657
|
|
|
$
|
61,035
|
|
2013 Financial Report
|
|
117
|
|
|
|
(a)
|
For 2011, includes King commencing on the acquisition date of January 31, 2011.
|
(b)
|
Lipitor lost exclusivity in Australia in April 2012, most of developed Europe in March and May 2012, the U.S. in November 2011 and various other major markets in 2011 and 2012. This loss of exclusivity reduced branded worldwide revenues by
$1.7 billion
in
2013
, in comparison with 2012, and reduced branded worldwide revenues by
$5.6 billion
in
2012
, in comparison with 2011.
|
(c)
|
Represents direct sales under license agreement with Eisai Co., Ltd.
|
(d)
|
Includes Enbrel (in the U.S. and Canada through October 31, 2013), Spiriva, Rebif, Aricept and Eliquis.
|
(e)
|
Other represents revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and includes, in 2013, the revenues related to our transitional manufacturing and supply agreements with Zoetis.
|
118
|
|
2013 Financial Report
|
|
|
|
Quarter
|
||||||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
2013
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
12,410
|
|
|
$
|
12,973
|
|
|
$
|
12,643
|
|
|
$
|
13,558
|
|
Costs and expenses
(a)
|
|
8,554
|
|
|
7,433
|
|
|
8,837
|
|
|
9,862
|
|
||||
Restructuring charges and certain acquisition-related costs
(b)
|
|
131
|
|
|
183
|
|
|
233
|
|
|
635
|
|
||||
Income from continuing operations before provision for taxes on income
|
|
3,725
|
|
|
5,357
|
|
|
3,573
|
|
|
3,061
|
|
||||
Provision for taxes on income
|
|
1,109
|
|
|
1,782
|
|
|
985
|
|
|
430
|
|
||||
Income from continuing operations
|
|
2,616
|
|
|
3,575
|
|
|
2,588
|
|
|
2,631
|
|
||||
Discontinued operations—net of tax
(c)
|
|
149
|
|
|
10,559
|
|
|
11
|
|
|
(57
|
)
|
||||
Net income before allocation to noncontrolling interests
|
|
2,765
|
|
|
14,134
|
|
|
2,599
|
|
|
2,574
|
|
||||
Less: Net income attributable to noncontrolling interests
|
|
15
|
|
|
39
|
|
|
9
|
|
|
6
|
|
||||
Net income attributable to Pfizer Inc.
|
|
$
|
2,750
|
|
|
$
|
14,095
|
|
|
$
|
2,590
|
|
|
$
|
2,568
|
|
Earnings per common share—basic:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.36
|
|
|
$
|
0.51
|
|
|
$
|
0.39
|
|
|
$
|
0.41
|
|
Discontinued operations—net of tax
|
|
0.02
|
|
|
1.50
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.38
|
|
|
$
|
2.00
|
|
|
$
|
0.39
|
|
|
$
|
0.40
|
|
Earnings per common share—diluted:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.36
|
|
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.40
|
|
Discontinued operations—net of tax
|
|
0.02
|
|
|
1.48
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.38
|
|
|
$
|
1.98
|
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid per common share
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
Stock prices
|
|
|
|
|
|
|
|
|
||||||||
High
|
|
$
|
28.90
|
|
|
$
|
31.15
|
|
|
$
|
30.43
|
|
|
$
|
32.50
|
|
Low
|
|
$
|
25.33
|
|
|
$
|
27.12
|
|
|
$
|
27.33
|
|
|
$
|
28.02
|
|
(a)
|
The fourth quarter of
2013
reflects historically higher fourth quarter costs in
Cost of sales, Selling, informational and administrative expenses and Research and development expenses.
|
(b)
|
The fourth quarter of
2013
reflects higher employee termination costs.
|
(c)
|
The second quarter of
2013
reflects the gain on the disposal of our Animal Health business (Zoetis).
|
2013 Financial Report
|
|
119
|
|
|
|
Quarter
|
||||||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
2012
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
13,845
|
|
|
$
|
13,968
|
|
|
$
|
12,953
|
|
|
$
|
13,891
|
|
Costs and expenses
(a)
|
|
11,077
|
|
|
9,604
|
|
|
9,835
|
|
|
11,089
|
|
||||
Restructuring charges and certain acquisition-related costs
(b)
|
|
589
|
|
|
184
|
|
|
312
|
|
|
725
|
|
||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
2,179
|
|
|
4,180
|
|
|
2,806
|
|
|
2,077
|
|
||||
Provision/(benefit) for taxes on income
|
|
625
|
|
|
1,180
|
|
|
(183
|
)
|
|
599
|
|
||||
Income from continuing operations
|
|
1,554
|
|
|
3,000
|
|
|
2,989
|
|
|
1,478
|
|
||||
Discontinued operations—net of tax
(c)
|
|
249
|
|
|
260
|
|
|
225
|
|
|
4,843
|
|
||||
Net income before allocation to noncontrolling interests
|
|
1,803
|
|
|
3,260
|
|
|
3,214
|
|
|
6,321
|
|
||||
Less: Net income attributable to noncontrolling interests
|
|
9
|
|
|
7
|
|
|
6
|
|
|
6
|
|
||||
Net income attributable to Pfizer Inc.
|
|
$
|
1,794
|
|
|
$
|
3,253
|
|
|
$
|
3,208
|
|
|
$
|
6,315
|
|
Earnings per common share—basic:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.20
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.20
|
|
Discontinued operations—net of tax
|
|
0.03
|
|
|
0.03
|
|
|
0.03
|
|
|
0.66
|
|
||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.24
|
|
|
$
|
0.44
|
|
|
$
|
0.43
|
|
|
$
|
0.86
|
|
Earnings per common share—diluted:
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.20
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
0.20
|
|
Discontinued operations—net of tax
|
|
0.03
|
|
|
0.03
|
|
|
0.03
|
|
|
0.65
|
|
||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.24
|
|
|
$
|
0.43
|
|
|
$
|
0.43
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid per common share
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
Stock prices
|
|
|
|
|
|
|
|
|
||||||||
High
|
|
$
|
22.80
|
|
|
$
|
23.30
|
|
|
$
|
25.15
|
|
|
$
|
26.09
|
|
Low
|
|
$
|
20.75
|
|
|
$
|
21.40
|
|
|
$
|
22.00
|
|
|
$
|
23.55
|
|
(a)
|
The fourth quarter of
2012
reflects historically higher fourth quarter costs in
Cost of sales,
Selling, informational and administrative expenses
and
Research and development expenses
.
|
(b)
|
The fourth quarter of
2012
reflects higher employee termination costs.
|
(c)
|
The fourth quarter of
2012
reflects the gain on the sale of our Nutrition business.
|
120
|
|
2013 Financial Report
|
|
|
|
|
|
Year Ended/As of December 31,
(a)
|
||||||||||||||||||
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|||||
Revenues
(b)
|
|
$
|
51,584
|
|
|
$
|
54,657
|
|
|
$
|
61,035
|
|
|
$
|
61,591
|
|
|
$
|
46,314
|
|
Income from continuing operations
(b)
|
|
11,410
|
|
|
9,021
|
|
|
7,860
|
|
|
7,951
|
|
|
8,361
|
|
|||||
Total assets
|
|
172,101
|
|
|
185,798
|
|
|
188,002
|
|
|
195,014
|
|
|
212,949
|
|
|||||
Long-term obligations
(b), (c)
|
|
72,115
|
|
|
74,934
|
|
|
75,914
|
|
|
76,789
|
|
|
83,762
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share—basic
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
1.67
|
|
|
$
|
1.21
|
|
|
$
|
1.00
|
|
|
$
|
0.99
|
|
|
$
|
1.19
|
|
Discontinued operations—net of tax
(d)
|
|
1.56
|
|
|
0.75
|
|
|
0.28
|
|
|
0.04
|
|
|
0.04
|
|
|||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
3.23
|
|
|
$
|
1.96
|
|
|
$
|
1.28
|
|
|
$
|
1.03
|
|
|
$
|
1.23
|
|
Earnings per common share—diluted
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
1.65
|
|
|
$
|
1.20
|
|
|
$
|
0.99
|
|
|
$
|
0.98
|
|
|
$
|
1.19
|
|
Discontinued operations—net of tax
(d)
|
|
1.54
|
|
|
0.74
|
|
|
0.28
|
|
|
0.04
|
|
|
0.04
|
|
|||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
3.19
|
|
|
$
|
1.94
|
|
|
$
|
1.27
|
|
|
$
|
1.02
|
|
|
$
|
1.23
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
|
$
|
0.96
|
|
|
$
|
0.88
|
|
|
$
|
0.80
|
|
|
$
|
0.72
|
|
|
$
|
0.80
|
|
(a)
|
Reflects the acquisition of King on January 31, 2011 and Wyeth on October 15, 2009.
|
(b)
|
All amounts reflect the June 24, 2013 disposition of Zoetis and its presentation as a discontinued operation in all periods presented.
|
(c)
|
Defined as
Long-term debt, Pension benefit obligations,net, Postretirement benefit obligations, net, Noncurrent deferred tax liabilities, Other taxes payable
and
Other noncurrent liabilities.
|
(d)
|
Includes (i) the Animal Health (Zoetis) business through June 24, 2013, the date of disposal, (ii) the Nutrition business through November 30, 2012, the date of disposal and (iii) the Capsugel business through August 1, 2011, the date of disposal.
|
2013 Financial Report
|
|
121
|
|
|
|
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
PFIZER
|
|
$100.0
|
|
$108.3
|
|
$108.6
|
|
$139.8
|
|
$168.4
|
|
$212.5
|
PEER GROUP
|
|
$100.0
|
|
$114.5
|
|
$115.0
|
|
$132.0
|
|
$148.5
|
|
$198.1
|
S&P 500
|
|
$100.0
|
|
$126.4
|
|
$145.5
|
|
$148.6
|
|
$172.3
|
|
$228.1
|
122
|
|
2013 Financial Report
|
Esperion LUV Development, Inc.
|
Delaware
|
Eurovita Trading Limited
|
Ireland
|
Excaliard Pharmaceuticals, Inc.
|
Delaware
|
Farminova Produtos Farmaceuticos de Inovacao, Lda.
|
Portugal
|
Farmitalia Carlo Erba Limited
|
United Kingdom
|
Farmogene Productos Farmaceuticos Lda
|
Portugal
|
Ferrosan A/S
|
Denmark
|
Ferrosan Finance S.A.
|
Panama
|
Ferrosan Holding A/S
|
Denmark
|
Ferrosan International A/S
|
Denmark
|
Ferrosan S.R.L.
|
Romania
|
FoldRx Pharmaceuticals, Inc.
|
Delaware
|
Fort Dodge (Hong Kong) Limited
|
Hong Kong
|
Fort Dodge Manufatura Ltda.
|
Brazil
|
FPZ AG
|
Germany
|
FPZ Deutschland den Rücken Stärken GmbH
|
Germany
|
G. D. Searle & Co. Limited
|
United Kingdom
|
G. D. Searle International Capital LLC
|
Delaware
|
G. D. Searle LLC
|
Delaware
|
Genetics Institute, LLC
|
Delaware
|
GenTrac, Inc.
|
Wisconsin
|
GI Europe, Inc.
|
Delaware
|
GI Japan, Inc.
|
Delaware
|
Grangematic Limited
|
Ireland
|
Greenstone LLC
|
Delaware
|
Haptogen Limited
|
United Kingdom
|
Icagen, Inc.
|
Delaware
|
Industrial Santa Agape, S.A.
|
Guatemala
|
Instituto Pasteur de Lisboa Virginio Leitao Vieira dos Santos & Filhos
S.A.
|
Portugal
|
International Affiliated Corporation LLC
|
Delaware
|
Invicta Farma, S.A.
|
Spain
|
JMI-Daniels Pharmaceuticals, Inc.
|
Florida
|
John Wyeth & Brother Limited
|
United Kingdom
|
Kiinteistö oy Espoon Pellavaniementie 14
|
Finland
|
King Pharmaceuticals Holdings LLC
|
Delaware
|
King Pharmaceuticals LLC
|
Delaware
|
King Pharmaceuticals Research and Development, Inc.
|
Delaware
|
Kommanditbolaget Hus Gron
|
Sweden
|
Korea Pharma Holding Company Limited
|
Hong Kong
|
Laboratoires Pfizer SA
|
Morocco
|
Laboratorios Parke Davis, S.L.
|
Spain
|
Laboratorios Pfizer Ltda.
|
Brazil
|
Laboratórios Pfizer, Lda.
|
Portugal
|
Laboratorios Wyeth LLC
|
Pennsylvania
|
Laboratorios Wyeth S.A.
|
Peru
|
Laboratorios Wyeth S.A.
|
Venezuela
|
LLC Ferrosan Consumer Health
|
Russia
|
Lothian Developments V SPRL
|
Belgium
|
Meridian Medical Technologies Limited
|
United Kingdom
|
Meridian Medical Technologies, Inc.
|
Delaware
|
Monarch Pharmaceuticals, Inc.
|
Tennessee
|
MPP Trustee Limited
|
United Kingdom
|
MTG Divestitures LLC
|
Delaware
|
Neusentis Limited
|
United Kingdom
|
NextWave Pharmaceuticals Incorporated
|
Delaware
|
Nordic Sales Group AS
|
Norway
|
Nostrum Farma, S.A.
|
Spain
|
Nutrifarma Ferrosan Sağlik Ürün ve Hizmetieri A.Ş.
|
Turkey
|
O.C.T. (Thailand) Ltd.
|
Thailand
|
PAH USA IN8 LLC
|
Delaware
|
Parke Davis Limited
|
Hong Kong
|
Parke Davis Productos Farmaceuticos Lda
|
Portugal
|
Parke, Davis & Company LLC
|
Michigan
|
Parkedale Pharmaceuticals, Inc.
|
Michigan
|
Parke-Davis Manufacturing Corp.
|
Delaware
|
P-D Co., LLC
|
Delaware
|
Peak Enterprises LLC
|
Delaware
|
PF Americas Holding C.V.
|
Netherlands
|
PF Asia Manufacturing Coöperatief U.A.
|
Netherlands
|
PF PR Holdings C.V.
|
Netherlands
|
PF PRISM C.V.
|
Netherlands
|
PF PRISM Holdings S.a.r.l.
|
Luxembourg
|
PF Prism S.á.r.l.
|
Luxembourg
|
Pfizer (China) Research and Development Co. Ltd.
|
People's Republic of China
|
Pfizer (Far East) Limited
|
Hong Kong
|
Pfizer (H.K.) Holding Limited
|
Hong Kong
|
Pfizer (Malaysia) Sdn Bhd
|
Malaysia
|
Pfizer (Perth) Pty Limited
|
Australia
|
Pfizer (S.A.S.)
|
France
|
Pfizer (Thailand) Limited
|
Thailand
|
Pfizer (Wuhan) Research and Development Co. Ltd.
|
People's Republic of China
|
Pfizer AB
|
Sweden
|
Pfizer Africa & Middle East for Pharmaceuticals, Veterinarian Products
& Chemicals S.A.E.
|
Egypt
|
Pfizer Afrique de L'Ouest
|
Senegal
|
Pfizer AG
|
Switzerland
|
Pfizer Animal Health MA EEIG
|
United Kingdom
|
Pfizer ApS
|
Denmark
|
Pfizer AS
|
Norway
|
Pfizer Asia Manufacturing Pte. Ltd.
|
Singapore
|
Pfizer Asia Pacific Pte Ltd.
|
Singapore
|
Pfizer AsiaPac Holdings SARL
|
Luxembourg
|
Pfizer Asset Management Luxembourg SARL
|
Luxembourg
|
Pfizer Atlantic Holdings S.a.r.l.
|
Luxembourg
|
Pfizer Australia Holdings B.V.
|
Netherlands
|
Pfizer Australia Holdings Pty Limited
|
Australia
|
Pfizer Australia Investments B.V.
|
Netherlands
|
Pfizer Australia Investments Pty. Ltd.
|
Australia
|
Pfizer Australia Pty Limited
|
Australia
|
Pfizer B.V.
|
Netherlands
|
Pfizer Baltic Holdings B.V.
|
Netherlands
|
Pfizer BH D.o.o.
|
Bosnia and Herzegovina
|
Pfizer Biologics Ireland Holdings Limited
|
Ireland
|
Pfizer Biotech Corporation
|
Taiwan
|
Pfizer Biotechnology Ireland
|
Ireland
|
Pfizer Bolivia S.A.
|
Bolivia
|
Pfizer Business Enterprises C.V.
|
Netherlands
|
Pfizer Canada Inc.
|
Canada
|
Pfizer CentreSource Asia Pacific Pte. Ltd.
|
Singapore
|
Pfizer Chile S.A.
|
Chile
|
Pfizer Cia. Ltda.
|
Ecuador
|
Pfizer Colombia Spinco I LLC
|
Pennsylvania
|
Pfizer Commercial Holdings Coöperatief U.A.
|
Netherlands
|
Pfizer Consumer Health AB
|
Sweden
|
Pfizer Consumer Healthcare GmbH
|
Germany
|
Pfizer Consumer Healthcare Ltd.
|
United Kingdom
|
Pfizer Continental Holdings SARL
|
Luxembourg
|
Pfizer Continental Services LLC
|
Delaware
|
Pfizer Cork Limited
|
Ireland
|
Pfizer Corporation
|
Panama
|
Pfizer Corporation Austria Gesellschaft m.b.H.
|
Austria
|
Pfizer Corporation Hong Kong Limited
|
Hong Kong
|
Pfizer Croatia d.o.o.
|
Croatia
|
Pfizer Deutschland GmbH
|
Germany
|
Pfizer Development LP
|
United Kingdom
|
Pfizer Development Services (UK) Limited
|
United Kingdom
|
Pfizer Domestic Ventures Limited
|
Isle of Jersey
|
Pfizer Dominicana, S.A.
|
Dominican Republic
|
Pfizer East India B.V.
|
Netherlands
|
Pfizer Eastern Investments B.V.
|
Netherlands
|
Pfizer Egypt S.A.E.
|
Egypt
|
Pfizer Enterprise Holdings B.V.
|
Netherlands
|
Pfizer Enterprises LLC
|
Delaware
|
Pfizer Enterprises SARL
|
Luxembourg
|
Pfizer ESP Pty Ltd
|
Australia
|
Pfizer Europe Holdings SARL
|
Luxembourg
|
Pfizer Europe MA EEIG
|
United Kingdom
|
Pfizer Europe Services LLC
|
Delaware
|
Pfizer Export AB
|
Sweden
|
Pfizer Export Company
|
Ireland
|
Pfizer Finance GmbH & Co. KG
|
Germany
|
Pfizer Finance Holding S.r.l.
|
Italy
|
Pfizer Finance International Holdings C.V.
|
Netherlands
|
Pfizer Finance Italy S.r.l.
|
Italy
|
Pfizer Finance Netherlands B.V.
|
Netherlands
|
Pfizer Finance Share Service (Dalian) Co., Ltd.
|
People's Republic of China
|
Pfizer Finance Verwaltungs GmbH
|
Germany
|
Pfizer Financial Services N.V./S.A.
|
Belgium
|
Pfizer France International Investments SAS
|
France
|
Pfizer Free Zone Panama, S. de R.L.
|
Panama
|
Pfizer Germany B.V. & Co. KG
|
Germany
|
Pfizer Germany Partner B.V.
|
Netherlands
|
Pfizer Global Holdings B.V.
|
Netherlands
|
Pfizer Global Supply
|
Ireland
|
Pfizer Global Supply Japan Inc.
|
Japan
|
Pfizer Global Trading
|
Ireland
|
Pfizer GmbH
|
Germany
|
Pfizer Group Luxembourg Sarl
|
Luxembourg
|
Pfizer Gulf FZ-LLC
|
United Arab Emirates
|
Pfizer H.C.P. Corporation
|
New York
|
Pfizer Health AB
|
Sweden
|
Pfizer Health Solutions Inc.
|
Delaware
|
Pfizer Healthcare Holdings Company Unlimited
|
Isle of Jersey
|
Pfizer Healthcare Ireland
|
Ireland
|
Pfizer Hellas, A.E.
|
Greece
|
Pfizer Himalaya Holdings Coöperatief U.A.
|
Netherlands
|
Pfizer HK Service Company Limited
|
Hong Kong
|
Pfizer Holding France (S.C.A.)
|
France
|
Pfizer Holding Ventures
|
Ireland
|
Pfizer Holdings Americas Corporation
|
Delaware
|
Pfizer Holdings Corporation
|
Delaware
|
Pfizer Holdings Europe
|
Ireland
|
Pfizer Holdings International Corporation
|
Delaware
|
Pfizer Holdings International Luxembourg (PHIL) Sarl
|
Luxembourg
|
Pfizer Holdings K.K.
|
Japan
|
Pfizer Holdings Luxembourg SARL
|
Luxembourg
|
Pfizer Holdings North America SARL
|
Luxembourg
|
Pfizer Holdings Turkey Limited
|
Isle of Jersey
|
Pfizer Holland Holdings B.V.
|
Netherlands
|
Pfizer Ilaclari Limited Sirketi
|
Turkey
|
Pfizer International Business Europe
|
Ireland
|
Pfizer International Investments Ltd.
|
Bermuda
|
Pfizer International LLC
|
New York
|
Pfizer International Luxembourg SA
|
Luxembourg
|
Pfizer International Markets Coöperatief U.A.
|
Netherlands
|
Pfizer International Operations (S.A.S.)
|
France
|
Pfizer International S. de R.L.
|
Panama
|
Pfizer International Sweden KB
|
Sweden
|
Pfizer International Trading (Shanghai) Limited
|
People's Republic of China
|
Pfizer Investment Capital
|
Ireland
|
Pfizer Investment Co. Ltd.
|
People's Republic of China
|
Pfizer Investment Holdings S.a.r.l.
|
Luxembourg
|
Pfizer Investments Netherlands B.V.
|
Netherlands
|
Pfizer Ireland Investments Limited
|
Ireland
|
Pfizer Ireland Pharmaceuticals
|
Ireland
|
Pfizer Ireland Ventures
|
Ireland
|
Pfizer Italia S.r.l.
|
Italy
|
Pfizer Italy Group Holding S.r.l.
|
Italy
|
Pfizer Japan Inc.
|
Japan
|
Pfizer Jersey Capital Limited
|
Isle of Jersey
|
Pfizer Jersey Company Limited
|
Isle of Jersey
|
Pfizer Jersey Finance Limited
|
Isle of Jersey
|
Pfizer Laboratories (Pty) Limited
|
South Africa
|
Pfizer Laboratories Limited
|
Kenya
|
Pfizer Leasing Ireland Limited
|
Ireland
|
Pfizer Leasing UK Limited
|
United Kingdom
|
Pfizer Limitada
|
Angola
|
Pfizer Limited
|
India
|
Pfizer Limited
|
Taiwan
|
Pfizer Limited
|
Tanzania
|
Pfizer Limited
|
Uganda
|
Pfizer Limited
|
United Kingdom
|
Pfizer LLC
|
Russia
|
Pfizer Luxco Holdings Sarl
|
Luxembourg
|
Pfizer Luxembourg Global Holdings SARL
|
Luxembourg
|
Pfizer Luxembourg SARL
|
Luxembourg
|
Pfizer Manufacturing Belgium N.V.
|
Belgium
|
Pfizer Manufacturing Deutschland GmbH
|
Germany
|
Pfizer Manufacturing Deutschland Grundbesitz GmbH & Co. KG
|
Germany
|
Pfizer Manufacturing Holdings Coöperatief U.A.
|
Netherlands
|
Pfizer Manufacturing Holdings LLC
|
Delaware
|
Pfizer Manufacturing Ireland
|
Ireland
|
Pfizer Manufacturing LLC
|
Delaware
|
Pfizer Manufacturing Services
|
Ireland
|
Pfizer Medical Technology Group (Belgium) N.V.
|
Belgium
|
Pfizer Medicamentos Genericos e Participacoes Ltda.
|
Brazil
|
Pfizer Mexico Luxco SARL
|
Luxembourg
|
Pfizer Mexico, S.A. de C.V.
|
Mexico
|
Pfizer Middle East for Pharmaceuticals, Animal Health and Chemicals
S.A.E.
|
Egypt
|
Pfizer Namibia (Proprietary) Limited
|
Namibia
|
Pfizer New Zealand Limited
|
New Zealand
|
Pfizer North American Holdings Inc.
|
Delaware
|
Pfizer OTC B.V.
|
Netherlands
|
Pfizer Overseas LLC
|
Delaware
|
Pfizer Oy
|
Finland
|
Pfizer Pacific Coöperatief U.A.
|
Netherlands
|
Pfizer Pacific Holdings B.V.
|
Netherlands
|
Pfizer Pacific Investments B.V.
|
Netherlands
|
Pfizer Pakistan Limited
|
Pakistan
|
Pfizer Parke Davis
|
Philippines
|
Pfizer Parke Davis (Thailand) Ltd.
|
Thailand
|
Pfizer Parke Davis Pte. Ltd.
|
Singapore
|
Pfizer Parke Davis Sdn. Bhd.
|
Malaysia
|
Pfizer PGM (S.A.S.)
|
France
|
Pfizer PGRD (S.A.S.)
|
France
|
Pfizer Pharm Algerie
|
Algeria
|
Pfizer Pharma GmbH
|
Germany
|
Pfizer Pharmaceutical (Wuxi) Co., Ltd.
|
People's Republic of China
|
Pfizer Pharmaceutical Trading Limited Liability Company
(a/k/a Pfizer Kft. or Pfizer LLC)
|
Hungary
|
Pfizer Pharmaceuticals B.V.
|
Netherlands
|
Pfizer Pharmaceuticals Global Coöperatief U.A.
|
Netherlands
|
Pfizer Pharmaceuticals Israel Ltd.
|
Israel
|
Pfizer Pharmaceuticals Korea Limited
|
Republic of Korea
|
Pfizer Pharmaceuticals Limited
|
Cayman Islands
|
Pfizer Pharmaceuticals LLC
|
Delaware
|
Pfizer Pharmaceuticals Ltd.
|
People's Republic of China
|
Pfizer Pharmaceuticals Tunisie Sarl
|
Tunisia
|
Pfizer PHF
|
Ireland
|
Pfizer Philippines Foundation, Inc
|
Philippines
|
Pfizer Philippines Holdings B.V.
|
Netherlands
|
Pfizer Pigments Inc.
|
Delaware
|
Pfizer Polska Sp. z.o.o.
|
Poland
|
Pfizer Precision Holdings SARL
|
Luxembourg
|
Pfizer Prev - Sociedade de Previdencia Privada
|
Brazil
|
Pfizer Private Ltd.
|
Singapore
|
Pfizer Production LLC
|
Delaware
|
Pfizer Products Inc.
|
Connecticut
|
Pfizer Products India Private Limited
|
India
|
Pfizer Romania SRL
|
Romania
|
Pfizer S.A.
|
Peru
|
Pfizer S.A. (Belgium)
|
Belgium
|
Pfizer S.A.S.
|
Colombia
|
Pfizer S.G.P.S. Lda.
|
Portugal
|
Pfizer S.R.L.
|
Argentina
|
Pfizer Saidal Manufacturing
|
Algeria
|
Pfizer Santé Familiale SAS
|
France
|
Pfizer Saudi Limited
|
Saudi Arabia
|
Pfizer Searle Investment Limited
|
Isle of Jersey
|
Pfizer Service Company BVBA
|
Belgium
|
Pfizer Service Company Ireland
|
Ireland
|
Pfizer Services 1 (S.N.C.)
|
France
|
Pfizer Services 3 (S.N.C.)
|
France
|
Pfizer Services 4 (S.N.C.)
|
France
|
Pfizer Services LLC
|
Delaware
|
Pfizer Shared Services
|
Ireland
|
Pfizer Shareholdings Intermediate SARL
|
Luxembourg
|
Pfizer Shareholdings Luxembourg SARL
|
Luxembourg
|
Pfizer Singapore Trading Pte. Ltd.
|
Singapore
|
Pfizer Spain Holdings Coöperatief U.A.
|
Netherlands
|
Pfizer Specialities Ghana
|
Ghana
|
Pfizer Specialties Limited
|
Nigeria
|
Pfizer Specialty UK Limited
|
United Kingdom
|
Pfizer Sterling Investments Limited
|
Isle of Jersey
|
Pfizer Strategic Investment Company Limited
|
Isle of Jersey
|
Pfizer Trading Polska sp. z.o.o.
|
Poland
|
Pfizer Transactions Ireland
|
Ireland
|
Pfizer Transactions LLC
|
Delaware
|
Pfizer Transactions Luxembourg SARL
|
Luxembourg
|
Pfizer Transport LLC
|
Delaware
|
Pfizer Tunisie SA
|
Tunisia
|
Pfizer Ukraine LLC
|
Ukraine
|
Pfizer Vaccines LLC
|
Delaware
|
Pfizer Venezuela, S.A.
|
Venezuela
|
Site Realty, Inc.
|
Delaware
|
Solinor LLC
|
Delaware
|
Sugen, Inc.
|
Delaware
|
Sutumex, S.A. de C.V.
|
Mexico
|
Tabor LLC
|
Delaware
|
The Pfizer Incubator LLC
|
Delaware
|
Thiakis Limited
|
United Kingdom
|
Trans-Europe Assurance Limited
|
Ireland
|
Upjohn Laboratorios Lda.
|
Portugal
|
US Oral Pharmaceuticals Pty Ltd
|
Australia
|
Vermont Whey Company
|
Vermont
|
Vesterålens Naturprodukter A/S
|
Denmark
|
Vesterålens Naturprodukter AB
|
Sweden
|
Vesterålens Naturprodukter AS
|
Norway
|
Vesterålens Naturprodukter OY
|
Finland
|
Vicuron Holdings LLC
|
Delaware
|
Vicuron Pharmaceuticals Italy S.r.l.
|
Italy
|
Vinci Farma, S.A.
|
Spain
|
Warner Lambert del Uruguay S.A.
|
Uruguay
|
Warner Lambert Ilac Sanayi ve Ticaret Limited Sirketi
|
Turkey
|
Warner-Lambert (Tanzania), Limited
|
Tanzania
|
Warner-Lambert (Thailand) Limited
|
Thailand
|
Warner-Lambert Company AG
|
Switzerland
|
Warner-Lambert Company LLC
|
Delaware
|
Warner-Lambert de El Salvador, S.A. de C.V.
|
El Salvador
|
Warner-Lambert de Honduras, Sociedad Anonima
|
Honduras
|
Warner-Lambert de Puerto Rico, Inc.
|
Puerto Rico
|
Warner-Lambert Guatemala, Sociedad Anonima
|
Guatemala
|
Warner-Lambert, S.A.
|
Delaware
|
Whitehall International Inc.
|
New York
|
Whitehall Laboratories Inc.
|
Delaware
|
Whitehall Laboratorios S.A.
|
Uruguay
|
WL de Guatemala, Sociedad Anonima
|
Guatemala
|
W-L LLC
|
Delaware
|
Wyeth (Asia) Limited
|
Delaware
|
Wyeth (Far East) Limited
|
Hong Kong
|
Wyeth (Thailand) Ltd.
|
Thailand
|
Wyeth AB
|
Sweden
|
Wyeth Advertising Inc.
|
New York
|
Wyeth Australia Pty. Limited
|
Australia
|
Wyeth Ayerst Inc.
|
Delaware
|
Wyeth Ayerst SARL
|
Luxembourg
|
Wyeth Canada ULC
|
Canada
|
Wyeth Consumer Healthcare LLC
|
Pennsylvania
|
Wyeth Europa Limited
|
United Kingdom
|
Wyeth Farma, S.A.
|
Spain
|
Wyeth Holdings LLC
|
Maine
|
Wyeth Industria Farmaceutica Ltda.
|
Brazil
|
Wyeth KFT.
|
Hungary
|
Wyeth Lederle S.r.l.
|
Italy
|
Wyeth Lederle Vaccines S.A.
|
Belgium
|
Wyeth Limited
|
India
|
Wyeth LLC
|
Delaware
|
Wyeth Pakistan Limited
|
Pakistan
|
Wyeth Pharmaceutical Co., Ltd.
|
People's Republic of China
|
Wyeth Pharmaceuticals Company
|
Puerto Rico
|
Wyeth Pharmaceuticals FZ-LLC
|
United Arab Emirates
|
Wyeth Pharmaceuticals Inc.
|
Delaware
|
Wyeth Pharmaceuticals India Private Limited
|
India
|
Wyeth Pharmaceuticals Limited
|
Ireland
|
Wyeth Philippines, Co. Ltd.
|
Philippines
|
Wyeth Prev-Sociedade de Previdencia Privada
|
Brazil
|
Wyeth Puerto Rico, Inc.
|
Puerto Rico
|
Wyeth Regional Manufacturing (Singapore) PTE. LTD.
|
Singapore
|
Wyeth Research Ireland Limited
|
Ireland
|
Wyeth Subsidiary Illinois Corporation
|
Illinois
|
Wyeth Whitehall Export GmbH
|
Austria
|
Wyeth Whitehall SARL
|
Luxembourg
|
Wyeth-Ayerst (Asia) Limited
|
Delaware
|
Wyeth-Ayerst International LLC
|
Delaware
|
Wyeth-Ayerst Promotions Limited
|
Delaware
|
Yusafarm D.O.O.
|
Serbia
|