Delaware
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13-5315170
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $.05 par value
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PFE
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New York Stock Exchange
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0.000% Notes due 2020
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PFE20A
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New York Stock Exchange
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0.250% Notes due 2022
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PFE22
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New York Stock Exchange
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1.000% Notes due 2027
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PFE27
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New York Stock Exchange
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Yes
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x
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No
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☐
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Yes
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x
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No
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☐
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Yes
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☐
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No
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x
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Page
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Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and July 1, 2018
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Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and
July 1, 2018 |
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Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018
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Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2019 and July 1, 2018
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and July 1, 2018
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2018 Financial Report
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Financial Report for the fiscal year ended December 31, 2018, which was filed as Exhibit 13 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2018
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2018 Form 10-K
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Annual Report on Form 10-K for the fiscal year ended December 31, 2018
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ACA (Also referred to as U.S. Healthcare Legislation)
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U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act
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ACIP
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Advisory Committee on Immunization Practices
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ALK
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anaplastic lymphoma kinase
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Alliance revenues
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Revenues from alliance agreements under which we co-promote products discovered or developed by other companies or us
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Allogene
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Allogene Therapeutics, Inc.
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Anacor
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Anacor Pharmaceuticals, Inc.
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AOCI
|
Accumulated Other Comprehensive Income
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Array
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Array BioPharma Inc.
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Astellas
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Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc.
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Bamboo
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Bamboo Therapeutics, Inc.
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Biopharma
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Pfizer Biopharmaceuticals Group
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BMS
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Bristol-Myers Squibb Company
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BRCA
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BReast CAncer susceptibility gene
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CAR T
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chimeric antigen receptor T cell
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CDC
|
U.S. Centers for Disease Control and Prevention
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cGMP
|
current Good Manufacturing Practices
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Citibank
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Citibank, N.A.
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Developed Markets
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U.S., Western Europe, Japan, Canada, South Korea, Australia, Scandinavian countries, Finland and
New Zealand |
EGFR
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epidermal growth factor receptor
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EH
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Essential Health
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EMA
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European Medicines Agency
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Emerging Markets
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Includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea),
Latin America, Eastern Europe, the Middle East, Africa, Central Europe and Turkey |
EPS
|
earnings per share
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EU
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European Union
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Exchange Act
|
Securities Exchange Act of 1934, as amended
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FASB
|
Financial Accounting Standards Board
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FDA
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U.S. Food and Drug Administration
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GAAP
|
Generally Accepted Accounting Principles
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GIST
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gastrointestinal stromal tumors
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GPD
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Global Product Development organization
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GSK
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GlaxoSmithKline plc
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GS&Co.
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Goldman, Sachs & Co. LLC
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hGH-CTP
|
human growth hormone
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HIS
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Hospira Infusion Systems
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Hisun Pfizer
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Hisun Pfizer Pharmaceuticals Company Limited
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Hospira
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Hospira, Inc.
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HR+
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hormone receptor-positive
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ICU Medical
|
ICU Medical, Inc.
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IH
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Innovative Health
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IPR&D
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in-process research and development
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IRS
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U.S. Internal Revenue Service
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IV
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intravenous
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Janssen
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Janssen Biotech Inc.
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J&J
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Johnson & Johnson
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King
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King Pharmaceuticals LLC (formerly King Pharmaceuticals, Inc.)
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LDL
|
low density lipoprotein
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LEP
|
Legacy Established Products
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LIBOR
|
London Interbank Offered Rate
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Lilly
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Eli Lilly & Company
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LOE
|
loss of exclusivity
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MCC
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Merkel cell carcinoma
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MCO
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managed care organization
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mCRC
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metastatic colorectal cancer
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MD&A
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Medivation
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Medivation LLC (formerly Medivation, Inc.)
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Merck
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Merck & Co., Inc.
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Meridian
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Meridian Medical Technologies, Inc.
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Moody’s
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Moody’s Investors Service
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Mylan
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Mylan N.V.
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NDA
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new drug application
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NSCLC
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non-small cell lung cancer
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NYSE
|
New York Stock Exchange
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OPKO
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OPKO Health, Inc.
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OTC
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over-the-counter
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PARP
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poly ADP ribose polymerase
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PBM
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pharmacy benefit manager
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Pharmacia
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Pharmacia Corporation
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PP&E
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property, plant & equipment
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PsA
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psoriatic arthritis
|
Quarterly Report on Form 10-Q
|
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019
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RA
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rheumatoid arthritis
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RCC
|
renal cell carcinoma
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R&D
|
research and development
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ROU
|
right of use
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Sandoz
|
Sandoz, Inc., a division of Novartis AG
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SEC
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U.S. Securities and Exchange Commission
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SFJ
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SFJ Pharmaceuticals Group
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Shire
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Shire International GmbH
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SI&A
|
selling, informational and administrative
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S&P
|
Standard and Poor’s
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TCJA
|
legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017
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Therachon
|
Therachon Holding AG
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UC
|
ulcerative colitis
|
U.K.
|
United Kingdom
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U.S.
|
United States
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ViiV
|
ViiV Healthcare Limited
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WRDM
|
Worldwide Research, Development and Medical
|
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Three Months Ended
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Six Months Ended
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||||||||||||
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
|
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June 30,
2019 |
|
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July 1,
2018 |
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June 30,
2019 |
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July 1,
2018 |
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||||
Revenues
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$
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13,264
|
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$
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13,466
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$
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26,382
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$
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26,373
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Costs and expenses:
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Cost of sales(a)
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2,576
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2,916
|
|
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5,009
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|
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5,479
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||||
Selling, informational and administrative expenses(a)
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3,511
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3,542
|
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6,850
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6,954
|
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||||
Research and development expenses(a)
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1,842
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1,797
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|
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3,544
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|
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3,540
|
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||||
Amortization of intangible assets
|
|
1,184
|
|
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1,191
|
|
|
2,367
|
|
|
2,387
|
|
||||
Restructuring charges and certain acquisition-related costs
|
|
(115
|
)
|
|
44
|
|
|
(69
|
)
|
|
87
|
|
||||
Other (income)/deductions––net
|
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126
|
|
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(551
|
)
|
|
218
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|
|
(728
|
)
|
||||
Income from continuing operations before provision/(benefit) for taxes on income
|
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4,141
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|
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4,527
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8,463
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|
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8,654
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Provision/(benefit) for taxes on income
|
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(915
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)
|
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648
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(481
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)
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1,204
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||||
Income from continuing operations
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5,056
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|
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3,879
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|
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8,945
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|
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7,450
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Discontinued operations––net of tax
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—
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—
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—
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(1
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)
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Net income before allocation to noncontrolling interests
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5,056
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3,879
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8,945
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|
|
7,449
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||||
Less: Net income attributable to noncontrolling interests
|
|
10
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7
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|
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15
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|
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16
|
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||||
Net income attributable to Pfizer Inc.
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$
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5,046
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$
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3,872
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|
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$
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8,929
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|
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$
|
7,432
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|
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||||||||
Earnings per common share––basic:
|
|
|
|
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Income from continuing operations attributable to Pfizer Inc. common shareholders
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$
|
0.91
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$
|
0.66
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|
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$
|
1.59
|
|
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$
|
1.26
|
|
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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|
||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.91
|
|
|
$
|
0.66
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|
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$
|
1.59
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
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|
||||||||
Earnings per common share––diluted:
|
|
|
|
|
|
|
|
|
|
|
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||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.89
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$
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0.65
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|
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$
|
1.56
|
|
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$
|
1.24
|
|
Discontinued operations––net of tax
|
|
—
|
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|
—
|
|
|
—
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|
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—
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||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.89
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|
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$
|
0.65
|
|
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$
|
1.56
|
|
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$
|
1.24
|
|
|
|
|
|
|
|
|
|
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||||||||
Weighted-average shares––basic
|
|
5,562
|
|
|
5,866
|
|
|
5,598
|
|
|
5,911
|
|
||||
Weighted-average shares––diluted
|
|
5,672
|
|
|
5,952
|
|
|
5,711
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|
|
6,004
|
|
(a)
|
Excludes amortization of intangible assets, except as disclosed in Note 9A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Net income before allocation to noncontrolling interests
|
|
$
|
5,056
|
|
|
$
|
3,879
|
|
|
$
|
8,945
|
|
|
$
|
7,449
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net
|
|
(485
|
)
|
|
(699
|
)
|
|
(161
|
)
|
|
59
|
|
||||
Reclassification adjustments
|
|
—
|
|
|
(35
|
)
|
|
2
|
|
|
(20
|
)
|
||||
|
|
(485
|
)
|
|
(734
|
)
|
|
(159
|
)
|
|
39
|
|
||||
Unrealized holding gains/(losses) on derivative financial instruments, net
|
|
(176
|
)
|
|
127
|
|
|
91
|
|
|
13
|
|
||||
Reclassification adjustments for (gains)/losses included in net income(a)
|
|
(81
|
)
|
|
310
|
|
|
(343
|
)
|
|
354
|
|
||||
|
|
(256
|
)
|
|
437
|
|
|
(252
|
)
|
|
367
|
|
||||
Unrealized holding gains/(losses) on available-for-sale securities, net
|
|
(7
|
)
|
|
(374
|
)
|
|
33
|
|
|
(214
|
)
|
||||
Reclassification adjustments for (gains)/losses included in net income(a)
|
|
26
|
|
|
143
|
|
|
37
|
|
|
(31
|
)
|
||||
Reclassification adjustments for unrealized gains included in Retained earnings(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(462
|
)
|
||||
|
|
19
|
|
|
(231
|
)
|
|
70
|
|
|
(707
|
)
|
||||
Benefit plans: actuarial gains/(losses), net
|
|
(4
|
)
|
|
(57
|
)
|
|
(4
|
)
|
|
106
|
|
||||
Reclassification adjustments related to amortization
|
|
60
|
|
|
61
|
|
|
121
|
|
|
123
|
|
||||
Reclassification adjustments related to settlements, net
|
|
2
|
|
|
30
|
|
|
2
|
|
|
67
|
|
||||
Other
|
|
41
|
|
|
107
|
|
|
18
|
|
|
21
|
|
||||
|
|
100
|
|
|
141
|
|
|
137
|
|
|
316
|
|
||||
Benefit plans: prior service costs and other, net
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Reclassification adjustments related to amortization of prior service costs and other, net
|
|
(46
|
)
|
|
(46
|
)
|
|
(93
|
)
|
|
(92
|
)
|
||||
Reclassification adjustments related to curtailments of prior service costs and other, net
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(13
|
)
|
||||
Other
|
|
1
|
|
|
(1
|
)
|
|
2
|
|
|
1
|
|
||||
|
|
(46
|
)
|
|
(53
|
)
|
|
(92
|
)
|
|
(104
|
)
|
||||
Other comprehensive loss, before tax
|
|
(669
|
)
|
|
(440
|
)
|
|
(296
|
)
|
|
(88
|
)
|
||||
Tax provision/(benefit) on other comprehensive loss
|
|
(59
|
)
|
|
173
|
|
|
(34
|
)
|
|
605
|
|
||||
Other comprehensive loss before allocation to noncontrolling interests
|
|
$
|
(610
|
)
|
|
$
|
(613
|
)
|
|
$
|
(262
|
)
|
|
$
|
(693
|
)
|
Comprehensive income before allocation to noncontrolling interests
|
|
$
|
4,446
|
|
|
$
|
3,266
|
|
|
$
|
8,683
|
|
|
$
|
6,755
|
|
Less: Comprehensive income/(loss) attributable to noncontrolling interests
|
|
12
|
|
|
(4
|
)
|
|
13
|
|
|
6
|
|
||||
Comprehensive income attributable to Pfizer Inc.
|
|
$
|
4,434
|
|
|
$
|
3,270
|
|
|
$
|
8,669
|
|
|
$
|
6,750
|
|
(a)
|
Reclassified into Other (income)/deductions—net and Cost of sales in the condensed consolidated statements of income. For additional information on amounts reclassified into Cost of sales, see Note 7E. Financial Instruments: Derivative Financial Instruments and Hedging Activities.
|
(b)
|
For additional information, see Notes to Consolidated Financial Statements—Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting Standards in 2018 in our 2018 Financial Report.
|
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
December 31,
2018 |
|
||
|
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,784
|
|
|
$
|
1,139
|
|
Short-term investments
|
|
11,128
|
|
|
17,694
|
|
||
Trade accounts receivable, less allowance for doubtful accounts: 2019—$540; 2018—$541
|
|
9,793
|
|
|
8,025
|
|
||
Inventories
|
|
8,233
|
|
|
7,508
|
|
||
Current tax assets
|
|
3,723
|
|
|
3,374
|
|
||
Other current assets
|
|
2,535
|
|
|
2,461
|
|
||
Assets held for sale
|
|
9,877
|
|
|
9,725
|
|
||
Total current assets
|
|
47,073
|
|
|
49,926
|
|
||
Long-term investments
|
|
2,905
|
|
|
2,767
|
|
||
Property, plant and equipment, less accumulated depreciation: 2019—$16,389; 2018—$16,591
|
|
13,521
|
|
|
13,385
|
|
||
Identifiable intangible assets, less accumulated amortization
|
|
33,024
|
|
|
35,211
|
|
||
Goodwill
|
|
53,352
|
|
|
53,411
|
|
||
Noncurrent deferred tax assets and other noncurrent tax assets
|
|
1,935
|
|
|
1,924
|
|
||
Other noncurrent assets
|
|
4,388
|
|
|
2,799
|
|
||
Total assets
|
|
$
|
156,199
|
|
|
$
|
159,422
|
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
|
|
||
Short-term borrowings, including current portion of long-term debt: 2019—$2,139; 2018—$4,776
|
|
$
|
10,507
|
|
|
$
|
8,831
|
|
Trade accounts payable
|
|
4,002
|
|
|
4,674
|
|
||
Dividends payable
|
|
1,991
|
|
|
2,047
|
|
||
Income taxes payable
|
|
1,536
|
|
|
1,265
|
|
||
Accrued compensation and related items
|
|
1,875
|
|
|
2,397
|
|
||
Other current liabilities
|
|
10,110
|
|
|
10,753
|
|
||
Liabilities held for sale
|
|
2,009
|
|
|
1,890
|
|
||
Total current liabilities
|
|
32,030
|
|
|
31,858
|
|
||
|
|
|
|
|
||||
Long-term debt
|
|
36,168
|
|
|
32,909
|
|
||
Pension benefit obligations, net
|
|
4,982
|
|
|
5,272
|
|
||
Postretirement benefit obligations, net
|
|
1,310
|
|
|
1,338
|
|
||
Noncurrent deferred tax liabilities
|
|
3,180
|
|
|
3,700
|
|
||
Other taxes payable
|
|
12,421
|
|
|
14,737
|
|
||
Other noncurrent liabilities
|
|
6,183
|
|
|
5,850
|
|
||
Total liabilities
|
|
96,274
|
|
|
95,664
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Preferred stock
|
|
18
|
|
|
19
|
|
||
Common stock
|
|
468
|
|
|
467
|
|
||
Additional paid-in capital
|
|
86,963
|
|
|
86,253
|
|
||
Treasury stock
|
|
(110,786
|
)
|
|
(101,610
|
)
|
||
Retained earnings
|
|
94,440
|
|
|
89,554
|
|
||
Accumulated other comprehensive loss
|
|
(11,535
|
)
|
|
(11,275
|
)
|
||
Total Pfizer Inc. shareholders’ equity
|
|
59,568
|
|
|
63,407
|
|
||
Equity attributable to noncontrolling interests
|
|
357
|
|
|
351
|
|
||
Total equity
|
|
59,924
|
|
|
63,758
|
|
||
Total liabilities and equity
|
|
$
|
156,199
|
|
|
$
|
159,422
|
|
|
|
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, March 31, 2019
|
|
466
|
|
|
$
|
19
|
|
|
9,358
|
|
|
$
|
468
|
|
|
$
|
86,635
|
|
|
(3,801
|
)
|
|
$
|
(110,781
|
)
|
|
$
|
93,388
|
|
|
$
|
(10,923
|
)
|
|
$
|
58,806
|
|
|
$
|
352
|
|
|
$
|
59,158
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,046
|
|
|
|
|
5,046
|
|
|
10
|
|
|
5,056
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(613
|
)
|
|
(613
|
)
|
|
3
|
|
|
(610
|
)
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,994
|
)
|
|
|
|
(3,994
|
)
|
|
|
|
(3,994
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
5
|
|
|
—
|
|
|
329
|
|
|
—
|
|
|
(6
|
)
|
|
|
|
|
|
324
|
|
|
|
|
324
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(8
|
)
|
|
—
|
|
|
|
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||
Balance, June 30, 2019
|
|
458
|
|
|
$
|
18
|
|
|
9,363
|
|
|
$
|
468
|
|
|
$
|
86,963
|
|
|
(3,801
|
)
|
|
$
|
(110,786
|
)
|
|
$
|
94,440
|
|
|
$
|
(11,535
|
)
|
|
$
|
59,568
|
|
|
$
|
357
|
|
|
$
|
59,924
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
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 April 1, 2018
|
|
513
|
|
|
$
|
21
|
|
|
9,299
|
|
|
$
|
465
|
|
|
$
|
84,599
|
|
|
(3,437
|
)
|
|
$
|
(95,460
|
)
|
|
$
|
89,961
|
|
|
$
|
(9,402
|
)
|
|
$
|
70,184
|
|
|
$
|
358
|
|
|
$
|
70,541
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,872
|
|
|
|
|
3,872
|
|
|
7
|
|
|
3,879
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(602
|
)
|
|
(602
|
)
|
|
(11
|
)
|
|
(613
|
)
|
||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,970
|
)
|
|
|
|
(3,970
|
)
|
|
|
|
(3,970
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
4
|
|
|
—
|
|
|
300
|
|
|
—
|
|
|
(4
|
)
|
|
|
|
|
|
|
297
|
|
|
|
|
297
|
|
|||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||||||||
Preferred stock conversions and redemptions
|
|
(11
|
)
|
|
—
|
|
|
|
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||||||||
Balance, July 1, 2018
|
|
502
|
|
|
$
|
20
|
|
|
9,303
|
|
|
$
|
465
|
|
|
$
|
84,898
|
|
|
(3,438
|
)
|
|
$
|
(95,463
|
)
|
|
$
|
89,860
|
|
|
$
|
(10,003
|
)
|
|
$
|
69,778
|
|
|
$
|
346
|
|
|
$
|
70,124
|
|
|
|
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, 2019
|
|
478
|
|
|
$
|
19
|
|
|
9,332
|
|
|
$
|
467
|
|
|
$
|
86,253
|
|
|
(3,615
|
)
|
|
$
|
(101,610
|
)
|
|
$
|
89,554
|
|
|
$
|
(11,275
|
)
|
|
$
|
63,407
|
|
|
$
|
351
|
|
|
$
|
63,758
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,929
|
|
|
|
|
8,929
|
|
|
15
|
|
|
8,945
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(260
|
)
|
|
(260
|
)
|
|
(2
|
)
|
|
(262
|
)
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,062
|
)
|
|
|
|
(4,062
|
)
|
|
|
|
(4,062
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
31
|
|
|
2
|
|
|
712
|
|
|
(7
|
)
|
|
(312
|
)
|
|
|
|
|
|
402
|
|
|
|
|
402
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(180
|
)
|
|
(8,865
|
)
|
|
|
|
|
|
(8,865
|
)
|
|
|
|
(8,865
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(20
|
)
|
|
(1
|
)
|
|
|
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
||||||||||||||
Other(a)
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|||||||||||
Balance, June 30, 2019
|
|
458
|
|
|
$
|
18
|
|
|
9,363
|
|
|
$
|
468
|
|
|
$
|
86,963
|
|
|
(3,801
|
)
|
|
$
|
(110,786
|
)
|
|
$
|
94,440
|
|
|
$
|
(11,535
|
)
|
|
$
|
59,568
|
|
|
$
|
357
|
|
|
$
|
59,924
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
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, 2018
|
|
524
|
|
|
$
|
21
|
|
|
9,275
|
|
|
$
|
464
|
|
|
$
|
84,278
|
|
|
(3,296
|
)
|
|
$
|
(89,425
|
)
|
|
$
|
85,291
|
|
|
$
|
(9,321
|
)
|
|
$
|
71,308
|
|
|
$
|
348
|
|
|
$
|
71,656
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,432
|
|
|
|
|
7,432
|
|
|
16
|
|
|
7,449
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(682
|
)
|
|
(682
|
)
|
|
(11
|
)
|
|
(693
|
)
|
||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,035
|
)
|
|
|
|
(4,035
|
)
|
|
|
|
(4,035
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
28
|
|
|
1
|
|
|
621
|
|
|
3
|
|
|
25
|
|
|
|
|
|
|
648
|
|
|
|
|
648
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(145
|
)
|
|
(6,063
|
)
|
|
|
|
|
|
(6,063
|
)
|
|
|
|
(6,063
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(22
|
)
|
|
(1
|
)
|
|
|
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
||||||||||||||
Other(b)
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,172
|
|
|
—
|
|
|
1,173
|
|
|
—
|
|
|
1,172
|
|
|||||||||||
Balance, July 1, 2018
|
|
502
|
|
|
$
|
20
|
|
|
9,303
|
|
|
$
|
465
|
|
|
$
|
84,898
|
|
|
(3,438
|
)
|
|
$
|
(95,463
|
)
|
|
$
|
89,860
|
|
|
$
|
(10,003
|
)
|
|
$
|
69,778
|
|
|
$
|
346
|
|
|
$
|
70,124
|
|
(a)
|
Represents the cumulative effect of the adoption of a new accounting standard for leases in the first quarter of 2019. For additional information, see Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting Standards.
|
(b)
|
Represents the cumulative effect of the adoption of new accounting standards in the first quarter of 2018 for revenues, financial assets and liabilities, income tax accounting, and the reclassification of certain tax effects from Accumulated other comprehensive income. For additional information, see Notes to Consolidated Financial Statements––Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting Standards in 2018 in our 2018 Financial Report.
|
|
|
Six Months Ended
|
||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||
Operating Activities
|
|
|
|
|
||||
Net income before allocation to noncontrolling interests
|
|
$
|
8,945
|
|
|
$
|
7,449
|
|
Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
3,073
|
|
|
3,129
|
|
||
Asset write-offs and impairments
|
|
178
|
|
|
41
|
|
||
TCJA impact(a)
|
|
(285
|
)
|
|
(68
|
)
|
||
Deferred taxes from continuing operations
|
|
(160
|
)
|
|
(500
|
)
|
||
Share-based compensation expense
|
|
384
|
|
|
379
|
|
||
Benefit plan contributions in excess of income
|
|
(313
|
)
|
|
(826
|
)
|
||
Other adjustments, net
|
|
(462
|
)
|
|
(523
|
)
|
||
Other changes in assets and liabilities, net of acquisitions and divestitures
|
|
(7,051
|
)
|
|
(3,250
|
)
|
||
Net cash provided by operating activities
|
|
4,309
|
|
|
5,830
|
|
||
|
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
|
||
Purchases of property, plant and equipment
|
|
(939
|
)
|
|
(810
|
)
|
||
Purchases of short-term investments
|
|
(4,063
|
)
|
|
(3,122
|
)
|
||
Proceeds from redemptions/sales of short-term investments
|
|
6,001
|
|
|
10,497
|
|
||
Net proceeds from redemptions/sales of short-term investments with original maturities of three months or less
|
|
4,717
|
|
|
1,231
|
|
||
Purchases of long-term investments
|
|
(123
|
)
|
|
(1,070
|
)
|
||
Proceeds from redemptions/sales of long-term investments
|
|
142
|
|
|
1,361
|
|
||
Acquisitions of intangible assets
|
|
(267
|
)
|
|
(32
|
)
|
||
Other investing activities, net
|
|
179
|
|
|
138
|
|
||
Net cash provided by investing activities
|
|
5,648
|
|
|
8,193
|
|
||
|
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
|
||
Proceeds from short-term borrowings
|
|
3,956
|
|
|
1,746
|
|
||
Principal payments on short-term borrowings
|
|
(2,375
|
)
|
|
(2,921
|
)
|
||
Net proceeds from short-term borrowings with original maturities of three months or less
|
|
2,719
|
|
|
2,092
|
|
||
Proceeds from issuance of long-term debt
|
|
4,942
|
|
|
—
|
|
||
Principal payments on long-term debt
|
|
(5,355
|
)
|
|
(3,104
|
)
|
||
Purchases of common stock
|
|
(8,865
|
)
|
|
(6,063
|
)
|
||
Cash dividends paid
|
|
(4,047
|
)
|
|
(4,021
|
)
|
||
Proceeds from exercise of stock options
|
|
248
|
|
|
474
|
|
||
Other financing activities, net
|
|
(541
|
)
|
|
(831
|
)
|
||
Net cash used in financing activities
|
|
(9,318
|
)
|
|
(12,628
|
)
|
||
Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents
|
|
(28
|
)
|
|
(15
|
)
|
||
Net increase in cash and cash equivalents and restricted cash and cash equivalents
|
|
612
|
|
|
1,381
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents, beginning
|
|
1,225
|
|
|
1,431
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents, end
|
|
$
|
1,837
|
|
|
$
|
2,811
|
|
|
|
|
|
|
|
|
||
Supplemental Cash Flow Information
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
|
||||
Equity investment in Allogene received in exchange for Pfizer's allogeneic CAR T developmental program assets(b)
|
|
$
|
—
|
|
|
$
|
92
|
|
Cash paid (received) during the period for:
|
|
|
|
|
|
|
||
Income taxes
|
|
2,136
|
|
|
1,197
|
|
||
Interest paid
|
|
809
|
|
|
724
|
|
||
Interest rate hedges
|
|
(72
|
)
|
|
(71
|
)
|
(a)
|
As a result of the enactment of the TCJA in December 2017, Pfizer’s Provision for taxes on income for (i) the six months ended June 30, 2019 was favorably impacted by approximately $285 million, primarily as a result of additional guidance issued by the U.S. Department of Treasury and (ii) the six months ended July 1, 2018 was favorably impacted by approximately $68 million, primarily related to certain tax initiatives associated with the lower U.S. tax rate as a result of the TCJA.
|
(b)
|
For additional information, see Notes to Consolidated Financial Statements––Note 2B. Acquisitions, Divestitures, Assets and Liabilities Held for Sale, Licensing Arrangements, Research and Development and Collaborative Arrangements, Equity-Method Investments and Privately Held Investment: Divestitures in our 2018 Financial Report.
|
•
|
Formation of a New Consumer Healthcare Joint Venture––On July 31, 2019, which fell in the third fiscal quarter of 2019, we closed the transaction in which we and GSK combined our respective consumer healthcare businesses into a new consumer healthcare joint venture that operates globally under the GSK Consumer Healthcare name. Assets and liabilities associated with our Consumer Healthcare business were reclassified as held for sale in the consolidated balance sheets as of June 30, 2019 and December 31, 2018.
|
•
|
Acquisition of Array BioPharma Inc.––On July 30, 2019, which fell in the third fiscal quarter of 2019, we acquired Array, a commercial stage biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule medicines to treat cancer and other diseases of high unmet need, for $48 per share in cash, for a total enterprise value of approximately $11.4 billion. We financed the majority of the transaction with debt and the balance with existing cash.
|
•
|
Agreement to Combine Upjohn with Mylan––On July 29, 2019, which fell in the third fiscal quarter of 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company. Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, Upjohn is expected to be spun off or split off to Pfizer’s shareholders and simultaneously combined with Mylan. Pfizer shareholders would own 57% of the combined new company, and Mylan shareholders would own 43%. The transaction is expected to be tax free to Pfizer and Pfizer shareholders. The transaction is anticipated to close in mid-2020, subject to Mylan shareholder approval and customary closing conditions, including receipt of regulatory approvals.
|
•
|
Acquisition of Therachon Holding AG––On July 1, 2019, which fell in the third fiscal quarter of 2019, we acquired all the remaining shares of Therachon, a privately-held clinical-stage biotechnology company focused on rare diseases, with assets in development for the treatment of achondroplasia, a genetic condition and the most common form of short-limb dwarfism, for $340 million upfront, plus potential milestone payments of up to $470 million, contingent on the achievement of key milestones in the development and commercialization of the lead asset TA-46. In 2018, Pfizer acquired 3% of Therachon’s outstanding shares.
|
Our total lease costs are as follows:
|
||||||||
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
||
(MILLIONS OF DOLLARS)
|
|
June 30, 2019
|
|
|
June 30, 2019
|
|
||
Operating lease cost
|
|
$
|
100
|
|
|
$
|
200
|
|
Variable lease cost
|
|
59
|
|
|
118
|
|
||
Sublease income
|
|
(11
|
)
|
|
(21
|
)
|
||
Total lease cost
|
|
$
|
148
|
|
|
$
|
297
|
|
(a)
|
Reflects lease payments due within 12 months subsequent to the balance sheet date.
|
As of December 31, 2018, the future minimum rental commitments under non-cancelable operating leases follow:
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
After 2023
|
|
||||||
Lease commitments
|
|
$
|
300
|
|
|
$
|
252
|
|
|
$
|
210
|
|
|
$
|
267
|
|
|
$
|
248
|
|
|
$
|
2,040
|
|
(a)
|
Other assets held for sale consist of PP&E.
|
•
|
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)
|
In the second quarter and first six months of 2019, restructuring credits mostly represent the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years (see Note 5B). In the three and six months ended July 1, 2018, restructuring credits were associated with cost-reduction and productivity initiatives not associated with acquisitions, as well as acquisition-related costs, primarily associated with Hospira.
|
•
|
For the second quarter of 2019, Biopharma ($62 million credit); Upjohn ($9 million credit); and Other ($74 million credit).
|
•
|
For the first six months of 2019, Biopharma ($48 million credit); Upjohn ($22 million credit); and Other ($63 million credit).
|
•
|
For the second quarter of 2018, total reportable segments ($10 million credit); and Other ($13 million credit).
|
•
|
For the first six months of 2018, total reportable segments ($24 million credit); and Other ($9 million credit). At the beginning of fiscal 2019, we revised our operating segments and are unable to directly associate these prior-period restructuring charges with the new individual segments.
|
(b)
|
Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. In the second quarter and first six months of 2019 and 2018, integration costs were primarily related to our acquisition of Hospira.
|
(c)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
(d)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.
|
(a)
|
Included in Other current liabilities ($823 million) and Other noncurrent liabilities ($428 million).
|
(b)
|
Includes the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years. See Note 5B for additional information.
|
(c)
|
Includes adjustments for foreign currency translation.
|
(d)
|
Included in Other current liabilities ($593 million) and Other noncurrent liabilities ($204 million).
|
The following table provides components of Other (income)/deductions––net:
|
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Interest income(a)
|
|
$
|
(59
|
)
|
|
$
|
(80
|
)
|
|
(125
|
)
|
|
(157
|
)
|
||
Interest expense(a)
|
|
389
|
|
|
326
|
|
|
750
|
|
|
635
|
|
||||
Net interest expense
|
|
330
|
|
|
245
|
|
|
625
|
|
|
478
|
|
||||
Royalty-related income(b)
|
|
(231
|
)
|
|
(121
|
)
|
|
(320
|
)
|
|
(217
|
)
|
||||
Net gains on asset disposals
|
|
—
|
|
|
(15
|
)
|
|
(1
|
)
|
|
(22
|
)
|
||||
Net gains recognized during the period on investments in equity securities(c)
|
|
(36
|
)
|
|
(257
|
)
|
|
(147
|
)
|
|
(375
|
)
|
||||
Net realized losses on sales of investments in debt securities
|
|
—
|
|
|
8
|
|
|
—
|
|
|
12
|
|
||||
Income from collaborations, out-licensing arrangements and sales of compound/product rights(d)
|
|
(22
|
)
|
|
(174
|
)
|
|
(104
|
)
|
|
(316
|
)
|
||||
Net periodic benefit credits other than service costs(e)
|
|
(51
|
)
|
|
(84
|
)
|
|
(91
|
)
|
|
(166
|
)
|
||||
Certain legal matters, net(f)
|
|
15
|
|
|
(88
|
)
|
|
19
|
|
|
(107
|
)
|
||||
Certain asset impairments(g)
|
|
10
|
|
|
40
|
|
|
160
|
|
|
40
|
|
||||
Business and legal entity alignment costs(h)
|
|
137
|
|
|
1
|
|
|
256
|
|
|
4
|
|
||||
Net losses on early retirement of debt(i)
|
|
—
|
|
|
—
|
|
|
138
|
|
|
3
|
|
||||
Other, net(j)
|
|
(27
|
)
|
|
(106
|
)
|
|
(318
|
)
|
|
(64
|
)
|
||||
Other (income)/deductions––net
|
|
$
|
126
|
|
|
$
|
(551
|
)
|
|
$
|
218
|
|
|
$
|
(728
|
)
|
(a)
|
Interest income decreased in the second quarter and first six months of 2019, primarily driven by a lower investment balance. Interest expense increased in the second quarter and first six months of 2019, mainly as a result of higher short-term interest rates, as well as the retirement of lower-coupon debt and the issuance of new debt with a higher coupon than the debt outstanding for the comparative prior year periods.
|
(b)
|
The increase in royalty-related income for the second quarter and first six months of 2019 is primarily due to a one-time favorable resolution in the second quarter of 2019 of a legal dispute for $82 million.
|
(c)
|
The second quarter of 2018 included gains of $142 million and the first six months of 2018 included gains of $203 million related to our investment in ICU Medical stock. For additional information, see Note 7B.
|
(d)
|
Includes income from upfront and milestone payments from our collaboration partners and income from out-licensing arrangements and sales of compound/product rights. In the first six months of 2019, mainly includes $68 million in milestone income from Mylan Pharmaceuticals Inc. related to the FDA’s approval and launch of Wixela Inhub®, a generic of Advair Diskus® (fluticasone propionate and salmeterol inhalation powder). In the second quarter of 2018, primarily included, among other things, $88 million in milestone income from multiple licensees and an upfront payment to us of $75 million for the sale of
|
(e)
|
For additional information, see Note 10.
|
(f)
|
In the second quarter and first six months of 2018, primarily represented the reversal of a legal accrual where a loss was no longer deemed probable.
|
(g)
|
The second quarter and first six months of 2019 include an intangible asset impairment charge of $10 million and the second quarter and first six months of 2018 included an intangible asset impairment charge of $31 million, which are all related to a finite-lived developed technology right, acquired in connection with our acquisition of Anacor, for the treatment for toenail fungus marketed in the U.S. market only, associated with Biopharma and reflect, among other things, updated commercial forecasts. The first six months of 2019 also includes intangible asset impairment charges of: (i) $90 million related to WRDM IPR&D, which relates to a pre-clinical stage asset from our acquisition of Bamboo for gene therapies for the potential treatment of patients with certain rare diseases; and (ii) $40 million related to a Biopharma developed technology right, acquired in connection with our acquisition of King, for government defense products. The WRDM IPR&D intangible asset impairment charge was the result of a determination to not use certain Bamboo IPR&D acquired in future rare disease development. The intangible asset impairment charge related to the Biopharma developed technology right reflects, among other things, updated commercial forecasts including manufacturing cost assumptions. In addition, the first six months of 2019, includes other asset impairments of $20 million.
|
(h)
|
In the second quarter and first six months of 2019, represents incremental costs associated with the design, planning and implementation of our new organizational structure, effective in the beginning of 2019, and primarily includes consulting, legal, tax and advisory services. In the second quarter and first six months of 2018, represents expenses for changes to our infrastructure to align our commercial operations that existed through December 31, 2018, including costs to internally separate our businesses into distinct legal entities, as well as to streamline our intercompany supply operations to better support each business.
|
(i)
|
In the first six months of 2019, represents net losses due to the early retirement of debt in the first quarter of 2019, inclusive of the related termination of cross-currency swaps.
|
(j)
|
The second quarter of 2019 includes, among other things, charges of $81 million, reflecting the change in the fair value of contingent consideration, dividend income of $76 million from our investment in ViiV and $25 million of income from insurance recoveries related to Hurricane Maria. The first six months of 2019 includes, among other things, dividend income of $140 million from our investment in ViiV and $50 million of income from insurance recoveries related to Hurricane Maria. The second quarter of 2018 included, among other things, dividend income of $76 million from our investment in ViiV, and charges of $23 million, reflecting the change in the fair value of contingent consideration. The first six months of 2018 included, among other things, dividend income of $135 million from our investment in ViiV, and charges of $135 million reflecting the change in the fair value of contingent consideration. The second quarter and first six months of 2018 also included a non-cash $50 million pre-tax gain on the contribution of Pfizer’s allogeneic CAR T development program assets obtained from Cellectis S.A. and Les Laboratoires Servier SAS in connection with our contribution agreement entered into with Allogene, and a non-cash $17 million gain on the cash settlement of a liability that we incurred in April 2018 upon the EU approval of Mylotarg.
|
(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.
|
(b)
|
Reflects intangible assets written down to fair value in the first six months of 2019. 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 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; 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.
|
•
|
an increase in tax benefits associated with the resolution of certain tax positions pertaining to prior years, primarily resulting from the aforementioned favorable settlement with the IRS;
|
•
|
the tax benefit recorded as a result of additional guidance issued by the U.S. Department of Treasury related to the enactment of the TCJA, as well as
|
•
|
the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business.
|
•
|
During the second quarter of 2019, Pfizer reached settlement of disputed issues at the IRS Office of Appeals, thereby settling all issues related to U.S. tax returns of Pfizer for the years 2009-2010. As a result of settling these years, in the second quarter of 2019 we recorded a benefit of approximately $1.4 billion, representing tax and interest.
|
•
|
With respect to Pfizer, tax years 2011-2015 are currently under audit. Tax years 2016-2019 are open, but not under audit. All other tax years are closed.
|
The following table provides the components of Tax provision/(benefit) on other comprehensive loss:
|
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Foreign currency translation adjustments, net(a)
|
|
$
|
(17
|
)
|
|
$
|
101
|
|
|
$
|
10
|
|
|
$
|
67
|
|
Unrealized holding gains/(losses) on derivative financial instruments, net
|
|
(53
|
)
|
|
8
|
|
|
6
|
|
|
4
|
|
||||
Reclassification adjustments for (gains)/losses included in net income
|
|
(4
|
)
|
|
72
|
|
|
(59
|
)
|
|
65
|
|
||||
Reclassification adjustments of certain tax effects from AOCI to Retained earnings(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
|
(57
|
)
|
|
79
|
|
|
(53
|
)
|
|
70
|
|
||||
Unrealized holding gains/(losses) on available-for-sale securities, net
|
|
(1
|
)
|
|
(48
|
)
|
|
4
|
|
|
(28
|
)
|
||||
Reclassification adjustments for (gains)/losses included in net income
|
|
3
|
|
|
20
|
|
|
5
|
|
|
(2
|
)
|
||||
Reclassification adjustments for tax on unrealized gains from AOCI to Retained earnings(c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
||||
|
|
2
|
|
|
(29
|
)
|
|
9
|
|
|
(76
|
)
|
||||
Benefit plans: actuarial gains/(losses), net
|
|
(1
|
)
|
|
(13
|
)
|
|
(1
|
)
|
|
25
|
|
||||
Reclassification adjustments related to amortization
|
|
15
|
|
|
14
|
|
|
18
|
|
|
28
|
|
||||
Reclassification adjustments related to settlements, net
|
|
—
|
|
|
7
|
|
|
1
|
|
|
15
|
|
||||
Reclassification adjustments of certain tax effects from AOCI to Retained earnings(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
637
|
|
||||
Other
|
|
8
|
|
|
27
|
|
|
3
|
|
|
6
|
|
||||
|
|
23
|
|
|
34
|
|
|
21
|
|
|
712
|
|
||||
Benefit plans: prior service costs and other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Reclassification adjustments related to amortization of prior service costs and other, net
|
|
(11
|
)
|
|
(11
|
)
|
|
(22
|
)
|
|
(22
|
)
|
||||
Reclassification adjustments related to curtailments of prior service costs and other, net
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(3
|
)
|
||||
Reclassification adjustments of certain tax effects from AOCI to Retained earnings(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(144
|
)
|
||||
Other
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
||||
|
|
(11
|
)
|
|
(13
|
)
|
|
(22
|
)
|
|
(168
|
)
|
||||
Tax provision/(benefit) on other comprehensive loss
|
|
$
|
(59
|
)
|
|
$
|
173
|
|
|
$
|
(34
|
)
|
|
$
|
605
|
|
(a)
|
Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.
|
(b)
|
For additional information on the adoption of a new accounting standard related to reclassification of certain tax effects from AOCI, see Notes to Consolidated Financial Statements––Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting Standards in 2018 in our 2018 Financial Report.
|
(c)
|
For additional information on the adoption of a new accounting standard related to financial assets and liabilities, see Notes to Consolidated Financial Statements––Note 1B. Basis of Presentation and Significant Accounting Policies: Adoption of New Accounting Standards in 2018 in our 2018 Financial Report.
|
The following table provides the changes, net of tax, in Accumulated other comprehensive loss:
|
||||||||||||||||||||||||
|
|
Net Unrealized Gains/(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, December 31, 2018
|
|
$
|
(6,075
|
)
|
|
$
|
167
|
|
|
$
|
(68
|
)
|
|
$
|
(6,027
|
)
|
|
$
|
728
|
|
|
$
|
(11,275
|
)
|
Other comprehensive income/(loss)(a)
|
|
(167
|
)
|
|
(200
|
)
|
|
61
|
|
|
116
|
|
|
(70
|
)
|
|
(260
|
)
|
||||||
Balance, June 30, 2019
|
|
$
|
(6,242
|
)
|
|
$
|
(33
|
)
|
|
$
|
(8
|
)
|
|
$
|
(5,911
|
)
|
|
$
|
658
|
|
|
$
|
(11,535
|
)
|
(a)
|
Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests of $2 million loss for the first six months of 2019.
|
The following table presents the financial assets and liabilities measured at fair value using a market approach on a recurring basis by balance sheet categories and fair value hierarchy level as defined in Notes to Consolidated Financial Statements––Note 1E. Basis of Presentation and Significant Accounting Policies: Fair Value in Pfizer’s 2018 Financial Report:
|
||||||||||||||||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
||||||||||||
Financial assets measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Classified as equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
$
|
4,727
|
|
|
$
|
—
|
|
|
$
|
4,727
|
|
|
$
|
1,571
|
|
|
$
|
—
|
|
|
$
|
1,571
|
|
Equity(a)
|
|
26
|
|
|
15
|
|
|
12
|
|
|
29
|
|
|
17
|
|
|
11
|
|
||||||
|
|
4,753
|
|
|
15
|
|
|
4,739
|
|
|
1,600
|
|
|
17
|
|
|
1,583
|
|
||||||
Classified as available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Government and agency—non-U.S.
|
|
3,014
|
|
|
—
|
|
|
3,014
|
|
|
9,609
|
|
|
—
|
|
|
9,609
|
|
||||||
Corporate and other
|
|
2,013
|
|
|
—
|
|
|
2,013
|
|
|
5,482
|
|
|
—
|
|
|
5,482
|
|
||||||
|
|
5,027
|
|
|
—
|
|
|
5,027
|
|
|
15,091
|
|
|
—
|
|
|
15,091
|
|
||||||
Total short-term investments
|
|
9,780
|
|
|
15
|
|
|
9,766
|
|
|
16,691
|
|
|
17
|
|
|
16,674
|
|
||||||
Other current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
79
|
|
|
—
|
|
|
79
|
|
|
97
|
|
|
—
|
|
|
97
|
|
||||||
Foreign exchange contracts
|
|
334
|
|
|
—
|
|
|
334
|
|
|
477
|
|
|
—
|
|
|
477
|
|
||||||
Total other current assets
|
|
412
|
|
|
—
|
|
|
412
|
|
|
574
|
|
|
—
|
|
|
574
|
|
||||||
Long-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Classified as equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity(a)
|
|
1,425
|
|
|
1,400
|
|
|
25
|
|
|
1,223
|
|
|
1,193
|
|
|
30
|
|
||||||
Classified as trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity funds
|
|
53
|
|
|
53
|
|
|
—
|
|
|
50
|
|
|
50
|
|
|
—
|
|
||||||
|
|
1,477
|
|
|
1,452
|
|
|
25
|
|
|
1,273
|
|
|
1,243
|
|
|
30
|
|
||||||
Classified as available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Government and agency—non-U.S.
|
|
45
|
|
|
—
|
|
|
45
|
|
|
94
|
|
|
—
|
|
|
94
|
|
||||||
Corporate and other
|
|
385
|
|
|
—
|
|
|
385
|
|
|
397
|
|
|
—
|
|
|
397
|
|
||||||
|
|
430
|
|
|
—
|
|
|
430
|
|
|
491
|
|
|
—
|
|
|
491
|
|
||||||
Total long-term investments
|
|
1,907
|
|
|
1,453
|
|
|
454
|
|
|
1,764
|
|
|
1,243
|
|
|
521
|
|
||||||
Other noncurrent assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
453
|
|
|
—
|
|
|
453
|
|
|
335
|
|
|
—
|
|
|
335
|
|
||||||
Foreign exchange contracts
|
|
249
|
|
|
—
|
|
|
249
|
|
|
232
|
|
|
—
|
|
|
232
|
|
||||||
Total other noncurrent assets
|
|
702
|
|
|
—
|
|
|
702
|
|
|
566
|
|
|
—
|
|
|
566
|
|
||||||
Total assets
|
|
$
|
12,801
|
|
|
$
|
1,467
|
|
|
$
|
11,334
|
|
|
$
|
19,595
|
|
|
$
|
1,260
|
|
|
$
|
18,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial liabilities measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Foreign exchange contracts
|
|
109
|
|
|
—
|
|
|
109
|
|
|
78
|
|
|
—
|
|
|
78
|
|
||||||
Total other current liabilities
|
|
110
|
|
|
—
|
|
|
110
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||||
Other noncurrent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
378
|
|
|
—
|
|
|
378
|
|
||||||
Foreign exchange contracts
|
|
467
|
|
|
—
|
|
|
467
|
|
|
564
|
|
|
—
|
|
|
564
|
|
||||||
Total other noncurrent liabilities
|
|
467
|
|
|
—
|
|
|
467
|
|
|
942
|
|
|
—
|
|
|
942
|
|
||||||
Total liabilities
|
|
$
|
577
|
|
|
$
|
—
|
|
|
$
|
577
|
|
|
$
|
1,024
|
|
|
$
|
—
|
|
|
$
|
1,024
|
|
(a)
|
As of June 30, 2019, short-term equity securities of $11 million and long-term equity securities of $24 million are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan. As of December 31, 2018, short-term equity securities of $11 million and long-term equity securities of $29 million are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan.
|
The following table presents the financial liabilities not measured at fair value on a recurring basis, including the carrying values and estimated fair values using a market approach:
|
||||||||||||||||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
|
|
Total
|
|
Level 2
|
|
|
|
Total
|
|
Level 2
|
||||||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt, excluding the current portion
|
|
$
|
36,168
|
|
|
$
|
40,301
|
|
|
$
|
40,301
|
|
|
$
|
32,909
|
|
|
$
|
35,260
|
|
|
$
|
35,260
|
|
At June 30, 2019, the investment securities portfolio consisted of debt securities that were virtually all investment-grade. Information on investments in debt and equity securities at June 30, 2019 and December 31, 2018 is as follows, including, as of June 30, 2019, the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
Gross Unrealized
|
|
|
|
Maturities (in Years)
|
|
|
|
|
Gross Unrealized
|
|
|
|
||||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Amortized Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Within 1
|
|
|
Over 1
to 5 |
|
|
Over 5
|
|
|
Total
|
|
|
Amortized Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
||||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Government and agency––non-U.S.
|
|
$
|
3,056
|
|
|
$
|
9
|
|
|
$
|
(7
|
)
|
|
$
|
3,059
|
|
|
$
|
3,014
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
3,059
|
|
|
$
|
9,754
|
|
|
$
|
7
|
|
|
$
|
(58
|
)
|
|
$
|
9,703
|
|
Corporate and other(a)
|
|
2,409
|
|
|
1
|
|
|
(12
|
)
|
|
2,398
|
|
|
2,013
|
|
|
382
|
|
|
3
|
|
|
2,398
|
|
|
5,905
|
|
|
—
|
|
|
(27
|
)
|
|
5,878
|
|
||||||||||||
Held-to-maturity debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Time deposits and other
|
|
693
|
|
|
—
|
|
|
—
|
|
|
693
|
|
|
646
|
|
|
10
|
|
|
37
|
|
|
693
|
|
|
668
|
|
|
—
|
|
|
—
|
|
|
668
|
|
||||||||||||
Government and agency––non-U.S.
|
|
865
|
|
|
—
|
|
|
—
|
|
|
865
|
|
|
864
|
|
|
—
|
|
|
—
|
|
|
865
|
|
|
592
|
|
|
—
|
|
|
—
|
|
|
592
|
|
||||||||||||
Total debt securities
|
|
$
|
7,023
|
|
|
$
|
10
|
|
|
$
|
(19
|
)
|
|
$
|
7,014
|
|
|
$
|
6,537
|
|
|
$
|
437
|
|
|
$
|
40
|
|
|
$
|
7,014
|
|
|
$
|
16,920
|
|
|
$
|
8
|
|
|
$
|
(85
|
)
|
|
$
|
16,842
|
|
(a)
|
Primarily issued by a diverse group of corporations.
|
The following table presents the net unrealized (gains) and losses for the period that relate to equity securities still held at the reporting date, calculated as follows:
|
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Net gains recognized during the period on investments in equity securities(a)
|
|
$
|
(36
|
)
|
|
$
|
(257
|
)
|
|
$
|
(147
|
)
|
|
$
|
(375
|
)
|
Less: Net gains recognized during the period on equity securities sold during the period
|
|
(6
|
)
|
|
(27
|
)
|
|
(10
|
)
|
|
(46
|
)
|
||||
Net unrealized gains during the reporting period on equity securities still held at the reporting date
|
|
$
|
(31
|
)
|
|
$
|
(230
|
)
|
|
$
|
(137
|
)
|
|
$
|
(328
|
)
|
(a)
|
The net gains on investments in equity securities are reported in Other (income)/deductions––net. For additional information, see Note 4.
|
Short-term borrowings include:
|
||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
December 31,
2018 |
|
||
Commercial paper
|
|
$
|
6,705
|
|
|
$
|
3,100
|
|
Current portion of long-term debt, principal amount
|
|
2,139
|
|
|
4,781
|
|
||
Other short-term borrowings, principal amount(a)
|
|
1,691
|
|
|
966
|
|
||
Total short-term borrowings, principal amount
|
|
10,535
|
|
|
8,847
|
|
||
Net fair value adjustments related to hedging and purchase accounting
|
|
—
|
|
|
(5
|
)
|
||
Net unamortized discounts, premiums and debt issuance costs
|
|
(29
|
)
|
|
(11
|
)
|
||
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted
|
|
$
|
10,507
|
|
|
$
|
8,831
|
|
(a)
|
Other short-term borrowings primarily include cash collateral. For additional information, see Note 7E.
|
In the first quarter of 2019, we issued the following senior unsecured notes:
|
||||||
|
|
|
|
Principal
|
||
(MILLIONS OF DOLLARS)
|
|
Maturity Date
|
|
As of June 30, 2019
|
||
2.800% notes(a)
|
|
March 11, 2022
|
|
$
|
500
|
|
2.950% notes(a)
|
|
March 15, 2024
|
|
750
|
|
|
3.450% notes(a)
|
|
March 15, 2029
|
|
1,750
|
|
|
3.900% notes(a)
|
|
March 15, 2039
|
|
750
|
|
|
4.000% notes(a)
|
|
March 15, 2049
|
|
1,250
|
|
|
Total long-term debt issued in the first quarter of 2019(b)
|
|
|
|
$
|
5,000
|
|
(a)
|
Fixed rate notes may be redeemed by us at any time, in whole, or in part, at varying redemption prices plus accrued and unpaid interest.
|
(b)
|
The weighted-average effective interest rate for the notes at issuance was 3.57%.
|
The following table provides the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:
|
||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
December 31,
2018 |
|
||
Total long-term debt, principal amount
|
|
$
|
35,082
|
|
|
$
|
32,558
|
|
Net fair value adjustments related to hedging and purchase accounting
|
|
1,264
|
|
|
479
|
|
||
Net unamortized discounts, premiums and debt issuance costs
|
|
(185
|
)
|
|
(136
|
)
|
||
Other long-term debt
|
|
6
|
|
|
7
|
|
||
Total long-term debt, carried at historical proceeds, as adjusted
|
|
$
|
36,168
|
|
|
$
|
32,909
|
|
Current portion of long-term debt, carried at historical proceeds, as adjusted
|
|
$
|
2,139
|
|
|
$
|
4,776
|
|
(a)
|
The notional amount of outstanding foreign currency forward-exchange contracts hedging our intercompany forecasted inventory sales was $6.7 billion as of June 30, 2019 and $5.8 billion as of December 31, 2018.
|
The following tables provide 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) |
|
Amount of Gains/(Losses)
Recognized in OCI(a), (b) |
|
Amount of Gains/(Losses)
Reclassified from OCI into OID and COS(a), (b) |
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||||
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments in Cash Flow Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts(c)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(204
|
)
|
|
$
|
107
|
|
|
$
|
48
|
|
|
$
|
(330
|
)
|
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach
|
|
—
|
|
|
—
|
|
|
28
|
|
|
20
|
|
|
32
|
|
|
20
|
|
||||||
Derivative Financial Instruments in Fair Value Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
483
|
|
|
(121
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hedged item
|
|
(483
|
)
|
|
121
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange contracts
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hedged item
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
153
|
|
|
—
|
|
|
—
|
|
||||||
The portion on foreign exchange contracts excluded from the assessment of hedge effectiveness
|
|
—
|
|
|
—
|
|
|
52
|
|
|
25
|
|
|
31
|
|
|
21
|
|
||||||
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency short-term borrowings(d)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
85
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency long-term debt(d)
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
186
|
|
|
—
|
|
|
—
|
|
||||||
Derivative Financial Instruments Not Designated as Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
(4
|
)
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
All other net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
|
|
$
|
(4
|
)
|
|
$
|
62
|
|
|
$
|
(216
|
)
|
|
$
|
577
|
|
|
$
|
111
|
|
|
$
|
(289
|
)
|
|
||||||||||||||||||||||||
|
|
Amount of
Gains/(Losses) Recognized in OID(a) |
|
Amount of Gains/(Losses)
Recognized in OCI(a), (b) |
|
Amount of Gains/(Losses)
Reclassified from OCI into OID and COS(a), (b) |
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||||
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments in Cash Flow Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts(c)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
(36
|
)
|
|
$
|
257
|
|
|
$
|
(402
|
)
|
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach
|
|
—
|
|
|
—
|
|
|
84
|
|
|
48
|
|
|
86
|
|
|
48
|
|
||||||
Derivative Financial Instruments in Fair Value Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate contracts
|
|
813
|
|
|
(520
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hedged item
|
|
(813
|
)
|
|
520
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange contracts
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hedged item
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
148
|
|
|
—
|
|
|
—
|
|
||||||
The portion of foreign exchange contracts excluded from the assessment of hedge effectiveness
|
|
—
|
|
|
—
|
|
|
93
|
|
|
27
|
|
|
55
|
|
|
26
|
|
||||||
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency short-term borrowings(d)
|
|
—
|
|
|
—
|
|
|
19
|
|
|
43
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency long-term debt(d)
|
|
—
|
|
|
—
|
|
|
11
|
|
|
94
|
|
|
—
|
|
|
—
|
|
||||||
Derivative Financial Instruments Not Designated as Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
(124
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
All other net
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
|
|
$
|
(124
|
)
|
|
$
|
6
|
|
|
$
|
188
|
|
|
$
|
325
|
|
|
$
|
398
|
|
|
$
|
(328
|
)
|
(a)
|
OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the condensed consolidated statements of income. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income.
|
(b)
|
For derivative financial instruments in cash flow hedge relationships, the gains and losses are included in Other comprehensive income––Unrealized holding gains/(losses) on derivative financial instruments, net. 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––Foreign currency translation adjustments, net.
|
(c)
|
Based on quarter-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax gain of $155 million within the next 12 months into Cost of sales. The maximum length of time over which we are hedging future foreign exchange cash flow relates to our $1.8 billion U.K. pound debt maturing in 2043.
|
(d)
|
Short-term borrowings include foreign currency short-term borrowings with carrying values of $1.1 billion as of June 30, 2019, which are used as hedging instruments in net investment hedges. Long-term debt includes foreign currency long-term borrowings with carrying values of $2.0 billion as of June 30, 2019, which are used as hedging instruments in net investment hedges.
|
(a)
|
Carrying amounts exclude the cumulative amount of fair value hedging adjustments.
|
The following table provides the components of Inventories:
|
||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
December 31,
2018 |
|
||
Finished goods
|
|
$
|
2,494
|
|
|
$
|
2,262
|
|
Work-in-process
|
|
5,249
|
|
|
4,701
|
|
||
Raw materials and supplies
|
|
490
|
|
|
546
|
|
||
Inventories(a)
|
|
$
|
8,233
|
|
|
$
|
7,508
|
|
Noncurrent inventories not included above(b)
|
|
$
|
646
|
|
|
$
|
618
|
|
(a)
|
The change from December 31, 2018 reflects increases for certain products to meet targeted levels in the normal course of business, including inventory build for supply recovery and market demand, partially offset by a decrease due to foreign exchange.
|
(b)
|
Included in Other noncurrent assets. There are no recoverability issues associated with these amounts.
|
The following table provides the components of Identifiable intangible assets:
|
||||||||||||||||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(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
|
|
$
|
89,540
|
|
|
$
|
(60,949
|
)
|
|
$
|
28,590
|
|
|
$
|
89,430
|
|
|
$
|
(58,895
|
)
|
|
$
|
30,535
|
|
Brands
|
|
923
|
|
|
(725
|
)
|
|
198
|
|
|
923
|
|
|
(708
|
)
|
|
215
|
|
||||||
Licensing agreements and other
|
|
1,440
|
|
|
(1,159
|
)
|
|
281
|
|
|
1,436
|
|
|
(1,140
|
)
|
|
296
|
|
||||||
|
|
91,903
|
|
|
(62,833
|
)
|
|
29,070
|
|
|
91,788
|
|
|
(60,743
|
)
|
|
31,045
|
|
||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Brands and other
|
|
1,994
|
|
|
|
|
|
1,994
|
|
|
1,994
|
|
|
|
|
|
1,994
|
|
||||||
IPR&D
|
|
1,961
|
|
|
|
|
|
1,961
|
|
|
2,171
|
|
|
|
|
|
2,171
|
|
||||||
|
|
3,954
|
|
|
|
|
|
3,954
|
|
|
4,165
|
|
|
|
|
|
4,165
|
|
||||||
Identifiable intangible assets(a)
|
|
$
|
95,857
|
|
|
$
|
(62,833
|
)
|
|
$
|
33,024
|
|
|
$
|
95,954
|
|
|
$
|
(60,743
|
)
|
|
$
|
35,211
|
|
(a)
|
The decrease in Identifiable intangible assets, less accumulated amortization, is primarily due to amortization and intangible asset impairment charges, partially offset by additions for the period. See Note 4 for additional information on intangible asset impairments.
|
(a)
|
Primarily reflects the impact of foreign exchange.
|
The following tables provide the components of net periodic benefit cost/(credit):
|
||||||||||||||||||||||||||||||||
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||||||||||||||||||
|
|
U.S.
Qualified
|
|
U.S. Supplemental
(Non-Qualified)
|
|
International
|
|
Postretirement
Plans
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
||||||||
Net periodic benefit cost/(credit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
34
|
|
|
$
|
9
|
|
|
$
|
10
|
|
Interest cost
|
|
157
|
|
|
150
|
|
|
12
|
|
|
14
|
|
|
54
|
|
|
55
|
|
|
19
|
|
|
18
|
|
||||||||
Expected return on plan assets
|
|
(223
|
)
|
|
(261
|
)
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
(93
|
)
|
|
(8
|
)
|
|
(9
|
)
|
||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Actuarial losses
|
|
37
|
|
|
30
|
|
|
2
|
|
|
3
|
|
|
20
|
|
|
26
|
|
|
1
|
|
|
2
|
|
||||||||
Prior service credits
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(45
|
)
|
|
(45
|
)
|
||||||||
Curtailments
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||||
Settlements
|
|
2
|
|
|
25
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Special termination benefits
|
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||||
|
|
$
|
(27
|
)
|
|
$
|
(49
|
)
|
|
$
|
17
|
|
|
$
|
21
|
|
|
$
|
25
|
|
|
$
|
21
|
|
|
$
|
(23
|
)
|
|
$
|
(32
|
)
|
|
||||||||||||||||||||||||||||||||
|
|
Six Months Ended
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||||||||||||||||||
|
|
U.S.
Qualified
|
|
U.S. Supplemental
(Non-Qualified)
|
|
International
|
|
Postretirement
Plans
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
|
June 30, 2019
|
|
|
July 1, 2018
|
|
||||||||
Net periodic benefit cost/(credit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63
|
|
|
$
|
71
|
|
|
$
|
19
|
|
|
$
|
20
|
|
Interest cost
|
|
315
|
|
|
301
|
|
|
25
|
|
|
26
|
|
|
109
|
|
|
109
|
|
|
38
|
|
|
36
|
|
||||||||
Expected return on plan assets
|
|
(445
|
)
|
|
(524
|
)
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|
(185
|
)
|
|
(16
|
)
|
|
(18
|
)
|
||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Actuarial losses
|
|
74
|
|
|
60
|
|
|
5
|
|
|
7
|
|
|
41
|
|
|
52
|
|
|
2
|
|
|
4
|
|
||||||||
Prior service costs/(credits)
|
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(89
|
)
|
|
(90
|
)
|
||||||||
Curtailments
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||||
Settlements
|
|
2
|
|
|
45
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Special termination benefits
|
|
1
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||||
|
|
$
|
(55
|
)
|
|
$
|
(107
|
)
|
|
$
|
37
|
|
|
$
|
55
|
|
|
$
|
51
|
|
|
$
|
44
|
|
|
$
|
(46
|
)
|
|
$
|
(63
|
)
|
The following table provides the amounts we contributed, and the amounts we expect to contribute during 2019, to our pension and postretirement plans from our general assets for the periods indicated:
|
||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
U.S. Qualified
|
|
U.S. Supplemental (Non-Qualified)
|
|
International
|
|
Postretirement Plans
|
||||||||
Contributions from our general assets for the six months ended June 30, 2019
|
|
$
|
5
|
|
|
$
|
99
|
|
|
$
|
130
|
|
|
$
|
67
|
|
Expected contributions from our general assets during 2019(a)
|
|
11
|
|
|
197
|
|
|
191
|
|
|
147
|
|
(a)
|
Contributions expected to be made for 2019 are inclusive of amounts contributed during the six months ended June 30, 2019. The U.S. supplemental (non-qualified) pension plan, international pension plan and the postretirement plan contributions from our general assets include direct employer benefit payments.
|
The following table provides the detailed calculation of EPS:
|
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(IN MILLIONS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
EPS Numerator––Basic
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
5,056
|
|
|
$
|
3,879
|
|
|
$
|
8,945
|
|
|
$
|
7,450
|
|
Less: Net income attributable to noncontrolling interests
|
|
10
|
|
|
7
|
|
|
15
|
|
|
16
|
|
||||
Income from continuing operations attributable to Pfizer Inc.
|
|
5,046
|
|
|
3,872
|
|
|
8,929
|
|
|
7,434
|
|
||||
Less: Preferred stock dividends––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
5,045
|
|
|
3,871
|
|
|
8,929
|
|
|
7,433
|
|
||||
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
5,045
|
|
|
$
|
3,871
|
|
|
$
|
8,929
|
|
|
$
|
7,432
|
|
EPS Numerator––Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
$
|
5,046
|
|
|
$
|
3,872
|
|
|
$
|
8,929
|
|
|
$
|
7,434
|
|
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Net income attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
$
|
5,046
|
|
|
$
|
3,872
|
|
|
$
|
8,929
|
|
|
$
|
7,432
|
|
EPS Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of common shares outstanding––Basic
|
|
5,562
|
|
|
5,866
|
|
|
5,598
|
|
|
5,911
|
|
||||
Common-share equivalents: stock options, stock issuable under employee compensation plans, convertible preferred stock and accelerated share repurchase agreements
|
|
110
|
|
|
86
|
|
|
112
|
|
|
93
|
|
||||
Weighted-average number of common shares outstanding––Diluted
|
|
5,672
|
|
|
5,952
|
|
|
5,711
|
|
|
6,004
|
|
||||
Stock options that had exercise prices greater than the average market price of our common stock issuable under employee compensation plans(a)
|
|
1
|
|
|
3
|
|
|
2
|
|
|
2
|
|
||||
Cash dividends declared per share
|
|
$
|
0.36
|
|
|
$
|
0.34
|
|
|
$
|
0.72
|
|
|
$
|
0.68
|
|
(a)
|
These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
|
•
|
Patent litigation, which typically involves challenges to the coverage and/or validity of patents on various products, processes or dosage forms. We are the plaintiff in the majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in loss of patent protection for a drug, a significant loss of revenues from that drug or impairment of the value of associated assets.
|
•
|
Product liability and other product-related litigation, which can include personal injury, consumer, off-label promotion, securities, 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 jurisdictions.
|
•
|
Antitrust Actions
|
•
|
Personal Injury Actions
|
•
|
Personal Injury Actions
|
•
|
Mississippi Attorney General Government Investigation
|
•
|
U.S. Department of Justice Antitrust Division Investigation
|
•
|
State Attorneys General Generics Antitrust Litigation
|
•
|
WRDM––the R&D and Medical expenses managed by our WRDM organization, which is generally responsible for research projects for our Biopharma portfolio until proof-of-concept is achieved and then for transitioning those projects to the GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRDM organization also has responsibility for certain science-based and other platform-services organizations, which provide end-to-end technical expertise and other services to the various R&D projects, as well as the Worldwide Medical and Safety group, which ensures that Pfizer provides all stakeholders––including patients, healthcare providers, pharmacists, payers and health authorities––with complete and up-to-date information on the risks and benefits associated with Pfizer products so that they can make appropriate decisions on how and when to use Pfizer’s medicines.
|
•
|
GPD––the costs associated with our GPD organization, which is generally responsible for clinical trials from WRDM in the Biopharma portfolio, including late stage portfolio spend. GPD also provides technical support and other services to Pfizer R&D projects. GPD is responsible for facilitating all regulatory submissions and interactions with regulatory agencies.
|
•
|
Other––the operating results of our Consumer Healthcare business, and costs associated with other commercial activities not managed as part of Biopharma or Upjohn, including all strategy, business development, portfolio management and valuation capabilities, which previously had been reported in various parts of the organization.
|
•
|
Corporate and Other Unallocated––the costs associated with platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance, and worldwide procurement), patient advocacy activities and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments, as well as overhead expenses associated with our manufacturing (which include manufacturing variances associated with production) and commercial operations that are not directly assessed to an operating segment, as business unit (segment) management does not manage these costs.
|
•
|
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 PP&E; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) certain significant items, representing substantive and/or unusual, and in some cases recurring, items (such as restructuring charges, legal charges or net gains and losses on investments in equity securities) that are evaluated on an individual basis by management and that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and disposals of assets or businesses, including, as applicable, any associated transition activities.
|
The following table provides selected income statement information by reportable segment:
|
||||||||||||||||
|
|
Three Months Ended
|
||||||||||||||
|
|
Revenues
|
|
Earnings(a)
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Reportable Segments:
|
|
|
|
|
|
|
|
|
||||||||
Biopharma
|
|
$
|
9,595
|
|
|
$
|
9,434
|
|
|
$
|
6,093
|
|
|
$
|
5,958
|
|
Upjohn
|
|
2,807
|
|
|
3,147
|
|
|
1,951
|
|
|
2,222
|
|
||||
Total reportable segments
|
|
12,402
|
|
|
12,581
|
|
|
8,044
|
|
|
8,181
|
|
||||
Other business activities
|
|
—
|
|
|
—
|
|
|
(1,193
|
)
|
|
(1,119
|
)
|
||||
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate and other unallocated
|
|
862
|
|
|
886
|
|
|
(1,399
|
)
|
|
(1,576
|
)
|
||||
Purchase accounting adjustments
|
|
—
|
|
|
—
|
|
|
(1,178
|
)
|
|
(1,134
|
)
|
||||
Acquisition-related costs
|
|
—
|
|
|
—
|
|
|
176
|
|
|
(62
|
)
|
||||
Certain significant items(b)
|
|
—
|
|
|
—
|
|
|
(309
|
)
|
|
237
|
|
||||
|
|
$
|
13,264
|
|
|
$
|
13,466
|
|
|
$
|
4,141
|
|
|
$
|
4,527
|
|
|
||||||||||||||||
|
|
Six Months Ended
|
||||||||||||||
|
|
Revenues
|
|
Earnings(a)
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Reportable Segments:
|
|
|
|
|
|
|
|
|
||||||||
Biopharma
|
|
$
|
18,779
|
|
|
$
|
18,315
|
|
|
$
|
11,981
|
|
|
$
|
11,781
|
|
Upjohn
|
|
5,882
|
|
|
6,267
|
|
|
4,225
|
|
|
4,391
|
|
||||
Total reportable segments
|
|
24,661
|
|
|
24,582
|
|
|
16,206
|
|
|
16,172
|
|
||||
Other business activities
|
|
—
|
|
|
—
|
|
|
(2,306
|
)
|
|
(2,307
|
)
|
||||
Reconciling Items:
|
|
|
|
|
|
|
|
|
||||||||
Corporate and other unallocated
|
|
1,721
|
|
|
1,791
|
|
|
(2,676
|
)
|
|
(2,900
|
)
|
||||
Purchase accounting adjustments
|
|
—
|
|
|
—
|
|
|
(2,217
|
)
|
|
(2,355
|
)
|
||||
Acquisition-related costs
|
|
—
|
|
|
—
|
|
|
148
|
|
|
(110
|
)
|
||||
Certain significant items(b)
|
|
—
|
|
|
—
|
|
|
(691
|
)
|
|
154
|
|
||||
|
|
$
|
26,382
|
|
|
$
|
26,373
|
|
|
$
|
8,463
|
|
|
$
|
8,654
|
|
(a)
|
Income from continuing operations before provision/(benefit) for taxes on income. Biopharma’s earnings include dividend income of $76 million in the second quarter of 2019 and $76 million in the second quarter of 2018, and $140 million in the first six months of 2019 and $135 million in the first six months of 2018 from our investment in ViiV. For additional information, see Note 4.
|
(b)
|
Certain significant items are substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) 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.
|
The following table provides revenues by geographic area:
|
||||||||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change
|
|
||||
U.S.
|
|
$
|
6,335
|
|
|
$
|
6,225
|
|
|
2
|
|
|
$
|
12,510
|
|
|
$
|
12,500
|
|
|
—
|
|
Developed Europe(a)
|
|
2,228
|
|
|
2,334
|
|
|
(5
|
)
|
|
4,315
|
|
|
4,426
|
|
|
(3
|
)
|
||||
Developed Rest of World(b)
|
|
1,639
|
|
|
1,694
|
|
|
(3
|
)
|
|
3,174
|
|
|
3,155
|
|
|
1
|
|
||||
Emerging Markets(c)
|
|
3,062
|
|
|
3,214
|
|
|
(5
|
)
|
|
6,383
|
|
|
6,292
|
|
|
1
|
|
||||
Revenues
|
|
$
|
13,264
|
|
|
$
|
13,466
|
|
|
(2
|
)
|
|
$
|
26,382
|
|
|
$
|
26,373
|
|
|
—
|
|
(a)
|
Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland. Revenues denominated in euros were $1.8 billion in the second quarter of 2019 and $1.9 billion in the second quarter of 2018, and were $3.5 billion in the first six months of 2019 and $3.6 billion in the first six months of 2018.
|
(b)
|
Developed Rest of World region includes the following markets: Japan, Canada, South Korea, Australia and New Zealand.
|
(c)
|
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Eastern Europe, the Middle East, Africa, Central Europe and Turkey.
|
The following table provides detailed revenue information:
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|||||||||||
PRODUCT
|
|
PRIMARY INDICATIONS OR CLASS
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
TOTAL REVENUES
|
|
|
|
$
|
13,264
|
|
|
$
|
13,466
|
|
|
$
|
26,382
|
|
|
$
|
26,373
|
|
PFIZER BIOPHARMACEUTICALS GROUP (BIOPHARMA)(a)
|
|
$
|
9,595
|
|
|
$
|
9,434
|
|
|
$
|
18,779
|
|
|
$
|
18,315
|
|
||
Internal Medicine(b)
|
|
|
|
$
|
2,330
|
|
|
$
|
2,276
|
|
|
$
|
4,546
|
|
|
$
|
4,347
|
|
Eliquis alliance revenues and direct sales
|
|
Atrial fibrillation, deep vein thrombosis, pulmonary embolism
|
|
1,085
|
|
|
889
|
|
|
2,096
|
|
|
1,654
|
|
||||
Chantix/Champix
|
|
An aid to smoking cessation treatment in adults 18 years of age or older
|
|
276
|
|
|
277
|
|
|
549
|
|
|
528
|
|
||||
Premarin family
|
|
Symptoms of menopause
|
|
193
|
|
|
210
|
|
|
361
|
|
|
401
|
|
||||
BMP2
|
|
Development of bone and cartilage
|
|
79
|
|
|
80
|
|
|
145
|
|
|
153
|
|
||||
Toviaz
|
|
Overactive bladder
|
|
65
|
|
|
70
|
|
|
125
|
|
|
130
|
|
||||
All other Internal Medicine
|
|
Various
|
|
631
|
|
|
750
|
|
|
1,270
|
|
|
1,480
|
|
||||
Oncology(c)
|
|
|
|
$
|
2,236
|
|
|
$
|
1,888
|
|
|
$
|
4,198
|
|
|
$
|
3,648
|
|
Ibrance
|
|
Advanced breast cancer
|
|
1,261
|
|
|
1,027
|
|
|
2,394
|
|
|
1,960
|
|
||||
Sutent
|
|
Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor
|
|
248
|
|
|
275
|
|
|
480
|
|
|
537
|
|
||||
Xtandi alliance revenues
|
|
Castration-resistant prostate cancer
|
|
201
|
|
|
171
|
|
|
369
|
|
|
330
|
|
||||
Xalkori
|
|
ALK-positive and ROS1-positive advanced NSCLC
|
|
133
|
|
|
137
|
|
|
255
|
|
|
290
|
|
||||
Bosulif
|
|
Philadelphia chromosome–positive chronic myelogenous leukemia
|
|
97
|
|
|
77
|
|
|
177
|
|
|
138
|
|
||||
Inlyta
|
|
Advanced RCC
|
|
104
|
|
|
81
|
|
|
177
|
|
|
155
|
|
||||
Retacrit(j)
|
|
Anemia
|
|
51
|
|
|
18
|
|
|
82
|
|
|
36
|
|
||||
All other Oncology
|
|
Various
|
|
140
|
|
|
100
|
|
|
262
|
|
|
201
|
|
||||
Hospital(d)
|
|
|
|
$
|
1,913
|
|
|
$
|
2,077
|
|
|
$
|
3,800
|
|
|
$
|
4,103
|
|
Sulperazon
|
|
Treatment of infections
|
|
165
|
|
|
150
|
|
|
342
|
|
|
319
|
|
||||
Medrol(e)
|
|
Steroid anti-inflammatory
|
|
120
|
|
|
123
|
|
|
240
|
|
|
258
|
|
||||
Vfend
|
|
Fungal infections
|
|
94
|
|
|
110
|
|
|
178
|
|
|
207
|
|
||||
Zithromax(e)
|
|
Bacterial infections
|
|
73
|
|
|
81
|
|
|
177
|
|
|
182
|
|
||||
EpiPen
|
|
Epinephrine injection used in treatment of life-threatening allergic reactions
|
|
80
|
|
|
95
|
|
|
146
|
|
|
148
|
|
||||
Zyvox
|
|
Bacterial infections
|
|
71
|
|
|
66
|
|
|
134
|
|
|
134
|
|
||||
Fragmin
|
|
Slows blood clotting
|
|
63
|
|
|
74
|
|
|
123
|
|
|
145
|
|
||||
Zosyn/Tazocin
|
|
Antibiotic
|
|
53
|
|
|
58
|
|
|
104
|
|
|
120
|
|
||||
Pfizer CentreOne(f)
|
|
Various
|
|
204
|
|
|
209
|
|
|
380
|
|
|
381
|
|
||||
All other Anti-infectives
|
|
Various
|
|
367
|
|
|
362
|
|
|
721
|
|
|
755
|
|
||||
All other Hospital(d)
|
|
Various
|
|
623
|
|
|
748
|
|
|
1,254
|
|
|
1,455
|
|
||||
Vaccines
|
|
|
|
$
|
1,375
|
|
|
$
|
1,400
|
|
|
$
|
2,988
|
|
|
$
|
2,863
|
|
Prevnar 13/Prevenar 13
|
|
Pneumococcal disease
|
|
1,179
|
|
|
1,250
|
|
|
2,665
|
|
|
2,631
|
|
||||
FSME/IMMUN-TicoVac
|
|
Tick-borne encephalitis disease
|
|
95
|
|
|
73
|
|
|
133
|
|
|
105
|
|
||||
Nimenrix
|
|
Meningococcal disease
|
|
58
|
|
|
30
|
|
|
107
|
|
|
49
|
|
||||
All other Vaccines
|
|
Various
|
|
43
|
|
|
47
|
|
|
82
|
|
|
78
|
|
||||
Inflammation & Immunology (I&I)(g)
|
|
|
|
$
|
1,219
|
|
|
$
|
1,222
|
|
|
$
|
2,256
|
|
|
$
|
2,235
|
|
Xeljanz
|
|
RA, PsA, UC
|
|
613
|
|
|
463
|
|
|
1,036
|
|
|
788
|
|
||||
Enbrel (Outside the U.S. and Canada)
|
|
RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis
|
|
420
|
|
|
551
|
|
|
871
|
|
|
1,057
|
|
||||
Inflectra/Remsima(g), (j)
|
|
Inflammatory diseases
|
|
153
|
|
|
158
|
|
|
291
|
|
|
303
|
|
||||
Eucrisa
|
|
Mild-to-moderate atopic dermatitis (eczema)
|
|
27
|
|
|
39
|
|
|
50
|
|
|
65
|
|
||||
All other I&I
|
|
Various
|
|
6
|
|
|
11
|
|
|
9
|
|
|
22
|
|
||||
Rare Disease
|
|
|
|
$
|
521
|
|
|
$
|
571
|
|
|
$
|
991
|
|
|
$
|
1,120
|
|
BeneFIX
|
|
Hemophilia
|
|
121
|
|
|
141
|
|
|
247
|
|
|
288
|
|
||||
Genotropin
|
|
Replacement of human growth hormone
|
|
125
|
|
|
140
|
|
|
232
|
|
|
272
|
|
||||
Refacto AF/Xyntha
|
|
Hemophilia
|
|
108
|
|
|
141
|
|
|
214
|
|
|
271
|
|
||||
Somavert
|
|
Acromegaly
|
|
68
|
|
|
68
|
|
|
128
|
|
|
131
|
|
||||
Vyndaqel
|
|
ATTR-Cardiomyopathy and Polyneuropathy
|
|
63
|
|
|
38
|
|
|
104
|
|
|
72
|
|
||||
All other Rare Disease
|
|
Various
|
|
35
|
|
|
43
|
|
|
66
|
|
|
86
|
|
(MILLIONS OF DOLLARS)
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|||||||||||
PRODUCT
|
|
PRIMARY INDICATIONS OR CLASS
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
UPJOHN(b), (h)
|
|
$
|
2,807
|
|
|
$
|
3,147
|
|
|
$
|
5,882
|
|
|
$
|
6,267
|
|
||
Lyrica
|
|
Epilepsy, post-herpetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury
|
|
1,175
|
|
|
1,223
|
|
|
2,362
|
|
|
2,436
|
|
||||
Lipitor
|
|
Reduction of LDL cholesterol
|
|
407
|
|
|
521
|
|
|
1,029
|
|
|
1,032
|
|
||||
Norvasc
|
|
Hypertension
|
|
216
|
|
|
273
|
|
|
516
|
|
|
529
|
|
||||
Celebrex
|
|
Arthritis pain and inflammation, acute pain
|
|
174
|
|
|
161
|
|
|
347
|
|
|
306
|
|
||||
Viagra
|
|
Erectile dysfunction
|
|
114
|
|
|
185
|
|
|
259
|
|
|
372
|
|
||||
Effexor
|
|
Depression and certain anxiety disorders
|
|
86
|
|
|
79
|
|
|
163
|
|
|
150
|
|
||||
Zoloft
|
|
Depression and certain anxiety disorders
|
|
73
|
|
|
77
|
|
|
143
|
|
|
151
|
|
||||
Xalatan/Xalacom
|
|
Glaucoma and ocular hypertension
|
|
72
|
|
|
85
|
|
|
133
|
|
|
157
|
|
||||
Revatio
|
|
Pulmonary arterial hypertension
|
|
56
|
|
|
54
|
|
|
98
|
|
|
109
|
|
||||
Xanax
|
|
Anxiety disorders
|
|
52
|
|
|
56
|
|
|
98
|
|
|
111
|
|
||||
All other Upjohn
|
|
Various
|
|
382
|
|
|
433
|
|
|
735
|
|
|
914
|
|
||||
CONSUMER HEALTHCARE BUSINESS(i)
|
|
|
|
$
|
862
|
|
|
$
|
886
|
|
|
$
|
1,721
|
|
|
$
|
1,791
|
|
Total Alliance revenues
|
|
Various
|
|
$
|
1,187
|
|
|
$
|
987
|
|
|
$
|
2,277
|
|
|
$
|
1,842
|
|
Total Biosimilars(j)
|
|
Various
|
|
$
|
217
|
|
|
$
|
188
|
|
|
$
|
396
|
|
|
$
|
361
|
|
Total Sterile Injectable Pharmaceuticals(k)
|
|
|
|
$
|
1,218
|
|
|
$
|
1,329
|
|
|
$
|
2,455
|
|
|
$
|
2,688
|
|
(a)
|
The Pfizer Biopharmaceuticals Group encompasses Internal Medicine, Oncology, Hospital, Vaccines, Inflammation & Immunology and Rare Disease. The new Hospital business unit commercializes our global portfolio of sterile injectable and anti-infective medicines, and also includes Pfizer CentreOne(f).
|
(b)
|
We reclassified certain products from the LEP category, including Premarin family products, and certain other products from the legacy Peri-LOE category, including Pristiq, to the Internal Medicine category and reclassified Lyrica from the Internal Medicine category to the Upjohn business to conform 2018 product revenues to the current presentation.
|
(c)
|
We performed certain reclassifications in the All other Oncology category to conform 2018 product revenues to the current presentation.
|
(d)
|
Hospital is a new business unit that commercializes our global portfolio of sterile injectable and anti-infective medicines. We performed certain reclassifications, primarily from the legacy Sterile Injectables Pharmaceuticals (SIP) category (Sulperazon, Medrol, Fragmin, Tygacil, Zosyn/Tazocin and Precedex, among other products), the LEP category (Epipen and Zithromax), and the legacy Peri-LOE category (Vfend and Zyvox) to the Hospital category to conform 2018 product revenues to the current presentation. Hospital also includes Pfizer CentreOne(f). All other Hospital primarily includes revenues from legacy SIP products (that are not anti-infective products) and, to a much lesser extent, solid oral dose products (that are not anti-infective products). SIP anti-infective products that are not individually listed above are recorded in “All other Anti-infectives”.
|
(e)
|
2018 revenues for Medrol and Zithromax may not agree to previously disclosed revenues because revenues for those products were previously split between LEP and the legacy SIP categories. All revenues for these products are currently reported in the Hospital category.
|
(f)
|
Pfizer CentreOne includes revenues from our contract manufacturing and active pharmaceutical ingredient sales operation, including sterile injectables contract manufacturing, and revenues related to our manufacturing and supply agreements, including with Zoetis Inc. In the fourth quarter of 2017, we sold our equity share in Hisun Pfizer. As a result, effective in the first quarter of 2018, Hisun Pfizer-related revenues, previously reported in emerging markets within legacy All Other LEP and legacy All Other SIP, are reported in emerging markets within Pfizer CentreOne.
|
(g)
|
We reclassified Inflectra/Remsima from the legacy Biosimilars category to the Inflammation & Immunology category to conform 2018 product revenues to the current presentation.
|
(h)
|
Pfizer’s Upjohn business encompasses primarily off-patent branded and generic established medicines that includes 20 of our primarily off-patent solid oral dose legacy brands including Lyrica, Lipitor, Norvasc, Celebrex and Viagra, as well as certain generic medicines.
|
(i)
|
Pfizer’s Consumer Healthcare business is an over-the-counter medicines business, which on July 31, 2019 was combined with GSK’s consumer healthcare business to form a new consumer healthcare joint venture. For additional information, see Note 2.
|
(j)
|
Biosimilars are highly similar versions of approved and authorized biological medicines and primarily include revenues from Inflectra/Remsima and Retacrit.
|
(k)
|
Sterile Injectable Pharmaceuticals represents the total of all branded and generic injectable products in the Hospital business, including anti-infective sterile injectable pharmaceuticals.
|
●
|
Beginning on page 48
|
||||
|
This section provides information about the following: Our Business; our performance during the second quarter and first six months of 2019 and 2018; Our Operating Environment; The Global Economic Environment; Our Strategy; Our Business Development Initiatives, such as acquisitions, dispositions, licensing and collaborations; Our Financial Guidance for 2019 and Preliminary Financial Profile Upon the Completion of the Proposed Combination of Upjohn and Mylan.
|
|
|||
●
|
Beginning on page 63
|
||||
|
This section discusses updates to our 2018 Financial Report disclosures for those accounting policies and estimates that we consider important in understanding our consolidated financial statements.
|
|
|||
●
|
Beginning on page 65
|
||||
|
This section includes the following sub-sections:
|
|
|||
|
Beginning on page 65
|
||||
|
This sub-section provides an overview of revenues by operating segment and geography as well as revenue deductions.
|
|
|||
|
Beginning on page 69
|
||||
|
This sub-section provides an overview of several of our biopharmaceutical products.
|
|
|||
|
Beginning on page 75
|
||||
|
This sub-section provides an overview of important biopharmaceutical product developments.
|
|
|||
|
Beginning on page 79
|
||||
|
This sub-section provides a discussion about our costs and expenses.
|
|
|||
|
Beginning on page 81
|
||||
|
This sub-section provides a discussion of items impacting our tax provisions.
|
|
|||
|
Beginning on page 81
|
||||
|
This sub-section provides a discussion of an alternative view of performance used by management.
|
|
|||
●
|
Beginning on page 87
|
||||
|
This section provides a discussion of the performance of each of our operating segments.
|
|
|||
●
|
Beginning on page 95
|
||||
|
This section provides a discussion of changes in certain components of other comprehensive income.
|
|
|||
●
|
Beginning on page 96
|
||||
|
This section provides a discussion of changes in certain balance sheet accounts.
|
|
|||
●
|
Beginning on page 97
|
||||
|
This section provides an analysis of our cash flows for the first six months of 2019 and 2018.
|
|
|||
●
|
Beginning on page 98
|
||||
|
This section provides an analysis of selected measures of our liquidity and of our capital resources as of June 30, 2019 and December 31, 2018, as well as a discussion of our outstanding debt and other commitments that existed as of June 30, 2019 and December 31, 2018. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future activities.
|
|
|||
●
|
Beginning on page 102
|
||||
|
This section discusses accounting standards that we have recently adopted, as well as those that recently have been issued, but not yet adopted.
|
|
|||
●
|
Beginning on page 103
|
||||
|
This section 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 MD&A. Also included in this section is a discussion of legal proceedings and contingencies.
|
|
•
|
Formation of a New Consumer Healthcare Joint Venture––On July 31, 2019, which fell in the third fiscal quarter of 2019, we closed the transaction in which we and GSK combined our respective consumer healthcare businesses into a new consumer healthcare joint venture that operates globally under the GSK Consumer Healthcare name. The joint venture is a category leader in pain relief, respiratory and vitamins, minerals and supplements, and therapeutic oral health and is the largest global OTC consumer healthcare business. In exchange for contributing our Consumer Healthcare business, we received a 32% equity stake in the new company and GSK owns the remaining 68%. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 2. Assets and Liabilities Held for Sale and the “Our Strategy––Commercial Operations” section of this MD&A below.
|
•
|
Acquisition of Array BioPharma Inc.––On July 30, 2019, which fell in the third fiscal quarter of 2019, we acquired Array, a commercial stage biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule medicines to treat cancer and other diseases of high unmet need, for $48 per share in cash, for a total enterprise value of approximately $11.4 billion. We financed the majority of the transaction with debt and the balance with existing cash.
|
•
|
Agreement to Combine Upjohn with Mylan––On July 29, 2019, which fell in the third fiscal quarter of 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company. Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, Upjohn is expected to be spun off or split off to Pfizer’s shareholders and simultaneously combined with Mylan. Pfizer shareholders would own
|
•
|
Acquisition of Therachon Holding AG––On July 1, 2019, which fell in the third fiscal quarter of 2019, we acquired all the remaining shares of Therachon, a privately-held clinical-stage biotechnology company focused on rare diseases, with assets in development for the treatment of achondroplasia, a genetic condition and the most common form of short-limb dwarfism, for $340 million upfront, plus potential milestone payments of up to $470 million. In 2018, Pfizer acquired 3% of Therachon’s outstanding shares.
|
(MILLIONS OF DOLLARS)
|
|
Three Months
|
|
|
Six Months
|
|
||
Revenues, for the three and six months ended July 1, 2018
|
|
$
|
13,466
|
|
|
$
|
26,373
|
|
|
|
|
|
|
|
|||
Operational growth/(decline):
|
|
|
|
|
||||
Continued growth from certain key brands(a)
|
|
675
|
|
|
1,400
|
|
||
Volume-driven growth from Celebrex and Effexor, primarily in Japan, and higher revenues for Biosimilars primarily in the U.S.
|
|
69
|
|
|
124
|
|
||
(Decline)/growth from Lipitor and Norvasc, primarily in China
|
|
(131
|
)
|
|
73
|
|
||
Declines from Viagra and Pfizer’s authorized generic for Viagra in the U.S.; the Hospital business; Enbrel internationally; certain rare disease products(b); Lyrica; Prevnar 13/Prevenar 13 in the second quarter of 2019; and, in the six months ended June 30, 2019, Greenstone, Upjohn’s solid oral dose generics subsidiary
|
|
(355
|
)
|
|
(592
|
)
|
||
Growth/(decline) from Consumer Healthcare
|
|
8
|
|
|
(11
|
)
|
||
Other operational factors, net
|
|
58
|
|
|
(5
|
)
|
||
Operational growth, net
|
|
324
|
|
|
989
|
|
||
|
|
|
|
|
||||
Operational revenues
|
|
13,791
|
|
|
27,361
|
|
||
Unfavorable impact of foreign exchange
|
|
(527
|
)
|
|
(980
|
)
|
||
Revenues, for the three and six months ended June 30, 2019
|
|
$
|
13,264
|
|
|
$
|
26,382
|
|
(a)
|
Key brands represent Ibrance, Eliquis and Xeljanz as well as, for the first six months of 2019, Prevnar 13/Prevenar 13.
|
(b)
|
Certain rare disease products include the hemophilia franchises (BeneFIX and Refacto AF/Xyntha) and Genotropin.
|
(MILLIONS OF DOLLARS)
|
|
Three Months
|
|
|
Six Months
|
|
||
Income from continuing operations before provision/(benefit) for taxes on income, for the three and six months ended July 1, 2018
|
|
$
|
4,527
|
|
|
$
|
8,654
|
|
Favorable/(unfavorable) change in revenues
|
|
(203
|
)
|
|
9
|
|
||
Favorable/(unfavorable) changes:
|
|
|
|
|
||||
Lower Cost of sales(a)
|
|
340
|
|
|
470
|
|
||
Lower Restructuring charges and certain acquisition-related costs(b)
|
|
160
|
|
|
157
|
|
||
(Unfavorable)/favorable change in the fair value of contingent consideration(c)
|
|
(58
|
)
|
|
125
|
|
||
Lower Selling, information and administrative expenses(d)
|
|
31
|
|
|
104
|
|
||
Higher royalty-related income(c)
|
|
110
|
|
|
103
|
|
||
Income from insurance recoveries related to Hurricane Maria(c)
|
|
25
|
|
|
50
|
|
||
Higher business and legal entity alignment costs(c)
|
|
(137
|
)
|
|
(252
|
)
|
||
Lower net gains recognized during the period on investments in equity-securities (c)
|
|
(221
|
)
|
|
(228
|
)
|
||
Lower income from collaborations, out-licensing arrangements and sales of compound/product rights(c)
|
|
(153
|
)
|
|
(212
|
)
|
||
Higher net interest expense(c)
|
|
(85
|
)
|
|
(147
|
)
|
||
Higher net losses on early retirement of debt(c)
|
|
—
|
|
|
(134
|
)
|
||
Unfavorable change in certain legal matters, net(c)
|
|
(103
|
)
|
|
(127
|
)
|
||
(Higher)/lower asset impairment charges(c)
|
|
30
|
|
|
(120
|
)
|
||
Unfavorable impact of net periodic benefit credits other than service costs(c)
|
|
(33
|
)
|
|
(75
|
)
|
||
Non-recurrence of gain on the contribution of Pfizer’s CAR T assets(c)
|
|
(50
|
)
|
|
(50
|
)
|
||
All other items, net
|
|
(39
|
)
|
|
137
|
|
||
Income from continuing operations before provision/(benefit) for taxes on income, for the three and six months ended June 30, 2019
|
|
$
|
4,141
|
|
|
$
|
8,463
|
|
(a)
|
See the “Costs and Expenses––Cost of Sales” section of this MD&A.
|
(b)
|
See the “Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A.
|
(c)
|
See the “Costs and Expenses––See the Notes to Condensed Consolidated Financial Statements––Note 4. Other (Income)/Deductions—Net.
|
(d)
|
See the “Costs and Expenses––Selling, Informational and Administrative (SI&A) Expenses” section of this MD&A.
|
•
|
Governments, corporations, and insurance companies, which provide insurance benefits to patients, have implemented increases in cost-sharing and restrictions on access to medicines, potentially causing patients to switch to generic or biosimilar products, delay treatments, skip doses or use less effective treatments. As discussed above, government financing pressures can lead to negative pricing pressure in various markets where governments take an active role in setting prices, access criteria (e.g., through public or private health technology assessments), or other means of cost control. Examples include the different EU Member States, Japan, China, Canada, South Korea and a number of other international markets. The U.S. continues to maintain competitive insurance markets, but has also seen significant increases in patient cost-sharing and growing government influence as government programs continue to grow as a source of coverage.
|
•
|
Significant portions of our revenues, costs and expenses, 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, having a negative impact on earnings, and our overall expenses would decrease, having a positive impact on earnings. Therefore, significant changes in foreign exchange rates can impact our results and our financial guidance.
|
•
|
In June 2016, the U.K. electorate voted in a referendum to leave the EU, which is commonly referred to as “Brexit”. In March 2017, the U.K. government formally notified the European Council of its intention to leave the EU after it triggered Article 50 of the Lisbon Treaty to begin the two-year negotiation process establishing the terms of the exit and outlining the future relationship between the U.K. and the EU. Formal negotiations officially started in June 2017. After multiple votes in the British Parliament in January and March 2019 failing to approve the draft Brexit withdrawal agreement with the EU, the U.K. government negotiated a delay to the U.K.’s withdrawal until October 31, 2019, with the option of an earlier date if agreement can be reached sooner, so the new date of Brexit is still uncertain. The outcome after Brexit also continues to be uncertain, which may pose certain implications to our research, commercial and general business operations in the U.K. and the EU, including the approval and supply of our products. At present, it is still unclear whether and to what extent the U.K. will remain within or aligned to the EU system of medicines regulation, depending on the ultimate outcome of the negotiations. However, both the U.K. and the EU have issued detailed guidance for the industry on how medicines, medical devices and clinical trials will be separately regulated in their respective territories in the event of a ‘hard Brexit’, meaning an outcome where no negotiated settlement is reached. This outcome is appearing increasingly more likely in light of recent political developments.
|
•
|
The former Worldwide, Research and Development organization is renamed Worldwide Research, Development and Medical (WRDM) as we have created a new Worldwide Medical & Safety organization in WRDM that incorporates the former Chief Medical Office as well as the Worldwide Safety function;
|
•
|
The R&D organization within our former Essential Health business has been integrated into the WRDM, GPD and Upjohn organizations, including moving biosimilars into WRDM and GPD and realigning them with the relevant therapeutic areas (e.g., Oncology and Inflammation & Immunology);
|
•
|
The Regulatory function has been moved from the WRDM organization into the GPD organization; and
|
•
|
Late-stage portfolio spend has been moved from our former Innovative Health business to GPD and from our former Essential Health business to GPD and Upjohn.
|
•
|
Bringing biosimilars into our Oncology and Inflammation & Immunology therapeutic categories gives us the potential to leverage our R&D, regulatory and commercial infrastructure within the Biopharma business to more efficiently bring those assets to market;
|
•
|
Creating a business unit (i.e., the Hospital unit within Biopharma) that is solely focused on medicines that are used in hospitals can potentially bring greater focus and attention to serving those customers and developing those relationships;
|
•
|
Giving Upjohn more autonomy with a focus on maximizing the value of its products, particularly in emerging markets, provides it the opportunity to operate as a standalone business within Pfizer with the potential for sustainable modest growth; and
|
•
|
We believe this new structure better positions each business to achieve its growth potential as we transition to a period post-2020 where we expect higher and more sustained revenue growth due to declining LOEs and the potential of our late-stage pipeline.
|
•
|
an aging global population that is generating increased demand for innovative medicines that address patients’ unmet needs;
|
•
|
advances in both biological science and digital technology that are enhancing the delivery of breakthrough new medicines; and
|
•
|
the increasingly significant role of hospitals in healthcare systems.
|
•
|
delivering a pipeline of differentiated therapies and vaccines with the greatest medical and commercial potential;
|
•
|
advancing our capabilities that can position Pfizer for long-term leadership; and
|
•
|
creating new models for biomedical collaboration that will expedite the pace of innovation and productivity.
|
•
|
Oncology;
|
•
|
Inflammation and Immunology;
|
•
|
Rare Diseases;
|
•
|
Hospital;
|
•
|
Vaccines; and
|
•
|
Internal Medicine.
|
•
|
Research Units within our WRDM organization are generally responsible for research and early-stage development assets for our Biopharma business (assets that have not yet achieved proof-of-concept). Our Research Units are organized by therapeutic area to enhance flexibility, cohesiveness and focus. Because of our structure, we are able to rapidly redeploy resources within a Research Unit between various projects as necessary because in many instances the workforce shares similar skills, expertise and/or focus.
|
•
|
Our science-based and other platform-services organizations, where a significant portion of our R&D spending occurs, provide technical expertise and other services to the various R&D projects, and are organized into science-based functions (which are part of our WRDM organization), such as Pharmaceutical Sciences, Medicine Design, and non-science-based functions, such as Facilities, Business Technology and Finance. As a result, within each of these functions, we are able to migrate resources among projects, candidates and/or targets in any therapeutic area and in most phases of development, allowing us to react quickly in response to evolving needs. In addition, the Worldwide Medical and Safety group ensures that Pfizer provides all stakeholders, including patients, healthcare providers, pharmacists, payers and health authorities with complete and up-to-date information on the risks and benefits associated with Pfizer products so that they can make appropriate decisions on how and when to use Pfizer’s medicines.
|
•
|
Our R&D organization within the Upjohn business supports the off-patent branded and generic established medicines and helps develop product enhancements, new indications and new market registrations based on these medicines.
|
•
|
Our GPD organization is a unified center for clinical development and regulatory activities that is generally responsible for the clinical development strategy and operational execution of clinical trials for both early-stage assets in the WRDM portfolio as well as late-stage assets in the Biopharma portfolio. For WRDM assets, GPD works in close collaboration with the Early Clinical Development group, which has expertise in various disciplines such as Biostatistics, Clinical Pharmacology and Digital Medicine. GPD enables more efficient and effective development and enhances our ability to accelerate and progress assets through our pipeline. GPD also provides operational support to Upjohn for select clinical development and regulatory activities.
|
•
|
Over the five-year period from 2018 through 2022, we plan to invest approximately $5.0 billion in capital projects in the U.S., including the strengthening of our manufacturing presence in the U.S. As part of this plan, in July 2018, we announced that we will increase our commitment to U.S. manufacturing with a $465 million investment to build one of the most technically advanced sterile injectable pharmaceutical production facilities in the world in Portage, Michigan. This U.S. investment will strengthen our capability to produce and supply critical, life-saving injectable medicines for patients around the world. Known as Modular Aseptic Processing, the new, multi-story, 400,000-square-foot production facility will also support the area economy by creating an estimated 450 new jobs over the next several years.
|
•
|
We made a $500 million voluntary contribution to the U.S. Pfizer Consolidated Pension Plan in February 2018.
|
•
|
In the fourth quarter of 2017, we made a $200 million charitable contribution to the Pfizer Foundation, an organization that provides grant and investment funding to support organizations and social entrepreneurs in an effort to improve healthcare delivery.
|
•
|
In the first quarter of 2018, we paid a special, one-time bonus to virtually all Pfizer colleagues, excluding executives, of $119 million in the aggregate.
|
•
|
Formation of a New Consumer Healthcare Joint Venture––On July 31, 2019, which fell in the third fiscal quarter of 2019, we closed the transaction in which we and GSK combined our respective consumer healthcare businesses into a new consumer healthcare joint venture that operates globally under the GSK Consumer Healthcare name. The joint venture is a category leader in pain relief, respiratory and vitamins, minerals and supplements, and therapeutic oral health and is the largest global OTC consumer healthcare business. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 2. Assets and Liabilities Held for Sale.
|
•
|
Acquisition of Array BioPharma Inc.––On July 30, 2019, which fell in the third fiscal quarter of 2019, we acquired Array, a commercial stage biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule medicines to treat cancer and other diseases of high unmet need, for $48 per share in cash, for a total enterprise value of approximately $11.4 billion. We financed the majority of the transaction with debt and the balance with existing cash.
|
•
|
Agreement to Combine Upjohn with Mylan––On July 29, 2019, which fell in the third fiscal quarter of 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company. Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, Upjohn is expected to be spun off or split off to Pfizer’s shareholders and simultaneously combined with Mylan. Pfizer shareholders would own 57% of the combined new company, and Mylan shareholders would own 43%. The transaction is expected to be tax free to Pfizer and Pfizer shareholders. The transaction is anticipated to close in mid-2020, subject to Mylan shareholder approval and customary closing conditions, including receipt of regulatory approvals. See the “Analysis of Financial Condition, Liquidity and Capital Resources” section of this MD&A for additional information.
|
•
|
Acquisition of Therachon Holding AG––On July 1, 2019, which fell in the third fiscal quarter of 2019, we acquired all the remaining shares of Therachon, a privately-held clinical-stage biotechnology company focused on rare diseases, with assets in development for the treatment of achondroplasia, a genetic condition and the most common form of short-limbed dwarfism. We acquired Therachon for $340 million upfront, plus potential milestone payments of up to $470 million, contingent on the achievement of key milestones in the development and commercialization of the lead asset TA-46. In 2018, Pfizer acquired 3% of Therachon’s outstanding shares.
|
•
|
The formation of the Consumer Healthcare joint venture with GSK:
|
–
|
Includes revenue and expense contributions associated with Pfizer’s Consumer Healthcare business through July 31, 2019.
|
–
|
Includes Pfizer’s pro rata share of the joint venture anticipated earnings, which will be recorded on a quarterly basis in Adjusted other (income)/deductions, from August 1, 2019 through the end of 2019. Pfizer will record its share of the joint venture’s anticipated earnings on a one-quarter lag; therefore, updated 2019 financial guidance for Adjusted other (income)/deductions and Adjusted diluted EPS now reflects Pfizer’s share of two months of the joint venture’s earnings that are expected to be generated in the third quarter of 2019, which will be recorded by Pfizer in the fourth quarter of 2019.
|
•
|
The completion of the Array acquisition and the completion of the Therachon acquisition. See the “Our Strategy––Our Business Development Initiatives” section above for additional information.
|
(a)
|
In addition to the Consumer Healthcare, Array and Therachon transactions discussed above, the 2019 financial guidance reflects the following:
|
•
|
Does not assume the completion of any business development transactions not completed as of June 30, 2019 (except for the July 31, 2019 formation of the Consumer Healthcare joint venture with GSK, the July 30, 2019 acquisition of Array and the July 1, 2019 acquisition of Therachon), including any one-time upfront payments associated with such transactions.
|
•
|
Reflects an anticipated negative revenue impact of $2.4 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or are anticipated to soon lose patent protection.
|
•
|
Exchange rates assumed are a blend of the actual exchange rates in effect through second-quarter 2019 and mid-July 2019 rates for the remainder of the year. Reflects the anticipated unfavorable impact of approximately $1.2 billion on revenues and approximately $0.08 on adjusted diluted EPS as a result of changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2018.
|
•
|
Guidance for adjusted diluted EPS assumes diluted weighted-average shares outstanding of approximately 5.7 billion shares, which reflects the weighted-average impact of share repurchases totaling $8.9 billion executed in the first quarter of 2019. Dilution related to share-based employee compensation programs is currently expected to offset the reduction in shares associated with these share repurchases by approximately half.
|
(b)
|
For an understanding of Adjusted income and its components and Adjusted diluted EPS (all of which are non-GAAP financial measures), see the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A.
|
The following table provides the components of the condensed consolidated statements of income:
|
||||||||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change
|
|
||||
Revenues
|
|
$
|
13,264
|
|
|
$
|
13,466
|
|
|
(2
|
)
|
|
$
|
26,382
|
|
|
$
|
26,373
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales(a)
|
|
2,576
|
|
|
2,916
|
|
|
(12
|
)
|
|
5,009
|
|
|
5,479
|
|
|
(9
|
)
|
||||
% of revenues
|
|
19.4
|
%
|
|
21.7
|
%
|
|
|
|
|
19.0
|
%
|
|
20.8
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, informational and administrative expenses(a)
|
|
3,511
|
|
|
3,542
|
|
|
(1
|
)
|
|
6,850
|
|
|
6,954
|
|
|
(1
|
)
|
||||
% of revenues
|
|
26.5
|
%
|
|
26.3
|
%
|
|
|
|
|
26.0
|
%
|
|
26.4
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development expenses(a)
|
|
1,842
|
|
|
1,797
|
|
|
2
|
|
|
3,544
|
|
|
3,540
|
|
|
—
|
|
||||
% of revenues
|
|
13.9
|
%
|
|
13.3
|
%
|
|
|
|
|
13.4
|
%
|
|
13.4
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amortization of intangible assets
|
|
1,184
|
|
|
1,191
|
|
|
(1
|
)
|
|
2,367
|
|
|
2,387
|
|
|
(1
|
)
|
||||
% of revenues
|
|
8.9
|
%
|
|
8.8
|
%
|
|
|
|
|
9.0
|
%
|
|
9.1
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restructuring (credits)/charges and certain acquisition-related costs
|
|
(115
|
)
|
|
44
|
|
|
*
|
|
|
(69
|
)
|
|
87
|
|
|
*
|
|
||||
% of revenues
|
|
(0.9
|
)%
|
|
0.3
|
%
|
|
|
|
|
(0.3
|
)%
|
|
0.3
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other (income)/deductions––net
|
|
126
|
|
|
(551
|
)
|
|
*
|
|
|
218
|
|
|
(728
|
)
|
|
*
|
|
||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
4,141
|
|
|
4,527
|
|
|
(9
|
)
|
|
8,463
|
|
|
8,654
|
|
|
(2
|
)
|
||||
% of revenues
|
|
31.2
|
%
|
|
33.6
|
%
|
|
|
|
|
32.1
|
%
|
|
32.8
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Provision/(benefit) for taxes on income
|
|
(915
|
)
|
|
648
|
|
|
*
|
|
|
(481
|
)
|
|
1,204
|
|
|
*
|
|
||||
Effective tax rate
|
|
(22.1
|
)%
|
|
14.3
|
%
|
|
|
|
|
(5.7
|
)%
|
|
13.9
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
|
5,056
|
|
|
3,879
|
|
|
30
|
|
|
8,945
|
|
|
7,450
|
|
|
20
|
|
||||
% of revenues
|
|
38.1
|
%
|
|
28.8
|
%
|
|
|
|
|
33.9
|
%
|
|
28.2
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
*
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income before allocation to noncontrolling interests
|
|
5,056
|
|
|
3,879
|
|
|
30
|
|
|
8,945
|
|
|
7,449
|
|
|
20
|
|
||||
% of revenues
|
|
38.1
|
%
|
|
28.8
|
%
|
|
|
|
|
33.9
|
%
|
|
28.2
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Less: Net income attributable to noncontrolling interests
|
|
10
|
|
|
7
|
|
|
39
|
|
|
15
|
|
|
16
|
|
|
(6
|
)
|
||||
Net income attributable to Pfizer Inc.
|
|
$
|
5,046
|
|
|
$
|
3,872
|
|
|
30
|
|
|
$
|
8,929
|
|
|
$
|
7,432
|
|
|
20
|
|
% of revenues
|
|
38.0
|
%
|
|
28.8
|
%
|
|
|
|
|
33.8
|
%
|
|
28.2
|
%
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share––basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.91
|
|
|
$
|
0.66
|
|
|
37
|
|
|
$
|
1.59
|
|
|
$
|
1.26
|
|
|
27
|
|
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.91
|
|
|
$
|
0.66
|
|
|
37
|
|
|
$
|
1.59
|
|
|
$
|
1.26
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share––diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.89
|
|
|
$
|
0.65
|
|
|
37
|
|
|
$
|
1.56
|
|
|
$
|
1.24
|
|
|
26
|
|
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
0.89
|
|
|
$
|
0.65
|
|
|
37
|
|
|
$
|
1.56
|
|
|
$
|
1.24
|
|
|
26
|
|
(a)
|
Excludes amortization of intangible assets, except as disclosed in Notes to Condensed Consolidated Financial Statements––Note 9A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.
|
2019 Sales by Geography
|
|
% of Total
|
U.S.
|
|
48%
|
International
|
|
52%
|
2018 Sales by Geography
|
|
% of Total
|
U.S.
|
|
46%
|
International
|
|
54%
|
2019 Sales by Geography
|
|
% of Total
|
U.S.
|
|
47%
|
International
|
|
53%
|
2018 Sales by Geography
|
|
% of Total
|
U.S.
|
|
47%
|
International
|
|
53%
|
(a)
|
For additional information about each operating segment, see the “Our Strategy––Commercial Operations” and “Analysis of Operating Segment Information” sections of this MD&A and Notes to Condensed Consolidated Financial Statements––Note 13A. Segment, Geographic and Other Revenue Information: Segment Information.
|
The following provides an analysis of the worldwide change in revenues by geographic areas in the second quarter of 2019:
|
||||||||||||
|
|
Three Months Ended June 30, 2019
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
Worldwide
|
|
U.S.
|
|
International
|
||||||
Operational growth/(decline):
|
|
|
|
|
|
|
||||||
Continued growth from certain key brands(a)
|
|
$
|
675
|
|
|
$
|
311
|
|
|
$
|
364
|
|
Growth from Biosimilars, primarily in the U.S.
|
|
38
|
|
|
42
|
|
|
(5
|
)
|
|||
Volume-driven growth from Celebrex and Effexor, primarily in Japan
|
|
31
|
|
|
(1
|
)
|
|
32
|
|
|||
Growth in Consumer Healthcare reflecting growth in international markets
|
|
8
|
|
|
(11
|
)
|
|
19
|
|
|||
Decline from Lipitor and Norvasc, primarily in China, driven by the March 2019 government implementation of a volume-based procurement program in certain cities
|
|
(131
|
)
|
|
(1
|
)
|
|
(130
|
)
|
|||
Lower revenues for Enbrel internationally, reflecting continued biosimilar competition in most developed Europe markets
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
|||
Lower revenues for the Hospital products business, primarily reflecting declines in developed markets, mostly due to the continued expected negative impact from generic competition for products that have previously lost marketing exclusivity as well as product supply shortages
|
|
(86
|
)
|
|
(77
|
)
|
|
(9
|
)
|
|||
Lower revenues for Viagra and Upjohn's authorized generic for Viagra in the U.S. resulting from increased generic competition following Viagra's December 2017 patent expiration
|
|
(70
|
)
|
|
(69
|
)
|
|
(1
|
)
|
|||
Lower revenues for certain rare disease products, including the hemophilia franchises (Refacto AF/Xyntha and BeneFIX), primarily due to competitive pressures, and Genotropin in developed markets, mainly due to unfavorable channel mix
|
|
(43
|
)
|
|
(9
|
)
|
|
(34
|
)
|
|||
Lower revenues for Prevnar 13 in the U.S., primarily reflecting lower government purchases for the pediatric indication as well as continued decline in revenues for the adult indication due to a declining “catch up” opportunity compared to the prior year quarter. International revenues increased mostly due to higher volumes reflecting continued uptake following the second quarter 2017 launch in China, as well as higher volumes resulting from increased shipments associated with Gavi, the Vaccine Alliance, partially offset by the unfavorable impact of timing associated with government purchases for the pediatric indication in certain emerging markets
|
|
(38
|
)
|
|
(70
|
)
|
|
31
|
|
|||
Lower worldwide revenues for Lyrica, primarily in the U.S., reflecting wholesaler destocking in advance of anticipated multi-source generic competition expected to begin on July 1, 2019 (which instead began on July 19, 2019), and in developed Europe, reflecting continued generic competition
|
|
(31
|
)
|
|
(26
|
)
|
|
(5
|
)
|
|||
Other operational factors, net
|
|
58
|
|
|
21
|
|
|
37
|
|
|||
Operational growth, net
|
|
324
|
|
|
110
|
|
|
213
|
|
|||
|
|
|
|
|
|
|
||||||
Unfavorable impact of foreign exchange
|
|
(527
|
)
|
|
—
|
|
|
(527
|
)
|
|||
Revenues increase/(decrease)
|
|
$
|
(203
|
)
|
|
$
|
110
|
|
|
$
|
(313
|
)
|
(a)
|
Certain key brands represent Ibrance, Eliquis and Xeljanz. See the “Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion" section of this MD&A for product analysis information.
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz and Prevnar 13/Prevenar 13. See the “Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion" section of this MD&A for product analysis information.
|
(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 MCOs within the U.S., including health maintenance organizations and PBMs, who receive rebates based on the achievement of contracted performance terms and claims under these contracts. Outside 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 U.S. wholesalers for honoring contracted prices to third parties.
|
(d)
|
Sales allowances primarily represent price reductions that are contractual or legislatively mandated outside the U.S., discounts and distribution fees.
|
(e)
|
For the three months ended June 30, 2019, associated with the following segments: Biopharma ($3.0 billion), Upjohn ($1.9 billion) and Other ($0.2 billion). For the three months ended July 1, 2018, associated with the following segments: Biopharma ($2.5 billion), Upjohn ($2.4 billion) and Other ($0.2 billion). For the six months ended June 30, 2019, associated with the following segments: Biopharma ($5.7 billion), Upjohn ($4.2 billion) and Other ($0.3 billion). For the six months ended July 1, 2018, associated with the following segments: Biopharma ($4.9 billion), Upjohn ($4.8 billion) and Other ($0.3 billion).
|
•
|
an increase in performance-based contract rebates, primarily in the U.S. due to increased sales of certain Biopharma products;
|
•
|
an increase in Biopharma sales allowances in U.S. and ex-U.S. markets; and
|
•
|
an increase in sales returns and cash discounts primarily due to a sales returns reserve recorded for Lyrica in the U.S. in the second quarter of 2019 in advance of anticipated multi-source generic competition that was expected to begin on July 1, 2019 but instead began on July 19, 2019,
|
•
|
a decrease in chargebacks, primarily related to Upjohn products, including Viagra.
|
•
|
Prevnar 13/Prevenar 13 (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
||||
U.S.
|
|
$
|
612
|
|
|
$
|
682
|
|
|
(10
|
)
|
|
|
|
|
$
|
1,490
|
|
|
$
|
1,508
|
|
|
(1
|
)
|
|
|
International
|
|
567
|
|
|
568
|
|
|
—
|
|
|
6
|
|
|
1,175
|
|
|
1,123
|
|
|
5
|
|
|
11
|
||||
Worldwide revenues
|
|
$
|
1,179
|
|
|
$
|
1,250
|
|
|
(6
|
)
|
|
(3
|
)
|
|
$
|
2,665
|
|
|
$
|
2,631
|
|
|
1
|
|
|
4
|
•
|
Ibrance (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
Oper.
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
Oper.
|
||||
U.S.
|
|
$
|
831
|
|
|
$
|
744
|
|
|
12
|
|
|
|
$
|
1,572
|
|
|
$
|
1,470
|
|
|
7
|
|
|
International
|
|
430
|
|
|
283
|
|
|
52
|
|
67
|
|
822
|
|
|
489
|
|
|
68
|
|
84
|
||||
Worldwide revenues
|
|
$
|
1,261
|
|
|
$
|
1,027
|
|
|
23
|
|
27
|
|
$
|
2,394
|
|
|
$
|
1,960
|
|
|
22
|
|
26
|
•
|
Lyrica (Upjohn):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
835
|
|
|
$
|
861
|
|
|
(3
|
)
|
|
|
|
|
$
|
1,724
|
|
|
$
|
1,768
|
|
|
(2
|
)
|
|
|
|
International
|
|
340
|
|
|
362
|
|
|
(6
|
)
|
|
(1
|
)
|
|
638
|
|
|
668
|
|
|
(5
|
)
|
|
(1
|
)
|
||||
Worldwide revenues
|
|
$
|
1,175
|
|
|
$
|
1,223
|
|
|
(4
|
)
|
|
(3
|
)
|
|
$
|
2,362
|
|
|
$
|
2,436
|
|
|
(3
|
)
|
|
(2
|
)
|
•
|
Eliquis alliance revenues and direct sales (Biopharma): Eliquis has been jointly developed and is commercialized by Pfizer and BMS. Pfizer funds between 50% and 60% of all development costs depending on the study. Profits and losses are shared equally on a global basis, except in certain countries where Pfizer commercializes Eliquis and pays BMS compensation based on a percentage of net sales. We have full commercialization rights in certain smaller markets. BMS supplies the product to us at cost, plus a percentage of the net sales to end-customers in these markets. Eliquis is part of the Novel Oral
|
•
|
Xeljanz (Biopharma):
|
•
|
Lipitor (Upjohn):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
||||
U.S.
|
|
$
|
30
|
|
|
$
|
32
|
|
|
(8
|
)
|
|
|
|
|
$
|
51
|
|
|
$
|
61
|
|
|
(17
|
)
|
|
|
International
|
|
377
|
|
|
489
|
|
|
(23
|
)
|
|
(17
|
)
|
|
979
|
|
|
971
|
|
|
1
|
|
|
7
|
||||
Worldwide revenues
|
|
$
|
407
|
|
|
$
|
521
|
|
|
(22
|
)
|
|
(17
|
)
|
|
$
|
1,029
|
|
|
$
|
1,032
|
|
|
—
|
|
|
5
|
•
|
Enbrel (Biopharma, outside the U.S. and Canada):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
International
|
|
420
|
|
|
551
|
|
|
(24
|
)
|
|
(16
|
)
|
|
871
|
|
|
1,057
|
|
|
(18
|
)
|
|
(10
|
)
|
||||
Worldwide revenues
|
|
$
|
420
|
|
|
$
|
551
|
|
|
(24
|
)
|
|
(16
|
)
|
|
$
|
871
|
|
|
$
|
1,057
|
|
|
(18
|
)
|
|
(10
|
)
|
•
|
Chantix/Champix (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
227
|
|
|
$
|
217
|
|
|
5
|
|
|
|
|
$
|
439
|
|
|
$
|
405
|
|
|
9
|
|
|
|
||
International
|
|
49
|
|
|
60
|
|
|
(19
|
)
|
|
(12
|
)
|
|
110
|
|
|
124
|
|
|
(11
|
)
|
|
(6
|
)
|
||||
Worldwide revenues
|
|
$
|
276
|
|
|
$
|
277
|
|
|
—
|
|
|
1
|
|
|
$
|
549
|
|
|
$
|
528
|
|
|
4
|
|
|
5
|
|
•
|
Norvasc (Upjohn):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
||||
U.S.
|
|
$
|
11
|
|
|
$
|
9
|
|
|
18
|
|
|
|
|
$
|
21
|
|
|
$
|
18
|
|
|
14
|
|
|
|
|
International
|
|
205
|
|
|
264
|
|
|
(22
|
)
|
|
(17
|
)
|
|
495
|
|
|
511
|
|
|
(3
|
)
|
|
3
|
||||
Worldwide revenues
|
|
$
|
216
|
|
|
$
|
273
|
|
|
(21
|
)
|
|
(16
|
)
|
|
$
|
516
|
|
|
$
|
529
|
|
|
(3
|
)
|
|
3
|
•
|
Sutent (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
82
|
|
|
$
|
94
|
|
|
(13
|
)
|
|
|
|
|
$
|
153
|
|
|
$
|
181
|
|
|
(16
|
)
|
|
|
|
International
|
|
166
|
|
|
181
|
|
|
(8
|
)
|
|
1
|
|
|
327
|
|
|
356
|
|
|
(8
|
)
|
|
1
|
|
||||
Worldwide revenues
|
|
$
|
248
|
|
|
$
|
275
|
|
|
(10
|
)
|
|
(4
|
)
|
|
$
|
480
|
|
|
$
|
537
|
|
|
(11
|
)
|
|
(5
|
)
|
•
|
Xtandi alliance revenues (Biopharma): Xtandi is being developed and commercialized through a collaboration with Astellas. The two companies share equally in the gross profits (losses) related to U.S. net sales of Xtandi. Subject to certain exceptions, Pfizer and Astellas also share equally all Xtandi commercialization costs attributable to the U.S. market. Pfizer and Astellas also share certain development and other collaboration expenses, and Pfizer receives tiered royalties as a percentage of international Xtandi net sales (recorded in Other (income)/deductions—net).
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
Oper.
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
Oper.
|
||||
U.S.
|
|
$
|
201
|
|
|
$
|
171
|
|
|
18
|
|
|
|
$
|
369
|
|
|
$
|
330
|
|
|
12
|
|
|
International
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
||||
Worldwide revenues
|
|
$
|
201
|
|
|
$
|
171
|
|
|
18
|
|
18
|
|
$
|
369
|
|
|
$
|
330
|
|
|
12
|
|
12
|
•
|
The Premarin family of products (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
182
|
|
|
$
|
197
|
|
|
(8
|
)
|
|
|
|
$
|
340
|
|
|
$
|
378
|
|
|
(10
|
)
|
|
|
||
International
|
|
11
|
|
|
13
|
|
|
(16
|
)
|
|
(11
|
)
|
|
21
|
|
|
24
|
|
|
(12
|
)
|
|
(6
|
)
|
||||
Worldwide revenues
|
|
$
|
193
|
|
|
$
|
210
|
|
|
(8
|
)
|
|
(8
|
)
|
|
$
|
361
|
|
|
$
|
401
|
|
|
(10
|
)
|
|
(10
|
)
|
•
|
Celebrex (Upjohn):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
||||
U.S.
|
|
$
|
16
|
|
|
$
|
18
|
|
|
(14
|
)
|
|
|
|
$
|
30
|
|
|
$
|
34
|
|
|
(10
|
)
|
|
|
International
|
|
158
|
|
|
143
|
|
|
10
|
|
|
15
|
|
317
|
|
|
272
|
|
|
16
|
|
|
21
|
||||
Worldwide revenues
|
|
$
|
174
|
|
|
$
|
161
|
|
|
8
|
|
|
12
|
|
$
|
347
|
|
|
$
|
306
|
|
|
13
|
|
|
17
|
•
|
Sulperazon (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
Oper.
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
Oper.
|
||||
U.S.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
International
|
|
165
|
|
|
150
|
|
|
10
|
|
17
|
|
342
|
|
|
319
|
|
|
7
|
|
14
|
||||
Worldwide revenues
|
|
$
|
165
|
|
|
$
|
150
|
|
|
10
|
|
17
|
|
$
|
342
|
|
|
$
|
319
|
|
|
7
|
|
14
|
•
|
Inflectra/Remsima (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
74
|
|
|
$
|
63
|
|
|
17
|
|
|
|
|
|
$
|
132
|
|
|
$
|
118
|
|
|
12
|
|
|
|
|
International
|
|
78
|
|
|
95
|
|
|
(17
|
)
|
|
(11
|
)
|
|
159
|
|
|
185
|
|
|
(14
|
)
|
|
(8
|
)
|
||||
Worldwide revenues
|
|
$
|
153
|
|
|
$
|
158
|
|
|
(4
|
)
|
|
—
|
|
|
$
|
291
|
|
|
$
|
303
|
|
|
(4
|
)
|
|
—
|
|
•
|
Viagra (Upjohn):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
13
|
|
|
$
|
75
|
|
|
(83
|
)
|
|
|
|
$
|
52
|
|
|
$
|
164
|
|
|
(68
|
)
|
|
|
||
International
|
|
102
|
|
|
109
|
|
|
(7
|
)
|
|
(1
|
)
|
|
207
|
|
|
208
|
|
|
(1
|
)
|
|
6
|
|
||||
Worldwide revenues
|
|
$
|
114
|
|
|
$
|
185
|
|
|
(38
|
)
|
|
(35
|
)
|
|
$
|
259
|
|
|
$
|
372
|
|
|
(30
|
)
|
|
(27
|
)
|
•
|
Xalkori (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
41
|
|
|
$
|
42
|
|
|
(3
|
)
|
|
|
|
$
|
75
|
|
|
$
|
84
|
|
|
(11
|
)
|
|
|
|
International
|
|
92
|
|
|
96
|
|
|
(4
|
)
|
|
4
|
|
180
|
|
|
206
|
|
|
(13
|
)
|
|
(6
|
)
|
||||
Worldwide revenues
|
|
$
|
133
|
|
|
$
|
137
|
|
|
(3
|
)
|
|
2
|
|
$
|
255
|
|
|
$
|
290
|
|
|
(12
|
)
|
|
(7
|
)
|
•
|
Inlyta (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
60
|
|
|
$
|
33
|
|
|
82
|
|
|
|
|
$
|
93
|
|
|
$
|
61
|
|
|
53
|
|
|
|
|
International
|
|
44
|
|
|
48
|
|
|
(9
|
)
|
|
—
|
|
84
|
|
|
94
|
|
|
(10
|
)
|
|
(2
|
)
|
||||
Worldwide revenues
|
|
$
|
104
|
|
|
$
|
81
|
|
|
28
|
|
|
34
|
|
$
|
177
|
|
|
$
|
155
|
|
|
14
|
|
|
19
|
|
•
|
Eucrisa (Biopharma):
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
Total
|
|
|
Oper.
|
|
||||
U.S.
|
|
$
|
26
|
|
|
$
|
39
|
|
|
(33
|
)
|
|
|
|
|
$
|
48
|
|
|
$
|
65
|
|
|
(25
|
)
|
|
|
|
International
|
|
1
|
|
|
—
|
|
|
*
|
|
|
*
|
|
|
1
|
|
|
—
|
|
|
*
|
|
|
*
|
|
||||
Worldwide revenues
|
|
$
|
27
|
|
|
$
|
39
|
|
|
(30
|
)
|
|
(30
|
)
|
|
$
|
50
|
|
|
$
|
65
|
|
|
(23
|
)
|
|
(23
|
)
|
•
|
Alliance revenues (Biopharma):
|
◦
|
Bavencio (Biopharma) is being developed and commercialized in collaboration with Merck KGaA. Both companies jointly fund the majority of development and commercialization costs, and split equally any profits generated from selling any products containing avelumab from this collaboration. Bavencio is currently approved in metastatic MCC in the U.S., Europe and Japan and select other markets, as well as in second line treatment of locally advanced or metastatic urothelial carcinoma and first-line treatment of patients with advanced renal cell carcinoma in combination with Inlyta in the U.S. In addition, in May 2019, Bavencio in combination with Inlyta was approved in the U.S. for the first-line treatment of advanced RCC. Patients with advanced RCC now have a new first-line treatment option that combines a PD-L1 immunotherapy with a well known Vascular Endothelial Growth Factor Receptor Tyrosine Kinase Inhibitor (VEGFR TKI).
|
RECENT FDA APPROVALS
|
||
PRODUCT
|
INDICATION
|
DATE APPROVED
|
Ruxience™ (rituximab-pvvr)(a)
|
A biosimilar to Rituxan® (rituximab) for the treatment of adult patients with non-Hodgkin’s lymphoma, chronic lymphocytic leukemia, and granulomatosis with polyangiitis and microscopic polyangiitis
|
July 2019
|
Zirabev (bevacizumab-bvzr)(b)
|
A biosimilar to Avastin® (bevacizumab) for the treatment of mCRC; unresectable, locally advanced, recurrent or metastatic NSCLC; recurrent glioblastoma; metastatic RCC; and persistent, recurrent or metastatic cervical cancer
|
June 2019
|
Bavencio (avelumab)
|
Bavencio (avelumab) in combination with Inlyta (axitinib) for the first-line treatment of patients with advanced renal cell carcinoma, which is being developed in collaboration with Merck KGaA, Germany
|
May 2019
|
Vyndaqel (tafamidis meglumine)
|
Treatment of the cardiomyopathy of wild-type or hereditary transthyretin-mediated amyloidosis (ATTR-CM) in adults to reduce cardiovascular mortality and cardiovascular-related hospitalization
|
May 2019
|
Vyndamax (tafamidis)
|
Treatment of the cardiomyopathy of wild-type or hereditary ATTR-CM in adults to reduce cardiovascular mortality and cardiovascular-related hospitalization
|
May 2019
|
Trazimera (trastuzumab-qyyp)(c)
|
A biosimilar to Herceptin® (trastuzumab) for all eligible indications of the reference product
|
March 2019
|
Daurismo (glasdegib)
|
Treatment of newly-diagnosed acute myeloid leukemia in adult patients who are 75 years or older or who have comorbidities that preclude use of intensive induction chemotherapy
|
November 2018
|
Lorbrena (lorlatinib)
|
Treatment of patients with ALK-positive metastatic NSCLC whose disease has progressed on crizotinib and at least one other ALK inhibitor for metastatic disease; or whose disease has progressed on alectinib or ceritinib as the first ALK inhibitor therapy for metastatic disease
|
November 2018
|
Talzenna (talazoparib)
|
Treatment of adult patients with deleterious or suspected deleterious germline BRCA-mutated (gBRCAm) human epidermal growth factor receptor 2 (HER2)-negative locally advanced or metastatic breast cancer
|
October 2018
|
Vizimpro (dacomitinib)
|
First-line treatment of patients with metastatic non-small cell lung cancer with epidermal growth factor receptor exon 19 deletion or exon 21 L858R substitution mutations as detected by an FDA-approved test, which is being developed in collaboration with SFJ
|
September 2018
|
(a)
|
Rituxan® is a registered trademark of Biogen MA Inc.
|
(b)
|
Avastin® is a registered trademark of Genentech, Inc.
|
(c)
|
Herceptin® is a registered trademark of Genentech, Inc.
|
PENDING U.S. NDAs AND SUPPLEMENTAL FILINGS
|
||
PRODUCT
|
PROPOSED INDICATION
|
DATE FILED*
|
PF-06410293(a)
|
A potential biosimilar to Humira® (adalimumab)
|
January 2019
|
Vyndaqel (tafamidis meglumine)(b)
|
Treatment of transthyretin familial amyloid polyneuropathy
|
February 2012
|
*
|
The dates set forth in this column are the dates on which the FDA accepted our submissions.
|
(a)
|
Humira® is a registered trademark of AbbVie Biotechnology Ltd.
|
(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 this 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. Pfizer has completed study B3461028, a global Phase 3 study to support the new indication of transthyretin amyloid cardiomyopathy, which includes patients with wild type and variant transthyretin. We are working with the FDA to identify next steps.
|
REGULATORY APPROVALS AND FILINGS IN THE EU AND JAPAN
|
|||
PRODUCT
|
DESCRIPTION OF EVENT
|
DATE APPROVED
|
DATE FILED*
|
Bosulif (bosutinib)
|
Application filed in Japan for the treatment of chronic myelogenous leukemia (CML), which is being developed in collaboration with Avillion
|
—
|
July 2019
|
Xtandi (enzalutamide)
|
Application filed in the EU for the treatment of metastatic hormone-sensitive prostate cancer, which is being developed through a collaboration with Astellas
|
—
|
July 2019
|
Talzenna (talazoparib)
|
Application approved in the EU for monotherapy for the treatment of adult patients with germline breast cancer susceptibility gene (gBRCA)1/2-mutations, who have human epidermal growth factor receptor 2-negative (HER2-) locally advanced or metastatic breast cancer
|
June 2019
|
—
|
Daurismo (glasdegib)
|
Application filed in the EU for treatment of newly-diagnosed acute myeloid leukemia in adult patients who are 75 years or older or who have co-morbidities that preclude use of intensive induction chemotherapy
|
—
|
May 2019
|
Lorviqua (lorlatinib)
|
Application approved in the EU as monotherapy, for the treatment of adult patients with ALK- positive advanced non-small cell lung cancer whose disease has progressed after:
•
alectinib or ceritinib as the first ALK tyrosine kinase inhibitor (TKI) therapy; or
•
crizotinib and at least one other ALK TKI
|
May 2019
|
—
|
Vizimpro (dacomitinib)
|
Application approved in the EU as monotherapy for the first-line treatment of adult patients with locally advanced or metastatic non-small cell lung cancer with EGFR activating mutations, which is being developed in collaboration with SFJ
|
April 2019
|
—
|
Bavencio (avelumab)
|
Application filed in the EU for Bavencio (avelumab) in combination with Inlyta (axitinib) for the first-line treatment of advanced renal cell carcinoma, which is being developed in collaboration with Merck KGaA, Germany
|
—
|
March 2019
|
Vyndaqel (tafamidis meglumine)
|
Application approved in Japan for treatment of transthyretin amyloid cardiomyopathy
|
March 2019
|
—
|
Zirabev(a)
|
Application approved in the EU for a biosimilar to Avastin® (bevacizumab) for the treatment of metastatic carcinoma of the colon or rectum, metastatic breast cancer, unresectable advanced, metastatic or recurrent NSCLC, advanced and/or metastatic renal cell cancer and persistent, recurrent, or metastatic carcinoma of the cervix
|
February 2019
|
—
|
Vyndaqel (tafamidis free acid)
|
Application filed in the EU for the treatment of adults with transthyretin amyloid cardiomyopathy
|
—
|
January 2019
|
Bavencio (avelumab)
|
Application filed in Japan for Bavencio (avelumab) in combination with Inlyta (axitinib) for the first-line treatment of advanced renal cell carcinoma, which is being developed in collaboration with Merck KGaA, Germany
|
—
|
January 2019
|
Vizimpro (dacomitinib)
|
Application approved in Japan for the treatment of patients with locally advanced or metastatic non-small cell lung cancer with EGFR mutations, which is being developed in collaboration with SFJ
|
January 2019
|
—
|
PF-06410293(b)
|
Application filed in the EU for a potential biosimilar to Humira® (adalimumab)
|
—
|
November 2018
|
Xtandi (enzalutamide)
|
Application approved in the EU for treatment of adult men with high-risk non-metastatic castration-resistant prostate cancer, which is being developed through a collaboration with Astellas
|
October 2018
|
—
|
Trastuzumab BS for IV Infusion 60mg/150mg “Pfizer”(c)
|
Application approved in Japan for a biosimilar to Herceptin® (trastuzumab)
|
September 2018
|
—
|
Lorbrena (lorlatinib)
|
Application approved in Japan for the treatment of patients with ALK-positive metastatic non-small cell lung cancer, previously treated with one or more ALK inhibitor
|
September 2018
|
—
|
PF-05280586(d)
|
Application filed in the EU for a potential biosimilar to Rituxan® (rituximab)
|
—
|
August 2018
|
crisaborole
|
Application filed in the EU for the treatment of mild-to-moderate atopic dermatitis
|
—
|
May 2018
|
Xeljanz (tofacitinib)
|
Application filed in the EU for modified release 11mg tablet for RA
|
—
|
March 2018
|
*
|
For applications in the EU, the dates set forth in this column are the dates on which the EMA validated our submissions.
|
(a)
|
Avastin® is a registered trademark of Genentech, Inc.
|
(b)
|
Humira® is a registered trademark of AbbVie Biotechnology Ltd.
|
(c)
|
Herceptin® is a registered trademark of Genentech, Inc.
|
(d)
|
Rituxan® is a registered trademark of Biogen MA Inc.
|
LATE-STAGE CLINICAL PROGRAMS FOR ADDITIONAL USES AND DOSAGE FORMS
FOR IN-LINE AND IN-REGISTRATION PRODUCTS |
|
PRODUCT
|
PROPOSED INDICATION
|
Bavencio (avelumab)
|
A monoclonal antibody that inhibits PD-L1 for the first-line treatment of stage IIIb/IV non-small cell lung
cancer, which is being developed in collaboration with Merck KGaA, Germany |
Bavencio (avelumab)
|
A monoclonal antibody that inhibits PD-L1 for maintenance treatment, in the first-line setting, for patients
with urothelial cancer, which is being developed in collaboration with Merck KGaA, Germany |
Bavencio (avelumab)
|
A monoclonal antibody that inhibits PD-L1 for maintenance treatment of advanced or metastatic gastric/
gastro-esophageal junction cancers, which is being developed in collaboration with Merck KGaA, Germany |
Bavencio (avelumab)
|
A monoclonal antibody that inhibits PD-L1 for treatment of locally advanced squamous cell carcinoma of the
head and neck, which is being developed in collaboration with Merck KGaA, Germany |
Braftovi (encorafenib) and Mektovi (binimetinib)
|
Second-or-third-line treatment of BRAF-mutant mCRC
|
Daurismo (glasdegib)
|
A smoothened inhibitor, in combination with azacitidine, for the treatment of acute myeloid leukemia
|
Ibrance (palbociclib)
|
Treatment of HER2+ advanced breast cancer, in collaboration with the Alliance Foundation Trials, LLC
|
Ibrance (palbociclib)
|
Treatment of high-risk early breast cancer, in collaboration with the German Breast Group
|
Ibrance (palbociclib)
|
Treatment of HR+ early breast cancer, in collaboration with the Alliance Foundation Trials, LLC, and the Austrian Breast Colorectal Cancer Study Group
|
Lorbrena (lorlatinib)
|
A next generation ALK/ROS1 tyrosine kinase inhibitor for the first-line treatment of patients with ALK-positive advanced non-small cell lung cancer
|
Xeljanz (tofacitinib)
|
Treatment of ankylosing spondylitis
|
Xtandi (enzalutamide)
|
Treatment of non-metastatic hormone-sensitive prostate cancer, which is being developed through a collaboration with Astellas
|
Xtandi (enzalutamide)
|
Treatment of metastatic hormone-sensitive prostate cancer, which is being developed through a collaboration with Astellas (U.S.)
|
Talzenna (talazoparib)
|
An oral PARP inhibitor, in combination with Xtandi (enzalutamide), for the treatment of metastatic castration-resistant prostate cancer
|
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT
|
|
CANDIDATE
|
PROPOSED INDICATION
|
aztreonam-avibactam
(PF-06947387) |
A beta lactam/beta lactamase inhibitor for the treatment of patients with infections caused by Gram-negative bacteria, including those that produce metallo-beta-lactamases, for which there are limited or no treatment options
|
fidanacogene elaparvovec (PF-06838435)
|
An investigational gene therapy for the treatment of hemophilia B
|
PF-06482077
|
A 20-Valent pneumococcal conjugate vaccine for the prevention of invasive pneumococcal disease and pneumonia caused by Streptococcus pneumoniae serotypes covered by the vaccine in adults 18 years of age and older
|
PF-06651600
|
A selective dual Janus kinase 3 (JAK3) and Tyrosine kinase Expressed in hepatocellular Carcinoma (TEC) family inhibitor for the treatment of patients with moderate to severe alopecia areata
|
PF-04965842
|
A Janus kinase 1 (JAK1) inhibitor for the treatment of moderate-to-severe atopic dermatitis
|
PF-06425090
|
A prophylactic vaccine for active immunization to prevent clostridium difficile disease
|
PF-06802861
|
An oral inhibitor of p38 mitogen-activated protein kinase for the treatment of patients with symptomatic dilated cardiomyopathy due to a Lamin A/C gene mutation
|
rivipansel (GMI-1070)(a)
|
A triple selectin inhibitor, with highest potency for E-selectin for the treatment of acute vaso-occlusive crises associated with sickle cell disease in patients aged 6 years and above, which was licensed from GlycoMimetics Inc.
|
somatrogon (PF-06836922)
|
A long-acting hGH-CTP for the treatment of growth hormone deficiency in children, which is being developed in collaboration with OPKO
|
somatrogon (PF-06836922)
|
A long-acting hGH-CTP for the treatment of growth hormone deficiency in adults, which is being developed in collaboration with OPKO
|
tanezumab
|
An anti-nerve growth factor monoclonal antibody for the treatment of pain, which is being developed in collaboration with Lilly
|
(a)
|
In August 2019, we announced that the rivipansel (GMI-1070) Phase 3 Rivipansel (GMI-1070): Evaluating Safety, Efficacy and Time to Discharge (RESET) pivotal study did not meet its primary or key secondary efficacy endpoints. The objective of the trial was to evaluate the efficacy and safety of rivipansel in patients aged six and older with sickle cell disease who were hospitalized for a vaso-occlusive crisis and required treatment with IV opioids. The primary endpoint was time to readiness-for-discharge and the key secondary efficacy endpoints were time-to-discharge, cumulative IV opioid consumption, and time to discontinuation of IV opioids. Detailed analyses of the RESET study, including additional data on efficacy and safety endpoints, which are not available at this time, will be submitted for presentation at a future scientific meeting. We are awaiting additional data to determine next steps.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change
|
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change
|
|
||||
Cost of sales
|
|
$
|
2,576
|
|
|
$
|
2,916
|
|
|
(12
|
)
|
|
$
|
5,009
|
|
|
$
|
5,479
|
|
|
(9
|
)
|
As a percentage of Revenues
|
|
19.4
|
%
|
|
21.7
|
%
|
|
|
|
19.0
|
%
|
|
20.8
|
%
|
|
|
•
|
the favorable impact of foreign exchange of $176 million; and
|
•
|
the favorable impact of hedging activity on intercompany inventory of $91 million.
|
•
|
the favorable impact of foreign exchange of $388 million; and
|
•
|
the favorable impact of hedging activity on intercompany inventory of $164 million,
|
•
|
an unfavorable change in product mix.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
||||
Selling, informational and administrative expenses
|
|
$
|
3,511
|
|
|
$
|
3,542
|
|
|
(1
|
)
|
|
$
|
6,850
|
|
|
$
|
6,954
|
|
|
(1
|
)
|
As a percentage of Revenues
|
|
26.5
|
%
|
|
26.3
|
%
|
|
|
|
26.0
|
%
|
|
26.4
|
%
|
|
|
•
|
the favorable impact of foreign exchange of $118 million; and
|
•
|
lower advertising, promotional and field force expenses in developed markets, primarily related to Lyrica in the U.S.,
|
•
|
additional investment across several of our products, primarily Xeljanz and Chantix/Champix, and to support the Vyndaqel launches; and
|
•
|
additional investments in China.
|
•
|
the favorable impact of foreign exchange of $206 million;
|
•
|
lower advertising, promotional and field force expenses in developed markets, primarily related to Lyrica in the U.S.; and
|
•
|
the non-recurrence of a special, one-time bonus paid to virtually all Pfizer colleagues, excluding executives, of $119 million, in the aggregate, in the first quarter of 2018,
|
•
|
additional investment across several of our key products, primarily Xeljanz and Chantix/Champix, and to support the Vyndaqel launches;
|
•
|
additional investments in China across key brands; and
|
•
|
the non-recurrence of a favorable true-up of healthcare reform expenses in the first quarter of 2018.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
||||
Research and development expenses
|
|
$
|
1,842
|
|
|
$
|
1,797
|
|
|
2
|
|
$
|
3,544
|
|
|
$
|
3,540
|
|
|
—
|
As a percentage of Revenues
|
|
13.9
|
%
|
|
13.3
|
%
|
|
|
|
13.4
|
%
|
|
13.4
|
%
|
|
|
•
|
increased spending on our Inflammation & Immunology and Rare Disease portfolios due to several phase 3 programs and
|
•
|
increased investments towards building new capabilities and driving automation,
|
•
|
decreased spending across the Oncology, Vaccines and Internal Medicine portfolios, as select programs have reached completion;
|
•
|
the favorable impact of foreign exchange; and
|
•
|
the discontinuance of the Staphylococcus aureus vaccine trial.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
||||
Restructuring credits—acquisition-related costs(a)
|
|
$
|
(206
|
)
|
|
$
|
(11
|
)
|
|
*
|
|
|
$
|
(214
|
)
|
|
$
|
(19
|
)
|
|
*
|
|
Restructuring charges/(credits)—cost reduction initiatives(b)
|
|
62
|
|
|
(13
|
)
|
|
*
|
|
|
81
|
|
|
(14
|
)
|
|
*
|
|
||||
Restructuring credits
|
|
(144
|
)
|
|
(24
|
)
|
|
*
|
|
|
(134
|
)
|
|
(33
|
)
|
|
*
|
|
||||
Integration costs(c)
|
|
29
|
|
|
68
|
|
|
(58
|
)
|
|
64
|
|
|
120
|
|
|
(47
|
)
|
||||
Restructuring charges and certain acquisition-related costs
|
|
(115
|
)
|
|
44
|
|
|
*
|
|
|
(69
|
)
|
|
87
|
|
|
*
|
|
||||
Net periodic benefit costs
|
|
4
|
|
|
29
|
|
|
(87
|
)
|
|
10
|
|
|
61
|
|
|
(83
|
)
|
||||
Additional depreciation—asset restructuring
|
|
10
|
|
|
13
|
|
|
(27
|
)
|
|
23
|
|
|
31
|
|
|
(26
|
)
|
||||
Total implementation costs
|
|
42
|
|
|
44
|
|
|
(3
|
)
|
|
69
|
|
|
82
|
|
|
(16
|
)
|
||||
Costs associated with acquisitions and cost-reduction/productivity initiatives(d)
|
|
$
|
(59
|
)
|
|
$
|
131
|
|
|
*
|
|
|
$
|
32
|
|
|
$
|
262
|
|
|
(88
|
)
|
* Calculation not meaningful or results are equal to or greater than 100%.
|
(a)
|
Restructuring credits––acquisition-related costs include employee termination costs, asset impairments and other exit costs associated with business combinations. Credits for the second quarter and the first six months of 2019 were mostly due to the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years. See Notes to Condensed Consolidated Financial Statements—Note 5B. Tax Contingencies. Credits for the second quarter of 2018 were primarily due to the reversal of previously recorded accruals for employee termination costs related to our acquisition of Hospira and credits for the first six months of 2018 were mainly due to the reversal of previously recorded accruals for exit and employee termination costs related to our acquisition of Hospira.
|
(b)
|
Restructuring charges/(credits)––cost reduction initiatives relate to employee termination costs, asset impairments and other exit costs not associated with acquisitions. For the second quarter of 2019, the charges were composed of employee termination costs and exit costs, partially offset by lower asset write downs, and for the first six months of 2019, the charges were mostly related to employee termination costs and exit costs. For the second quarter of 2018, the credits were mostly related to the reversal of previously recorded accruals for employee termination costs and, for the first six months of 2018, the credits were mainly related to the reversal of previously recorded accruals for employee termination costs and lower asset write downs, partially offset by exit costs.
|
(c)
|
For additional information, see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
(d)
|
Comprises Restructuring charges and certain acquisition-related costs as well as costs associated with our cost-reduction/productivity initiatives included in Cost of sales, Research and development expenses, Selling, informational and administrative expenses and/or Other (income)/deductions––net as appropriate. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
||||
Other (income)/deductions––net
|
|
$
|
126
|
|
|
$
|
(551
|
)
|
|
*
|
|
$
|
218
|
|
|
$
|
(728
|
)
|
|
*
|
* Calculation not meaningful or results are equal to or greater than 100%.
|
•
|
senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income and Adjusted diluted earnings per share basis;
|
•
|
our annual budgets are prepared on an Adjusted income and Adjusted diluted earnings per share basis; and
|
•
|
senior management’s annual compensation is derived, in part, using Adjusted income and Adjusted diluted earnings per share measures.
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Items(a)
|
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
||||||
Revenues
|
|
$
|
13,264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,264
|
|
Cost of sales
|
|
2,576
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
2,556
|
|
||||||
Selling, informational and administrative expenses
|
|
3,511
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
(47
|
)
|
|
3,464
|
|
||||||
Research and development expenses
|
|
1,842
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
1,825
|
|
||||||
Amortization of intangible assets
|
|
1,184
|
|
|
(1,117
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
(115
|
)
|
|
—
|
|
|
177
|
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
126
|
|
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
(156
|
)
|
|
(100
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
4,141
|
|
|
1,178
|
|
|
(176
|
)
|
|
—
|
|
|
309
|
|
|
5,452
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
(915
|
)
|
|
222
|
|
|
6
|
|
|
—
|
|
|
1,610
|
|
|
923
|
|
||||||
Income from continuing operations
|
|
5,056
|
|
|
957
|
|
|
(182
|
)
|
|
—
|
|
|
(1,301
|
)
|
|
4,529
|
|
||||||
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Net income attributable to Pfizer Inc. common shareholders
|
|
5,046
|
|
|
957
|
|
|
(182
|
)
|
|
—
|
|
|
(1,301
|
)
|
|
4,520
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
0.89
|
|
|
0.17
|
|
|
(0.03
|
)
|
|
—
|
|
|
(0.23
|
)
|
|
0.80
|
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Items(a)
|
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
||||||
Revenues
|
|
$
|
26,382
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,382
|
|
Cost of sales
|
|
5,009
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
4,971
|
|
||||||
Selling, informational and administrative expenses
|
|
6,850
|
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
(74
|
)
|
|
6,775
|
|
||||||
Research and development expenses
|
|
3,544
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
3,518
|
|
||||||
Amortization of intangible assets
|
|
2,367
|
|
|
(2,237
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
(69
|
)
|
|
—
|
|
|
150
|
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
218
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(459
|
)
|
|
(235
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
8,463
|
|
|
2,217
|
|
|
(148
|
)
|
|
—
|
|
|
691
|
|
|
11,223
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
(481
|
)
|
|
446
|
|
|
11
|
|
|
—
|
|
|
1,822
|
|
|
1,797
|
|
||||||
Income from continuing operations
|
|
8,945
|
|
|
1,771
|
|
|
(159
|
)
|
|
—
|
|
|
(1,131
|
)
|
|
9,426
|
|
||||||
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||
Net income attributable to Pfizer Inc. common shareholders
|
|
8,929
|
|
|
1,771
|
|
|
(159
|
)
|
|
—
|
|
|
(1,131
|
)
|
|
9,410
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
1.56
|
|
|
0.31
|
|
|
(0.03
|
)
|
|
—
|
|
|
(0.20
|
)
|
|
1.65
|
|
|
|
Three Months Ended July 1, 2018
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Items(a)
|
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
||||||
Revenues
|
|
$
|
13,466
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,466
|
|
Cost of sales
|
|
2,916
|
|
|
(2
|
)
|
|
(3
|
)
|
|
—
|
|
|
(35
|
)
|
|
2,876
|
|
||||||
Selling, informational and administrative expenses
|
|
3,542
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
3,507
|
|
||||||
Research and development expenses
|
|
1,797
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
1,789
|
|
||||||
Amortization of intangible assets
|
|
1,191
|
|
|
(1,121
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
44
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
13
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
(551
|
)
|
|
(12
|
)
|
|
(2
|
)
|
|
—
|
|
|
303
|
|
|
(262
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
4,527
|
|
|
1,134
|
|
|
62
|
|
|
—
|
|
|
(237
|
)
|
|
5,485
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
648
|
|
|
233
|
|
|
11
|
|
|
—
|
|
|
(6
|
)
|
|
886
|
|
||||||
Income from continuing operations
|
|
3,879
|
|
|
901
|
|
|
51
|
|
|
—
|
|
|
(231
|
)
|
|
4,600
|
|
||||||
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Net income attributable to Pfizer Inc. common shareholders
|
|
3,872
|
|
|
901
|
|
|
51
|
|
|
—
|
|
|
(231
|
)
|
|
4,593
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
0.65
|
|
|
0.15
|
|
|
0.01
|
|
|
—
|
|
|
(0.04
|
)
|
|
0.77
|
|
|
|
Six Months Ended July 1, 2018
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Items(a)
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
|||||||
Revenues
|
|
$
|
26,373
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,373
|
|
Cost of sales
|
|
5,479
|
|
|
(3
|
)
|
|
(6
|
)
|
|
—
|
|
|
(58
|
)
|
|
5,413
|
|
||||||
Selling, informational and administrative expenses
|
|
6,954
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
6,793
|
|
||||||
Research and development expenses
|
|
3,540
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
3,528
|
|
||||||
Amortization of intangible assets
|
|
2,387
|
|
|
(2,246
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
87
|
|
|
—
|
|
|
(102
|
)
|
|
—
|
|
|
14
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
(728
|
)
|
|
(109
|
)
|
|
(2
|
)
|
|
—
|
|
|
373
|
|
|
(466
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
8,654
|
|
|
2,355
|
|
|
110
|
|
|
—
|
|
|
(154
|
)
|
|
10,965
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
1,204
|
|
|
472
|
|
|
19
|
|
|
—
|
|
|
106
|
|
|
1,801
|
|
||||||
Income from continuing operations
|
|
7,450
|
|
|
1,883
|
|
|
91
|
|
|
—
|
|
|
(260
|
)
|
|
9,164
|
|
||||||
Discontinued operations––net of tax
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||
Net income attributable to Pfizer Inc. common shareholders
|
|
7,432
|
|
|
1,883
|
|
|
91
|
|
|
1
|
|
|
(260
|
)
|
|
9,147
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
1.24
|
|
|
0.31
|
|
|
0.02
|
|
|
—
|
|
|
(0.04
|
)
|
|
1.52
|
|
(a)
|
For details of adjustments, see “Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income” below.
|
(b)
|
The effective tax rate on Non-GAAP Adjusted income was 16.9% in the second quarter of 2019, compared to 16.1% in the second quarter of 2018. The increase was primarily due to a decrease in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with foreign tax authorities, partially offset by the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business. The effective tax rate on Non-GAAP Adjusted income was 16.0% in the first six months of 2019, compared to 16.4% in the first six months of 2018. The decrease was primarily due to a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business, partially offset by the decrease in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with foreign tax authorities.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
||||
Purchase accounting adjustments
|
|
|
|
|
|
|
|
|
||||||||
Amortization, depreciation and other(a)
|
|
$
|
1,185
|
|
|
$
|
1,132
|
|
|
$
|
2,227
|
|
|
$
|
2,352
|
|
Cost of sales
|
|
(6
|
)
|
|
2
|
|
|
(10
|
)
|
|
3
|
|
||||
Total purchase accounting adjustments––pre-tax
|
|
1,178
|
|
|
1,134
|
|
|
2,217
|
|
|
2,355
|
|
||||
Income taxes(b)
|
|
(222
|
)
|
|
(233
|
)
|
|
(446
|
)
|
|
(472
|
)
|
||||
Total purchase accounting adjustments––net of tax
|
|
957
|
|
|
901
|
|
|
1,771
|
|
|
1,883
|
|
||||
Acquisition-related items
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Restructuring credits(c)
|
|
(206
|
)
|
|
(11
|
)
|
|
(214
|
)
|
|
(19
|
)
|
||||
Integration costs(c)
|
|
29
|
|
|
68
|
|
|
64
|
|
|
120
|
|
||||
Net periodic benefit costs other than service costs
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Additional depreciation––asset restructuring(d)
|
|
1
|
|
|
3
|
|
|
2
|
|
|
6
|
|
||||
Total acquisition-related items––pre-tax
|
|
(176
|
)
|
|
62
|
|
|
(148
|
)
|
|
110
|
|
||||
Income taxes(e)
|
|
(6
|
)
|
|
(11
|
)
|
|
(11
|
)
|
|
(19
|
)
|
||||
Total acquisition-related items––net of tax
|
|
(182
|
)
|
|
51
|
|
|
(159
|
)
|
|
91
|
|
||||
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total discontinued operations––net of tax, attributable to Pfizer Inc.(f)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Certain significant items
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Restructuring charges/(credits)––cost reduction initiatives(g)
|
|
62
|
|
|
(13
|
)
|
|
81
|
|
|
(14
|
)
|
||||
Implementation costs and additional depreciation––asset restructuring(h)
|
|
51
|
|
|
54
|
|
|
89
|
|
|
107
|
|
||||
Certain legal matters, net(i)
|
|
15
|
|
|
(88
|
)
|
|
9
|
|
|
(107
|
)
|
||||
Certain asset impairments(i)
|
|
10
|
|
|
31
|
|
|
149
|
|
|
31
|
|
||||
Business and legal entity alignment costs(i)
|
|
141
|
|
|
1
|
|
|
264
|
|
|
4
|
|
||||
Net gains recognized during the period on investments in equity securities(i)
|
|
(25
|
)
|
|
(257
|
)
|
|
(136
|
)
|
|
(375
|
)
|
||||
Net losses on early retirement of debt(i)
|
|
—
|
|
|
—
|
|
|
138
|
|
|
3
|
|
||||
Other(j)
|
|
56
|
|
|
35
|
|
|
97
|
|
|
197
|
|
||||
Total certain significant items––pre-tax
|
|
309
|
|
|
(237
|
)
|
|
691
|
|
|
(154
|
)
|
||||
Income taxes(k)
|
|
(1,610
|
)
|
|
6
|
|
|
(1,822
|
)
|
|
(106
|
)
|
||||
Total certain significant items––net of tax
|
|
(1,301
|
)
|
|
(231
|
)
|
|
(1,131
|
)
|
|
(260
|
)
|
||||
Total purchase accounting adjustments, acquisition-related items, discontinued operations and certain significant items––net of tax, attributable to Pfizer Inc.
|
|
$
|
(526
|
)
|
|
$
|
721
|
|
|
$
|
481
|
|
|
$
|
1,715
|
|
(a)
|
Included primarily in Amortization of intangible assets.
|
(b)
|
Included in Provision/(benefit) 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.
|
(c)
|
Included in Restructuring charges and certain acquisition-related costs and includes employee termination costs, asset impairments and other exit costs associated with business combinations. Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. For additional information, See the “Costs and Expenses—Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A and Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
(d)
|
Included in Selling, informational and administrative expenses for the three and six months ended June 30, 2019 and in Cost of sales for the three and six months ended July 1, 2018. Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions.
|
(e)
|
Included in Provision/(benefit) 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 second quarter and first six months of 2019 include the impact of the non-taxable reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years.
|
(f)
|
Included in Discontinued operations––net of tax.
|
(g)
|
Amounts relate to employee termination costs, asset impairments and other exit costs not associated with acquisitions, which are included in Restructuring charges and certain acquisition-related costs (See the “Costs and Expenses—Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this MD&A and Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).
|
(h)
|
Amounts relate to our cost-reduction/productivity initiatives not related to acquisitions (see Notes to Condensed Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives). For the three months ended June 30, 2019, included in Cost of sales ($24 million), Selling, informational and administrative expenses ($16 million) and Research and development expenses ($11 million). For the six months ended June 30, 2019, included in Cost of sales ($46 million), Selling, informational and administrative expenses ($25 million) and Research and development expenses ($18 million). For the three months ended July 1, 2018, included in Cost of sales ($30 million), Selling, informational and administrative expenses ($16 million) and Research and development expenses ($7 million). For the six months ended July 1, 2018,
|
(i)
|
Included in Other (income)/deductions—net except for business and legal entity alignment costs that are primarily included in Other (income)/deductions—net (see Notes to Condensed Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net).
|
(j)
|
For the three months ended June 30, 2019, included in Cost of sales ($2 million), Selling, informational and administrative expenses ($28 million), Research and development expenses ($6 million) and Other (income)/deductions––net ($19 million). For the six months ended June 30, 2019, included in Cost of sales ($3 million), Selling, informational and administrative expenses ($41 million), Research and development expenses ($11 million) and Other (income)/deductions––net ($43 million). For the three months ended July 1, 2018, primarily included in Cost of sales ($4 million), Selling, informational and administrative expenses ($18 million) and Other (income)/deductions––net ($10 million). For the six months ended July 1, 2018, primarily included in Cost of sales ($3 million income), Selling, informational and administrative expenses ($128 million) and Other (income)/deductions––net ($70 million). The three and six months ended July 1, 2018 include, among other things, a non-cash $50 million pre-tax gain in Other (income)/deductions––net as a result of the contribution of our allogeneic CAR T therapy development program assets in connection with our asset contribution agreement entered into with Allogene, and the six months ended July 1, 2018 also includes a $119 million charge, in the aggregate, in Selling, informational and administrative expenses for a special, one-time bonus paid to virtually all Pfizer colleagues, excluding executives, which was one of several actions taken by us after evaluating the expected positive net impact of the December 2017 enactment of the legislation commonly referred to as the TCJA.
|
(k)
|
Included in Provision/(benefit) 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 three and six months ended June 30, 2019 were favorably impacted primarily by a benefit recorded of approximately $1.4 billion, representing tax and interest, resulting from the favorable settlement of a U.S. IRS audit for multiple tax years, as well as the tax benefit recorded as a result of additional guidance issued by the U.S. Department of Treasury related to the TCJA. The first six months of 2018 were favorably impacted by the December 2017 enactment of the TCJA, primarily related to certain tax initiatives associated with the lower U.S. tax rate as a result of the TCJA.
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma(a)
|
|
|
Upjohn(a)
|
|
|
Other(b)
|
|
|
Non-GAAP
Adjusted(c) |
|
|
Reconciling Items(d)
|
|
|
GAAP Reported
|
|
||||||
Revenues
|
|
$
|
18,779
|
|
|
$
|
5,882
|
|
|
$
|
1,721
|
|
|
$
|
26,382
|
|
|
$
|
—
|
|
|
$
|
26,382
|
|
Cost of sales
|
|
3,619
|
|
|
843
|
|
|
510
|
|
|
4,971
|
|
|
38
|
|
|
5,009
|
|
||||||
% of revenue
|
|
19.3
|
%
|
|
14.3
|
%
|
|
*
|
|
|
18.8
|
%
|
|
*
|
|
|
19.0
|
%
|
||||||
Selling, informational and administrative expenses
|
|
3,219
|
|
|
703
|
|
|
2,853
|
|
|
6,775
|
|
|
75
|
|
|
6,850
|
|
||||||
Research and development expenses
|
|
367
|
|
|
112
|
|
|
3,039
|
|
|
3,518
|
|
|
26
|
|
|
3,544
|
|
||||||
Amortization of intangible assets
|
|
129
|
|
|
—
|
|
|
—
|
|
|
130
|
|
|
2,237
|
|
|
2,367
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
(69
|
)
|
||||||
Other (income)/deductions––net
|
|
(536
|
)
|
|
(1
|
)
|
|
302
|
|
|
(235
|
)
|
|
453
|
|
|
218
|
|
||||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
11,981
|
|
|
4,225
|
|
|
(4,983
|
)
|
|
11,223
|
|
|
(2,760
|
)
|
|
8,463
|
|
|
|
Second Quarter of 2018
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma(a)
|
|
|
Upjohn(a)
|
|
|
Other(b)
|
|
|
Non-GAAP
Adjusted(c) |
|
|
Reconciling Items(d)
|
|
|
GAAP Reported
|
|
||||||
Revenues
|
|
$
|
9,434
|
|
|
$
|
3,147
|
|
|
$
|
886
|
|
|
$
|
13,466
|
|
|
$
|
—
|
|
|
$
|
13,466
|
|
Cost of sales
|
|
1,893
|
|
|
509
|
|
|
475
|
|
|
2,876
|
|
|
40
|
|
|
2,916
|
|
||||||
% of revenue
|
|
20.1
|
%
|
|
16.2
|
%
|
|
*
|
|
|
21.4
|
%
|
|
*
|
|
|
21.7
|
%
|
||||||
Selling, informational and administrative expenses
|
|
1,683
|
|
|
364
|
|
|
1,460
|
|
|
3,507
|
|
|
35
|
|
|
3,542
|
|
||||||
Research and development expenses
|
|
206
|
|
|
54
|
|
|
1,529
|
|
|
1,789
|
|
|
8
|
|
|
1,797
|
|
||||||
Amortization of intangible assets
|
|
52
|
|
|
—
|
|
|
18
|
|
|
70
|
|
|
1,121
|
|
|
1,191
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
||||||
Other (income)/deductions––net
|
|
(358
|
)
|
|
(2
|
)
|
|
99
|
|
|
(262
|
)
|
|
(289
|
)
|
|
(551
|
)
|
||||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
5,958
|
|
|
2,222
|
|
|
(2,695
|
)
|
|
5,485
|
|
|
(959
|
)
|
|
4,527
|
|
|
|
Six Months Ended July 1, 2018
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma(a)
|
|
|
Upjohn(a)
|
|
|
Other(b)
|
|
|
Non-GAAP
Adjusted(c) |
|
|
Reconciling Items(d)
|
|
|
GAAP Reported
|
|
||||||
Revenues
|
|
$
|
18,315
|
|
|
$
|
6,267
|
|
|
$
|
1,791
|
|
|
$
|
26,373
|
|
|
$
|
—
|
|
|
$
|
26,373
|
|
Cost of sales
|
|
3,568
|
|
|
978
|
|
|
867
|
|
|
5,413
|
|
|
67
|
|
|
5,479
|
|
||||||
% of revenue
|
|
19.5
|
%
|
|
15.6
|
%
|
|
*
|
|
|
20.5
|
%
|
|
*
|
|
|
20.8
|
%
|
||||||
Selling, informational and administrative expenses
|
|
3,139
|
|
|
800
|
|
|
2,855
|
|
|
6,793
|
|
|
161
|
|
|
6,954
|
|
||||||
Research and development expenses
|
|
368
|
|
|
106
|
|
|
3,054
|
|
|
3,528
|
|
|
13
|
|
|
3,540
|
|
||||||
Amortization of intangible assets
|
|
111
|
|
|
—
|
|
|
29
|
|
|
141
|
|
|
2,246
|
|
|
2,387
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
87
|
|
||||||
Other (income)/deductions––net
|
|
(652
|
)
|
|
(8
|
)
|
|
194
|
|
|
(466
|
)
|
|
(262
|
)
|
|
(728
|
)
|
||||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
11,781
|
|
|
4,391
|
|
|
(5,207
|
)
|
|
10,965
|
|
|
(2,311
|
)
|
|
8,654
|
|
*
|
Indicates calculation not meaningful or result is equal to or greater than 100%.
|
(a)
|
Amounts represent the revenues and costs managed by each of the Biopharma and Upjohn reportable operating segments for the periods presented. The expenses generally include only those costs directly attributable to the operating segment.
|
(b)
|
Other comprises the revenues and costs included in our Adjusted income components (see footnote (c) below) that are managed outside Biopharma and Upjohn and includes the following:
|
|
|
Second Quarter of 2019
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
|
|||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other Unallocated(iv)
|
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
862
|
|
|
$
|
—
|
|
|
$
|
862
|
|
Cost of sales
|
|
—
|
|
|
1
|
|
|
276
|
|
|
(3
|
)
|
|
273
|
|
|||||
Selling, informational and administrative expenses
|
|
29
|
|
|
—
|
|
|
407
|
|
|
958
|
|
|
1,394
|
|
|||||
Research and development expenses
|
|
548
|
|
|
764
|
|
|
32
|
|
|
221
|
|
|
1,565
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|
224
|
|
|
222
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(576
|
)
|
|
(765
|
)
|
|
148
|
|
|
(1,399
|
)
|
|
(2,592
|
)
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other Unallocated(iv)
|
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,721
|
|
|
$
|
—
|
|
|
$
|
1,721
|
|
Cost of sales
|
|
—
|
|
|
1
|
|
|
550
|
|
|
(42
|
)
|
|
510
|
|
|||||
Selling, informational and administrative expenses
|
|
50
|
|
|
—
|
|
|
795
|
|
|
2,008
|
|
|
2,853
|
|
|||||
Research and development expenses
|
|
1,080
|
|
|
1,490
|
|
|
63
|
|
|
406
|
|
|
3,039
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
304
|
|
|
302
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(1,128
|
)
|
|
(1,491
|
)
|
|
313
|
|
|
(2,676
|
)
|
|
(4,983
|
)
|
|
|
Second Quarter of 2018
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
|
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other Unallocated(iv)
|
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
886
|
|
|
$
|
—
|
|
|
$
|
886
|
|
Cost of sales
|
|
—
|
|
|
(3
|
)
|
|
291
|
|
|
187
|
|
|
475
|
|
|||||
Selling, informational and administrative expenses
|
|
36
|
|
|
—
|
|
|
427
|
|
|
998
|
|
|
1,460
|
|
|||||
Research and development expenses
|
|
551
|
|
|
750
|
|
|
46
|
|
|
182
|
|
|
1,529
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
12
|
|
|
7
|
|
|
18
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(100
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
203
|
|
|
99
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(486
|
)
|
|
(746
|
)
|
|
113
|
|
|
(1,576
|
)
|
|
(2,695
|
)
|
|
|
Six Months Ended July 1, 2018
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
|
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other Unallocated(iv)
|
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,791
|
|
|
$
|
—
|
|
|
$
|
1,791
|
|
Cost of sales
|
|
—
|
|
|
(3
|
)
|
|
589
|
|
|
281
|
|
|
867
|
|
|||||
Selling, informational and administrative expenses
|
|
63
|
|
|
—
|
|
|
834
|
|
|
1,958
|
|
|
2,855
|
|
|||||
Research and development expenses
|
|
1,099
|
|
|
1,512
|
|
|
89
|
|
|
354
|
|
|
3,054
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
23
|
|
|
7
|
|
|
29
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(104
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
300
|
|
|
194
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(1,058
|
)
|
|
(1,508
|
)
|
|
258
|
|
|
(2,900
|
)
|
|
(5,207
|
)
|
(i)
|
WRDM—the R&D and Medical expenses managed by our WRDM organization, which is generally responsible for research projects for our Biopharma portfolio until proof-of-concept is achieved and then for transitioning those projects to the GPD organization for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. The WRDM organization also has responsibility for certain science-based and other platform-services organizations, which provide end-to-end technical expertise and other services to the various R&D projects, as well as the Worldwide Medical and Safety group, which ensures that Pfizer provides all stakeholders––including patients, healthcare providers, pharmacists, payers and health authorities––with complete and up-to-date information on the risks and benefits associated with Pfizer products so that they can make appropriate decisions on how and when to use Pfizer’s medicines.
|
(ii)
|
GPD––the costs associated with our GPD organization, which is generally responsible for clinical trials from WRDM in the Biopharma portfolio, including late stage portfolio spend. GPD also provides technical support and other services to Pfizer R&D projects. GPD is responsible for facilitating all regulatory submissions and interactions with regulatory agencies.
|
(iii)
|
Other—the operating results of our Consumer Healthcare business, and costs associated with other commercial activities not managed as part of Biopharma or Upjohn, including all strategy, business development, portfolio management and valuation capabilities, which previously had been reported in various parts of the organization.
|
(iv)
|
Corporate and Other Unallocated––the costs associated with platform functions (such as worldwide technology, global real estate operations, legal, finance, human resources, worldwide public affairs, compliance and worldwide procurement), patient advocacy activities and certain compensation and other corporate costs, such as interest income and expense, and gains and losses on investments, as well as overhead expenses associated with our
|
•
|
a $59 million gain in the second quarter of 2019;
|
•
|
a $103 million gain in the first six months of 2019;
|
•
|
a $32 million loss in the second quarter of 2018; and
|
•
|
a $61 million loss in the first six months of 2018.
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||
|
|
|
|
Estimated Other Costs Associated with Biopharma(ii)
|
|
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma Non-GAAP Adjusted(i), (iii)
|
|
|
Estimated WRDM/
GPD/Other Business Activities(ii) |
|
|
Estimated Corporate/Other Unallocated(ii)
|
|
|
Biopharma with
Estimated Other Costs Associated with Biopharma Non-GAAP Adjusted(ii), (iii) |
|
||||
Revenues
|
|
$
|
18,779
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,779
|
|
Cost of sales
|
|
3,619
|
|
|
1
|
|
|
(35
|
)
|
|
3,585
|
|
||||
Selling, informational and administrative expenses
|
|
3,219
|
|
|
261
|
|
|
1,452
|
|
|
4,932
|
|
||||
Research and development expenses
|
|
367
|
|
|
2,574
|
|
|
388
|
|
|
3,329
|
|
||||
Amortization of intangible assets
|
|
129
|
|
|
—
|
|
|
—
|
|
|
129
|
|
||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other (income)/deductions––net
|
|
(536
|
)
|
|
—
|
|
|
(173
|
)
|
|
(709
|
)
|
||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
11,981
|
|
|
(2,836
|
)
|
|
(1,632
|
)
|
|
7,513
|
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||
|
|
|
|
Estimated Other Costs Associated with Upjohn(ii)
|
|
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
Upjohn
Non-GAAP Adjusted(i), (iii) |
|
|
Estimated WRDM/
GPD/Other Business Activities(ii) |
|
|
Estimated Corporate/Other Unallocated(ii)
|
|
|
Upjohn with
Estimated Other Costs Associated with Upjohn Non-GAAP Adjusted(ii), (iii) |
|
||||
Revenues
|
|
$
|
5,882
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,882
|
|
Cost of sales
|
|
843
|
|
|
—
|
|
|
(15
|
)
|
|
828
|
|
||||
Selling, informational and administrative expenses
|
|
703
|
|
|
17
|
|
|
432
|
|
|
1,152
|
|
||||
Research and development expenses
|
|
112
|
|
|
1
|
|
|
9
|
|
|
122
|
|
||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other (income)/deductions––net
|
|
(1
|
)
|
|
—
|
|
|
(28
|
)
|
|
(29
|
)
|
||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
4,225
|
|
|
(18
|
)
|
|
(398
|
)
|
|
3,809
|
|
(i)
|
Amount represents the revenues and costs managed by the operating segments. The expenses generally include only those costs directly attributable to the operating segment. See note (a) above for more information.
|
(ii)
|
Represents costs not assessed to an operating segment, as business unit (segment) management does not manage these costs. For a description of these other costs and business activities, see note (b) above.
|
•
|
WRDM/GPD/Other Business Activities––The information provided for WRDM, GPD and Other Business Activities was substantially all derived from our estimates of the costs incurred in connection with the R&D projects associated with the Biopharma and Upjohn operating segments as well as specific identification and estimates of costs incurred in connection with activities associated with the Biopharma and Upjohn operating segments.
|
•
|
Corporate/Other Unallocated––The information provided for Corporate and Other Unallocated was derived mainly using proportional allocation methods based on global, regional or country revenues or global, regional or country headcount, as well as certain cost metrics, as appropriate, such as those derived from research and development and manufacturing costs, and, to a lesser extent, specific identification and estimates. Management believes that the allocations of Corporate and Other Unallocated costs are reasonable.
|
(iii)
|
See note (c) below for an explanation of our Non-GAAP Adjusted financial measure.
|
(c)
|
See the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A for a definition of these “Adjusted Income” components.
|
(d)
|
Includes costs associated with (i) purchase accounting adjustments; (ii) acquisition-related costs; and (iii) certain significant items, which are substantive and/or unusual, and in some cases recurring, items (such as restructuring charges, legal charges or net gains and losses on investment in equity securities), that are evaluated on an individual basis by management. For additional information about these reconciling items and/or our Non-GAAP adjusted measure of performance, see the “Non-GAAP Financial Measure (Adjusted Income)” section of this MD&A.
|
(MILLIONS OF DOLLARS)
|
|
|
||
Biopharma Revenues, for the three months ended July 1, 2018
|
|
$
|
9,434
|
|
|
|
|
||
Operational growth/(decline):
|
|
|
||
Continued worldwide growth from certain key brands(a)
|
|
675
|
|
|
Growth from Biosimilars, primarily in the U.S.
|
|
38
|
|
|
Lower revenues for Enbrel internationally, reflecting continued biosimilar competition in most developed Europe markets
|
|
(87
|
)
|
|
Lower revenues for the Hospital products business, primarily reflecting declines in developed markets, mostly due to the continued expected negative impact from generic competition for products that have previously lost marketing exclusivity as well as product supply shortages
|
|
(86
|
)
|
|
Lower revenues for certain rare disease products, including the hemophilia franchises (Refacto AF/Xyntha and BeneFIX), primarily due to competitive pressures, and Genotropin in developed markets, mainly due to unfavorable channel mix
|
|
(43
|
)
|
|
Lower revenues for Prevnar 13 in the U.S., primarily reflecting lower government purchases for the pediatric indication as well as continued decline in revenues for the adult indication due to a declining “catch up” opportunity compared to the prior year quarter. International revenues increased mostly due to higher volumes reflecting continued uptake following the second quarter 2017 launch in China, as well as higher volumes resulting from increased shipments associated with Gavi, the Vaccine Alliance, partially offset by the unfavorable impact of timing associated with government purchases for the pediatric indication in certain emerging markets
|
|
(38
|
)
|
|
Other operational factors, net
|
|
92
|
|
|
Operational growth, net
|
|
551
|
|
|
Unfavorable impact of foreign exchange
|
|
(390
|
)
|
|
Biopharma Revenues increase
|
|
160
|
|
|
Biopharma Revenues, for the three months ended June 30, 2019
|
|
$
|
9,595
|
|
(a)
|
Certain key brands represent Ibrance, Eliquis and Xeljanz. See the “Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion” section of this MD&A for product analysis information.
|
•
|
Cost of sales as a percentage of Revenues decreased 1 percentage point primarily driven by a favorable change in product mix, which includes an increase in alliance revenue which has no associated cost of sales.
|
•
|
The decrease in Cost of sales of 2% was mainly driven by the favorable impact of foreign exchange, partially offset by an unfavorable change in product mix, an increase in royalty expenses based on the mix of products sold and an increase in sales volumes for various products within our product portfolio.
|
•
|
The increase in Selling, informational and administrative expenses of 1% was mostly driven by additional investment across several of our products, primarily Chantix/Champix as well as to support the Vyndaqel launches, partially offset by the favorable impact of foreign exchange.
|
•
|
Research and development expenses were relatively flat.
|
•
|
The unfavorable change in Other (income)/deductions––net primarily reflects an $86 million decrease in income from collaborations, out-licensing arrangements and sales of compound/product rights, partially offset by an increase in royalty-related income mainly due to a one-time favorable resolution in the second quarter of 2019 of a legal dispute for $82 million.
|
(MILLIONS OF DOLLARS)
|
|
|
|
|
Upjohn Revenues, for the three months ended July 1, 2018
|
|
$
|
3,147
|
|
|
|
|
|
|
Operational growth/(decline):
|
|
|
|
|
Decline from Lipitor and Norvasc, primarily in China, driven by the March 2019 government implementation of a volume-based procurement program in certain cities
|
|
(131
|
)
|
|
Lower revenues for Viagra and Upjohn's authorized generic for Viagra in the U.S. resulting from increased generic competition following Viagra's December 2017 patent expiration
|
|
(70
|
)
|
|
Lower worldwide revenues for Lyrica, primarily in the U.S., reflecting wholesaler destocking in advance of anticipated multi-source generic competition expected to begin on July 1, 2019 (which instead began on July 19, 2019), and in developed Europe, reflecting continued generic competition
|
|
(31
|
)
|
|
Volume-driven growth from Celebrex and Effexor, primarily in Japan
|
|
31
|
|
|
Other operational factors, net
|
|
(34
|
)
|
|
Operational decline, net
|
|
(235
|
)
|
|
Unfavorable impact of foreign exchange
|
|
(105
|
)
|
|
Upjohn Revenues decrease
|
|
(339
|
)
|
|
Upjohn Revenues, for the three months ended June 30, 2019
|
|
$
|
2,807
|
|
•
|
Cost of sales as a percentage of Revenues decreased 1.1 percentage points and Cost of sales as compared to the prior year period decreased 17% driven by a decrease in royalty expense, the favorable impact of foreign exchange and lower atorvastatin active product ingredients import duties in China.
|
•
|
Selling, informational and administrative expenses increased 3% mostly driven by non-recurrence of a one-time general and administrative expense reversal in the second quarter of 2018, partially offset by a reduction in field force and advertising and promotion expenses in developed markets, primarily related to Lyrica in the U.S., and the favorable impact of foreign exchange.
|
•
|
Research and development expenses and Other (income)/deductions––net were relatively unchanged.
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz and Prevnar/Prevenar 13. See the “Analysis of the Condensed Consolidated Statements of Income––Revenues––Selected Product Discussion” section of this MD&A for product analysis information.
|
•
|
Cost of sales as a percentage of Revenues was relatively flat.
|
•
|
The increase in Cost of sales of 1% was mainly driven by an unfavorable change in product mix, an increase in sales volumes for various products within the Biopharma product portfolio, and an increase in royalty expenses based on the mix of products sold, partially offset by the favorable impact of foreign exchange.
|
•
|
The increase in Selling, informational and administrative expenses of 3% was mostly driven by additional investment across several of our products, primarily Xeljanz and Chantix/Champix and to support the Vyndaqel launches, as well as the non-recurrence of a favorable true-up of healthcare reform expenses in the first quarter of 2018, partially offset by the favorable impact of foreign exchange.
|
•
|
Research and development expenses were relatively flat.
|
•
|
The unfavorable change in Other (income)/deductions––net primarily reflects a $205 million decrease in income from collaborations, out-licensing arrangements and sales of compound/product rights, partially offset by an increase in royalty-related income mainly due to a one-time favorable resolution in the second quarter of 2019 of a legal dispute for $82 million.
|
(MILLIONS OF DOLLARS)
|
|
|
||
Upjohn Revenues, for the six months ended July 1, 2018
|
|
$
|
6,267
|
|
|
|
|
||
Operational growth/(decline):
|
|
|
||
Lower revenues for Viagra and Upjohn's authorized generic for Viagra in the U.S. resulting from increased generic competition following Viagra's December 2017 patent expiration
|
|
(167
|
)
|
|
Lower worldwide revenues for Lyrica, primarily in the U.S., reflecting wholesaler destocking in advance of anticipated multi-source generic competition expected to begin on July 1, 2019 (which instead began on July 19, 2019), and in developed Europe, reflecting continued generic competition
|
|
(49
|
)
|
|
Lower revenues for Greenstone, Upjohn's authorized generic subsidiary, primarily due to continued industry-wide pricing challenges in the U.S., excluding revenues for Upjohn's authorized generic for Viagra in the U.S.
|
|
(22
|
)
|
|
Volume-driven growth from Celebrex and Effexor, primarily in Japan
|
|
73
|
|
|
Growth from Lipitor and Norvasc, primarily in emerging markets, driven by strong, volume-driven operational growth in China in the first fiscal quarter of 2019, partially offset by declines driven by the March 2019 government implementation of a volume-based procurement program in certain cities in the second quarter of 2019
|
|
73
|
|
|
Other operational factors, net
|
|
(96
|
)
|
|
Operational decline, net
|
|
(188
|
)
|
|
Unfavorable impact of foreign exchange
|
|
(196
|
)
|
|
Upjohn Revenues decrease
|
|
(385
|
)
|
|
Upjohn Revenues, for the six months ended June 30, 2019
|
|
$
|
5,882
|
|
•
|
Cost of sales as a percentage of Revenues decreased 1.3 percentage points and Cost of sales as compared to the prior year period decreased 14%, primarily due to the favorable impact of foreign exchange, lower royalty expense and lower atorvastatin active product ingredients import duties in China.
|
•
|
Selling, informational and administrative expenses decreased 12% driven by a reduction in field force and advertising and promotion expenses in developed markets, primarily related to Lyrica in the U.S., as well as the favorable impact of foreign exchange, partially offset by non-recurrence of a one-time general and administrative expense reversal in the second quarter of 2018 and investments in China across key brands.
|
•
|
Research and development expenses and Other (income)/deductions––net were relatively unchanged.
|
•
|
For Foreign currency translation adjustments, net, the second quarter of 2019 primarily reflects the strengthening of the U.S. dollar against the euro, British pound, and Australian dollar; and for the first six months of 2019, mainly reflects the strengthening of the U.S. dollar against the Australian dollar and the euro, partially offset by the weakening of the U.S. dollar against the Japanese yen.
|
•
|
For Unrealized holding gains/(losses) on derivative financial instruments, net and Unrealized holding gains/(losses) on available-for-sale securities, net, reflects the impact of fair value re-measurements and the reclassification of amounts into income. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 7. Financial Instruments.
|
•
|
For Benefit plans: actuarial gains/(losses), net, mainly reflects the amortization of changes in the pension benefit obligation previously recognized in Other comprehensive income and the unfavorable impact of foreign exchange. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.
|
•
|
For Benefit plans: prior service costs and other, net, reflects the reclassification into income of amounts related to amortization of changes in prior service costs and credits previously recognized in Other comprehensive income. For additional information, see Notes to Condensed Consolidated Financial Statements—Note 10. Pension and Postretirement Benefit Plans.
|
•
|
For Trade accounts receivable, less allowance for doubtful accounts, the change reflects the timing of sales and collections in the normal course of business.
|
•
|
For Inventories, the change reflects the increases for certain products to meet targeted levels in the normal course of business, including inventory build for supply recovery and market demand.
|
•
|
For PP&E, the change primarily reflects capital additions in the normal course of business, partially offset by depreciation during the period.
|
•
|
For Identifiable intangible assets, less accumulated amortization, the change primarily reflects amortization for the period and intangible asset impairment charges (see Notes to Condensed Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net), partially offset by additions for the period.
|
•
|
For Other noncurrent assets, the change reflects a net increase in assets in the normal course of business, and an increase in receivables associated with derivative instruments.
|
•
|
For Trade accounts payable, the change reflects the timing of purchases and payments in the normal course of business.
|
•
|
For Accrued compensation and related items, the decrease reflects normal bonus payments made to employees and the timing of payments in the normal course of business.
|
•
|
For Other current liabilities, the change reflects a decrease in liabilities associated with:
|
◦
|
payments and accruals in the normal course of business;
|
◦
|
payments for restructuring activities; and
|
◦
|
payments for contingent consideration obligations,
|
◦
|
an increase in sales returns reserve recorded for Lyrica in the U.S. in the second quarter of 2019 in advance of anticipated multi-source generic competition that was expected to begin on July 1, 2019 but instead began on July 19, 2019; and
|
◦
|
an increase due to reclassifications from noncurrent to current.
|
•
|
For Pension benefit obligations, net, the change reflects voluntary pension contributions and direct employer benefit payments.
|
•
|
For Other noncurrent liabilities, the change reflects a decrease in liabilities associated with:
|
◦
|
a decrease in payables associated with derivative financial instruments;
|
◦
|
a decrease in restructuring liabilities related to the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years (see Notes to Condensed Consolidated Financial Statements—Note 5B. Tax Contingencies); and
|
◦
|
a decrease due to reclassifications from noncurrent to current,
|
◦
|
an increase in accruals in the normal course of business.
|
•
|
For Treasury stock, the change reflects $6.8 billion paid to GS&Co. in February 2019 pursuant to the terms of an accelerated share repurchase agreement as well as open market share repurchases. See Notes to Condensed Consolidated Financial Statements—Note 12C. Contingencies and Certain Commitments: Certain Commitments for additional information.
|
|
|
Six Months Ended
|
|
|
|||||||
(MILLIONS OF DOLLARS)
|
|
June 30,
2019 |
|
|
July 1,
2018 |
|
|
%
Change |
|
||
Cash provided by/(used in):
|
|
|
|
|
|
|
|||||
Operating activities
|
|
$
|
4,309
|
|
|
$
|
5,830
|
|
|
(26
|
)
|
Investing activities
|
|
5,648
|
|
|
8,193
|
|
|
(31
|
)
|
||
Financing activities
|
|
(9,318
|
)
|
|
(12,628
|
)
|
|
(26
|
)
|
||
Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents
|
|
(28
|
)
|
|
(15
|
)
|
|
83
|
|
||
Net increase in Cash and cash equivalents and restricted cash and cash equivalents
|
|
$
|
612
|
|
|
$
|
1,381
|
|
|
(56
|
)
|
•
|
a reduction in net unrealized gains on equity securities; and
|
•
|
the non-recurrence of a non-cash gain on the contribution of Pfizer’s allogeneic CAR T developmental program assets, in connection with our contribution agreement with Allogene in 2018,
|
•
|
net gains on foreign exchange contracts hedging a portion of our forecasted intercompany inventory sales (that fixes the cost of inventory sold later to customers).
|
•
|
the issuance of long-term debt of $4.9 billion in the first six months of 2019, with no corresponding issuance of debt in the first six months of 2018 (see Notes to Condensed Consolidated Financial Statements––Note 7D. Financial Instruments: Long-Term Debt); and
|
•
|
$4.3 billion net proceeds raised from short-term borrowings in the first six months of 2019, compared to net proceeds of $0.9 billion in the first six months of 2018,
|
•
|
higher purchases of common stock of $2.8 billion;
|
•
|
higher repayments on long-term debt of $2.3 billion; and
|
•
|
lower proceeds from the exercise of stock options of $226 million.
|
•
|
the working capital requirements of our operations, including our R&D activities;
|
•
|
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 Condensed 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)
|
The increase in selected net financial liabilities was primarily driven by the decrease in short-term investments used for cash needs and the net increase in long-term debt. We retain a strong financial liquidity position as a result of our net cash provided by operating activities, our high-quality financial asset portfolio and access to capital markets. For additional information, see the “Credit Ratings” section of this MD&A.
|
(c)
|
The decrease in working capital was primarily due to:
|
•
|
a decrease in Short-term investments mainly driven by the financing requirements for share repurchase activities, dividend payments, capital expenditures and debt repayment, partially offset by operating cash flow generation, cash from employee stock option exercises and the long-term debt issuance;
|
•
|
an increase in short-term borrowings as a result of the issuance of commercial paper; and
|
•
|
the net impact of foreign currency exchange,
|
•
|
the timing of accruals, cash receipts and payments in the ordinary course of business; and
|
•
|
an increase in inventory related to increases for certain products to meet targeted levels in the normal course of business, including inventory build for supply recovery and market demand.
|
(d)
|
Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury stock).
|
(a)
|
Represents shares purchased pursuant to an accelerated share repurchase agreement with GS&Co. entered into on February 7, 2019, as well as other share repurchases. For additional information, see Notes to Condensed Consolidated Financial Statements––Note 12C. Contingencies and Certain Commitments: Certain Commitments and “Unregistered Sales of Equity Securities and Use of Proceeds––Issuer Purchases of Equity Securities” in Part II, Item 2 of this Quarterly Report on Form 10-Q.
|
(b)
|
Represents shares purchased pursuant to an accelerated share repurchase agreement with Citibank entered into on March 12, 2018, as well as other share repurchases. For additional information, see Notes to Consolidated Financial Statements––Note 12. Equity in our 2018 Financial Report.
|
Recently Issued Accounting Standards, Not Adopted as of June 30, 2019
|
||||
Standard/Description
|
|
Effective Date
|
|
Effect on the Financial Statements or Other Significant Matters
|
In June 2016, the FASB issued new guidance on accounting for credit losses of financial instruments. The new guidance replaces the probable initial recognition threshold for incurred loss estimates in current GAAP with a methodology that reflects expected credit loss estimates.
|
|
January 1, 2020. Earlier application is permitted as of fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.
|
|
We are assessing the impact of the provisions of this new guidance on our consolidated financial statements. This standard includes our financial instruments, such as accounts receivable, and investments that are generally of high credit quality.
Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss.
The new guidance requires us to identify, analyze, document and support new methodologies for quantifying expected credit loss estimates for our financial instruments, using information such as historical experience and current economic conditions, plus the use of reasonable supportable forecast information.
|
In January 2017, the FASB issued new guidance for goodwill impairment testing. The new guidance eliminates the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. Under the new guidance the goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, although it cannot exceed the total amount of goodwill allocated to that reporting unit.
|
|
January 1, 2020. Earlier application is permitted.
|
|
We do not expect this new guidance to have a material impact on our consolidated financial statements.
|
In August 2018, the FASB issued new guidance related to customers’ accounting for implementation costs incurred in a cloud computing arrangement that is considered a service contract. The new guidance aligns the requirements for capitalizing implementation costs in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance can be adopted either prospectively or retrospectively.
|
|
January 1, 2020. Earlier application is permitted.
|
|
We are assessing the impact of the provisions of this new guidance on our consolidated financial statements. We do not expect this new guidance to have a material impact on our consolidated financial statements.
|
In November 2018, the FASB issued new guidance clarifying the interaction between the accounting guidance for collaboration agreements and revenue from contracts with customers.
|
|
January 1, 2020. Earlier application is permitted
|
|
We have assessed the impact of the provisions of this new guidance and do not expect it will have a material impact on our consolidated financial statements.
|
•
|
the outcome of R&D activities, including, without limitation, the ability to meet anticipated pre-clinical or clinical endpoints, commencement and/or completion dates for our pre-clinical or clinical trials, regulatory submission dates, regulatory approval dates and/or launch dates, as well as the possibility of unfavorable pre-clinical and clinical trial results, including the possibility of unfavorable new clinical data and further analyses of existing clinical data;
|
•
|
the risk we may not be able to successfully address all of the comments received from regulatory authorities such as the FDA or the EMA, or obtain approval from regulators, which will depend on myriad factors, including such regulator making a determination as to whether a product’s benefits outweigh its known risks and a determination of the product’s efficacy; regulatory decisions impacting labeling, manufacturing processes, safety and/or other matters; and recommendations by technical or advisory committees, such as ACIP, that may impact the use of our vaccines;
|
•
|
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, changes in product labeling, and/or new or increased concerns about the side effects or efficacy of, a product that could affect its availability or commercial potential, such as the update to the U.S. prescribing information for Xeljanz and Xeljanz extended release;
|
•
|
the success of external business-development activities, including the ability to identify and execute on potential business development opportunities, the ability to satisfy the conditions to closing of announced transactions in the anticipated time frame or at all, the ability to realize the anticipated benefits of any such transactions, and the potential need to obtain additional equity or debt financing to pursue these opportunities, which could result in increased leverage and impact our credit ratings;
|
•
|
competitive developments, including the impact on our competitive position of new product entrants, in-line branded products, generic products, private label products, biosimilars and product candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates;
|
•
|
the implementation by the FDA and regulatory authorities in certain countries of an abbreviated legal pathway to approve biosimilar products, which could subject our biologic products to competition from biosimilar products, with attendant competitive pressures, after the expiration of any applicable exclusivity period and patent rights;
|
•
|
risks related to our ability to develop and launch biosimilars, including risks associated with “at risk” launches, defined as the marketing of a product by Pfizer before the final resolution of litigation (including any appeals) brought by a third party alleging that such marketing would infringe one or more patents owned or controlled by the third party, and access challenges for our biosimilar products where our product may not receive appropriate formulary access or remains in a disadvantaged position relative to the innovator product;
|
•
|
the ability to meet competition from generic, branded and biosimilar products after the loss or expiration 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, including delays caused by natural events, such as hurricanes; supply shortages at our facilities; and legal or regulatory actions, such as warning letters, suspension of manufacturing, seizure of product, injunctions, debarment, voluntary recall of a product or failure to secure product approvals;
|
•
|
trade buying patterns;
|
•
|
the impact of existing and future legislation and regulatory provisions on product exclusivity;
|
•
|
trends toward managed care and healthcare cost containment, and our ability to obtain or maintain timely or adequate pricing or favorable formulary placement for our products;
|
•
|
the impact of any significant spending reductions or cost controls affecting Medicare, Medicaid or other publicly funded or subsidized health programs or changes in the tax treatment of employer-sponsored health insurance that may be implemented;
|
•
|
the impact of any U.S. healthcare reform or legislation, including any replacement, repeal, modification or invalidation of some or all of the provisions of the U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act;
|
•
|
U.S. federal or state legislation or regulatory action and/or policy efforts affecting, among other things, pharmaceutical product pricing, intellectual property, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs; patient out-of-pocket costs for medicines, manufacturer prices and/or price increases that could result in new mandatory rebates and discounts or other pricing restrictions; general budget control actions; the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries; revisions to reimbursement of biopharmaceuticals under government programs; restrictions on U.S. direct-to-consumer advertising; limitations on interactions with healthcare professionals; or 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; as well as pricing pressures for our products as a result of highly competitive insurance markets;
|
•
|
legislation or regulatory action in markets outside the U.S., including China, affecting pharmaceutical product pricing, intellectual property, reimbursement or access, including, in particular, continued government-mandated reductions in prices and access restrictions for certain biopharmaceutical products to control costs in those markets;
|
•
|
the exposure of our operations outside the U.S. to possible capital and exchange controls, economic conditions, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, as well as political unrest, unstable governments and legal systems and inter-governmental disputes;
|
•
|
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 and settlement costs;
|
•
|
the risk of an adverse decision or settlement and the adequacy of reserves related to legal proceedings, including patent litigation, such as claims that our patents are invalid and/or do not cover the product of the generic drug manufacturer or where one or more third parties seeks damages and/or injunctive relief to compensate for alleged infringement of its patents by our commercial or other activities, product liability and other product-related litigation, including personal injury, consumer, off-label promotion, securities, antitrust and breach of contract claims, commercial, environmental, government investigations, employment and other legal proceedings, including various means for resolving asbestos litigation, as well as tax issues;
|
•
|
the risk that our currently pending or future patent applications may not result in issued patents, or be granted on a timely basis, or any patent-term extensions that we seek may not be granted on a timely basis, if at all;
|
•
|
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, including further clarifications and/or interpretations of the TCJA enacted in 2017;
|
•
|
any significant issues involving our largest wholesale distributors, 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;
|
•
|
the end result of any negotiations between the U.K. government and the EU regarding the terms of the U.K.’s exit from the EU, which could have implications on our research, commercial and general business operations in the U.K. and the EU, including the approval and supply of our products;
|
•
|
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 or regulatory requirements and industry standards;
|
•
|
any significant issues that may arise related to our joint ventures and other third-party business arrangements;
|
•
|
changes in U.S. generally accepted accounting principles;
|
•
|
further clarifications and/or changes in interpretations of existing laws and regulations, or changes in laws and regulations, in the U.S. and other countries;
|
•
|
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; the related risk that our allowance for doubtful accounts may not be adequate; and the risks related to volatility of our income due to changes in the market value of equity investments;
|
•
|
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;
|
•
|
the impact of purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items;
|
•
|
the impact of acquisitions, divestitures, restructurings and internal reorganizations, including the reorganization of our commercial operations into three businesses, which became effective at the beginning of the company’s 2019 fiscal year, the transaction with GSK to combine our respective consumer healthcare businesses into a new consumer healthcare joint venture and our recently-announced agreement to combine Upjohn with Mylan, as well as any other corporate strategic initiatives, and cost-reduction and productivity initiatives, each of which requires upfront costs but may fail to yield anticipated benefits and may result in unexpected costs or organizational disruption;
|
•
|
the impact of product recalls, withdrawals and other unusual items;
|
•
|
the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
|
•
|
risks related to internal control over financial reporting;
|
•
|
risks and uncertainties related to acquisitions, such as the acquisition of Array, including, among other things, the ability to realize the anticipated benefits of those acquisitions, including the possibility that the expected cost savings and/or accretion from certain of those acquisitions will not be realized or will not be realized within the expected time frame; the risk that the businesses will not be integrated successfully; disruption from the transactions making it more difficult to maintain business and operational relationships; risks related to our ability to grow revenues for certain acquired products; significant transaction costs; and unknown liabilities;
|
•
|
risks and uncertainties related to our transaction with GSK, which combined our respective consumer healthcare businesses into a new consumer healthcare joint venture, including, among other things, risks related to the ability to realize the anticipated benefits of the transaction, including the possibility that the expected benefits and cost synergies from the transaction will not be realized or will not be realized within the expected time period, the risk that the businesses will not be integrated successfully, the possibility that a future separation of the joint venture may not occur, disruption from the transaction making it more difficult to maintain business and operational relationships, negative effects of the transaction on the market price of Pfizer’s common stock and on Pfizer’s operating results, significant transaction costs, unknown liabilities, the risk of litigation and/or regulatory actions related to the transaction, other business effects, including the effects of industry, market, economic, political or regulatory conditions, future exchange and interest rates, changes in tax and other laws, regulations, rates and policies, future business combinations or disposals and competitive developments; and
|
•
|
risks and uncertainties related to our recently-announced agreement to combine Upjohn with Mylan to create a new global pharmaceutical company, including, among other things, risks related to the satisfaction of the conditions to closing the transaction (including the failure to obtain necessary shareholder and regulatory approvals) in the anticipated timeframe or at all and the possibility that the transaction does not close, risks related to the ability to realize the anticipated benefits of the transaction, including the possibility that the expected benefits and cost synergies of the combined company from the proposed transaction will not be realized or will not be realized within the expected time period, the risk that the businesses will not be integrated successfully, disruption from the transaction making it more difficult to maintain business and operational relationships, negative effects of the announcement or the consummation of the proposed transaction on the market price of Pfizer’s common stock, Pfizer’s credit ratings and/or on Pfizer’s or the combined company’s operating results, significant transaction costs, unknown liabilities, the risk of litigation and/or regulatory actions related to the proposed transaction, other business effects, including the effects of industry, market, economic, political or regulatory conditions, future exchange and interest rates, changes in tax and other laws, regulations, rates and policies, future business combinations or disposals and competitive developments.
|
Period
|
|
Total Number of
Shares Purchased(b)
|
|
|
Average Price
Paid per Share(b)
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan(a)
|
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan(a)
|
|
||
April 1, 2019 through April 28, 2019
|
|
36,804
|
|
|
$
|
42.50
|
|
|
—
|
|
|
$
|
5,292,881,709
|
|
April 29, 2019 through May 26, 2019
|
|
47,184
|
|
|
$
|
39.68
|
|
|
—
|
|
|
$
|
5,292,881,709
|
|
May 27, 2019 through June 30, 2019
|
|
32,081
|
|
|
$
|
42.09
|
|
|
—
|
|
|
$
|
5,292,881,709
|
|
Total
|
|
116,069
|
|
|
$
|
41.24
|
|
|
—
|
|
|
|
(a)
|
Our December 2017 $10 billion share repurchase program was exhausted in the first quarter of 2019. In December 2018, the Board of Directors authorized a new $10 billion share repurchase program to be utilized over time (the 2018 program) and share repurchases commenced thereunder in the first quarter of 2019. On February 7, 2019, we entered into an accelerated share repurchase agreement with GS&Co. to repurchase approximately $6.8 billion of our common stock. For additional information, see the Notes to Condensed Consolidated Financial Statements––Note 12C. Contingencies and Certain Commitments: Certain Commitments. At June 30, 2019, our remaining share-purchase authorization under the 2018 program was approximately $5.3 billion.
|
(b)
|
These columns represent (i) 111,118 shares of common stock surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of awards under our long-term incentive programs and (ii) the open market purchase by the trustee of 4,951 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.
|
|
-
|
Amendment No. 6 to the Pfizer Supplemental Savings Plan
|
|
|
-
|
Accountants’ Acknowledgment.
|
|
|
-
|
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
-
|
Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
-
|
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.
|
|
|
-
|
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.
|
|
|
Exhibit 101:
|
|
|
|
EX-101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
EX-101.SCH
EX-101.CAL
EX-101.LAB
EX-101.PRE
EX-101.DEF
|
|
Inline XBRL Taxonomy Extension Schema
Inline XBRL Taxonomy Extension Calculation Linkbase
Inline XBRL Taxonomy Extension Label Linkbase
Inline XBRL Taxonomy Extension Presentation Linkbase
Inline XBRL Taxonomy Extension Definition Document
|
|
Exhibit 104
|
|
Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
Pfizer Inc.
|
|
|
(Registrant)
|
|
|
|
|
|
|
Dated:
|
August 8, 2019
|
/s/ Loretta V. Cangialosi
|
|
|
Loretta V. Cangialosi, Senior Vice President and
Controller
(Principal Accounting Officer and
Duly Authorized Officer)
|
1.
|
New Appendix H is added to read as follows:
|
1.
|
As of the Closing Date, Transferred GSK Employees are no longer eligible to participate in the Plan.
|
2.
|
For purposes of any Matching Contribution paid with respect to the 2019 plan year, the Closing Date for each such Transferred GSK Employee shall be considered to have occurred on the last day of the applicable quarter of 2019.
|
3.
|
For purposes of the Retirement Savings Contribution paid with respect to the 2019 plan year, the Closing Date for each such Transferred GSK Employee shall be considered to have occurred on the last day of 2019.
|
4.
|
Effective as of the Closing Date, any unvested Retirement Savings Contributions in the Accounts of Transferred GSK Employees shall be vested.
|
/s/ ALBERT BOURLA
|
|
|
Albert Bourla
|
|
|
Chief Executive Officer
|
|
/s/ FRANK A. D'AMELIO
|
|
|
Frank A. D'Amelio
|
|
|
Chief Financial Officer, Executive Vice President,
Business Operations and Global Supply
|
|
/s/ ALBERT BOURLA
|
|
|
Albert Bourla
|
|
|
Chief Executive Officer
|
|
|
|
|
|
August 8, 2019
|
|
|
/s/ FRANK A. D'AMELIO
|
|
|
Frank A. D'Amelio
|
|
|
Chief Financial Officer, Executive Vice President,
Business Operations and Global Supply
|
||
|
|
|
August 8, 2019
|
|
|