UNITED STATES SECURITIES AND EXCHANGE COMMISSION
|
Washington, D.C. 20549
|
|
|
|
(Mark One)
|
|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
13-5315170
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $.05 par value
|
PFE
|
New York Stock Exchange
|
0.000% Notes due 2020
|
PFE20A
|
New York Stock Exchange
|
0.250% Notes due 2022
|
PFE22
|
New York Stock Exchange
|
1.000% Notes due 2027
|
PFE27
|
New York Stock Exchange
|
Securities registered pursuant to Section 12(g) of the Act: None
|
DOCUMENTS INCORPORATED BY REFERENCE
|
|
Portions of the 2019 Annual Report to Shareholders
|
Parts I, II and IV
|
Portions of the Proxy Statement for the 2020 Annual Meeting of Shareholders
|
Part III
|
TABLE OF CONTENTS
|
|
Page
|
|
|
|
|
|
|
Pfizer Inc.
|
2019 Form 10-K
|
i
|
DEFINED TERMS
|
Pfizer Inc.
|
2019 Form 10-K
|
ii
|
PMDA
|
Pharmaceuticals and Medical Device Agency in Japan
|
QCE
|
quality consistency evaluation in China
|
R&D
|
research and development
|
SEC
|
U.S. Securities and Exchange Commission
|
Teva
|
Teva Pharmaceuticals USA, Inc.
|
U.K.
|
United Kingdom
|
U.S.
|
United States
|
VAI
|
Voluntary Action Indicated
|
VBP
|
volume-based procurement in China
|
WRDM
|
Worldwide Research, Development and Medical
|
Pfizer Inc.
|
2019 Form 10-K
|
iii
|
|
|
|
|
|
|
|
|
|
Pfizer Biopharmaceuticals Group (Biopharma) (~$39.4 Billion 2019 Revenues) /
Upjohn (~$10.2 Billion 2019 Revenues) / Consumer Healthcare
|
|
|
|
Internal Medicine, Oncology, Hospital, Vaccines, Inflammation & Immunology and Rare Disease
|
|
|
|
20 Globally Recognized Brands and the Greenstone generics platform in Upjohn
|
|
|
|
>125 Countries Where We Sell Our Products
|
|
|
|
|
|
|
|
~$8.7 Billion 2019 R&D Expense
|
|
|
|
42 Manufacturing Sites Worldwide Operated by PGS;
7 Manufacturing Sites Worldwide Operated by Upjohn
|
|
|
|
Pfizer Inc.
|
2019 Form 10-K
|
iv
|
PART I
|
ITEM 1.
|
BUSINESS
|
•
|
License Agreement with Akcea Therapeutics, Inc.––In October 2019, we entered into a worldwide exclusive licensing agreement for AKCEA-ANGPTL3-LRx, an investigational antisense therapy being developed to treat patients with certain cardiovascular and metabolic diseases, with Akcea, a majority-owned affiliate of Ionis. The transaction closed in November 2019 and we made an upfront payment of $250 million to Akcea and Ionis.
|
•
|
Formation of a New Consumer Healthcare Joint Venture—On July 31, 2019, we completed 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 to the joint venture, we received a 32% equity stake in the new company and GSK owns the remaining 68%.
|
•
|
Acquisition of Array BioPharma Inc.—On July 30, 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. The total fair value of the consideration transferred for Array was approximately $11.2 billion ($10.9 billion, net of cash acquired).
|
•
|
Agreement to Combine Upjohn with Mylan N.V.—On July 29, 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company, Viatris. 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, immediately thereafter, combined with Mylan. Pfizer shareholders would own 57% of the combined new company, and former 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 satisfaction of other customary closing conditions, including receipt of regulatory approvals.
|
Pfizer Inc.
|
2019 Form 10-K
|
1
|
•
|
Acquisition of Therachon Holding AG—On July 1, 2019, we acquired all the remaining shares of Therachon Holding AG, 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.
|
Pfizer Inc.
|
2019 Form 10-K
|
2
|
Pfizer Inc.
|
2019 Form 10-K
|
3
|
Therapeutic Area
|
Description
|
Key Products
|
Internal Medicine
|
Includes innovative brands from two therapeutic areas, Cardiovascular Metabolic and Pain, as well as regional brands.
|
Eliquis, Chantix/Champix and Premarin family
|
Oncology
|
Includes innovative oncology brands of biologics, small molecules, immunotherapies, and biosimilars across a wide range of cancers.
|
Ibrance, Sutent, Xtandi, Xalkori, Inlyta and Braftovi + Mektovi
|
Hospital
|
Includes our global portfolio of sterile injectable and anti-infective medicines, as well as Pfizer CentreOne, our contract manufacturing and active pharmaceutical ingredient sales operation.
|
Sulperazon, Medrol, Vfend and Zithromax
|
Vaccines
|
Includes innovative vaccines brands across all ages—infants, adolescents and adults—in pneumococcal disease, Meningococcal disease and tick-borne encephalitis, with a pipeline focus on healthcare-acquired infections and maternal health.
|
Prevnar 13/Prevenar 13 (pediatric/adult), FSME-IMMUN, Nimenrix and Trumenba
|
Inflammation and Immunology
|
Includes innovative brands and biosimilars for chronic immune and inflammatory diseases.
|
Xeljanz, Enbrel (outside the U.S. and Canada), Inflectra and Eucrisa
|
Rare Disease
|
Includes innovative brands for a number of therapeutic areas with rare diseases, including amyloidosis, hemophilia, and endocrine diseases.
|
Vyndaqel/Vyndamax, BeneFIX, Genotropin and Refacto AF/Xyntha
|
Pfizer Inc.
|
2019 Form 10-K
|
4
|
•
|
Cardiovascular (Lipitor, Norvasc and Revatio);
|
•
|
Pain and neurology (Lyrica and Celebrex);
|
•
|
Psychiatry (Effexor, Zoloft and Xanax);
|
•
|
Urology (Viagra); and
|
•
|
Ophthalmology (Xalatan/Xalacom).
|
Pfizer Inc.
|
2019 Form 10-K
|
5
|
•
|
delivering a pipeline of highly differentiated medicines and vaccines where Pfizer has a unique opportunity to bring the most important new therapies to patients in need;
|
•
|
advancing our capabilities that can position Pfizer for long-term R&D leadership; and
|
•
|
advancing new models for partnerships with creativity, flexibility and urgency to deliver innovation to patients as quickly as possible.
|
•
|
Oncology;
|
•
|
Inflammation and Immunology;
|
•
|
Vaccines;
|
•
|
Internal Medicine;
|
•
|
Rare Diseases; and
|
•
|
Hospital.
|
•
|
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 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, Digital and Finance. 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, within WRDM, 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 Upjohn supports the off-patent branded and generic established medicines and helps to develop product enhancements, new indications and new market registrations for these medicines.
|
Pfizer Inc.
|
2019 Form 10-K
|
6
|
•
|
Our Global Product Development (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.
|
Pfizer Inc.
|
2019 Form 10-K
|
7
|
Pfizer Inc.
|
2019 Form 10-K
|
8
|
Pfizer Inc.
|
2019 Form 10-K
|
9
|
Drug
|
|
U.S. Basic Product Patent Expiration Year
|
|
Major EU Basic Product Patent Expiration Year
|
|
Japan Basic Product Patent Expiration Year
|
Lyrica
|
|
2019(1)
|
|
2014(2)
|
|
2022(3)
|
Chantix/Champix
|
|
2020
|
|
2021
|
|
2022
|
Sutent
|
|
2021
|
|
2022
|
|
2024
|
Ibrance
|
|
2023
|
|
2028
|
|
2028
|
Vyndaqel/Vyndamax
|
|
2024
|
|
2026
|
|
2026
|
Inlyta
|
|
2025
|
|
2025
|
|
2025
|
Xeljanz
|
|
2025
|
|
2028(4)
|
|
2025
|
Prevnar 13/Prevenar 13
|
|
2026
|
|
__(5)
|
|
2029
|
Eliquis(6)
|
|
2026
|
|
2026
|
|
2026
|
Xtandi(7)
|
|
2027
|
|
*(7)
|
|
*(7)
|
Xalkori
|
|
2029
|
|
2027
|
|
2028
|
Besponsa
|
|
2030
|
|
2028
|
|
2028(8)
|
Braftovi(9)
|
|
2031
|
|
*(9)
|
|
*(9)
|
Mektovi(9)
|
|
2031(10)
|
|
*(9)
|
|
*(9)
|
Bavencio(11)
|
|
2033
|
|
2032
|
|
2033
|
(1)
|
Lyrica lost patent protection in the U.S. in June 2019 and multi-source generic competition began in July 2019.
|
(2)
|
Lyrica regulatory exclusivity in the EU expired in July 2014.
|
(3)
|
Lyrica is covered by a Japanese method-of-use patent which expires in 2022. The patent is currently subject to an invalidation action.
|
(4)
|
Xeljanz EU expiry is provided by regulatory exclusivity.
|
(5)
|
The EU patent that covers the combination of the 13 serotype conjugates of Prevenar 13 was revoked following an opposition and has now been withdrawn. There are other EU patents and pending applications covering the formulation, various aspects of the manufacturing process, and the combination of serotype conjugates of Prevenar 13 that remain in force.
|
(6)
|
Eliquis was developed and is being commercialized in collaboration with BMS.
|
(7)
|
Xtandi is being developed and commercialized in collaboration with Astellas, which has exclusive commercialization rights for Xtandi outside the U.S. Pfizer receives tiered royalties as a percentage of international Xtandi net sales.
|
(8)
|
Besponsa Japan expiry is provided by regulatory exclusivity.
|
(9)
|
Pfizer has exclusive rights to Braftovi and Mektovi in the U.S. The Pierre Fabre Group has exclusive rights to commercialize both products in Europe and Ono Pharmaceutical Co., Ltd. has exclusive rights to commercialize both products in Japan. Pfizer receives royalties from The Pierre Fabre Group and Ono Pharmaceutical Co., Ltd. on sales of Braftovi and Mektovi outside the U.S.
|
(10)
|
The U.S. expiration date in the table for Mektovi is provided by a method-of-use patent.
|
(11)
|
Bavencio is being developed and commercialized in collaboration with Merck KGaA.
|
Pfizer Inc.
|
2019 Form 10-K
|
10
|
(MILLIONS OF DOLLARS)
|
|
|
|
|
|
Product Revenues in Markets Impacted
|
||||||||||
Products
|
|
Key Dates(a)
|
|
Markets Impacted
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Viagra(b)
|
|
June 2013
May 2014 December 2017 |
|
Major European markets
Japan U.S. |
|
$
|
134
|
|
|
$
|
274
|
|
|
$
|
850
|
|
Lyrica(c)
|
|
July 2014
June 2019
|
|
Major European markets
U.S.
|
|
2,208
|
|
|
3,852
|
|
|
3,901
|
|
|||
Pristiq(d)
|
|
March 2017
|
|
U.S.
|
|
42
|
|
|
71
|
|
|
133
|
|
|||
Chantix(e)
|
|
November 2020
|
|
U.S.
|
|
899
|
|
|
838
|
|
|
742
|
|
(a)
|
Unless otherwise noted, “Key Dates” indicate patent-based expiration dates.
|
(b)
|
As a result of a patent litigation settlement, Teva launched a generic version of Viagra in the U.S. in December 2017.
|
(c)
|
Lyrica lost patent protection in the U.S. in June 2019 and multi-source generic competition began in July 2019.
|
(d)
|
As a result of a patent litigation settlement with several generic manufacturers, generic versions of Pristiq launched in the U.S. in March 2017.
|
(e)
|
The basic product patent for Chantix in the U.S. will expire in November 2020, which includes the FDA’s grant of pediatric exclusivity that extended the period of market exclusivity in the U.S. for Chantix for an additional six months from May 2020.
|
Pfizer Inc.
|
2019 Form 10-K
|
11
|
Pfizer Inc.
|
2019 Form 10-K
|
12
|
Pfizer Inc.
|
2019 Form 10-K
|
13
|
Pfizer Inc.
|
2019 Form 10-K
|
14
|
Pfizer Inc.
|
2019 Form 10-K
|
15
|
Pfizer Inc.
|
2019 Form 10-K
|
16
|
Pfizer Inc.
|
2019 Form 10-K
|
17
|
Pfizer Inc.
|
2019 Form 10-K
|
18
|
Pfizer Inc.
|
2019 Form 10-K
|
19
|
•
|
environment-related capital expenditures— $31 million; and
|
•
|
other environment-related expenses— $136 million.
|
Pfizer Inc.
|
2019 Form 10-K
|
20
|
ITEM 1A.
|
RISK FACTORS
|
Pfizer Inc.
|
2019 Form 10-K
|
21
|
Pfizer Inc.
|
2019 Form 10-K
|
22
|
Pfizer Inc.
|
2019 Form 10-K
|
23
|
Pfizer Inc.
|
2019 Form 10-K
|
24
|
Pfizer Inc.
|
2019 Form 10-K
|
25
|
Pfizer Inc.
|
2019 Form 10-K
|
26
|
Pfizer Inc.
|
2019 Form 10-K
|
27
|
Pfizer Inc.
|
2019 Form 10-K
|
28
|
Pfizer Inc.
|
2019 Form 10-K
|
29
|
Pfizer Inc.
|
2019 Form 10-K
|
30
|
Pfizer Inc.
|
2019 Form 10-K
|
31
|
Pfizer Inc.
|
2019 Form 10-K
|
32
|
Pfizer Inc.
|
2019 Form 10-K
|
33
|
Pfizer Inc.
|
2019 Form 10-K
|
34
|
Pfizer Inc.
|
2019 Form 10-K
|
35
|
Pfizer Inc.
|
2019 Form 10-K
|
36
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
Pfizer Inc.
|
2019 Form 10-K
|
37
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Albert Bourla
|
|
58
|
|
Chairman of the Board since January 2020 and Chief Executive Officer since January 2019. Chief Operating Officer from January 2018 until December 2018; Group President, Pfizer Innovative Health from June 2016 until December 2017; Group President, Global Innovative Pharma Business (responsible for Vaccines, Oncology and Consumer Healthcare since 2014) from February 2016 until June 2016. President and General Manager of Established Products Business Unit from December 2010 until December 2013. Our Director since February 2018. Board member of Pharmaceutical Research and Manufacturers of America (PhRMA). Board member of the Pfizer Foundation, which promotes access to quality healthcare. Member of the Board of Directors of the Partnership for New York City and Catalyst, a global non-profit organization accelerating progress for the advancement of women into leadership.
|
|
|
|
|
|
Frank A. D’Amelio
|
|
62
|
|
Chief Financial Officer, Executive Vice President, Business Operations and Global Supply since November 2018. Executive Vice President, Business Operations and Chief Financial Officer from December 2010 until October 2018. Senior Vice President and Chief Financial Officer from September 2007 until December 2010. Director of Zoetis Inc. and Humana Inc. and Chair of the Humana Inc. Board of Directors’ Audit Committee. Director of the Independent College Fund of New Jersey.
|
|
|
|
|
|
Mikael Dolsten
|
|
61
|
|
Chief Scientific Officer, President, Worldwide Research, Development and Medical since January 2019. President of Worldwide Research and Development from December 2010 until December 2018. Senior Vice President; President of Worldwide Research and Development from May 2010 until December 2010. Senior Vice President; President of Pfizer BioTherapeutics Research & Development Group from October 2009 until May 2010. He was Senior Vice President of Wyeth and President, Wyeth Research from June 2008 until October 2009. Director of Karyopharm Therapeutics Inc. Chairman of the Translational Advisory Board of Apple Tree Partners from 2016 to 2017.
|
|
|
|
|
|
Lidia Fonseca
|
|
51
|
|
Chief Digital and Technology Officer, Executive Vice President since January 2019. Chief Information Officer and Senior Vice President of Quest Diagnostics Incorporated from 2014 to 2018. Senior Vice President of Laboratory Corporation of America Holdings from 2008 until March 2013. Director of Tegna, Inc.
|
|
|
|
|
|
Angela Hwang
|
|
54
|
|
Group President, Pfizer Biopharmaceuticals Group since January 2019. Group President, Pfizer Essential Health from January 2018 until December 2018. Global President, Pfizer Inflammation and Immunology from January 2016 until December 2017. Regional Head, U.S. Vaccines from January 2014 until December 2015. Vice President, Emerging Markets for the Primary Care business from September 2011 until December 2013. Vice President, U.S. Brands business within Essential Health from October 2009 until August 2011.
|
|
|
|
|
|
Rady A. Johnson
|
|
58
|
|
Chief Compliance, Quality and Risk Officer, Executive Vice President since January 2019. Executive Vice President, Chief Compliance and Risk Officer from December 2013 until December 2018. Senior Vice President and Associate General Counsel from October 2006 until December 2013.
|
|
|
|
|
|
Douglas M. Lankler
|
|
54
|
|
General Counsel, Executive Vice President since December 2013. Corporate Secretary from January 2014 until February 2014. Executive Vice President, Chief Compliance and Risk Officer from February 2011 until December 2013. Executive Vice President, Chief Compliance Officer from December 2010 until February 2011. Senior Vice President and Chief Compliance Officer from January 2010 until December 2010. Senior Vice President, Deputy General Counsel and Chief Compliance Officer from August 2009 until January 2010.
|
|
|
|
|
|
Pfizer Inc.
|
2019 Form 10-K
|
38
|
Name
|
|
Age
|
|
Position
|
A. Rod MacKenzie
|
|
60
|
|
Chief Development Officer, Executive Vice President since June 2016. Senior Vice President, Chief Development Officer from March 2016 until June 2016. Group Senior Vice President and Head, Pharma Therapeutics Research and Development from 2010 until March 2016. Dr. MacKenzie represents Pfizer as a member of the Board of Directors of ViiV Healthcare Limited, TransCelerate Biopharma Inc. and the National Health Council.
|
|
|
|
|
|
Dawn Rogers
|
|
55
|
|
Chief Human Resources Officer, Executive Vice President since January 2019. Executive Vice President, Worldwide Human Resources from June 2018 until December 2018. Senior Vice President, Human Resources for the Chief Operating Officer from November 2017 until May 2018. Senior Vice President of Human Resources for Pfizer Essential Health, Global Product Development, and the Legal and Compliance Divisions from 2016 until November 2017. Senior Vice President of Human Resources for the Global Innovative Pharma Business from 2013 until 2016. Senior Vice President of Human Resources for the Primary Care Business Unit from 2011 until 2013. Senior Vice President of Human Resources for Worldwide Research and Development from 2008 until 2011.
|
|
|
|
|
|
Sally Susman
|
|
58
|
|
Chief Corporate Affairs Officer, Executive Vice President since January 2019. Executive Vice President, Corporate Affairs (formerly Policy, External Affairs and Communications) from December 2010 until December 2018. Senior Vice President, Policy, External Affairs and Communications from December 2009 until December 2010. Director of WPP plc.
|
|
|
|
|
|
John D. Young
|
|
55
|
|
Chief Business Officer, Group President since January 2019. Group President, Pfizer Innovative Health from January 2018 until December 2018. Group President, Pfizer Essential Health from June 2016 until December 2017; Group President, Global Established Pharma Business from January 2014 until June 2016. President and General Manager, Pfizer Primary Care from June 2012 until December 2013. Primary Care Business Unit’s Regional President for Europe and Canada from 2009 until June 2012. Director of Johnson Controls International plc. Mr. Young represents Pfizer as a member of the Board of Directors of the GSK Consumer Healthcare joint venture.
|
Pfizer Inc.
|
2019 Form 10-K
|
39
|
PART II
|
ITEM 5.
|
MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period
|
Total Number
of Shares
Purchased(b)
|
|
Average Price
Paid per
Share(b)
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan
|
|
Approximate Dollar Value of Shares
that May Yet Be Purchased
Under the Plan(a)
|
||||||
September 30, 2019 through October 27, 2019
|
32,848
|
|
$
|
36.06
|
|
|
—
|
|
|
$
|
5,292,881,709
|
|
|
October 28, 2019 through November 30, 2019
|
13,399
|
|
$
|
37.50
|
|
|
—
|
|
|
$
|
5,292,881,709
|
|
|
December 1, 2019 through December 31, 2019
|
67,767
|
|
$
|
38.86
|
|
|
—
|
|
|
$
|
5,292,881,709
|
|
|
Total
|
114,014
|
|
|
$
|
37.89
|
|
|
—
|
|
|
|
(a)
|
For additional information, see the Notes to Consolidated Financial Statements––Note 12. Equity in our 2019 Financial Report, which is incorporated by reference.
|
(b)
|
These columns represent (i) 108,367 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 5,647 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.
|
Pfizer Inc.
|
2019 Form 10-K
|
40
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Pfizer Inc.
|
2019 Form 10-K
|
41
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
Pfizer Inc.
|
2019 Form 10-K
|
42
|
PART III
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Pfizer Inc.
|
2019 Form 10-K
|
43
|
PART IV
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
•
|
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
|
•
|
Consolidated Statements of Income
|
•
|
Consolidated Statements of Comprehensive Income
|
•
|
Consolidated Balance Sheets
|
•
|
Consolidated Statements of Equity
|
•
|
Consolidated Statements of Cash Flows
|
•
|
Notes to Consolidated Financial Statements
|
•
|
Selected Quarterly Financial Data (Unaudited)
|
|
|
|
|
Stock and Asset Purchase Agreement, dated December 19, 2018, by and among Pfizer Inc., GlaxoSmithKline plc and GlaxoSmithKline Consumer Healthcare Holdings Limited is incorporated by reference from our 2018 Annual Report on Form 10-K (File No. 001-03619). (Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby agrees to supplementally furnish to the Securities and Exchange Commission upon request any omitted schedule or exhibit to the Stock and Asset Purchase Agreement.)
|
|
|
|
|
|
Business Combination Agreement, dated July 29, 2019, by and among Pfizer Inc., Upjohn Inc., Utah Acquisition Sub Inc., Mylan N.V., Mylan I B.V. and Mylan II B.V. is incorporated by reference from our Current Report on Form 8-K filed on July 29, 2019 (File No. 001-03619). (Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby agrees to supplementally furnish to the Securities and Exchange Commission upon request any omitted schedule or exhibit to the Business Combination Agreement.)
|
|
|
|
|
|
Separation and Distribution Agreement, dated as of July 29, 2019, by and between Pfizer Inc. and Upjohn Inc. is incorporated by reference from our Current Report on Form 8-K filed on July 29, 2019 (File No. 001-03619). (Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby agrees to supplementally furnish to the Securities and Exchange Commission upon request any omitted schedule or exhibit to the Separation and Distribution Agreement.)
|
|
|
|
|
*2.4
|
|
Amendment No. 1 to the Separation and Distribution Agreement, dated as of February 18, 2020, by and between Pfizer Inc. and Upjohn Inc.
|
|
|
|
|
Our Restated Certificate of Incorporation dated April 12, 2004, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended March 28, 2004 (File No. 001-03619).
|
|
|
|
|
|
Amendment dated May 1, 2006 to Restated Certificate of Incorporation dated April 12, 2004, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended July 2, 2006 (File No. 001-03619).
|
|
|
|
|
|
Our By-laws, as amended December 18, 2017, are incorporated by reference from our Current Report on Form 8-K filed on December 21, 2017 (File No. 001-03619).
|
|
|
|
|
|
Indenture, dated as of January 30, 2001, between us and The Chase Manhattan Bank, is incorporated by reference from our Current Report on Form 8-K filed on January 30, 2001 (File No. 001-03619).
|
|
|
|
|
|
First Supplemental Indenture, dated as of March 24, 2009, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended June 28, 2009 (File No. 001-03619).
|
|
|
|
|
Pfizer Inc.
|
2019 Form 10-K
|
44
|
|
Second Supplemental Indenture, dated as of June 2, 2009, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K filed on June 3, 2009 (File No. 001-03619).
|
|
|
|
|
|
Third Supplemental Indenture, dated as of June 3, 2013, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K filed on June 3, 2013 (File No. 001-03619).
|
|
|
|
|
|
Fourth Supplemental Indenture, dated as of May 15, 2014, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on May 15, 2014 (File No. 001-03619).
|
|
|
|
|
|
Fifth Supplemental Indenture, dated as of October 5, 2015, between us and The Bank of New York Mellon (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank)), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on October 6, 2015 (File No. 001-03619).
|
|
|
|
|
|
Sixth Supplemental Indenture, dated as of June 3, 2016, between us and The Bank of New York Mellon (formerly The Bank of New York (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank (National Association)))), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on June 3, 2016 (File No. 001-03619).
|
|
|
|
|
|
Seventh Supplemental Indenture, dated as of November 21, 2016, between us and The Bank of New York Mellon (formerly The Bank of New York (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank (National Association)))), as trustee, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on November 21, 2016 (File No. 001-03619).
|
|
|
|
|
|
Eighth Supplemental Indenture, dated as of March 17, 2017, among us, The Bank of New York Mellon (formerly The Bank of New York (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank (successor to the Chase Manhattan Bank (National Association)))), as trustee, and The Bank of New York Mellon, London Branch, as paying agent, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on March 17, 2017 (File No. 001-03619).
|
|
|
|
|
|
Ninth Supplemental Indenture, dated as of March 6, 2017, among us, The Bank of New York Mellon (formerly The Bank of New York (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank (National Association)))), as trustee, and The Bank of New York Mellon, London Branch, as paying agent and calculation agent, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on March 6, 2017 (File No. 001-03619).
|
|
|
|
|
|
Tenth Supplemental Indenture, dated as of December 19, 2017, among us, The Bank of New York Mellon (formerly The Bank of New York (successor to JPMorgan Chase Bank, N.A. (formerly JPMorgan Chase Bank, formerly The Chase Manhattan Bank (National Association)))), as trustee, and The Bank of New York Mellon, London Branch, as paying agent, to Indenture dated as of January 30, 2001, is incorporated by reference from our Current Report on Form 8-K report filed on December 19, 2017 (File No. 001-03619).
|
|
|
|
|
|
Indenture, dated as of April 10, 1992, between Wyeth (formerly American Home Products Corporation) and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as trustee, is incorporated by reference from Wyeth’s Registration Statement on Form S-3 (File No. 33-57339), filed on January 18, 1995.
|
|
|
|
|
|
Supplemental Indenture, dated as of October 13, 1992, between Wyeth and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as trustee, is incorporated by reference from Wyeth’s Registration Statement on Form S-3 (File No. 33-57339), filed on January 18, 1995.
|
|
|
|
|
|
Fifth Supplemental Indenture, dated as of December 16, 2003, between Wyeth and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as trustee, is incorporated by reference from Wyeth’s 2003 Annual Report on Form 10-K (File No. 001-01225).
|
|
|
Sixth Supplemental Indenture, dated as of November 14, 2005, between Wyeth and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as trustee, is incorporated by reference from Wyeth’s Current Report on Form 8-K filed on November 15, 2005 (File No. 001-01225).
|
|
|
|
|
|
Seventh Supplemental Indenture, dated as of March 27, 2007, between Wyeth and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as trustee, is incorporated by reference from Wyeth’s Current Report on Form 8-K filed on March 28, 2007 (File No. 001-01225).
|
|
|
|
|
|
Eighth Supplemental Indenture, dated as of October 30, 2009, between Wyeth, us and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, formerly The Chase Manhattan Bank), as trustee, to Indenture dated as of April 10, 1992 (as amended on October 13, 1992), is incorporated by reference from our Current Report on Form 8-K filed on November 3, 2009 (File No. 001-03619).
|
|
|
|
|
|
Indenture, dated as of September 7, 2018, between us and The Bank of New York Mellon, as trustee, is incorporated by reference from our Current Report on Form 8-K filed on September 7, 2018 (File No. 001-03619).
|
|
|
|
|
Pfizer Inc.
|
2019 Form 10-K
|
45
|
|
First Supplemental Indenture, dated as of September 7, 2018, between us and The Bank of New York Mellon, as trustee, is incorporated by reference from our Current Report on Form 8-K filed on September 7, 2018 (File No. 001-03619).
|
|
|
|
|
|
Second Supplemental Indenture, dated as of March 11, 2019, between us and The Bank of New York Mellon, as trustee, is incorporated by reference from our Current Report on Form 8-K filed on March 11, 2019 (File No. 001-03619).
|
|
|
|
|
*4.21
|
|
Description of Pfizer’s Securities.
|
|
|
|
4.22
|
|
Except as set forth in Exhibits 4.1-21 above, the instruments defining the rights of holders of long-term debt securities of the Company and its subsidiaries have been omitted.1
|
|
|
|
|
2001 Stock and Incentive Plan is incorporated by reference from our Proxy Statement for the 2001 Annual Meeting of Shareholders (File No. 001-03619).
|
|
|
|
|
|
Pfizer Inc. 2004 Stock Plan, as Amended and Restated is incorporated by reference from our 2011 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Pfizer Inc. 2014 Stock Plan is incorporated by reference from our Proxy Statement for the 2014 Annual Meeting of Shareholders (File No. 001-03619).
|
|
|
|
|
|
Form of Acknowledgment and Consent and Summary of Key Terms for Stock Option Grants, RSUs and TSRUs is incorporated by reference from our 2017 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Form of Executive Grant Letter is incorporated by reference from our 2015 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Pfizer Consolidated Supplemental Pension Plan for United States and Puerto Rico Employees is incorporated by reference from our 2017 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 1 to the Pfizer Consolidated Supplemental Pension Plan for United States and Puerto Rico Employees is incorporated by reference from our 2018 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Pfizer Supplemental Savings Plan is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended April 3, 2016 (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 1 to the Pfizer Supplemental Savings Plan (Amended and Restated as of January 1, 2016), is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended October 1, 2017 (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 2 to the Pfizer Supplemental Savings Plan is incorporated by reference from our 2017 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 3 to the Pfizer Supplemental Savings Plan is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended September 30, 2018 (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 4 to the Pfizer Supplemental Savings Plan is incorporated by reference from our 2018 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 5 to the Pfizer Supplemental Savings Plan is incorporated by reference from our 2018 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 6 to the Pfizer Supplemental Savings Plan is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended June 30, 2019 (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 7 to the Pfizer Supplemental Savings Plan.
|
|
|
|
|
|
Pfizer Inc. Global Performance Plan is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended October 1, 2017 (File No. 001-03619).
|
|
|
|
|
|
Executive Annual Incentive Plan is incorporated by reference from our 2012 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amended and Restated Deferred Compensation Plan is incorporated by reference from our 2012 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment to Amended and Restated Deferred Compensation Plan, dated June 20, 2013, is incorporated by reference from our 2013 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
||
|
Amendment No. 2 to Amended and Restated Deferred Compensation Plan, dated April 27, 2016, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended July 3, 2016 (File No. 001-03619).
|
|
|
|
|
|
Wyeth 2005 (409A) Deferred Compensation Plan (frozen as of January 2012), together with all material Amendments, is incorporated by reference from our 2013 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
1 We agree to furnish to the Securities and Exchange Commission, upon request, a copy of each instrument with respect to issuances of long-term debt of the Company and its subsidiaries.
|
Pfizer Inc.
|
2019 Form 10-K
|
46
|
|
Amended and Restated Wyeth Supplemental Employee Savings Plan (effective as of January 1, 2005 and frozen as of January 2012), together with all material Amendments is incorporated by reference from our 2011 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment to Amended and Restated Wyeth Supplemental Employee Savings Plan, dated June 20, 2013, is incorporated by reference from our 2013 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
The form of Indemnification Agreement with each of our non-employee Directors is incorporated by reference from our 1996 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
The form of Indemnification Agreement with each of the Named Executive Officers identified in our Proxy Statement for the 2019 Annual Meeting of Shareholders is incorporated by reference from our 1997 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Letter to Frank A. D’Amelio regarding replacement pension benefit dated August 22, 2007 is incorporated by reference from our Current Report on Form 8-K filed on August 22, 2007 (File No. 001-03619).
|
|
|
|
|
|
Pfizer Inc. Executive Severance Plan is incorporated by referenced from our Current Report on Form 8-K filed on February 20, 2009 (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 1 to the Pfizer Inc. Executive Severance Plan is incorporated by reference from our 2018 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Amendment No. 2 to the Pfizer Inc. Executive Severance Plan.
|
|
|
|
|
|
Annual Retainer Unit Award Plan (for Non-Employee Directors) (frozen as of March 1, 2006) as amended, is incorporated by reference from our 2008 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors, as amended, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended September 28, 2014 (File No. 001-03619).
|
|
|
|
|
|
Form of Special Award Letter Agreement is incorporated by reference from our Current Report on Form 8-K filed on October 28, 2009 (File No. 001-03619).
|
|
|
|
|
|
Offer Letter to G. Mikael Dolsten, dated April 6, 2009, is incorporated by reference from our Quarterly Report on Form 10-Q for the period ended April 3, 2011 (File No. 001-03619).
|
|
|
|
|
|
Form of Special Performance-Based Incentive Award Letter is incorporated by reference from our 2017 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Form of Special Performance-Based Incentive Grant Letter is incorporated by reference from our 2017 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Pfizer Inc. 2019 Stock Plan is incorporated by reference from our Proxy Statement for the 2019 Annual Meeting of Shareholders (File No. 001-03619).
|
|
|
Time Sharing Agreement, dated December 17, 2018, by and between Pfizer Inc. and Ian C. Read is incorporated by reference from our 2018 Annual Report on Form 10-K (File No. 001-03619).
|
|
|
|
|
|
Consulting Agreement, dated December 13, 2019, between Ian C. Read and Pfizer Inc. is incorporated by reference from our Current Report on Form 8-K filed on December 19, 2019 (File No. 001-03619).
|
|
|
|
|
*13
|
|
Portions of the 2019 Financial Report, which, except for those sections incorporated by reference, are furnished solely for the information of the SEC and are not to be deemed “filed.”
|
|
|
|
*21
|
|
Subsidiaries of the Company.
|
|
|
|
*23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
*24
|
|
Power of Attorney (included as part of signature page).
|
|
|
|
*31.1
|
|
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*31.2
|
|
Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32.1
|
|
Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32.2
|
|
Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
Exhibit 101:
|
|
|
*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.
|
|
|
|
*101.SCH
|
|
Inline XBRL Taxonomy Extension Schema
|
|
|
|
*101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
Pfizer Inc.
|
2019 Form 10-K
|
47
|
|
|
|
*101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|
|
|
*101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
*101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Document
|
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.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Pfizer Inc.
|
2019 Form 10-K
|
48
|
|
Pfizer Inc.
|
||
|
|
|
|
Dated: February 27, 2020
|
By:
|
|
/S/ MARGARET M. MADDEN
|
|
|
|
Margaret M. Madden
Senior Vice President and Corporate Secretary
Chief Governance Counsel
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/ ALBERT BOURLA
Albert Bourla
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
February 25, 2020
|
|
|
|
|
|
/S/ FRANK A. D’AMELIO
Frank A. D’Amelio
|
|
Chief Financial Officer, Executive Vice President, Business Operations and Global Supply (Principal Financial Officer)
|
|
February 25, 2020
|
|
|
|
|
|
/S/ LORETTA V. CANGIALOSI
Loretta V. Cangialosi
|
|
Senior Vice President—Controller
(Principal Accounting Officer)
|
|
February 25, 2020
|
|
|
|
|
|
/S/ RONALD E. BLAYLOCK
Ronald E. Blaylock |
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ W. DON CORNWELL
W. Don Cornwell |
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ JOSEPH J. ECHEVARRIA
Joseph J. Echevarria
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ SCOTT GOTTLIEB
Scott Gottlieb
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ HELEN H. HOBBS
Helen H. Hobbs
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/S/ JAMES M. KILTS
James M. Kilts
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ DAN R. LITTMAN
Dan R. Littman
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ SHANTANU NARAYEN
Shantanu Narayen
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ SUZANNE NORA JOHNSON
Suzanne Nora Johnson
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
/S/ JAMES C. SMITH
James C. Smith
|
|
Director
|
|
February 25, 2020
|
|
|
|
|
|
PFIZER INC.
|
|
By:
|
|
|
/s/ DOUGLAS E. GIORDANO
|
|
Name: Douglas E. Giordano
|
|
Title: Senior Vice President, Worldwide Business Development
|
|
|
UPJOHN INC.
|
|
By:
|
|
|
/s/ BRYAN A. SUPRAN
|
|
Name: Bryan A. Supran
|
|
Title: Vice President
|
•
|
limit the right of stockholders to call special meetings of stockholders to holders of at least 10% of the total number of shares of stock entitled to vote on the matter to be brought before the proposed special meeting;
|
•
|
authorize our Board of Directors to establish one or more series of preferred stock without stockholder approval;
|
•
|
authorize the Board to issue dividends in the form of stock purchase or similar rights, including rights that would have the effect of making an attempt to acquire us more costly;
|
•
|
grant to the Board of Directors, and not to the stockholders, the sole power to set the number of Directors;
|
•
|
require that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing; and
|
•
|
subject to the rights of the holders of any one or more series of preferred stock then outstanding, allow our Directors, and not our stockholders, to fill vacancies on our Board of
|
•
|
100% of the principal amount of the redemption notes being redeemed on the redemption date; and
|
•
|
the sum of the present values of the remaining scheduled payments of principal and interest on the redemption notes being redeemed on that redemption date (not including the amount, if any, of accrued and unpaid interest to, but excluding, the redemption date) discounted to the redemption date on an annual basis at a rate equal to the sum of the Comparable Government Bond Rate plus (a) 15 basis points in the case of the 2022 notes and (b) 15 basis points in the case of the 2027 notes;
|
•
|
It is incorporated under the laws of Luxembourg and licensed as a bank and professional depositary. Clearstream holds securities for its participating organizations and facilitates the clearance and settlement of securities transactions among its participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates.
|
•
|
Clearstream provides to its participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries.
|
•
|
Clearstream has established an electronic bridge with the Euroclear Operator to facilitate the settlement of trades between the nominees of Clearstream and Euroclear.
|
•
|
As a registered bank in Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector.
|
•
|
Clearstream customers are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with, a Clearstream participant, either directly or indirectly.
|
•
|
It was created in 1968 to hold securities for its participants and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash.
|
•
|
Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries.
|
•
|
Euroclear is operated by the Euroclear Operator. All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator.
|
•
|
Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related operating procedures of Euroclear, and applicable Belgian law (collectively, the “Terms and Conditions”). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The
|
•
|
Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.
|
•
|
the common depositary notifies us that it is no longer willing or able to act as a depositary for such global notes or ceases to be a clearing agency registered under the Exchange Act and we fail to appoint a successor common depositary within 90 days;
|
•
|
an event of default has occurred and is continuing and the common depositary requests the issuance of certificated notes; or
|
•
|
we determine not to have the notes represented by a global note.
|
•
|
we fail to make the principal or any premium payment on any note of such series when due;
|
•
|
we fail to make any sinking fund payment for 60 days after payment was due by the terms of any note of such series;
|
•
|
we fail to pay interest on any note of such series for 60 days after payment was due;
|
•
|
we fail to perform any other covenant in the indenture and this failure continues for 90 days after we receive written notice of it; or
|
•
|
we, or a court, take certain actions relating to the bankruptcy, insolvency or reorganization of our company.
|
•
|
the holders act before the trustee has obtained a judgment or decree for payment of the money due;
|
•
|
we have paid or deposited with the trustee a sum sufficient to pay overdue interest and overdue principal other than the accelerated interest and principal; and
|
•
|
we have cured or the holders have waived all Events of Default, other than the non-payment of accelerated principal and interest with respect to notes of that series, as provided in the indenture.
|
•
|
a failure to pay the principal of, and premium, if any, or interest on any security or in the payment of any sinking fund installment; or
|
•
|
a covenant or provision that cannot be modified or amended without the consent of each holder of outstanding notes of that series.
|
•
|
we will be discharged from our obligations with respect to the notes of such series; or
|
•
|
we will no longer be under any obligation to comply with certain restrictive covenants under the indenture, and certain events of default will no longer apply to us.
|
Pfizer Inc. 2019 Financial Report
|
|
|
|
|
2018 Financial Report
|
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
|
2019 Financial Report
|
This Financial Report for the fiscal year ended December 31, 2019, which was filed as Exhibit 13 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019
|
2019 Form 10-K
|
Annual Report on Form 10-K for the fiscal year ended December 31, 2019
|
ABO
|
Accumulated benefit obligation
|
ACA (Also referred to as U.S. Healthcare Legislation)
|
U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act
|
ACIP
|
Advisory Committee on Immunization Practices
|
ALK
|
anaplastic lymphoma kinase
|
Allergan
|
Allergan plc
|
Alliance revenues
|
Revenues from alliance agreements under which we co-promote products discovered or developed by other companies or us
|
Allogene
|
Allogene Therapeutics, Inc.
|
Akcea
|
Akcea Therapeutics, Inc.
|
AMPA
|
α-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid
|
Anacor
|
Anacor Pharmaceuticals, Inc.
|
AOCI
|
Accumulated Other Comprehensive Income
|
Array
|
Array BioPharma Inc.
|
Astellas
|
Astellas Pharma Inc., Astellas US LLC and Astellas Pharma US, Inc.
|
ATM-AVI
|
aztreonam-avibactam
|
Bain Capital
|
Bain Capital Private Equity and Bain Capital Life Sciences
|
Bamboo
|
Bamboo Therapeutics, Inc.
|
Biogen
|
Biogen Inc.
|
Biopharma
|
Pfizer Biopharmaceuticals Group
|
BMS
|
Bristol-Myers Squibb Company
|
BRCA
|
BReast CAncer susceptibility gene
|
CAR T
|
chimeric antigen receptor T cell
|
CDC
|
U.S. Centers for Disease Control and Prevention
|
Cellectis
|
Cellectis S.A.
|
Cerevel
|
Cerevel Therapeutics, LLC
|
CHMP
|
Committee for Medicinal Products for Human Use
|
CIAS
|
cognitive impairment associated with schizophrenia
|
Citibank
|
Citibank, N.A.
|
CML
|
chronic myelogenous leukemia
|
Developed Markets
|
U.S., Western Europe, Japan, Canada, South Korea, Australia, Scandinavian countries, Finland and New Zealand
|
EC
|
European Commission
|
EGFR
|
epidermal growth factor receptor
|
EH
|
Essential Health
|
EMA
|
European Medicines Agency
|
Emerging Markets
|
Includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Eastern Europe, Africa, the Middle East, Central Europe and Turkey
|
EPS
|
earnings per share
|
EU
|
European Union
|
FASB
|
Financial Accounting Standards Board
|
FDA
|
U.S. Food and Drug Administration
|
GAAP
|
Generally Accepted Accounting Principles
|
GIST
|
gastrointestinal stromal tumors
|
GPD
|
Global Product Development organization
|
GSK
|
GlaxoSmithKline plc
|
GS&Co.
|
Goldman, Sachs & Co. LLC
|
HER2-
|
human epidermal growth factor receptor 2-negative
|
hGH-CTP
|
human growth hormone
|
HIS
|
Hospira Infusion Systems
|
Hisun
|
Zhejiang Hisun Pharmaceuticals Co., Ltd.
|
Hisun Pfizer
|
Hisun Pfizer Pharmaceuticals Company Limited
|
Hospira
|
Hospira, Inc.
|
HR+
|
hormone receptor-positive
|
IBT
|
Income before tax
|
ICU Medical
|
ICU Medical, Inc.
|
IH
|
Innovative Health
|
2019 Financial Report
|
|
i
|
|
Ionis
|
Ionis Pharmaceuticals, Inc.
|
InnoPharma
|
InnoPharma, Inc.
|
IPR&D
|
in-process research and development
|
IRC
|
Internal Revenue Code
|
IRS
|
U.S. Internal Revenue Service
|
IV
|
intravenous
|
Janssen
|
Janssen Biotech, Inc.
|
J&J
|
Johnson & Johnson
|
JV
|
joint venture
|
King
|
King Pharmaceuticals LLC (formerly King Pharmaceuticals, Inc.)
|
LDL
|
low density lipoprotein
|
LEP
|
Legacy Established Products
|
LIBOR
|
London Interbank Offered Rate
|
Lilly
|
Eli Lilly and Company
|
LOE
|
loss of exclusivity
|
MCC
|
Merkel Cell Carcinoma
|
MCO
|
Managed Care Organization
|
mCRC
|
metastatic colorectal cancer
|
Medivation
|
Medivation, Inc.
|
Merck
|
Merck & Co., Inc.
|
Meridian
|
Meridian Medical Technologies, Inc.
|
Moody’s
|
Moody’s Investors Service
|
Mylan
|
Mylan N.V.
|
NAV
|
Net asset value
|
NDA
|
new drug application
|
NovaQuest
|
NovaQuest Co-Investment Fund II, L.P. or NovaQuest Co-Investment Fund V, L.P., as applicable
|
NSCLC
|
non-small cell lung cancer
|
NYSE
|
New York Stock Exchange
|
OPKO
|
OPKO Health, Inc.
|
OTC
|
over-the-counter
|
PARP
|
poly ADP ribose polymerase
|
PBM
|
Pharmacy Benefit Manager
|
PBO
|
Projected benefit obligation
|
Pharmacia
|
Pharmacia Corporation
|
PPS
|
Portfolio Performance Shares
|
PP&E
|
Property, plant & equipment
|
PSAs
|
Performance Share Awards
|
PsA
|
psoriatic arthritis
|
PTSRUs
|
Performance Total Shareholder Return Units
|
PTUs
|
Profit Units
|
RA
|
rheumatoid arthritis
|
RCC
|
renal cell carcinoma
|
R&D
|
research and development
|
ROU
|
right of use
|
RPI
|
RPI Finance Trust
|
RSUs
|
Restricted Stock Units
|
Sandoz
|
Sandoz, Inc., a division of Novartis AG
|
SEC
|
U.S. Securities and Exchange Commission
|
Servier
|
Les Laboratoires Servier SAS
|
SFJ
|
SFJ Pharmaceuticals
|
Shire
|
Shire International GmbH
|
SI&A
|
Selling, informational and administrative
|
S&P
|
Standard and Poor’s
|
SIP
|
Sterile Injectable Pharmaceuticals
|
Tax Cuts and Jobs Act or TCJA
|
Legislation commonly referred to as the U.S. Tax Cuts and Jobs Act of 2017
|
Teuto
|
Laboratório Teuto Brasileiro S.A.
|
Therachon
|
Therachon Holding AG
|
TSR
|
Total Shareholder Return
|
TSRUs
|
Total Shareholder Return Units
|
UC
|
ulcerative colitis
|
U.K.
|
United Kingdom
|
U.S.
|
United States
|
VBP
|
volume-based procurement in China
|
ViiV
|
ViiV Healthcare Limited
|
WRDM
|
Worldwide Research, Development and Medical
|
ii
|
|
2019 Financial Report
|
|
●
|
|
Beginning on page 2
|
||||
|
|
This section provides information about the following: Financial Highlights; Our Business; Our Business Development Initiatives; Our 2019 Performance; Our Operating Environment; The Global Economic Environment; Our Strategy; and Our Financial Guidance for 2020.
|
|
|||
●
|
|
Beginning on page 12
|
||||
|
|
This section discusses those accounting policies and estimates that we consider important in understanding our consolidated financial statements. For additional discussion of our accounting policies, see Notes to Consolidated Financial Statements—Note 1. Basis of Presentation and Significant Accounting Policies.
|
|
|||
●
|
|
Beginning on page 16
|
||||
|
|
This section includes the following sub-sections:
|
|
|||
|
○
|
Beginning on page 16
|
||||
|
|
This sub-section provides a high-level summary of our revenues, including revenue deductions.
|
|
|||
|
○
|
Beginning on page 18
|
||||
|
|
This sub-section provides an overview of revenues by segment and geography.
|
|
|||
|
○
|
Beginning on page 21
|
||||
|
|
This sub-section provides an overview of several of our biopharmaceutical products.
|
|
|||
|
○
|
Beginning on page 26
|
||||
|
|
This sub-section provides an overview of important biopharmaceutical product developments.
|
|
|||
|
○
|
Beginning on page 30
|
||||
|
|
This sub-section provides a discussion about our costs and expenses.
|
|
|||
|
○
|
Beginning on page 33
|
||||
|
|
This sub-section provides a discussion of items impacting our tax provisions.
|
|
|||
|
○
|
Beginning on page 34
|
||||
|
|
This sub-section provides a discussion of an alternative view of performance used by management.
|
|
|||
●
|
|
Beginning on page 39
|
||||
|
|
This section provides a discussion of the performance of each of our operating segments.
|
|
|||
●
|
|
Beginning on page 48
|
||||
|
|
This section provides an analysis of our consolidated cash flows for the three years ended December 31, 2019.
|
|
|||
●
|
|
Beginning on page 49
|
||||
|
|
This section provides an analysis of selected measures of our liquidity and of our capital resources as of December 31, 2019 and December 31, 2018, as well as a discussion of our outstanding debt and other commitments that existed as of December 31, 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 54
|
||||
|
|
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 55
|
||||
|
|
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 Financial Review.
|
|
2019 Financial Report
|
|
1
|
|
2019 Total Revenues––$51.8 billion
|
2019 Net Cash Flow from Operations––$12.6 billion
|
A decrease of 4% compared to 2018
|
A decrease of 20% compared to 2018
|
2019 Reported Diluted EPS––$2.87
|
2019 Adjusted Diluted EPS (Non-GAAP)––$2.95*
|
An increase of 54% compared to 2018
|
An increase of 1% compared to 2018
|
*
|
For additional information regarding Adjusted diluted EPS (which is a non-GAAP financial measure), including reconciliations of certain GAAP reported to non-GAAP adjusted information, see the “Non-GAAP Financial Measure (Adjusted Income)” section of this Financial Review. We have revised 2018 and 2017 Adjusted diluted EPS to conform with our 2019 presentation (see the “Non-GAAP Financial Measure (Adjusted Income)––Certain Significant Items)” section of this Financial Review).
|
2
|
|
2019 Financial Report
|
|
References to developed and emerging markets in this Financial Review include:
|
||
Developed markets
|
|
U.S., Western Europe, Japan, Canada, South Korea, Australia, Scandinavian countries, Finland and New Zealand
|
|
|
|
Emerging markets (include, but are not limited to)
|
|
Asia (excluding Japan and South Korea), Latin America, Eastern Europe, Africa, the Middle East, Central Europe and Turkey
|
•
|
License Agreement with Akcea Therapeutics, Inc.––In October 2019, we entered into a worldwide exclusive licensing agreement for AKCEA-ANGPTL3-LRx, an investigational antisense therapy being developed to treat patients with certain cardiovascular and metabolic diseases, with Akcea, a majority-owned affiliate of Ionis. The transaction closed in November 2019 and we made an upfront payment of $250 million to Akcea and Ionis, which was recorded in Research and development expenses in our fiscal fourth quarter of 2019.
|
•
|
Formation of a New Consumer Healthcare Joint Venture––On July 31, 2019, we completed 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 accordance with our domestic and international reporting periods, our financial results, and our Consumer Healthcare segment’s operating results, for 2019 reflect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations. Assets and liabilities associated with our Consumer Healthcare business were reclassified as held for sale in the consolidated balance sheet as of December 31, 2018. See Note 1A. Basis of Presentation and Significant Accounting Policies: Basis of Presentation.
|
•
|
Acquisition of Array BioPharma Inc.––On July 30, 2019, we acquired Array for $48 per share in cash. The total fair value of the consideration transferred for Array was approximately $11.2 billion ($10.9 billion, net of cash acquired). Our financial statements for 2019 reflect the assets, liabilities, operating results and cash flows of Array, commencing from the acquisition date.
|
•
|
Agreement to Combine Upjohn with Mylan N.V.––On July 29, 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company, Viatris. 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, immediately thereafter, combined with Mylan. Pfizer shareholders would own 57% of the combined new company, and former 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 satisfaction of other customary closing conditions, including receipt of regulatory approvals. We expect to incur costs of approximately $500 million in connection with fully separating Upjohn, inclusive of $145 million incurred in 2019. Such charges will include costs and expenses related to separation of legal entities and anticipated transaction costs.
|
•
|
Acquisition of Therachon Holding AG––On July 1, 2019, we acquired all the remaining shares of 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. The total fair value of the consideration transferred for Therachon was approximately $322 million. Our financial statements for 2019 reflect the assets, liabilities, operating results and cash flows of Therachon, commencing from the acquisition date and, in accordance with our international reporting period, reflect five months of Therachon operations and cash flows.
|
•
|
Sale of Hospira Infusion Systems Net Assets to ICU Medical, Inc.––On February 3, 2017, we completed the sale of Pfizer’s global infusion systems net assets, HIS, to ICU Medical for up to approximately $900 million, composed of cash and contingent cash consideration, ICU Medical common stock (all of which we sold during 2018) and seller financing. The operating results of HIS are included in our consolidated statement of income through February 2, 2017 and, therefore, our financial results for 2017 reflect one month of HIS domestic operations and two months of HIS international operations. Our financial results for 2019 and 2018 do not reflect any contribution from HIS global operations.
|
•
|
Acquisition of AstraZeneca’s Small Molecule Anti-Infectives Business––On December 22, 2016, which fell in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca’s small molecule anti-infectives
|
2019 Financial Report
|
|
3
|
|
*
|
LOE generally pertains to period-over-period revenue impacts for products across our portfolios experiencing patent expirations or loss of regulatory exclusivity in certain developed markets.
|
**
|
On July 31, 2019, we completed 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. For additional information, see Notes to Consolidated Financial Statements––Note 2. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements.
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz and Prevnar 13/Prevenar 13. See the “Analysis of the Consolidated Statements of Income––Revenues––Selected Product Discussion" section of this Financial Review for product analysis information.
|
4
|
|
2019 Financial Report
|
|
(a)
|
See the “Costs and Expenses––Cost of Sales” section of this Financial Review.
|
(b)
|
See the “Costs and Expenses––Selling, Informational and Administrative (SI&A) Expenses” section of this Financial Review.
|
(c)
|
See the “Costs and Expenses––Research and Development (R&D) Expenses” section of this Financial Review.
|
(d)
|
See the “Costs and Expenses––Amortization of Intangible Assets” section of this Financial Review.
|
(e)
|
See the “Costs and Expenses––Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” and Notes to Consolidated Financial Statements––Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
(f)
|
See the Notes to Consolidated Financial Statements––Note 4. Other (Income)/Deductions—Net.
|
2019 Financial Report
|
|
5
|
|
6
|
|
2019 Financial Report
|
|
•
|
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.
|
•
|
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 Chinese renminbi, the Japanese yen, the Canadian dollar, the U.K. pound 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. Following the General Election in December 2019, the new U.K. parliament approved the negotiated withdrawal agreement and the U.K. left the EU on January 31, 2020 with status quo arrangements through a transition period scheduled to end on December 31, 2020. The transition period will be used to negotiate future trade arrangements between the U.K. and the EU. The consequences of the U.K. leaving the EU and the terms of the future trading relationship continue to be highly 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, after the end of the transition period. 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. Pfizer has substantially completed its preparations for Brexit, having made the changes necessary to meet relevant regulatory requirements in the EU and the U.K., through the transition period and afterwards, especially in the regulatory, research, manufacturing and supply chain areas. Between 2018 and 2021, we expect to spend up to approximately $60 million in one-time costs to make these adaptations.
|
•
|
Public health epidemics or outbreaks could adversely impact our business. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. In particular, the continued spread of the coronavirus globally could adversely impact our operations, including among others, our manufacturing and supply chain, sales and marketing and clinical trial operations and could have an adverse impact on our business and our financial results.
|
2019 Financial Report
|
|
7
|
|
•
|
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.
|
8
|
|
2019 Financial Report
|
|
•
|
delivering a pipeline of highly differentiated medicines and vaccines where Pfizer has a unique opportunity to bring the most important new therapies to patients in need;
|
•
|
advancing our capabilities that can position Pfizer for long-term R&D leadership; and
|
•
|
advancing new models for partnerships with creativity, flexibility and urgency to deliver innovation to patients as quickly as possible.
|
•
|
Oncology;
|
•
|
Inflammation and Immunology;
|
•
|
Vaccines;
|
•
|
Internal Medicine;
|
•
|
Rare Diseases; and
|
•
|
Hospital.
|
2019 Financial Report
|
|
9
|
|
•
|
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, creating an estimated 450 new jobs over the next several years; and
|
◦
|
in August 2019, we announced an additional half billion dollar investment for the construction of a state-of-the-art gene therapy manufacturing facility in Sanford, North Carolina. This facility is anticipated to support our continuing investment in gene therapy R&D, similar to Pfizer’s Chapel Hill and Kit Creek, North Carolina R&D sites. This facility would expand our presence in North Carolina. The expanded facility is projected to add approximately 300 new jobs.
|
•
|
We made a $500 million voluntary contribution to the U.S. Pfizer Consolidated Pension Plan in February 2018.
|
•
|
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.
|
10
|
|
2019 Financial Report
|
|
2020 financial guidance for Total Company is presented below(a), (b):
|
|
Revenues
|
$48.5 to $50.5 billion
|
Adjusted cost of sales as a percentage of revenues
|
19.9% to 20.9%
|
Adjusted selling, informational and administrative expenses
|
$12.0 to $13.0 billion
|
Adjusted research and development expenses
|
$8.1 to $8.5 billion
|
Adjusted other (income)/deductions
|
Approximately $800 million of income
|
Effective tax rate on adjusted income
|
Approximately 15.0%
|
Adjusted diluted EPS
|
$2.82 to $2.92
|
(a)
|
The 2020 financial guidance for Total Company reflects the following:
|
•
|
Reflects a full year of revenue and expense contributions from Biopharma and Upjohn, and excludes any impact from the pending Upjohn combination with Mylan.
|
•
|
Does not assume the completion of any business development transactions not completed as of December 31, 2019, including any one-time upfront payments associated with such transactions.
|
•
|
Includes Pfizer’s pro rata share of the Consumer Healthcare joint venture anticipated earnings, which is recorded in Adjusted other (income)/deductions on a one-quarter lag. Therefore, 2020 financial guidance for Adjusted other (income)/deductions and Adjusted diluted EPS reflects Pfizer’s share of the joint venture’s earnings that were generated in the fourth quarter of 2019 (to be recorded by Pfizer in the first quarter of 2020) as well as Pfizer’s share of the joint venture’s projected earnings during the first three quarters of 2020.
|
•
|
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 as of mid-January 2020. Reflects the anticipated unfavorable impact of approximately $0.2 billion on revenues and approximately $0.01 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 2019.
|
•
|
Guidance for adjusted diluted EPS assumes diluted weighted-average shares outstanding of approximately 5.65 billion shares, which assumes no share repurchases in 2020.
|
(b)
|
For additional information regarding 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 Financial Review.
|
(a)
|
Financial guidance for New Pfizer reflects a full-year 2020 pro-forma view of the company assuming the pending Upjohn combination with Mylan was completed at the beginning of 2020. Therefore, New Pfizer reflects contributions from the Biopharma business as it is presently being managed, which excludes contributions from Pfizer’s Meridian subsidiary and the Pfizer-Mylan strategic collaboration in Japan (Mylan-Japan). Pfizer’s Meridian subsidiary and Mylan-Japan were managed by Pfizer’s Biopharma business in 2019. Financial guidance for New Pfizer also includes the full-year effect of the following items that assume the completion of the Upjohn combination with Mylan: (i) $12 billion of net proceeds from Upjohn to be retained by Pfizer, which Pfizer will use to repay its own existing indebtedness; and (ii) other transaction-related items, such as income from transition services agreements between Pfizer and Viatris. In addition, 2020 financial guidance for New Pfizer Adjusted IBT Margin and Adjusted diluted EPS reflects Pfizer’s share of the earnings generated by the Consumer Healthcare joint venture in fourth-quarter 2019 (to be recorded by Pfizer in first-quarter 2020) as well as Pfizer’s share of the Consumer Healthcare joint venture’s projected earnings during the first three quarters of 2020.
|
(b)
|
For additional information regarding 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 Financial Review.
|
(c)
|
Adjusted income before tax margin (Adjusted IBT margin) is defined as revenue less the sum of Adjusted cost of sales, Adjusted SI&A expenses, Adjusted R&D expenses, Adjusted amortization of intangible assets and Adjusted other (income)/deductions as a percentage of revenue. Adjusted IBT Margin is presented because management believes this performance measure supplements investors’ and other readers’ understanding and assessment of the financial performance of New Pfizer. Adjusted IBT margin is not, and should not be viewed as, a substitute for U.S. GAAP income before tax margin.
|
(d)
|
Does not include our planned $1.25 billion voluntary contribution to the U.S. qualified pension plans in the second half of 2020.
|
2019 Financial Report
|
|
11
|
|
2020 financial guidance for Upjohn is presented below(a):
|
|
Revenues
|
$8.0 to $8.5 billion
|
Adjusted EBITDA(b)
|
$3.8 to $4.2 billion
|
(a)
|
Financial guidance for Upjohn assumes a full-year 2020 contribution from the Upjohn business as it is presently being managed, which includes contributions from Pfizer’s Meridian subsidiary and Mylan-Japan.
|
(b)
|
Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) is defined as reported U.S. GAAP net income/(loss), and its components, adjusted for interest expense, provision/(benefit) for taxes on income/(loss) and depreciation and amortization, further adjusted to exclude purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as gains on the completion of joint venture transactions, restructuring charges, legal charges or net gains and losses on equity securities, but which management does not believe are reflective of ongoing core operations). Adjusted EBITDA is presented because management believes this performance measure supplements investors’ and other readers’ understanding and assessment of the financial performance of Upjohn. Adjusted EBITDA as defined is not a measurement of financial performance under GAAP, and should not be considered as an alternative to net income/(loss) or cash flow from operations determined in accordance with GAAP.
|
12
|
|
2019 Financial Report
|
|
•
|
A significant adverse change in legal factors or in the business climate that could affect the value of the asset. For example, a successful challenge of our patent rights would likely result in generic competition earlier than expected.
|
•
|
A significant adverse change in the extent or manner in which an asset is used. For example, restrictions imposed by the FDA or other regulatory authorities could affect our ability to manufacture or sell a product.
|
•
|
A projection or forecast that indicates losses or reduced profits associated with an asset. This could result, for example, from a change in a government reimbursement program that results in an inability to sustain projected product revenues and profitability. This also could result from the introduction of a competitor’s product that results in a significant loss of market share or the inability to achieve the previously projected revenue growth, as well as the lack of acceptance of a product by patients, physicians and payers. For IPR&D projects, this could result from, among other things, a change in outlook based on clinical trial data, a delay in the projected launch date or additional expenditures to commercialize the product.
|
•
|
The income approach is a forward-looking approach to estimating fair value and relies primarily on internal forecasts. Within the income approach, the method that we use is the discounted cash flow method. We start with a forecast of all the expected net cash flows associated with the reporting unit, which includes the application of a terminal value, and then we apply a reporting unit-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of technological risk and competitive, legal and/or regulatory forces on the projections, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.
|
•
|
The market approach is a historical approach to estimating fair value and relies primarily on external information. Within the market approach are two methods that we may use:
|
◦
|
Guideline public company method—this method employs market multiples derived from market prices of stocks of companies that are engaged in the same or similar lines of business and that are actively traded on a free and open market and the application of the identified multiples to the corresponding measure of our reporting unit’s financial performance.
|
2019 Financial Report
|
|
13
|
|
◦
|
Guideline transaction method—this method relies on pricing multiples derived from transactions of significant interests in companies engaged in the same or similar lines of business and the application of the identified multiples to the corresponding measure of our reporting unit’s financial performance.
|
(a)
|
For detailed assumptions associated with our benefit plans, see Notes to Consolidated Financial Statements—Note 11B. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Actuarial Assumptions.
|
14
|
|
2019 Financial Report
|
|
The following table illustrates the sensitivity of net periodic benefit costs to a 50 basis point decline in our assumption for the expected annual rate of return on plan assets, holding all other assumptions constant (in millions, pre-tax):
|
||||
Assumption
|
|
Change
|
|
Increase in 2020 Net Periodic Benefit Costs
|
Expected annual rate of return on plan assets
|
|
50 basis point decline
|
|
$110
|
2019 Financial Report
|
|
15
|
|
The following table provides the components of the consolidated statements of income:
|
||||||||||||||||||
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
2018
|
|
2017
|
|
19/18
|
|
18/17
|
||||||||
Revenues
|
|
$
|
51,750
|
|
|
$
|
53,647
|
|
|
$
|
52,546
|
|
|
(4
|
)
|
|
2
|
|
Cost of sales(a)
|
|
10,219
|
|
|
11,248
|
|
|
11,228
|
|
|
(9
|
)
|
|
—
|
|
|||
% of revenues
|
|
19.7
|
%
|
|
21.0
|
%
|
|
21.4
|
%
|
|
|
|
|
|||||
Selling, informational and administrative expenses(a)
|
|
14,350
|
|
|
14,455
|
|
|
14,804
|
|
|
(1
|
)
|
|
(2
|
)
|
|||
% of revenues
|
|
27.7
|
%
|
|
26.9
|
%
|
|
28.2
|
%
|
|
|
|
|
|||||
Research and development expenses(a)
|
|
8,650
|
|
|
8,006
|
|
|
7,683
|
|
|
8
|
|
|
4
|
|
|||
% of revenues
|
|
16.7
|
%
|
|
14.9
|
%
|
|
14.6
|
%
|
|
|
|
|
|||||
Amortization of intangible assets
|
|
4,610
|
|
|
4,893
|
|
|
4,758
|
|
|
(6
|
)
|
|
3
|
|
|||
% of revenues
|
|
8.9
|
%
|
|
9.1
|
%
|
|
9.1
|
%
|
|
|
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
747
|
|
|
1,044
|
|
|
351
|
|
|
(28
|
)
|
|
*
|
|
|||
% of revenues
|
|
1.4
|
%
|
|
1.9
|
%
|
|
0.7
|
%
|
|
|
|
|
|||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
(8,086
|
)
|
|
—
|
|
|
—
|
|
|
*
|
|
|
—
|
|
|||
% of revenues
|
|
15.6
|
%
|
|
—
|
|
|
—
|
|
|
|
|
|
|||||
Other (income)/deductions—net
|
|
3,578
|
|
|
2,116
|
|
|
1,416
|
|
|
69
|
|
|
49
|
|
|||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
17,682
|
|
|
11,885
|
|
|
12,305
|
|
|
49
|
|
|
(3
|
)
|
|||
% of revenues
|
|
34.2
|
%
|
|
22.2
|
%
|
|
23.4
|
%
|
|
|
|
|
|||||
Provision/(benefit) for taxes on income
|
|
1,384
|
|
|
706
|
|
|
(9,049
|
)
|
|
96
|
|
|
*
|
|
|||
Effective tax rate
|
|
7.8
|
%
|
|
5.9
|
%
|
|
(73.5
|
)%
|
|
|
|
|
|||||
Income from continuing operations
|
|
16,298
|
|
|
11,179
|
|
|
21,353
|
|
|
46
|
|
|
(48
|
)
|
|||
% of revenues
|
|
31.5
|
%
|
|
20.8
|
%
|
|
40.6
|
%
|
|
|
|
|
|||||
Discontinued operations—net of tax
|
|
4
|
|
|
10
|
|
|
2
|
|
|
(61
|
)
|
|
*
|
|
|||
Net income before allocation to noncontrolling interests
|
|
16,302
|
|
|
11,188
|
|
|
21,355
|
|
|
46
|
|
|
(48
|
)
|
|||
% of revenues
|
|
31.5
|
%
|
|
20.9
|
%
|
|
40.6
|
%
|
|
|
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
29
|
|
|
36
|
|
|
47
|
|
|
(18
|
)
|
|
(24
|
)
|
|||
Net income attributable to Pfizer Inc.
|
|
$
|
16,273
|
|
|
$
|
11,153
|
|
|
$
|
21,308
|
|
|
46
|
|
|
(48
|
)
|
% of revenues
|
|
31.4
|
%
|
|
20.8
|
%
|
|
40.6
|
%
|
|
|
|
|
*
|
Indicates calculation not meaningful or result is equal to or greater than 100%.
|
(a)
|
Excludes amortization of intangible assets, except as disclosed in Notes to Consolidated Financial Statements––Note 10A. Identifiable Intangible Assets and Goodwill: Identifiable Intangible Assets.
|
16
|
|
2019 Financial Report
|
|
(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 2019, associated with the following segments: Biopharma ($12.0 billion), Upjohn ($7.2 billion) and Other ($0.4 billion). For 2018, associated with the following segments: Biopharma ($10.2 billion), Upjohn ($9.7 billion) and Other ($0.7 billion). For 2017, associated with the following segments: Biopharma ($9.2 billion), Upjohn ($9.2 billion) and Other ($0.7 billion).
|
•
|
a decrease in chargebacks primarily related to Upjohn products, including Viagra and Lyrica; and
|
•
|
a decrease in Medicare rebates, driven by a significant decrease in Lyrica sales in the U.S. due to multi-source generic competition that began in July 2019,
|
•
|
an increase in performance-based contract rebates, primarily in the U.S. due to increased sales of certain Biopharma products, slightly offset by decreased Lyrica sales.
|
2019 Financial Report
|
|
17
|
|
2019 Revenues by Geography
|
|
% of Total
|
U.S.
|
|
46%
|
International
|
|
54%
|
2018 Revenues by Geography
|
|
% of Total
|
U.S.
|
|
47%
|
International
|
|
53%
|
2017 Revenues by Geography
|
|
% of Total
|
U.S.
|
|
50%
|
International
|
|
50%
|
18
|
|
2019 Financial Report
|
|
The following table provides worldwide revenues by operating segment and geography:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
|
% Change
|
|||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Worldwide
|
|
U.S.
|
|
International
|
|
Worldwide
|
|
U.S.
|
|
International
|
|||||||||||||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
|
18/17
|
|
|
19/18
|
|
|
18/17
|
|
|
19/18
|
|
|
18/17
|
|||||||||
Operating Segments(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Biopharma
|
|
$
|
39,419
|
|
|
$
|
37,558
|
|
|
$
|
35,530
|
|
|
$
|
19,605
|
|
|
$
|
18,243
|
|
|
$
|
17,961
|
|
|
$
|
19,814
|
|
|
$
|
19,315
|
|
|
$
|
17,569
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
2
|
|
|
3
|
|
|
10
|
Upjohn
|
|
10,233
|
|
|
12,484
|
|
|
13,447
|
|
|
3,259
|
|
|
5,209
|
|
|
6,150
|
|
|
6,974
|
|
|
7,275
|
|
|
7,297
|
|
|
(18
|
)
|
|
(7
|
)
|
|
(37
|
)
|
|
(15
|
)
|
|
(4
|
)
|
|
—
|
|||||||||
Consumer Healthcare
|
|
2,098
|
|
|
3,605
|
|
|
3,472
|
|
|
988
|
|
|
1,877
|
|
|
1,851
|
|
|
1,110
|
|
|
1,728
|
|
|
1,621
|
|
|
(42
|
)
|
|
4
|
|
|
(47
|
)
|
|
1
|
|
|
(36
|
)
|
|
7
|
|||||||||
Other(b)
|
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
*
|
|
|
—
|
|
|
*
|
|
|
—
|
|
|
*
|
|||||||||
Total revenues
|
|
$
|
51,750
|
|
|
$
|
53,647
|
|
|
$
|
52,546
|
|
|
$
|
23,852
|
|
|
$
|
25,329
|
|
|
$
|
26,026
|
|
|
$
|
27,898
|
|
|
$
|
28,318
|
|
|
$
|
26,519
|
|
|
(4
|
)
|
|
2
|
|
|
(6
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
7
|
*
|
Indicates the calculation is not meaningful or results are equal to or greater than 100%.
|
(a)
|
For additional information about each operating segment, see the “Commercial Operations” section in Part I, Item 1, “Business” of our 2019 Form 10-K, the “Analysis of Operating Segment Information” section of this Financial Review and Notes to Consolidated Financial Statements––Note 17A. Segment, Geographic and Other Revenue Information: Segment Information.
|
(b)
|
Represents HIS revenues through February 2, 2017. On February 3, 2017, we completed the sale of HIS to ICU Medical. For additional information, see Notes to Consolidated Financial Statements—Note 1A. Basis of Presentation and Significant Accounting Policies: Basis of Presentation.
|
2019 Financial Report
|
|
19
|
|
(MILLIONS OF DOLLARS)
|
|
Worldwide
|
|
U.S.
|
|
International
|
||||||
Operational growth/(decline):
|
|
|
|
|
|
|
||||||
Continued growth from certain key brands(a)
|
|
$
|
2,495
|
|
|
$
|
914
|
|
|
$
|
1,581
|
|
Higher revenue from continued growth of anti-infective products in China, driven by increased demand for Sulperazon and new launches, the 2018 U.S. launches of our immune globulin intravenous products (Panzyga and Octagam) and the launches of certain anti-infectives products (Zavicefta, Zinforo and Cresemba) in international developed and emerging markets, all in the Hospital products business
|
|
472
|
|
|
174
|
|
|
298
|
|
|||
Higher revenues for Inlyta, primarily in the U.S. driven by increased demand resulting from the second quarter of 2019 U.S. FDA approvals for the combinations of certain immune checkpoint inhibitors plus Inlyta for the first-line treatment of patients with advanced RCC
|
|
190
|
|
|
175
|
|
|
14
|
|
|||
Higher revenues for Biosimilars, primarily in the U.S.
|
|
168
|
|
|
185
|
|
|
(17
|
)
|
|||
Higher revenues for rare disease products driven by the U.S. launches in May 2019 of Vyndaqel and in September 2019 of Vyndamax, for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM); and in international markets, primarily driven by continued uptake for the transthyretin amyloid polyneuropathy indication, primarily in developed Europe, as well as the March 2019 launch of the ATTR-CM indication in Japan, partially offset by 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 in the U.S.
|
|
159
|
|
|
108
|
|
|
51
|
|
|||
Volume-driven growth from Celebrex and Effexor, primarily in Japan and China
|
|
78
|
|
|
(8
|
)
|
|
87
|
|
|||
Lower worldwide revenues for Lyrica, primarily in the U.S., reflecting the expected significantly lower volumes associated with multi-source generic competition that began in July 2019
|
|
(1,628
|
)
|
|
(1,582
|
)
|
|
(46
|
)
|
|||
Lower revenues for Consumer Healthcare reflecting the July 31, 2019 completion of the Consumer Healthcare joint venture transaction with GSK. As a result, 2019 revenues reflect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations
|
|
(1,436
|
)
|
|
(889
|
)
|
|
(547
|
)
|
|||
Lower revenues from other Hospital products, 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
|
|
(447
|
)
|
|
(200
|
)
|
|
(247
|
)
|
|||
Lower revenues for Enbrel internationally, reflecting continued biosimilar competition in most developed Europe markets
|
|
(292
|
)
|
|
—
|
|
|
(292
|
)
|
|||
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, partially offset by increased retail demand growth in China
|
|
(171
|
)
|
|
(193
|
)
|
|
21
|
|
|||
Decline in revenues for Revatio driven by lower U.S. Oral Suspension formulation sales and pricing pressures due to a recent generic entry, and for Relpax, driven by continued generic competition across developed markets
|
|
(149
|
)
|
|
(110
|
)
|
|
(39
|
)
|
|||
Decline in Norvasc and Lipitor due to pricing pressures from the implementation of the VBP in certain cities in China and lower volumes in Japan, partially offset by overall increased demand in China in the first quarter of 2019 and continued geographic expansion in China during the second half of 2019 in provinces where the VBP had not yet been implemented
|
|
(40
|
)
|
|
(4
|
)
|
|
(36
|
)
|
|||
Other operational factors, net
|
|
57
|
|
|
(47
|
)
|
|
104
|
|
|||
Operational growth/(decline), net
|
|
(545
|
)
|
|
(1,477
|
)
|
|
932
|
|
|||
|
|
|
|
|
|
|
||||||
Unfavorable impact of foreign exchange
|
|
(1,352
|
)
|
|
—
|
|
|
(1,352
|
)
|
|||
Revenues decrease
|
|
$
|
(1,897
|
)
|
|
$
|
(1,477
|
)
|
|
$
|
(420
|
)
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz and Prevnar 13/Prevenar 13. See the “Analysis of the Consolidated Statements of Income––Revenues––Selected Product Discussion" section of this Financial Review for product analysis information.
|
20
|
|
2019 Financial Report
|
|
(MILLIONS OF DOLLARS)
|
|
Worldwide
|
|
U.S.
|
|
International
|
||||||
Operational growth/(decline):
|
|
|
|
|
|
|
||||||
Continued growth from certain key brands(a)
|
|
$
|
2,715
|
|
|
$
|
1,019
|
|
|
$
|
1,696
|
|
Growth from Biosimilars, primarily from Inflectra in certain channels in the U.S. and developed Europe markets
|
|
217
|
|
|
147
|
|
|
69
|
|
|||
Growth from recently launched products, including Eucrisa in the U.S., as well as Besponsa and Bavencio, primarily in the U.S. and developed Europe
|
|
195
|
|
|
158
|
|
|
37
|
|
|||
Higher revenues for Lipitor and Norvasc primarily due to increased demand in China, partially offset by pricing pressures in China and lower volumes in Japan for Lipitor and Norvasc and the non-recurrence of favorable U.S. rebates for Lipitor that occurred in 2017
|
|
182
|
|
|
(52
|
)
|
|
234
|
|
|||
Growth in our Consumer Healthcare business across all markets
|
|
107
|
|
|
26
|
|
|
81
|
|
|||
Lower revenues for Viagra in the U.S. resulting from the loss of exclusivity in December 2017
|
|
(572
|
)
|
|
(572
|
)
|
|
—
|
|
|||
Decline in the Hospital products business, driven by lower revenues in developed markets, primarily due to increased competition across the portfolio and continued legacy Hospira product shortages in the U.S., partially offset by an increase in emerging markets, primarily in China
|
|
(482
|
)
|
|
(703
|
)
|
|
221
|
|
|||
Lower revenues for Enbrel, primarily in most developed Europe markets due to continued biosimilar competition
|
|
(350
|
)
|
|
—
|
|
|
(350
|
)
|
|||
Decline in Greenstone, Upjohn's solid oral dose generics subsidiary, due to additional generic competition in the U.S. and decline in Relpax, primarily due to loss of exclusivity in the U.S.
|
|
(318
|
)
|
|
(310
|
)
|
|
(8
|
)
|
|||
Lower revenues for the Premarin family of products and Pristiq primarily driven by generic competition in the U.S.
|
|
(241
|
)
|
|
(201
|
)
|
|
(40
|
)
|
|||
Decline in revenues for Lyrica, primarily driven by losses of exclusivity in developed Europe markets and Australia, partially offset by growth in the U.S. and growth in the orally dissolving tablet formulation in Japan
|
|
(115
|
)
|
|
131
|
|
|
(246
|
)
|
|||
Lower revenues from the hemophilia portfolio (BeneFIX and Refacto AF/Xyntha), primarily in developed Europe
|
|
(100
|
)
|
|
(13
|
)
|
|
(88
|
)
|
|||
Decline in revenues for Celebrex, primarily driven by the non-recurrence of favorable U.S. rebates that occurred in 2017 and lower volumes in the U.S.
|
|
(99
|
)
|
|
(99
|
)
|
|
—
|
|
|||
Impact on financial results from the sale of HIS in February 2017. 2018 does not reflect any contribution from HIS global operations, compared to approximately one month of HIS domestic operations and approximately two months of HIS international operations in the same period in 2017
|
|
(97
|
)
|
|
(64
|
)
|
|
(33
|
)
|
|||
Other operational factors, net
|
|
(251
|
)
|
|
(166
|
)
|
|
(84
|
)
|
|||
Operational growth/(decline), net
|
|
791
|
|
|
(698
|
)
|
|
1,489
|
|
|||
|
|
|
|
|
|
|
||||||
Favorable impact of foreign exchange
|
|
310
|
|
|
—
|
|
|
310
|
|
|||
Revenues increase/(decrease)
|
|
$
|
1,101
|
|
|
$
|
(698
|
)
|
|
$
|
1,799
|
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz, Prevnar/Prevenar 13, Xtandi and Chantix/Champix. See the “Analysis of the Consolidated Statements of Income––Revenues––Selected Product Discussion" section of this Financial Review for product analysis information.
|
2019 Financial Report
|
|
21
|
|
•
|
Prevnar 13/Prevenar 13 (Biopharma):
|
|
|
Year Ended December 31,
|
|||||||||||
|
|
|
|
|
|
% Change
|
|||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
||
U.S.
|
|
$
|
3,209
|
|
|
$
|
3,360
|
|
|
(4
|
)
|
|
|
International
|
|
2,638
|
|
|
2,443
|
|
|
8
|
|
|
12
|
||
Worldwide revenues
|
|
$
|
5,847
|
|
|
$
|
5,802
|
|
|
1
|
|
|
3
|
•
|
Ibrance (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
3,250
|
|
|
$
|
2,922
|
|
|
11
|
|
|
International
|
|
1,710
|
|
|
1,196
|
|
|
43
|
|
53
|
||
Worldwide revenues
|
|
$
|
4,961
|
|
|
$
|
4,118
|
|
|
20
|
|
23
|
•
|
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 Anticoagulant market; the agents in this class were developed as alternative treatment options to warfarin in appropriate patients.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
2,343
|
|
|
$
|
1,849
|
|
|
27
|
|
|
International
|
|
1,877
|
|
|
1,585
|
|
|
18
|
|
24
|
||
Worldwide revenues
|
|
$
|
4,220
|
|
|
$
|
3,434
|
|
|
23
|
|
26
|
22
|
|
2019 Financial Report
|
|
•
|
Lyrica (Upjohn):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
2,012
|
|
|
$
|
3,594
|
|
|
(44
|
)
|
|
|
|
International
|
|
1,308
|
|
|
1,375
|
|
|
(5
|
)
|
|
(3
|
)
|
||
Worldwide revenues
|
|
$
|
3,321
|
|
|
$
|
4,970
|
|
|
(33
|
)
|
|
(33
|
)
|
•
|
Xeljanz (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
1,636
|
|
|
$
|
1,394
|
|
|
17
|
|
|
International
|
|
606
|
|
|
380
|
|
|
59
|
|
70
|
||
Worldwide revenues
|
|
$
|
2,242
|
|
|
$
|
1,774
|
|
|
26
|
|
29
|
•
|
Lipitor (Upjohn):
|
|
|
Year Ended December 31,
|
|||||||||||
|
|
|
|
|
|
% Change
|
|||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
||
U.S.
|
|
$
|
104
|
|
|
$
|
110
|
|
|
(6
|
)
|
|
|
International
|
|
1,870
|
|
|
1,952
|
|
|
(4
|
)
|
|
—
|
||
Worldwide revenues
|
|
$
|
1,973
|
|
|
$
|
2,062
|
|
|
(4
|
)
|
|
—
|
•
|
Enbrel (Biopharma, outside the U.S. and Canada):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
International
|
|
1,699
|
|
|
2,112
|
|
|
(20
|
)
|
|
(14
|
)
|
||
Worldwide revenues
|
|
$
|
1,699
|
|
|
$
|
2,112
|
|
|
(20
|
)
|
|
(14
|
)
|
2019 Financial Report
|
|
23
|
|
•
|
Chantix/Champix (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
899
|
|
|
$
|
838
|
|
|
7
|
|
|
|
|
International
|
|
208
|
|
|
247
|
|
|
(16
|
)
|
|
(12
|
)
|
||
Worldwide revenues
|
|
$
|
1,107
|
|
|
$
|
1,085
|
|
|
2
|
|
|
3
|
|
•
|
Norvasc (Upjohn):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
39
|
|
|
$
|
36
|
|
|
6
|
|
|
|
|
International
|
|
911
|
|
|
992
|
|
|
(8
|
)
|
|
(4
|
)
|
||
Worldwide revenues
|
|
$
|
950
|
|
|
$
|
1,029
|
|
|
(8
|
)
|
|
(4
|
)
|
•
|
Sutent (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
283
|
|
|
$
|
357
|
|
|
(21
|
)
|
|
|
|
International
|
|
653
|
|
|
692
|
|
|
(6
|
)
|
|
1
|
|
||
Worldwide revenues
|
|
$
|
936
|
|
|
$
|
1,049
|
|
|
(11
|
)
|
|
(7
|
)
|
•
|
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).
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
838
|
|
|
$
|
699
|
|
|
20
|
|
|
International
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
||
Worldwide revenues
|
|
$
|
838
|
|
|
$
|
699
|
|
|
20
|
|
20
|
•
|
The Premarin family of products (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
690
|
|
|
$
|
783
|
|
|
(12
|
)
|
|
|
|
International
|
|
44
|
|
|
49
|
|
|
(10
|
)
|
|
(6
|
)
|
||
Worldwide revenues
|
|
$
|
734
|
|
|
$
|
832
|
|
|
(12
|
)
|
|
(12
|
)
|
24
|
|
2019 Financial Report
|
|
•
|
Celebrex (Upjohn):
|
|
|
Year Ended December 31,
|
|||||||||||
|
|
|
|
|
|
% Change
|
|||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
||
U.S.
|
|
$
|
58
|
|
|
$
|
65
|
|
|
(11
|
)
|
|
|
International
|
|
661
|
|
|
621
|
|
|
7
|
|
|
8
|
||
Worldwide revenues
|
|
$
|
719
|
|
|
$
|
686
|
|
|
5
|
|
|
7
|
•
|
Sulperazon (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
International
|
|
684
|
|
|
613
|
|
|
12
|
|
17
|
||
Worldwide revenues
|
|
$
|
684
|
|
|
$
|
613
|
|
|
12
|
|
17
|
•
|
Inflectra/Remsima (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
300
|
|
|
$
|
259
|
|
|
16
|
|
|
|
|
International
|
|
325
|
|
|
383
|
|
|
(15
|
)
|
|
(10
|
)
|
||
Worldwide revenues
|
|
$
|
625
|
|
|
$
|
642
|
|
|
(3
|
)
|
|
—
|
|
•
|
Xalkori (Biopharma):
|
|
|
Year Ended December 31,
|
|||||||||||
|
|
|
|
|
|
% Change
|
|||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
||
U.S.
|
|
$
|
149
|
|
|
$
|
158
|
|
|
(5
|
)
|
|
|
International
|
|
381
|
|
|
366
|
|
|
4
|
|
|
9
|
||
Worldwide revenues
|
|
$
|
530
|
|
|
$
|
524
|
|
|
1
|
|
|
5
|
•
|
Viagra (Upjohn)
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
75
|
|
|
$
|
217
|
|
|
(65
|
)
|
|
|
|
International
|
|
422
|
|
|
419
|
|
|
1
|
|
|
5
|
|
||
Worldwide revenues
|
|
$
|
497
|
|
|
$
|
636
|
|
|
(22
|
)
|
|
(19
|
)
|
2019 Financial Report
|
|
25
|
|
•
|
Inlyta (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
295
|
|
|
$
|
119
|
|
|
*
|
|
|
International
|
|
182
|
|
|
178
|
|
|
2
|
|
8
|
||
Worldwide revenues
|
|
$
|
477
|
|
|
$
|
298
|
|
|
60
|
|
64
|
•
|
Vyndaqel/Vyndamax (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
191
|
|
|
$
|
—
|
|
|
*
|
|
|
International
|
|
282
|
|
|
148
|
|
|
91
|
|
96
|
||
Worldwide revenues
|
|
$
|
473
|
|
|
$
|
148
|
|
|
*
|
|
*
|
•
|
Eucrisa (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||||
|
|
|
|
|
|
% Change
|
||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
|
Oper.
|
|
||
U.S.
|
|
$
|
134
|
|
|
$
|
147
|
|
|
(9
|
)
|
|
|
|
International
|
|
3
|
|
|
—
|
|
|
*
|
|
|
*
|
|
||
Worldwide revenues
|
|
$
|
138
|
|
|
$
|
147
|
|
|
(7
|
)
|
|
(7
|
)
|
•
|
Alliance revenues (Biopharma):
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
|
|
|
% Change
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
Total
|
|
Oper.
|
||
U.S.
|
|
$
|
3,208
|
|
|
$
|
2,576
|
|
|
25
|
|
|
International
|
|
1,440
|
|
|
1,263
|
|
|
14
|
|
19
|
||
Worldwide revenues
|
|
$
|
4,648
|
|
|
$
|
3,838
|
|
|
21
|
|
23
|
◦
|
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 related to net sales generated from selling any products containing avelumab from this collaboration. Bavencio is currently approved in metastatic MCC in the U.S., the EU, Japan and select other markets; the second-line treatment of locally advanced or metastatic urothelial carcinoma in the U.S. and select other markets; and first-line treatment of patients with advanced RCC in combination with Inlyta in the U.S., the EU, Japan and select other markets.
|
26
|
|
2019 Financial Report
|
|
RECENT FDA APPROVALS
|
||
PRODUCT
|
INDICATION
|
DATE APPROVED
|
Xtandi (enzalutamide)
|
Treatment of metastatic castration-sensitive prostate cancer, which is being developed through a collaboration with Astellas
|
December 2019
|
Abrilada (adalimumab-afzb)(a)
|
A biosimilar to Humira® (adalimumab) for the treatment of certain patients with rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, adult Crohn's disease, ulcerative colitis and plaque psoriasis
|
November 2019
|
Ruxience (rituximab-pvvr)(b)
|
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)(c)
|
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 RCC, 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)(d)
|
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
|
(a)
|
Humira® is a registered trademark of AbbVie Biotechnology Ltd. Pfizer is working to make Abrilada available to U.S. patients as soon as feasible based on the terms of its agreement with AbbVie. Current plans are to launch Abrilada in 2023.
|
(b)
|
Rituxan® is a registered trademark of Biogen MA Inc.
|
(c)
|
Avastin® is a registered trademark of Genentech, Inc.
|
(d)
|
Herceptin® is a registered trademark of Genentech, Inc.
|
PENDING U.S. NDAs AND SUPPLEMENTAL FILINGS
|
||
PRODUCT
|
PROPOSED INDICATION
|
DATE FILED*
|
Braftovi (encorafenib)(a)
|
Braftovi (encorafenib) in combination with Erbitux® (cetuximab) for the treatment of BRAFV600E-mutant metastatic colorectal cancer after prior therapy
|
December 2019
|
PF-06881894(b)
|
A potential biosimilar to Neulasta® (pegfilgrastim)
|
August 2019
|
Vyndaqel (tafamidis meglumine)(c)
|
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)
|
Erbitux® is a registered trademark of ImClone LLC.
|
(b)
|
Neulasta® is a registered U.S. trademark of Amgen Inc.
|
(c)
|
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.
|
2019 Financial Report
|
|
27
|
|
REGULATORY APPROVALS AND FILINGS IN THE EU AND JAPAN
|
|||
PRODUCT
|
DESCRIPTION OF EVENT
|
DATE APPROVED
|
DATE FILED*
|
Vyndaqel (tafamidis free acid)
|
Application approved in the EU for a once-daily 61 mg oral capsule, for the treatment of wild-type or hereditary transthyretin amyloidosis in adult patients with cardiomyopathy
|
February 2020
|
—
|
Amsparity (adalimumab)(a)
|
Application approved in the EU for a biosimilar to Humira® (adalimumab) for the treatment of certain patients with rheumatoid arthritis, juvenile idiopathic arthritis, axial spondyloarthritis, psoriatic arthritis, psoriasis, hidradenitis suppurativa, Crohn’s disease, ulcerative colitis, uveitis, and pediatric plaque psoriasis
|
February 2020
|
—
|
Xeljanz (tofacitinib)
|
Application approved in the EU for Xeljanz (tofacitinib) 11 mg prolonged release tablets in combination with methotrexate for the treatment of moderate to severe active rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to one or more disease-modifying antirheumatic drugs
|
December 2019
|
—
|
Bavencio (avelumab)
|
Application approved in Japan for Bavencio (avelumab) in combination with Inlyta (axitinib) for the first-line treatment of advanced RCC, which is being developed in collaboration with Merck KGaA, Germany
|
December 2019
|
—
|
Braftovi (encorafenib) and Mektovi (binimetinib)
|
Application filed in the EU for second-or-third-line treatment of BRAF-mutant mCRC in patients who have received prior systemic therapy, which is being developed in collaboration with the Pierre Fabre Group
|
—
|
November 2019
|
Bavencio (avelumab)
|
Application approved in the EU for Bavencio (avelumab) in combination with Inlyta (axitinib) for the first-line treatment of advanced RCC, which is being developed in collaboration with Merck KGaA, Germany
|
October 2019
|
—
|
PF-06881894(b)
|
Application filed in the EU for a potential biosimilar to Neulasta® (pegfilgrastim)
|
—
|
October 2019
|
Rituximab Pfizer (rituximab)(c)
|
Application approved in Japan for a biosimilar to Rituxan® (rituximab) for the treatment of CD20-positive, B-cell non-Hodgkin’s Lymphoma, CD20-positive, B-cell lymphoproliferative disease under immunosuppression, and Granulomatosis with polyangiitis, and microscopic polyangiitis
|
September 2019
|
—
|
Bosulif (bosutinib)
|
Application filed in Japan for the treatment of chronic myelogenous leukemia (CML), which is being developed in collaboration with Avillion LLP
|
—
|
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 HER2- locally advanced or metastatic breast cancer
|
June 2019
|
—
|
Bevacizumab Pfizer (bevacizumab)(d)
|
Application approved in Japan for a biosimilar to Avastin® (bevacizumab) for the treatment of metastatic colorectal 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
|
—
|
Vyndaqel (tafamidis meglumine)
|
Application approved in Japan for treatment of transthyretin amyloid cardiomyopathy
|
March 2019
|
—
|
Zirabev(d)
|
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
|
—
|
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-05280586(e)
|
Application filed in the EU for a potential biosimilar to MabThera® (rituximab)
|
—
|
August 2018
|
crisaborole(f)
|
Application filed in the EU for the treatment of mild to moderate atopic dermatitis in adults and pediatric patients from 2 years of age with ≤ 40% body surface area (BSA) affected
|
—
|
May 2018
|
*
|
For applications in the EU, the dates set forth in this column are the dates on which the EMA validated our submissions.
|
(a)
|
Humira® is a registered trademark of AbbVie Biotechnology Ltd. Pfizer does not currently plan to commercialize Amsparity in the EU due to unfavorable market conditions.
|
(b)
|
Neulasta® is a registered trademark of Amgen Inc.
|
(c)
|
Rituxan® is a registered trademark of Biogen MA Inc.
|
(d)
|
Avastin® is a registered trademark of Genentech, Inc.
|
(e)
|
MabThera® is a registered trademark of Roche, Inc. In January 2020, the EMA’s CHMP adopted a positive opinion recommending the approval of PF-05280586 as a potential biosimilar to MabThera® (rituximab) for the treatment of non-Hodgkin’s lymphoma, chronic lymphocytic leukemia, RA, granulomatosis with polyangiitis and microscopic polyangiitis, and pemphigus vulgaris.
|
(f)
|
In January 2020, the EMA’s CHMP adopted a positive opinion recommending the approval of Staquis (crisaborole) for the treatment of mild to moderate atopic dermatitis in adults and pediatric patients from 2 years of age with ≤ 40% BSA affected.
|
28
|
|
2019 Financial Report
|
|
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 treatment of locally advanced squamous cell carcinoma of the head and neck, which is being developed in collaboration with Merck KGaA, Germany
|
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)
|
Treatment of patients with metastatic non-small cell lung cancer whose tumors are ALK-positive as detected by an FDA-approved test
|
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
|
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
|
abrocitinib (PF-04965842)
|
A Janus kinase 1 (JAK1) inhibitor for the treatment of moderate-to-severe atopic dermatitis
|
PF-06425090
|
A prophylactic vaccine for prevention of primary clostridioides difficile infection (CDI) in individuals
|
PF-07265803
|
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
|
PF-06801591
|
A monoclonal antibody that inhibits PD-1, in combination with Bacillus Calmette-Guerin (BCG), for the treatment of non-muscle invasive bladder cancer
|
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
|
2019 Financial Report
|
|
29
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
|
18/17
|
|||
Cost of sales
|
|
$
|
10,219
|
|
|
$
|
11,248
|
|
|
$
|
11,228
|
|
|
(9
|
)
|
|
—
|
As a percentage of Revenues
|
|
19.7
|
%
|
|
21.0
|
%
|
|
21.4
|
%
|
|
|
|
|
•
|
the favorable impact of the July 31, 2019 completion of the Consumer Healthcare joint venture transaction with GSK;
|
•
|
the favorable impact of foreign exchange of $279 million;
|
•
|
the favorable impact of hedging activity on intercompany inventory of $261 million; and
|
•
|
lower royalty expense for Lyrica due to the patent expiration,
|
•
|
an unfavorable change in product mix.
|
•
|
increased sales volumes mostly related to key products within our product portfolio;
|
•
|
higher costs across the legacy SIP portfolio, as a result of the complexity of high quality product manufacture across the legacy Hospira plants, which was partially offset by decreases in other costs across various markets;
|
•
|
an increase in royalty expenses based on the mix of products sold; and
|
•
|
the unfavorable impact of hedging activity on intercompany inventory of $65 million,
|
•
|
lower volumes from the legacy SIP portfolio, in developed markets, primarily due to increased competition across the legacy SIP portfolio and continued legacy Hospira product shortages in the U.S.;
|
•
|
the non-recurrence of $195 million in inventory losses, overhead costs, and incremental costs related to the period in 2017 during which our Puerto Rico plants were not operational due to hurricanes;
|
•
|
the favorable impact of foreign exchange of $153 million;
|
•
|
the non-recurrence of charges related to a product recall that occurred in 2017; and
|
•
|
the favorable impact of the sale of HIS of $35 million.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
|
18/17
|
|
|||
Selling, informational and administrative expenses
|
|
$
|
14,350
|
|
|
$
|
14,455
|
|
|
$
|
14,804
|
|
|
(1
|
)
|
|
(2
|
)
|
As a percentage of Revenues
|
|
27.7
|
%
|
|
26.9
|
%
|
|
28.2
|
%
|
|
|
|
|
•
|
the favorable impact of the July 31, 2019 completion of the Consumer Healthcare joint venture with GSK;
|
30
|
|
2019 Financial Report
|
|
•
|
reduction in field force expense as well as advertising and promotion expenses in developed markets, primarily related to Lyrica in the U.S.; and
|
•
|
the favorable impact of foreign exchange of $291 million,
|
•
|
additional Biopharma investment in emerging markets;
|
•
|
separation costs of $127 million associated with our planned Upjohn transaction with Mylan;
|
•
|
additional investment in the Oncology portfolio in developed markets;
|
•
|
increased employee deferred compensation as a result of savings plan gains;
|
•
|
an increase due to the timing of expenses (i.e., insurance recoveries and product donations);
|
•
|
marketing and promotional expenses associated with the U.S. launches of Vyndaqel in May 2019 and Vyndamax in September 2019;
|
•
|
costs to separate Consumer Healthcare;
|
•
|
increased healthcare reform expenses; and
|
•
|
Upjohn investments in China across key brands.
|
•
|
lower advertising, promotional and field force expenses, as well as general and administrative expenses, reflecting the benefits of cost-reduction and productivity initiatives;
|
•
|
the non-recurrence of a $200 million charitable contribution to the Pfizer Foundation;
|
•
|
decreased investment across several of our key products, primarily Viagra and Enbrel; and
|
•
|
lower healthcare reform expenses as a result of a true up of the prior year amount,
|
•
|
additional investment across several of our key products, primarily, Xeljanz, Ibrance, Eucrisa and Prevnar 13/Prevenar 13;
|
•
|
additional investments in China; and
|
•
|
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.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
18/17
|
|||
Research and development expenses
|
|
$
|
8,650
|
|
|
$
|
8,006
|
|
|
$
|
7,683
|
|
|
8
|
|
4
|
As a percentage of Revenues
|
|
16.7
|
%
|
|
14.9
|
%
|
|
14.6
|
%
|
|
|
|
|
•
|
upfront payments to Therachon and Akcea (see Notes to Consolidated Financial Statements—Note 2. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements);
|
•
|
increased investments towards building new capabilities and driving automation;
|
•
|
increased spending on our Inflammation & Immunology and Rare Disease portfolios due to several Phase 3 programs and
|
•
|
increased spending related to assets acquired from Array; and
|
•
|
increased medical spend for new and growing products,
|
•
|
decreased spending across the Oncology, Vaccines and Internal Medicine portfolios, as select programs have reached completion;
|
•
|
a decrease in the value of the portfolio performance share grants reflecting changes in the price of Pfizer’s common stock, as well as management’s assessment of the probability that the specified performance criteria will be achieved;
|
•
|
the discontinuation of the Staphylococcus aureus vaccine trial;
|
•
|
the favorable impact of the July 31, 2019 completion of the Consumer Healthcare joint venture with GSK; and
|
•
|
the favorable impact of foreign exchange.
|
•
|
increased costs associated with our Phase 3 clinical trials related to our JAK1 inhibitor (which was initiated in December 2017) and the C. difficile vaccine program (which was initiated in March 2017) as well as increased spending for our 20 valent pneumococcal conjugate vaccine candidate;
|
•
|
increased costs associated with the Bavencio program; and
|
2019 Financial Report
|
|
31
|
|
•
|
an increase in the value of the portfolio performance share grants reflecting changes in the price of Pfizer’s common stock, as well as management’s assessment of the probability that the specified performance criteria will be achieved,
|
•
|
decreased spending for biosimilars as several programs have reached completion; and
|
•
|
the impact of our decision to end internal neuroscience discovery and early development efforts.
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
|
18/17
|
|||
Amortization of intangible assets
|
|
$
|
4,610
|
|
|
$
|
4,893
|
|
|
$
|
4,758
|
|
|
(6
|
)
|
|
3
|
As a percentage of Revenues
|
|
8.9
|
%
|
|
9.1
|
%
|
|
9.1
|
%
|
|
|
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
|
18/17
|
|
|||
Restructuring charges/(credits)––acquisition-related costs(a)
|
|
$
|
(192
|
)
|
|
$
|
37
|
|
|
$
|
105
|
|
|
*
|
|
|
(64
|
)
|
Restructuring charges/(credits)––cost reduction initiatives(b)
|
|
565
|
|
|
745
|
|
|
(75
|
)
|
|
(24
|
)
|
|
*
|
|
|||
Restructuring charges
|
|
373
|
|
|
782
|
|
|
30
|
|
|
(52
|
)
|
|
*
|
|
|||
Transaction costs(c)
|
|
63
|
|
|
1
|
|
|
4
|
|
|
*
|
|
|
(62
|
)
|
|||
Integration costs and other(c)
|
|
311
|
|
|
260
|
|
|
317
|
|
|
20
|
|
|
(18
|
)
|
|||
Restructuring charges and certain acquisition-related costs
|
|
747
|
|
|
1,044
|
|
|
351
|
|
|
(28
|
)
|
|
*
|
|
|||
Net periodic benefit costs(c)
|
|
23
|
|
|
146
|
|
|
136
|
|
|
(84
|
)
|
|
8
|
|
|||
Total additional depreciation––asset restructuring
|
|
38
|
|
|
50
|
|
|
91
|
|
|
(24
|
)
|
|
(45
|
)
|
|||
Total implementation costs
|
|
158
|
|
|
194
|
|
|
227
|
|
|
(18
|
)
|
|
(15
|
)
|
|||
Costs associated with acquisitions and cost-reduction/productivity initiatives(d)
|
|
$
|
967
|
|
|
$
|
1,434
|
|
|
$
|
805
|
|
|
(33
|
)
|
|
78
|
|
(a)
|
Restructuring charges/(credits)––acquisition-related costs include employee termination costs, asset impairments and other exit costs associated with business combinations. Credits for 2019 were mostly due to the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of an IRS audit for multiple tax years. See Notes Consolidated Financial Statements—Note 5D. Tax Matters: Tax Contingencies. Charges for 2018 were mainly due to asset write downs, partially offset by the reversal of previously recorded accruals for employee termination costs related to our acquisition of Hospira. Restructuring charges for 2017 mainly related to our acquisitions of Hospira and Medivation and were primarily due to asset write-downs, partially offset by the reversal of previously recorded accruals for employee termination costs.
|
(b)
|
Restructuring charges/(credits)––cost reduction initiatives relate to employee termination costs, asset impairments and other exit costs not associated with acquisitions. For 2019, the charges were mostly related to employee termination costs. For 2018, the charges were mostly related to employee termination costs and asset write downs. The employee termination costs for 2019 and 2018 were primarily associated with our improvements to operational effectiveness as part of the realignment of our organizational structure, and for 2019, also includes employee termination costs associated with the Transforming to a More Focused Company initiative. For 2017, the credits were mostly related to the reversal of previously recorded accruals for employee termination costs, partially offset by asset write downs.
|
(c)
|
For additional information, see Notes to 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 Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
32
|
|
2019 Financial Report
|
|
*
|
Indicates calculation not meaningful or result is equal to or greater than 100%.
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
18/17
|
|||
Other (income)/deductions—net
|
|
$
|
3,578
|
|
|
$
|
2,116
|
|
|
$
|
1,416
|
|
|
69
|
|
49
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
18/17
|
|||
Provision/(benefit) for taxes on income
|
|
$
|
1,384
|
|
|
$
|
706
|
|
|
$
|
(9,049
|
)
|
|
96
|
|
*
|
Effective tax rate on continuing operations
|
|
7.8
|
%
|
|
5.9
|
%
|
|
(73.5
|
)%
|
|
|
|
|
*
|
Indicates calculation not meaningful or result is equal to or greater than 100%.
|
•
|
the tax expense of approximately $2.7 billion associated with the gain related to the completion of the Consumer Healthcare joint venture transaction with GSK; and
|
•
|
the non-recurrence of certain tax initiatives and favorable adjustments to the provisional estimate of the TCJA,
|
2019 Financial Report
|
|
33
|
|
•
|
an increase in tax benefits associated with the resolution of certain tax positions pertaining to prior years, primarily due to a benefit of $1.4 billion, representing tax and interest, resulting from the favorable settlement of a U.S. IRS audit;
|
•
|
benefits related to certain tax initiatives associated with the implementation of our new organizational structure;
|
•
|
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; and
|
•
|
the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business.
|
•
|
the non-recurrence of a $10.7 billion tax benefit recorded in 2017 to reflect the enactment of the TCJA,
|
•
|
tax benefits related to the TCJA, including certain 2018 tax initiatives as well as favorable adjustments to the provisional estimate of the impact of the legislation, reported and disclosed within the applicable measurement period, in accordance with guidance issued by the SEC;
|
•
|
the favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business; as well as
|
•
|
an increase in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations.
|
•
|
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. The bonus plans for virtually all bonus-eligible, non-sales-force employees worldwide, including the Executive Leadership Team members
|
34
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
35
|
|
|
|
2019
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Costs(a)
|
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
||||||
Revenues
|
|
$
|
51,750
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,750
|
|
Cost of sales
|
|
10,219
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
(208
|
)
|
|
10,030
|
|
||||||
Selling, informational and administrative expenses
|
|
14,350
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
(309
|
)
|
|
14,041
|
|
||||||
Research and development expenses
|
|
8,650
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(666
|
)
|
|
7,988
|
|
||||||
Amortization of intangible assets
|
|
4,610
|
|
|
(4,339
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
271
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
747
|
|
|
—
|
|
|
(183
|
)
|
|
—
|
|
|
(565
|
)
|
|
—
|
|
||||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
(8,086
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,086
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
3,578
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
(3,858
|
)
|
|
(300
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
17,682
|
|
|
4,333
|
|
|
185
|
|
|
—
|
|
|
(2,481
|
)
|
|
19,720
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
1,384
|
|
|
848
|
|
|
59
|
|
|
—
|
|
|
667
|
|
|
2,958
|
|
||||||
Income from continuing operations
|
|
16,298
|
|
|
3,485
|
|
|
126
|
|
|
—
|
|
|
(3,148
|
)
|
|
16,762
|
|
||||||
Discontinued operations––net of tax
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||||
Net income attributable to Pfizer Inc.
|
|
16,273
|
|
|
3,485
|
|
|
126
|
|
|
(4
|
)
|
|
(3,148
|
)
|
|
16,733
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
2.87
|
|
|
0.61
|
|
|
0.02
|
|
|
—
|
|
|
(0.55
|
)
|
|
2.95
|
|
36
|
|
2019 Financial Report
|
|
|
|
2018
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Costs(a)
|
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
||||||
Revenues
|
|
$
|
53,647
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53,647
|
|
Cost of sales
|
|
11,248
|
|
|
3
|
|
|
(10
|
)
|
|
—
|
|
|
(110
|
)
|
|
11,130
|
|
||||||
Selling, informational and administrative expenses
|
|
14,455
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
(222
|
)
|
|
14,232
|
|
||||||
Research and development expenses
|
|
8,006
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
7,962
|
|
||||||
Amortization of intangible assets
|
|
4,893
|
|
|
(4,612
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
1,044
|
|
|
—
|
|
|
(299
|
)
|
|
—
|
|
|
(745
|
)
|
|
—
|
|
||||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
2,116
|
|
|
(182
|
)
|
|
(7
|
)
|
|
—
|
|
|
(2,595
|
)
|
|
(667
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
11,885
|
|
|
4,786
|
|
|
318
|
|
|
—
|
|
|
3,719
|
|
|
20,709
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
706
|
|
|
915
|
|
|
54
|
|
|
—
|
|
|
1,520
|
|
|
3,196
|
|
||||||
Income from continuing operations
|
|
11,179
|
|
|
3,871
|
|
|
264
|
|
|
—
|
|
|
2,199
|
|
|
17,513
|
|
||||||
Discontinued operations––net of tax
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
||||||
Net income attributable to Pfizer Inc.
|
|
11,153
|
|
|
3,871
|
|
|
264
|
|
|
(10
|
)
|
|
2,199
|
|
|
17,477
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
1.87
|
|
|
0.65
|
|
|
0.04
|
|
|
—
|
|
|
0.37
|
|
|
2.92
|
|
|
|
2017
|
||||||||||||||||||||||
IN MILLIONS, EXCEPT PER COMMON SHARE DATA
|
|
GAAP Reported
|
|
|
Purchase Accounting Adjustments(a)
|
|
|
Acquisition-Related Costs(a)
|
|
|
Discontinued Operations(a)
|
|
|
Certain Significant Items(a)
|
|
|
Non-GAAP Adjusted
|
|
||||||
Revenues
|
|
$
|
52,546
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52,546
|
|
Cost of sales
|
|
11,228
|
|
|
(47
|
)
|
|
(39
|
)
|
|
—
|
|
|
(363
|
)
|
|
10,778
|
|
||||||
Selling, informational and administrative expenses
|
|
14,804
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(299
|
)
|
|
14,489
|
|
||||||
Research and development expenses
|
|
7,683
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
7,653
|
|
||||||
Amortization of intangible assets
|
|
4,758
|
|
|
(4,565
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
351
|
|
|
—
|
|
|
(426
|
)
|
|
—
|
|
|
75
|
|
|
—
|
|
||||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
1,416
|
|
|
(138
|
)
|
|
9
|
|
|
—
|
|
|
(1,796
|
)
|
|
(509
|
)
|
||||||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
12,305
|
|
|
4,758
|
|
|
456
|
|
|
—
|
|
|
2,423
|
|
|
19,941
|
|
||||||
Provision/(benefit) for taxes on income(b)
|
|
(9,049
|
)
|
|
1,331
|
|
|
173
|
|
|
—
|
|
|
11,506
|
|
|
3,962
|
|
||||||
Income from continuing operations
|
|
21,353
|
|
|
3,426
|
|
|
283
|
|
|
—
|
|
|
(9,083
|
)
|
|
15,980
|
|
||||||
Discontinued operations––net of tax
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||||
Net income attributable to noncontrolling interests
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
||||||
Net income attributable to Pfizer Inc.
|
|
21,308
|
|
|
3,426
|
|
|
283
|
|
|
(2
|
)
|
|
(9,083
|
)
|
|
15,933
|
|
||||||
Earnings per common share attributable to Pfizer Inc.––diluted
|
|
3.52
|
|
|
0.57
|
|
|
0.05
|
|
|
—
|
|
|
(1.50
|
)
|
|
2.63
|
|
(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 15.0% in 2019, 15.4% in 2018 and 19.9% in 2017. The decrease in the effective tax rate on Non-GAAP Adjusted income for 2019, compared with 2018, 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 a decrease in tax benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities. The decrease in the effective tax rate on Non-GAAP Adjusted income for 2018 compared with 2017 was primarily due to tax benefits associated with the December 2017 enactment of the TCJA, a favorable change in the jurisdictional mix of earnings as a result of operating fluctuations in the normal course of business, as well as an increase in benefits associated with the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations.
|
2019 Financial Report
|
|
37
|
|
Adjusted income, as shown above, excludes the following items:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Purchase accounting adjustments
|
|
|
|
|
|
|
||||||
Amortization, depreciation and other(a)
|
|
$
|
4,353
|
|
|
$
|
4,789
|
|
|
$
|
4,711
|
|
Cost of sales
|
|
(19
|
)
|
|
(3
|
)
|
|
47
|
|
|||
Total purchase accounting adjustments—pre-tax
|
|
4,333
|
|
|
4,786
|
|
|
4,758
|
|
|||
Income taxes(b)
|
|
(848
|
)
|
|
(915
|
)
|
|
(1,331
|
)
|
|||
Total purchase accounting adjustments—net of tax
|
|
3,485
|
|
|
3,871
|
|
|
3,426
|
|
|||
|
|
|
|
|
|
|
||||||
Acquisition-related costs
|
|
|
|
|
|
|
||||||
Restructuring charges/(credits)(c)
|
|
(192
|
)
|
|
37
|
|
|
105
|
|
|||
Transaction costs(c)
|
|
63
|
|
|
1
|
|
|
4
|
|
|||
Integration costs and other(c)
|
|
311
|
|
|
260
|
|
|
317
|
|
|||
Net periodic benefit costs/(credits) other than service costs(d)
|
|
—
|
|
|
7
|
|
|
(9
|
)
|
|||
Additional depreciation—asset restructuring(e)
|
|
3
|
|
|
12
|
|
|
39
|
|
|||
Total acquisition-related costs—pre-tax
|
|
185
|
|
|
318
|
|
|
456
|
|
|||
Income taxes(f)
|
|
(59
|
)
|
|
(54
|
)
|
|
(173
|
)
|
|||
Total acquisition-related costs—net of tax
|
|
126
|
|
|
264
|
|
|
283
|
|
|||
|
|
|
|
|
|
|
||||||
Discontinued operations
|
|
|
|
|
|
|
||||||
Total discontinued operations—net of tax, attributable to Pfizer Inc.(g)
|
|
(4
|
)
|
|
(10
|
)
|
|
(2
|
)
|
|||
|
|
|
|
|
|
|
||||||
Certain significant items
|
|
|
|
|
|
|
||||||
Restructuring charges/(credits)––cost reduction initiatives(h)
|
|
565
|
|
|
745
|
|
|
(75
|
)
|
|||
Implementation costs and additional depreciation—asset restructuring(i)
|
|
194
|
|
|
232
|
|
|
279
|
|
|||
Certain legal matters, net(j)
|
|
543
|
|
|
157
|
|
|
237
|
|
|||
Certain asset impairments(j)
|
|
2,798
|
|
|
3,101
|
|
|
379
|
|
|||
Business and legal entity alignment costs(k)
|
|
495
|
|
|
63
|
|
|
71
|
|
|||
Net gains recognized during the period on equity securities(j)
|
|
(415
|
)
|
|
(586
|
)
|
|
(224
|
)
|
|||
(Gain) on completion of Consumer Healthcare JV transaction(l)
|
|
(8,086
|
)
|
|
—
|
|
|
—
|
|
|||
Net losses on early retirement of debt(j)
|
|
138
|
|
|
3
|
|
|
999
|
|
|||
Other(m)
|
|
1,289
|
|
|
4
|
|
|
756
|
|
|||
Total certain significant items—pre-tax
|
|
(2,481
|
)
|
|
3,719
|
|
|
2,423
|
|
|||
Income taxes(n)
|
|
(667
|
)
|
|
(1,520
|
)
|
|
(11,506
|
)
|
|||
Total certain significant items—net of tax
|
|
(3,148
|
)
|
|
2,199
|
|
|
(9,083
|
)
|
|||
Total purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items—net of tax, attributable to Pfizer Inc.
|
|
$
|
460
|
|
|
$
|
6,324
|
|
|
$
|
(5,376
|
)
|
(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. Income taxes recorded in 2017 do not reflect any changes associated with the enactment of the TCJA. These changes resulting from the TCJA have been reflected in the line item, Certain significant items “Income taxes”.
|
(c)
|
Included in Restructuring charges and certain acquisition-related costs. Restructuring charges/(credits) include employee termination costs, asset impairments and other exit costs associated with business combinations. Transaction costs represent external costs for banking, legal, accounting and other similar services. Integration costs and other represent external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes and certain other qualifying costs. For additional information, see the “Costs and Expenses—Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives” section of this Financial Review and Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
(d)
|
Included in Other (income)/deductions—net. The credits in 2017 included a net settlement gain, partially offset by accelerated amortization of actuarial losses and prior service costs upon the settlement of the remaining obligation associated with the Hospira U.S. qualified defined benefit pension plan. See Notes to Consolidated Financial Statements—Note 11. Pension and Postretirement Benefit Plans and Defined Contribution Plans.
|
(e)
|
In 2019, primarily included in Selling, informational and administrative expenses. In 2018 and 2017, primarily included in Cost of sales. Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions.
|
(f)
|
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. 2019 includes 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. Income taxes recorded in 2017 do not reflect any changes associated with the December 2017 enactment of the TCJA. These changes resulting from the TCJA have been reflected in Certain significant items “Income taxes”.
|
(g)
|
Included in Discontinued operations––net of tax. For all years presented, represents post-close adjustments.
|
38
|
|
2019 Financial Report
|
|
(h)
|
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 Financial Review and Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).
|
(i)
|
Amounts relate to our cost-reduction/productivity initiatives not related to acquisitions (see Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives). For 2019, included in Cost of sales ($90 million), Selling, informational and administrative expenses ($74 million) and Research and development expenses ($30 million). For 2018, included in Cost of sales ($121 million), Selling, informational and administrative expenses ($72 million) and Research and development expenses ($39 million). For 2017, included in Cost of sales ($170 million), Selling, informational and administrative expenses ($71 million) and Research and development expenses ($38 million).
|
(j)
|
Included in Other (income)/deductions—net (see the Notes to Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net).
|
(k)
|
In 2019, primarily included in Cost of sales ($15 million), Selling, informational and administrative expenses ($139 million) and Other (income)/deductions––net ($338 million) and represents (i) incremental costs of $350 million 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 and (ii) separation costs of $145 million associated with our planned Upjohn transaction with Mylan and mainly includes consulting, legal, tax and advisory services. In full-year 2018, primarily included in Other (income)/deductions––net and mainly 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.
|
(l)
|
Included in (Gain) on completion of Consumer Healthcare JV transaction (see notes to Consolidated Financial Statements––Note 2C. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Equity-Method Investments and Assets and Liabilities Held for Sale).
|
(m)
|
For 2019, included in Cost of sales ($103 million), Selling, informational and administrative expenses ($96 million), Research and development expenses ($632 million) and Other (income)/deductions––net ($457 million). For 2018, included in Cost of sales ($10 million income), Selling, informational and administrative expenses ($151 million), Research and development expenses ($8 million) and Other (income)/deductions––net ($143 million income). For 2017, included in Cost of sales ($193 million), Selling, informational and administrative expenses ($229 million) and Other (income)/deductions––net ($334 million). For 2019 includes, among other things, (i) an upfront license fee payment of $250 million to Akcea, which was recorded in Research and development expenses, (ii) charges of $112 million recorded in Other (income)/deductions––net representing our pro rata share of primarily restructuring and business combination accounting charges recorded by the Consumer Healthcare joint venture, (iii) a $337 million charge in Research and development expenses related to our acquisition of Therachon, (iv) a $99 million charge in Cost of sales related to rivipansel, primarily for inventory manufactured for expected future sale and (v) charges of $240 million, primarily in Selling, informational and administrative expenses ($87 million) and Other (income)/deductions––net ($152 million), for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity associated with the formation of the GSK Consumer Healthcare joint venture. For 2018, includes, among other things, (i) a non-cash $343 million pre-tax gain in Other (income)/deductions––net associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and preclinical stage neuroscience assets primarily targeting disorders of the central nervous system, (ii) 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 and (iii) a non-cash $50 million pre-tax gain in Other (income)/deductions––net as a result of the contribution of our allogeneic chimeric antigen receptor T cell therapy development program assets in connection with our contribution agreement entered into with Allogene (see Notes to Consolidated Financial Statements—Note 2B. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Divestitures). For 2017, includes, among other things, (i) a charitable contribution to the Pfizer Foundation of $200 million, which is included in Selling, informational and administrative expenses; (ii) $195 million in inventory losses, overhead costs related to the period in which our Puerto Rico plants were not operational, and incremental costs, all of which resulted from hurricanes in Puerto Rico in 2017 and are included in Cost of sales; (iii) an $81 million loss related to the sale of our former 49% equity share in Hisun Pfizer, which is included in Other (income)/deductions––net; (iv) charges of $55 million in Other (income)/deductions––net representing adjustments to amounts previously recorded to write down the HIS net assets to fair value less costs to sell and (v) a net loss of $30 million related to the sale of our former 40% ownership investment in Teuto, including the extinguishment of a put option for the remaining 60% ownership interest, which is included in Other (income)/deductions––net.
|
(n)
|
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. Also included is the effect of certain U.S. tax consequences. The amount in 2019 was favorably impacted by a benefit of $1.4 billion, representing tax and interest, resulting from the favorable settlement of a U.S. IRS audit for multiple tax years, the benefits related to certain tax initiatives associated with the implementation of our new organizational structure, 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 and unfavorably impacted by the tax expense of approximately $2.7 billion associated with the gain related to the completion of the Consumer Healthcare joint venture transaction with GSK. The amount in 2018 was favorably impacted primarily by tax benefits related to the TCJA, including certain 2018 tax initiatives as well as adjustments to the provisional estimate of the legislation, reported and disclosed within the applicable measurement period, in accordance with guidance issued by the SEC. The amount in 2017 was favorably impacted by tax benefits primarily associated with the remeasurement of deferred tax liabilities, which includes the repatriation tax on deemed repatriated accumulated post-1986 earnings of foreign subsidiaries associated with the TCJA. See Notes to Consolidated Financial Statements—Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
|
2019 Financial Report
|
|
39
|
|
The following tables provide revenue and cost information by reportable operating segment and a reconciliation of that information to our consolidated statements of income:
|
||||||||||||||||||||||||
|
|
2019
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma(a)
|
|
|
Upjohn(a)
|
|
|
Other(b)
|
|
|
Non-GAAP
Adjusted(c) |
|
|
Reconciling Items(d)
|
|
|
GAAP Reported
|
|
||||||
Revenues
|
|
$
|
39,419
|
|
|
$
|
10,233
|
|
|
$
|
2,098
|
|
|
$
|
51,750
|
|
|
$
|
—
|
|
|
$
|
51,750
|
|
Cost of sales
|
|
7,579
|
|
|
1,724
|
|
|
727
|
|
|
10,030
|
|
|
189
|
|
|
10,219
|
|
||||||
% of revenue
|
|
19.2
|
%
|
|
16.8
|
%
|
|
*
|
|
|
19.4
|
%
|
|
*
|
|
|
19.7
|
%
|
||||||
Selling, informational and administrative expenses
|
|
7,000
|
|
|
1,492
|
|
|
5,549
|
|
|
14,041
|
|
|
309
|
|
|
14,350
|
|
||||||
Research and development expenses
|
|
1,047
|
|
|
236
|
|
|
6,705
|
|
|
7,988
|
|
|
661
|
|
|
8,650
|
|
||||||
Amortization of intangible assets
|
|
271
|
|
|
1
|
|
|
—
|
|
|
271
|
|
|
4,339
|
|
|
4,610
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
747
|
|
|
747
|
|
||||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,086
|
)
|
|
(8,086
|
)
|
||||||
Other (income)/deductions––net
|
|
(993
|
)
|
|
(5
|
)
|
|
698
|
|
|
(300
|
)
|
|
3,878
|
|
|
3,578
|
|
||||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
24,517
|
|
|
6,785
|
|
|
(11,582
|
)
|
|
19,720
|
|
|
(2,037
|
)
|
|
17,682
|
|
|
|
2018
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma(a)
|
|
|
Upjohn(a)
|
|
|
Other(b)
|
|
|
Non-GAAP
Adjusted(c) |
|
|
Reconciling
Items(d)
|
|
|
GAAP Reported
|
|
||||||
Revenues
|
|
$
|
37,558
|
|
|
$
|
12,484
|
|
|
$
|
3,605
|
|
|
$
|
53,647
|
|
|
$
|
—
|
|
|
$
|
53,647
|
|
Cost of sales
|
|
7,147
|
|
|
1,964
|
|
|
2,018
|
|
|
11,130
|
|
|
118
|
|
|
11,248
|
|
||||||
% of revenue
|
|
19.0
|
%
|
|
15.7
|
%
|
|
*
|
|
|
20.7
|
%
|
|
*
|
|
|
21.0
|
%
|
||||||
Selling, informational and administrative expenses
|
|
6,678
|
|
|
1,668
|
|
|
5,886
|
|
|
14,232
|
|
|
223
|
|
|
14,455
|
|
||||||
Research and development expenses
|
|
907
|
|
|
233
|
|
|
6,822
|
|
|
7,962
|
|
|
43
|
|
|
8,006
|
|
||||||
Amortization of intangible assets
|
|
235
|
|
|
1
|
|
|
45
|
|
|
281
|
|
|
4,612
|
|
|
4,893
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
|
1,044
|
|
||||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
(1,148
|
)
|
|
(18
|
)
|
|
499
|
|
|
(667
|
)
|
|
2,784
|
|
|
2,116
|
|
||||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
23,738
|
|
|
8,636
|
|
|
(11,666
|
)
|
|
20,709
|
|
|
(8,823
|
)
|
|
11,885
|
|
|
|
2017
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma(a)
|
|
|
Upjohn(a)
|
|
|
Other(b)
|
|
|
Non-GAAP
Adjusted(c) |
|
|
Reconciling Items(d)
|
|
|
GAAP Reported
|
|
||||||
Revenues
|
|
$
|
35,530
|
|
|
$
|
13,447
|
|
|
$
|
3,569
|
|
|
$
|
52,546
|
|
|
$
|
—
|
|
|
$
|
52,546
|
|
Cost of sales
|
|
7,012
|
|
|
1,919
|
|
|
1,847
|
|
|
10,778
|
|
|
449
|
|
|
11,228
|
|
||||||
% of revenue
|
|
19.7
|
%
|
|
14.3
|
%
|
|
*
|
|
|
20.5
|
%
|
|
*
|
|
|
21.4
|
%
|
||||||
Selling, informational and administrative expenses
|
|
6,487
|
|
|
1,913
|
|
|
6,089
|
|
|
14,489
|
|
|
316
|
|
|
14,804
|
|
||||||
Research and development expenses
|
|
847
|
|
|
275
|
|
|
6,531
|
|
|
7,653
|
|
|
31
|
|
|
7,683
|
|
||||||
Amortization of intangible assets
|
|
149
|
|
|
1
|
|
|
44
|
|
|
193
|
|
|
4,565
|
|
|
4,758
|
|
||||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
351
|
|
|
351
|
|
||||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other (income)/deductions––net
|
|
(1,159
|
)
|
|
(8
|
)
|
|
658
|
|
|
(509
|
)
|
|
1,925
|
|
|
1,416
|
|
||||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
22,194
|
|
|
9,348
|
|
|
(11,600
|
)
|
|
19,941
|
|
|
(7,637
|
)
|
|
12,305
|
|
*
|
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.
|
40
|
|
2019 Financial Report
|
|
(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:
|
|
|
2019
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
|
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other
Unallocated(iv) |
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,098
|
|
|
$
|
—
|
|
|
$
|
2,098
|
|
Cost of sales
|
|
—
|
|
|
2
|
|
|
663
|
|
|
62
|
|
|
727
|
|
|||||
Selling, informational and administrative expenses
|
|
146
|
|
|
—
|
|
|
1,218
|
|
|
4,185
|
|
|
5,549
|
|
|||||
Research and development expenses
|
|
2,398
|
|
|
3,311
|
|
|
89
|
|
|
908
|
|
|
6,705
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
704
|
|
|
698
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(2,538
|
)
|
|
(3,313
|
)
|
|
128
|
|
|
(5,859
|
)
|
|
(11,582
|
)
|
|
|
2018
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
|
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other
Unallocated(iv) |
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,605
|
|
|
$
|
—
|
|
|
$
|
3,605
|
|
Cost of sales
|
|
—
|
|
|
—
|
|
|
1,211
|
|
|
807
|
|
|
2,018
|
|
|||||
Selling, informational and administrative expenses
|
|
159
|
|
|
—
|
|
|
1,753
|
|
|
3,974
|
|
|
5,886
|
|
|||||
Research and development expenses
|
|
2,319
|
|
|
3,359
|
|
|
179
|
|
|
965
|
|
|
6,822
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(127
|
)
|
|
(18
|
)
|
|
7
|
|
|
637
|
|
|
499
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(2,352
|
)
|
|
(3,341
|
)
|
|
410
|
|
|
(6,383
|
)
|
|
(11,666
|
)
|
|
|
2017
|
||||||||||||||||||
|
|
Other Business Activities
|
|
|
|
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
WRDM(i)
|
|
|
GPD(ii)
|
|
|
Other(iii)
|
|
|
Corporate and Other
Unallocated(iv) |
|
|
Total
|
|
|||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,472
|
|
|
$
|
97
|
|
|
$
|
3,569
|
|
Cost of sales
|
|
—
|
|
|
2
|
|
|
1,192
|
|
|
653
|
|
|
1,847
|
|
|||||
Selling, informational and administrative expenses
|
|
143
|
|
|
1
|
|
|
1,741
|
|
|
4,204
|
|
|
6,089
|
|
|||||
Research and development expenses
|
|
2,363
|
|
|
3,151
|
|
|
176
|
|
|
840
|
|
|
6,531
|
|
|||||
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
|||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income)/deductions––net
|
|
(49
|
)
|
|
(6
|
)
|
|
15
|
|
|
698
|
|
|
658
|
|
|||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
(2,457
|
)
|
|
(3,148
|
)
|
|
304
|
|
|
(6,299
|
)
|
|
(11,600
|
)
|
(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.
|
2019 Financial Report
|
|
41
|
|
(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, through July 31, 2019, 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 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.
|
•
|
a $247 million net gain in 2019;
|
•
|
a $13 million net loss in 2018; and
|
•
|
a $52 million net gain in 2017.
|
|
|
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
|
|
$
|
39,419
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,419
|
|
Cost of sales
|
|
7,579
|
|
|
2
|
|
|
55
|
|
|
7,635
|
|
||||
Selling, informational and administrative expenses
|
|
7,000
|
|
|
611
|
|
|
3,268
|
|
|
10,879
|
|
||||
Research and development expenses
|
|
1,047
|
|
|
5,721
|
|
|
873
|
|
|
7,640
|
|
||||
Amortization of intangible assets
|
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other (income)/deductions––net
|
|
(993
|
)
|
|
(5
|
)
|
|
(275
|
)
|
|
(1,273
|
)
|
||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
24,517
|
|
|
(6,329
|
)
|
|
(3,921
|
)
|
|
14,267
|
|
42
|
|
2019 Financial Report
|
|
|
|
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
|
|
$
|
10,233
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,233
|
|
Cost of sales
|
|
1,724
|
|
|
—
|
|
|
(14
|
)
|
|
1,710
|
|
||||
Selling, informational and administrative expenses
|
|
1,492
|
|
|
34
|
|
|
753
|
|
|
2,280
|
|
||||
Research and development expenses
|
|
236
|
|
|
5
|
|
|
21
|
|
|
262
|
|
||||
Amortization of intangible assets
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Restructuring charges and certain acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other (income)/deductions––net
|
|
(5
|
)
|
|
—
|
|
|
(46
|
)
|
|
(51
|
)
|
||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income
|
|
6,785
|
|
|
(39
|
)
|
|
(714
|
)
|
|
6,031
|
|
(i)
|
Amount represents the revenues and costs managed by each of our 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 segment.
|
•
|
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 R&D 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 Financial Review 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 gains on the completion of joint venture transactions, 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 Financial Review.
|
*
|
LOE generally pertains to period-over-period revenue impacts for products across our portfolios experiencing patent expirations or loss of regulatory exclusivity in certain developed markets.
|
2019 Financial Report
|
|
43
|
|
(MILLIONS OF DOLLARS)
|
|
|
||
Biopharma Revenues, 2018
|
|
$
|
37,558
|
|
|
|
|
||
Operational growth/(decline):
|
|
|
||
Continued growth from certain key brands(a)
|
|
2,495
|
|
|
Higher revenue from continued growth of anti-infective products in China, driven by increased demand for Sulperazon and new launches, the 2018 U.S. launches of our immune globulin intravenous products (Panzyga and Octagam) and the launches of certain anti-infectives products (Zavicefta, Zinforo and Cresemba) in international developed and emerging markets, all in the Hospital products business
|
|
472
|
|
|
Higher revenues for Inlyta, primarily in the U.S. driven by increased demand resulting from the second quarter of 2019 U.S. FDA approvals for the combinations of certain immune checkpoint inhibitors plus Inlyta for the first-line treatment of patients with advanced RCC
|
|
190
|
|
|
Growth from Biosimilars, primarily in the U.S.
|
|
168
|
|
|
Higher revenues for rare disease products driven by the U.S. launches in May 2019 of Vyndaqel and in September 2019 of Vyndamax, for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM); and in international markets, primarily driven by continued uptake for the transthyretin amyloid polyneuropathy indication, primarily in developed Europe, as well as the March 2019 launch of the ATTR-CM indication in Japan, partially offset by 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 in the U.S.
|
|
159
|
|
|
Lower revenues from other Hospital products, 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
|
|
(447
|
)
|
|
Lower revenues for Enbrel internationally, reflecting continued biosimilar competition in most developed Europe markets
|
|
(292
|
)
|
|
Other operational factors, net
|
|
150
|
|
|
Operational growth, net
|
|
2,894
|
|
|
|
|
|
||
Unfavorable impact of foreign exchange
|
|
(1,033
|
)
|
|
Biopharma Revenues increase
|
|
1,862
|
|
|
Biopharma Revenues, 2019
|
|
$
|
39,419
|
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz and Prevnar 13/Prevenar 13. See the “Analysis of the Consolidated Statements of Income––Revenues––Selected Product Discussion" section of this Financial Review for product analysis information.
|
•
|
Cost of sales as a percentage of Revenues was relatively flat.
|
•
|
The increase in Cost of sales of 6% was mainly driven 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, partially offset by a favorable impact of foreign exchange.
|
•
|
The increase in Selling, informational and administrative expenses of 5% was mostly driven by additional investment in emerging markets, the Oncology portfolio in developed markets, and for marketing and promotional expenses associated with the U.S. launches of Vyndaqel in May 2019 and Vyndamax in September 2019, as well as an increase in healthcare reform expenses, partially offset by a favorable impact of foreign exchange.
|
•
|
The increase in Research and development expenses of 15% was mainly related to the Array acquisition, as well as an increase in medical spend for new and growing products.
|
•
|
The unfavorable change in Other (income)/deductions––net primarily reflects a $246 million decrease in income from collaborations, out-licensing arrangements and sales of compound/product rights and a $33 million decrease in dividend income from our investment in ViiV, 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, as well as a favorable impact of foreign exchange.
|
44
|
|
2019 Financial Report
|
|
*
|
LOE generally pertains to period-over-period revenue impacts for products across our portfolios experiencing patent expirations or loss of regulatory exclusivity in certain developed markets.
|
(a)
|
Certain key brands represent Ibrance, Eliquis, Xeljanz, Prevnar 13/Prevenar 13, Xtandi and Chantix/Champix.
|
•
|
Cost of sales as a percentage of Revenues decreased 0.7 percentage points mainly driven by a favorable change in product mix, which includes an increase in alliance revenue which has no associated cost of sales, and a favorable impact of foreign exchange, partially offset by an increase in royalty expenses based on the mix of products sold.
|
•
|
The increase in Cost of sales of 2% was mostly driven by an increase in royalty expenses based on the mix of products sold, an unfavorable change in product mix, and an increase in sales volumes for various products within our product portfolio, partially offset by a favorable impact of foreign exchange.
|
•
|
The increase in Selling, informational and administrative expenses of 3% was mainly driven by additional investment across several of our products, primarily Xeljanz, Ibrance, Eucrisa and Prevnar 13/Prevenar 13 (pediatric indication), partially offset by lower marketing, advertising and promotion expenses, reflecting the benefits of cost-reduction and productivity initiatives.
|
•
|
The increase in Research and development expenses of 7% was driven by an increase in medical spend, mostly in Oncology (including Ibrance, as well as investments for new global capabilities) and expenses associated with the creation of new business units, as well as support for recently launched assets (including Talzenna), partially offset by a decrease in spend on products transferred from EH to Internal Medicine and on Hospital products.
|
•
|
Other (income)/deductions––net was relatively unchanged.
|
2019 Financial Report
|
|
45
|
|
*
|
LOE generally pertains to period-over-period revenue impacts for products across our portfolios experiencing patent expirations or loss of regulatory exclusivity in certain developed markets.
|
•
|
Cost of sales as a percentage of Revenues increased 1.1 percentage points, driven by lower Lyrica revenues in developed markets, primarily in the U.S. due to multi-source generic competition that began in July 2019, partially offset by lower royalty expense for Lyrica due to the patent expiration.
|
•
|
The decrease in Cost of sales of 12% was mainly driven by lower royalty expense due to the Lyrica patent expiration and multi-source generic competition that began in July 2019, as well as a favorable impact of foreign exchange.
|
•
|
Selling, informational and administrative expenses decreased 11% driven by a reduction in field force expense as well as advertising and promotion expenses in developed markets, primarily related to Lyrica in the U.S., as well as a favorable impact of foreign exchange, partially offset by the non-recurrence of one-time general and administrative expense reversals in the second and third quarters of 2018, and investments in China across key brands.
|
•
|
Research and development expenses and Other (income)/deductions––net were relatively unchanged.
|
46
|
|
2019 Financial Report
|
|
*
|
LOE generally pertains to period-over-period revenue impacts for products across our portfolios experiencing patent expirations or loss of regulatory exclusivity in certain developed markets.
|
•
|
Cost of sales as a percentage of Revenues increased 1.5 percentage points driven by lower revenues for Viagra in the U.S. resulting from the loss of exclusivity in December 2017, as well as increased manufacturing plant costs in Puerto Rico due to hurricane-related recovery expenses, partially offset by a favorable impact of foreign exchange.
|
•
|
The increase in Cost of sales of 2% was mostly driven by higher sales volume of Lyrica in the U.S. and Japan, as well as key products in China, partially offset by a favorable impact of foreign exchange.
|
•
|
Selling, informational and administrative expenses decreased 13%, primarily driven by a reduction in field force expense as well as advertising and promotion expenses in developed markets, mainly related to Viagra and Lyrica in the U.S., as well as one-time general and administrative expense reversals in the second and third quarters of 2018, partially offset by additional investments in China across key brands.
|
•
|
Research and development expenses decreased 15% mostly due to decreased spending for post-approval commitment activities for Lyrica and Celebrex.
|
•
|
Other (income)/deductions––net were relatively unchanged.
|
2019 Financial Report
|
|
47
|
|
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
19/18
|
|
|
18/17
|
|
|||
Cash provided by/(used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
|
$
|
12,588
|
|
|
$
|
15,827
|
|
|
$
|
16,802
|
|
|
(20
|
)
|
|
(6
|
)
|
Investing activities
|
|
(3,945
|
)
|
|
4,525
|
|
|
(4,740
|
)
|
|
*
|
|
|
*
|
|
|||
Financing activities
|
|
(8,485
|
)
|
|
(20,441
|
)
|
|
(13,350
|
)
|
|
(58
|
)
|
|
53
|
|
|||
Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents
|
|
(32
|
)
|
|
(116
|
)
|
|
53
|
|
|
(73
|
)
|
|
*
|
|
|||
Net increase/(decrease) in Cash and cash equivalents and restricted cash and cash equivalents
|
|
$
|
125
|
|
|
$
|
(205
|
)
|
|
$
|
(1,235
|
)
|
|
*
|
|
|
(83
|
)
|
*
|
Indicates calculation not meaningful or result is equal to or greater than 100%.
|
•
|
the non-recurrence of a non-cash gain associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and pre-clinical stage neuroscience assets in 2018 (see Notes to Consolidated Financial Statements––Note 2A. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Acquisitions); 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 (see Notes to Consolidated Financial Statements––Note 2B. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Divestitures),
|
•
|
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 non-recurrence of a non-cash net loss on early retirement of debt under an exchange offer in 2017;
|
•
|
unrealized net gains on equity securities resulting from the adoption of a new accounting standard on January 1, 2018, related to the recognition and measurement of financial assets and liabilities;
|
•
|
a decrease in debt extinguishment costs in 2018 related to early retirement of debt under an exchange offer in 2017, which had been reclassified from operating to financing activities in 2018 and 2017 in accordance with our implementation of a new accounting standard on January 1, 2018 related to the classification of debt prepayment and extinguishment costs;
|
•
|
a non-cash gain associated with our transaction with Bain Capital to create a new biopharmaceutical company to continue development of a portfolio of clinical and preclinical stage neuroscience assets (see Notes to Consolidated Financial Statements––Note 2B. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Divestitures); and
|
48
|
|
2019 Financial Report
|
|
•
|
a non-cash gain on the contribution of Pfizer’s allogeneic CAR T developmental program assets, in connection with our contribution agreement with Allogene (see Notes to Consolidated Financial Statements—Note 2B. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Divestitures),
|
•
|
decreases in net realized gains on sales of investments in debt and equity securities;
|
•
|
net losses on foreign exchange contracts hedging a portion of our forecasted intercompany inventory sales (that fixes the cost of inventory later sold to customers); and
|
•
|
a decrease in gains on the sale of property, plant and equipment.
|
•
|
cash used for the acquisition of Array, net of cash acquired, of $10.9 billion in 2019,
|
•
|
an increase in net proceeds generated from the sale of investments of $2.9 billion for cash needs, including financing the acquisition of Array (see Notes to Consolidated Financial Statements––Note 2A. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Acquisitions).
|
•
|
an increase in net proceeds generated from the sale of investments of $8.6 billion in 2018 for cash needs; and
|
•
|
a decrease in cash used for acquisitions, net of cash acquired of $1.0 billion due to the acquisition of the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business and substantially all of the remaining consideration for the Medivation acquisition in 2017 (see Notes to Consolidated Financial Statements—Note 2A. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Acquisitions).
|
•
|
$10.6 billion net proceeds raised from short-term borrowings in 2019, primarily in connection with the acquisition of Array, compared to net payments on short-term borrowings of $2.3 billion in 2018; and
|
•
|
lower purchases of common stock of $3.3 billion,
|
•
|
higher repayments on long-term debt of $3.2 billion; and
|
•
|
lower proceeds from the exercise of stock options of $864 million.
|
•
|
$2.3 billion less proceeds raised from short-term borrowings in 2018, compared to 2017; and
|
•
|
higher purchases of common stock of $7.2 billion,
|
•
|
lower repayments on long-term debt of $2.6 billion.
|
2019 Financial Report
|
|
49
|
|
•
|
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 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 a decrease in short-term investments and net increase in short-term debt, mainly as a result of cash paid for the acquisition of Array (see Notes to Consolidated Financial Statements––Note 2A. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Acquisitions). 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 Financial Review.
|
(c)
|
The decrease in working capital was primarily due to:
|
•
|
financing requirements for the acquisition of Array, 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 March 2019 long-term debt issuance discussed below;
|
•
|
the impact of the deconsolidation of the Consumer Healthcare business as a result of the completion of the joint venture transaction; 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 for certain products, including inventory build for new product launches, supply recovery, and market demand, partially offset by a charge related to rivipansel, primarily for inventory manufactured for expected future sale (see Notes to Consolidated Financial Statements—Note 2E. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Research and Development and Collaborative Arrangements for additional information).
|
(d)
|
Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury stock).
|
50
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
51
|
|
|
|
|
|
Years
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Total
|
|
|
2020
|
|
|
2021-2022
|
|
|
2023-2024
|
|
|
Thereafter
|
|
|||||
Long-term debt, including current portion(a)
|
|
$
|
37,417
|
|
|
$
|
1,462
|
|
|
$
|
4,769
|
|
|
$
|
5,274
|
|
|
$
|
25,912
|
|
Interest payments on long-term debt obligations(b)
|
|
21,612
|
|
|
1,403
|
|
|
2,701
|
|
|
2,436
|
|
|
15,073
|
|
|||||
Other long-term liabilities(c)
|
|
2,521
|
|
|
427
|
|
|
534
|
|
|
483
|
|
|
1,078
|
|
|||||
Operating leases(d)
|
|
3,280
|
|
|
323
|
|
|
512
|
|
|
433
|
|
|
2,012
|
|
|||||
Purchase obligations and other(e)
|
|
2,534
|
|
|
711
|
|
|
994
|
|
|
485
|
|
|
344
|
|
|||||
Other taxes payable—deemed repatriated accumulated post-1986 earnings of foreign subsidiaries(f)
|
|
9,650
|
|
|
600
|
|
|
1,700
|
|
|
2,400
|
|
|
4,950
|
|
|||||
Uncertain tax positions(g)
|
|
130
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(a)
|
Long-term debt consists of senior unsecured notes (including fixed and floating rate, foreign currency denominated, and other notes), carried at historical proceeds, as adjusted (see Notes to Consolidated Financial Statements—Note 7. Financial Instruments). Commitments under financing leases are not significant.
|
(b)
|
Our calculations of expected interest payments incorporate only current period assumptions for interest rates, foreign currency translation rates and hedging strategies (see Notes to Consolidated Financial Statements—Note 7. Financial Instruments), and assume that interest is accrued through the maturity date or expiration of the related instrument.
|
(c)
|
Includes expected payments relating to our unfunded U.S. supplemental (non-qualified) pension plans, postretirement plans and deferred compensation plans. Excludes amounts relating to our U.S. qualified pension plans and international pension plans, all of which have a substantial amount of plan assets, because the required funding obligations are not expected to be material and/or because such liabilities do not necessarily reflect future cash payments, as the impact of changes in economic conditions on the fair value of the pension plan assets and/or liabilities can be significant. Also, excludes $3.9 billion of liabilities related to the fair value of derivative financial instruments, legal matters and employee terminations, among other liabilities, most of which do not represent contractual obligations. See also our liquidity discussion above in this “Analysis of Financial Condition, Liquidity and Capital Resources” section, as well as the Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives, Note 7A. Financial Instruments: Fair Value Measurements, Note 11E. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Cash Flows, and Note 16. Contingencies and Certain Commitments.
|
(d)
|
Includes future minimum rental commitments under non-cancelable operating leases. These amounts include an agreement we entered in April 2018 to lease space in an office building in New York City. We expect to take control of the property in 2021 and relocate our global headquarters to this new office building in 2022. Our future minimum rental commitment under this 20-year lease is approximately $1.7 billion.
|
(e)
|
Includes agreements to purchase goods and services that are enforceable and legally binding and includes amounts relating to advertising, information technology services, employee benefit administration services, and potential milestone payments deemed reasonably likely to occur. Also includes obligations to make guaranteed fixed annual payments over the next 7 years in connection with the U.S. and EU approvals for Besponsa ($412 million) and an obligation to make guaranteed fixed annual payments over the next 8 years for Bosulif ($217 million), both associated with R&D arrangements. For additional information, see Notes to Consolidated Financial Statements—Note 7E. Financial Instruments: Other Noncurrent Liabilities and —Note 16C. Contingencies and Certain Commitments: Certain Commitments.
|
(f)
|
Represents estimated cash payments related to the TCJA repatriation tax for which we elected with the filing of our 2018 U.S. Federal Consolidated Income Tax Return to pay in annual installments over eight years through 2026 (with the next installment due in April 2020). Our obligations may vary as a result of changes in our uncertain tax positions and/or availability of attributes such as foreign tax and other credit carryforwards. For additional information, see Notes to Consolidated Financial Statements—Note 5A. Tax Matters: Taxes on Income from Continuing Operations and Note 5C. Tax Matters: Deferred Taxes.
|
(g)
|
Includes only income tax amounts currently payable. We are unable to predict the timing of tax settlements related to our noncurrent obligations for uncertain tax positions as tax audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject to negotiation or litigation.
|
52
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
53
|
|
Recently Issued Accounting Standards, Not Adopted as of December 31, 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 and related amendments replace the probable initial recognition threshold for incurred loss estimates in current GAAP with a methodology that reflects expected credit loss estimates.
|
|
January 1, 2020.
|
|
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. We do not expect this new guidance to have a material impact on our consolidated financial statements.
|
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.
|
|
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.
|
|
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.
|
|
We do not expect this new guidance to have a material impact on our consolidated financial statements.
|
In December 2019, the FASB issued new guidance that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.
|
|
January 1, 2021. Early adoption is permitted.
|
|
We are assessing the impact of the provisions of this new guidance on our consolidated financial statements.
|
54
|
|
2019 Financial Report
|
|
•
|
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;
|
•
|
claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates, including claims and concerns that may arise from 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. and EU prescribing information for Xeljanz;
|
•
|
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;
|
2019 Financial Report
|
|
55
|
|
•
|
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 commercialize 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, sales or marketing, including delays caused by natural events, such as hurricanes; supply disruptions, shortages or stock-outs at our facilities; and legal or regulatory actions, such as warning letters, suspension of manufacturing, seizure of product, injunctions, debarment, recall of a product, delays or denials of product approvals, import bans or denial of import certifications;
|
•
|
the impact of public health epidemics or outbreaks on our operations (such as the novel strain of coronavirus impacting China and several other countries);
|
•
|
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;
|
•
|
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 or changes to 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;
|
56
|
|
2019 Financial Report
|
|
•
|
uncertainties based on the formal change in relationship between the U.K. government and 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;
|
•
|
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, including changes in U.S. generally accepted accounting principles;
|
•
|
uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and lenders and counterparties to our foreign-exchange and interest-rate agreements of challenging global economic conditions and recent and possible future changes in global financial markets; 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 product recalls, withdrawals and other unusual items;
|
•
|
the risk of an impairment charge related to our intangible assets, goodwill or equity-method investments;
|
•
|
the impact of, and risks and uncertainties related to, acquisitions and divestitures, such as the acquisition of Array, our transaction with GSK which combined our respective consumer healthcare businesses into a new consumer healthcare joint venture and our agreement to combine Upjohn with Mylan to create a new global pharmaceutical company, Viatris, including, among other things, risks related to the satisfaction of the conditions to closing to any pending transaction (including the failure to obtain any necessary shareholder and regulatory approvals) in the anticipated timeframe or at all and the possibility that such transaction does not close; the ability to realize the anticipated benefits of those transactions, including the possibility that the expected cost savings and/or accretion from certain of those transactions will not be realized or will not be realized within the expected time frame; the risk that the businesses will not be integrated successfully; negative effects of the announcement or the consummation of the transaction on the market price of Pfizer’s common stock, Pfizer’s credit ratings and/or Pfizer’s operating results; 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; 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; competitive developments; and as it relates to the Consumer Healthcare JV with GSK, the possibility that a future separation of the joint venture as an independent company via a demerger of GSK’s equity interest to GSK’s shareholders and a listing of the joint venture on the U.K. equity market may not occur; and
|
•
|
the impact of, and risks and uncertainties related to, restructurings and internal reorganizations, including the reorganization of our commercial operations in 2019, 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.
|
2019 Financial Report
|
|
57
|
|
|
|
|
Albert Bourla
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
Frank D’Amelio
|
|
Loretta Cangialosi
|
Principal Financial Officer
|
|
Principal Accounting Officer
|
|
|
|
February 27, 2020
|
|
|
58
|
|
2019 Financial Report
|
|
The Audit Committee
|
|
Suzanne Nora Johnson, Chair
|
Ronald E. Blaylock
|
Joseph J. Echevarria
|
James C. Smith
|
|
February 27, 2020
|
2019 Financial Report
|
|
59
|
|
60
|
|
2019 Financial Report
|
|
KPMG LLP
|
|
We have not been able to determine the specific year that KPMG and our predecessor firms began serving as the Company’s auditor, however, we are aware that KPMG and our predecessor firms have served as the Company’s auditor since at least 1942.
|
|
New York, New York
|
|
February 27, 2020
|
2019 Financial Report
|
|
61
|
|
KPMG LLP
|
New York, New York
|
|
February 27, 2020
|
62
|
|
2019 Financial Report
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Revenues
|
|
$
|
51,750
|
|
|
$
|
53,647
|
|
|
$
|
52,546
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||
Cost of sales(a)
|
|
10,219
|
|
|
11,248
|
|
|
11,228
|
|
|||
Selling, informational and administrative expenses(a)
|
|
14,350
|
|
|
14,455
|
|
|
14,804
|
|
|||
Research and development expenses(a)
|
|
8,650
|
|
|
8,006
|
|
|
7,683
|
|
|||
Amortization of intangible assets
|
|
4,610
|
|
|
4,893
|
|
|
4,758
|
|
|||
Restructuring charges and certain acquisition-related costs
|
|
747
|
|
|
1,044
|
|
|
351
|
|
|||
(Gain) on completion of Consumer Healthcare JV transaction
|
|
(8,086
|
)
|
|
—
|
|
|
—
|
|
|||
Other (income)/deductions––net
|
|
3,578
|
|
|
2,116
|
|
|
1,416
|
|
|||
Income from continuing operations before provision/(benefit) for taxes on income
|
|
17,682
|
|
|
11,885
|
|
|
12,305
|
|
|||
Provision/(benefit) for taxes on income
|
|
1,384
|
|
|
706
|
|
|
(9,049
|
)
|
|||
Income from continuing operations
|
|
16,298
|
|
|
11,179
|
|
|
21,353
|
|
|||
Discontinued operations:
|
|
|
|
|
|
|
||||||
Income from discontinued operations––net of tax
|
|
4
|
|
|
10
|
|
|
(1
|
)
|
|||
Gain on disposal of discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
3
|
|
|||
Discontinued operations––net of tax
|
|
4
|
|
|
10
|
|
|
2
|
|
|||
Net income before allocation to noncontrolling interests
|
|
16,302
|
|
|
11,188
|
|
|
21,355
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
29
|
|
|
36
|
|
|
47
|
|
|||
Net income attributable to Pfizer Inc.
|
|
$
|
16,273
|
|
|
$
|
11,153
|
|
|
$
|
21,308
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share––basic:
|
|
|
|
|
|
|
|
|
|
|||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
2.92
|
|
|
$
|
1.90
|
|
|
$
|
3.57
|
|
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
2.92
|
|
|
$
|
1.90
|
|
|
$
|
3.57
|
|
Earnings per common share––diluted:
|
|
|
|
|
|
|
|
|
|
|||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
2.87
|
|
|
$
|
1.86
|
|
|
$
|
3.52
|
|
Discontinued operations––net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
2.87
|
|
|
$
|
1.87
|
|
|
$
|
3.52
|
|
|
|
|
|
|
|
|
||||||
Weighted-average shares––basic
|
|
5,569
|
|
|
5,872
|
|
|
5,970
|
|
|||
Weighted-average shares––diluted
|
|
5,675
|
|
|
5,977
|
|
|
6,058
|
|
(a)
|
Exclusive of amortization of intangible assets, except as disclosed in Note 1L.
|
2019 Financial Report
|
|
63
|
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net income before allocation to noncontrolling interests
|
|
$
|
16,302
|
|
|
$
|
11,188
|
|
|
$
|
21,355
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments, net(a)
|
|
$
|
654
|
|
|
$
|
(799
|
)
|
|
$
|
1,116
|
|
Reclassification adjustments(b)
|
|
(288
|
)
|
|
(22
|
)
|
|
162
|
|
|||
|
|
366
|
|
|
(821
|
)
|
|
1,278
|
|
|||
Unrealized holding gains/(losses) on derivative financial instruments, net
|
|
476
|
|
|
220
|
|
|
(10
|
)
|
|||
Reclassification adjustments for (gains)/losses included in net income(c)
|
|
(664
|
)
|
|
27
|
|
|
(520
|
)
|
|||
|
|
(188
|
)
|
|
247
|
|
|
(530
|
)
|
|||
Unrealized holding gains/(losses) on available-for-sale securities, net
|
|
(1
|
)
|
|
(185
|
)
|
|
818
|
|
|||
Reclassification adjustments for (gains)/losses included in net income(c)
|
|
39
|
|
|
124
|
|
|
(244
|
)
|
|||
Reclassification adjustments for unrealized gains included in Retained earnings(d)
|
|
—
|
|
|
(462
|
)
|
|
—
|
|
|||
|
|
38
|
|
|
(522
|
)
|
|
574
|
|
|||
Benefit plans: actuarial losses, net
|
|
(826
|
)
|
|
(649
|
)
|
|
(212
|
)
|
|||
Reclassification adjustments related to amortization
|
|
241
|
|
|
242
|
|
|
588
|
|
|||
Reclassification adjustments related to settlements, net
|
|
274
|
|
|
142
|
|
|
117
|
|
|||
Other
|
|
22
|
|
|
112
|
|
|
(145
|
)
|
|||
|
|
(289
|
)
|
|
(153
|
)
|
|
348
|
|
|||
Benefit plans: prior service costs and other, net
|
|
(7
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|||
Reclassification adjustments related to amortization of prior service costs and other, net
|
|
(181
|
)
|
|
(181
|
)
|
|
(184
|
)
|
|||
Reclassification adjustments related to curtailments of prior service costs and other, net
|
|
(2
|
)
|
|
(19
|
)
|
|
(18
|
)
|
|||
Other
|
|
1
|
|
|
2
|
|
|
—
|
|
|||
|
|
(189
|
)
|
|
(207
|
)
|
|
(203
|
)
|
|||
Other comprehensive income/(loss), before tax
|
|
(262
|
)
|
|
(1,457
|
)
|
|
1,468
|
|
|||
Tax provision/(benefit) on other comprehensive income/(loss)(e)
|
|
115
|
|
|
518
|
|
|
(262
|
)
|
|||
Other comprehensive income/(loss) before allocation to noncontrolling interests
|
|
$
|
(376
|
)
|
|
$
|
(1,975
|
)
|
|
$
|
1,730
|
|
|
|
|
|
|
|
|
|
|
|
|||
Comprehensive income before allocation to noncontrolling interests
|
|
$
|
15,926
|
|
|
$
|
9,214
|
|
|
$
|
23,085
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
18
|
|
|
16
|
|
|
62
|
|
|||
Comprehensive income attributable to Pfizer Inc.
|
|
$
|
15,908
|
|
|
$
|
9,198
|
|
|
$
|
23,023
|
|
(a)
|
Amounts in 2019 include a gain of approximately $1.3 billion pre-tax ($978 million after-tax) related to foreign currency translation adjustments attributable to our equity method investment in the GSK Consumer Healthcare joint venture (see Note 2C), partially offset by the strengthening of the U.S. dollar against the euro and the Australian dollar, and the results of our net investment hedging program. In 2018, Foreign currency translation adjustments, net, primarily reflects the strengthening of the U.S. dollar against the euro, U.K. pound and Chinese renminbi, In 2017, Foreign currency translation adjustments, net, primarily reflects the weakening of the U.S. dollar against the euro, U.K. pound and the Canadian dollar.
|
(b)
|
For the year ended December 31, 2019, the foreign currency translation adjustments are primarily reclassified into (Gain) on completion of Consumer Healthcare JV transaction in the consolidated statement of income as a result of the contribution of our Consumer Healthcare business to the Consumer Healthcare joint venture with GSK. See Note 2C. For the year ended December 31, 2017, the foreign currency translation adjustments reclassified into Other (income)/deductions—net in the consolidated statement of income primarily result from the sale of our former 40% ownership investment in Teuto and the sale of our former 49%-owned equity method investment in Hisun Pfizer. See Note 2C.
|
(c)
|
Reclassified into Other (income)/deductions—net and Cost of sales in the consolidated statements of income. For additional information on amounts reclassified into Other (income)/deductions—net and Cost of sales, see Note 7F.
|
(d)
|
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.
|
(e)
|
For additional information. see Note 5E.
|
64
|
|
2019 Financial Report
|
|
|
|
As of December 31,
|
||||||
(MILLIONS, EXCEPT PREFERRED STOCK ISSUED AND PER COMMON SHARE DATA)
|
|
2019
|
|
|
2018
|
|
||
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,305
|
|
|
$
|
1,139
|
|
Short-term investments
|
|
8,525
|
|
|
17,694
|
|
||
Trade accounts receivable, less allowance for doubtful accounts: 2019—$527; 2018—$541
|
|
8,724
|
|
|
8,025
|
|
||
Inventories
|
|
8,283
|
|
|
7,508
|
|
||
Current tax assets
|
|
3,344
|
|
|
3,374
|
|
||
Other current assets
|
|
2,600
|
|
|
2,461
|
|
||
Assets held for sale
|
|
21
|
|
|
9,725
|
|
||
Total current assets
|
|
32,803
|
|
|
49,926
|
|
||
Equity-method investments
|
|
17,133
|
|
|
181
|
|
||
Long-term investments
|
|
3,014
|
|
|
2,586
|
|
||
Property, plant and equipment, less accumulated depreciation
|
|
13,967
|
|
|
13,385
|
|
||
Identifiable intangible assets, less accumulated amortization
|
|
35,370
|
|
|
35,211
|
|
||
Goodwill
|
|
58,653
|
|
|
53,411
|
|
||
Noncurrent deferred tax assets and other noncurrent tax assets
|
|
2,099
|
|
|
1,924
|
|
||
Other noncurrent assets
|
|
4,450
|
|
|
2,799
|
|
||
Total assets
|
|
$
|
167,489
|
|
|
$
|
159,422
|
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
|
|
||
Short-term borrowings, including current portion of long-term debt: 2019—$1,462; 2018—$4,776
|
|
$
|
16,195
|
|
|
$
|
8,831
|
|
Trade accounts payable
|
|
4,220
|
|
|
4,674
|
|
||
Dividends payable
|
|
2,104
|
|
|
2,047
|
|
||
Income taxes payable
|
|
980
|
|
|
1,265
|
|
||
Accrued compensation and related items
|
|
2,720
|
|
|
2,397
|
|
||
Other current liabilities
|
|
11,083
|
|
|
10,753
|
|
||
Liabilities held for sale
|
|
—
|
|
|
1,890
|
|
||
Total current liabilities
|
|
37,304
|
|
|
31,858
|
|
||
|
|
|
|
|
||||
Long-term debt
|
|
35,955
|
|
|
32,909
|
|
||
Pension benefit obligations, net
|
|
5,638
|
|
|
5,272
|
|
||
Postretirement benefit obligations, net
|
|
1,124
|
|
|
1,338
|
|
||
Noncurrent deferred tax liabilities
|
|
5,578
|
|
|
3,700
|
|
||
Other taxes payable
|
|
12,126
|
|
|
14,737
|
|
||
Other noncurrent liabilities
|
|
6,317
|
|
|
5,850
|
|
||
Total liabilities
|
|
104,042
|
|
|
95,664
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Preferred stock, no par value, at stated value; 27 shares authorized; issued: 2019—431; 2018—478
|
|
17
|
|
|
19
|
|
||
Common stock, $0.05 par value; 12,000 shares authorized; issued: 2019—9,369; 2018—9,332
|
|
468
|
|
|
467
|
|
||
Additional paid-in capital
|
|
87,428
|
|
|
86,253
|
|
||
Treasury stock, shares at cost: 2019—3,835; 2018—3,615
|
|
(110,801
|
)
|
|
(101,610
|
)
|
||
Retained earnings
|
|
97,670
|
|
|
89,554
|
|
||
Accumulated other comprehensive loss
|
|
(11,640
|
)
|
|
(11,275
|
)
|
||
Total Pfizer Inc. shareholders’ equity
|
|
63,143
|
|
|
63,407
|
|
||
Equity attributable to noncontrolling interests
|
|
303
|
|
|
351
|
|
||
Total equity
|
|
63,447
|
|
|
63,758
|
|
||
Total liabilities and equity
|
|
$
|
167,489
|
|
|
$
|
159,422
|
|
2019 Financial Report
|
|
65
|
|
|
|
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, 2017
|
|
597
|
|
|
$
|
24
|
|
|
9,230
|
|
|
$
|
461
|
|
|
$
|
82,685
|
|
|
(3,160
|
)
|
|
$
|
(84,364
|
)
|
|
$
|
71,774
|
|
|
$
|
(11,036
|
)
|
|
$
|
59,544
|
|
|
$
|
296
|
|
|
$
|
59,840
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,308
|
|
|
|
|
21,308
|
|
|
47
|
|
|
21,355
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,715
|
|
|
1,715
|
|
|
14
|
|
|
1,730
|
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,789
|
)
|
|
|
|
(7,789
|
)
|
|
|
|
(7,789
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
||||||||||||||||||
Share-based payment transactions(a)
|
|
|
|
|
|
45
|
|
|
2
|
|
|
1,597
|
|
|
15
|
|
|
(63
|
)
|
|
|
|
|
|
1,536
|
|
|
|
|
1,536
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(150
|
)
|
|
(5,000
|
)
|
|
|
|
|
|
(5,000
|
)
|
|
|
|
(5,000
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(73
|
)
|
|
(3
|
)
|
|
|
|
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
(5
|
)
|
||||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Balance, December 31, 2017
|
|
524
|
|
|
21
|
|
|
9,275
|
|
|
464
|
|
|
84,278
|
|
|
(3,296
|
)
|
|
(89,425
|
)
|
|
85,291
|
|
|
(9,321
|
)
|
|
71,308
|
|
|
348
|
|
|
71,656
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,153
|
|
|
|
|
11,153
|
|
|
36
|
|
|
11,188
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,955
|
)
|
|
(1,955
|
)
|
|
(20
|
)
|
|
(1,975
|
)
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,060
|
)
|
|
|
|
(8,060
|
)
|
|
|
|
|
(8,060
|
)
|
|||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
|
(1
|
)
|
|||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
57
|
|
|
3
|
|
|
1,977
|
|
|
(12
|
)
|
|
13
|
|
|
|
|
|
|
1,993
|
|
|
|
|
1,993
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
(307
|
)
|
|
(12,198
|
)
|
|
|
|
|
|
(12,198
|
)
|
|
|
|
(12,198
|
)
|
||||||||||||||||
Preferred stock conversions and redemptions
|
|
(46
|
)
|
|
(2
|
)
|
|
|
|
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
(4
|
)
|
|||||||||||||
Other(b)
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
1,172
|
|
|
|
|
|
1,172
|
|
|
—
|
|
|
1,172
|
|
||||||||||||
Balance, December 31, 2018
|
|
478
|
|
|
19
|
|
|
9,332
|
|
|
467
|
|
|
86,253
|
|
|
(3,615
|
)
|
|
(101,610
|
)
|
|
89,554
|
|
|
(11,275
|
)
|
|
63,407
|
|
|
351
|
|
|
63,758
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,273
|
|
|
|
|
16,273
|
|
|
29
|
|
|
16,302
|
|
|||||||||||||||||
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(365
|
)
|
|
(365
|
)
|
|
(11
|
)
|
|
(376
|
)
|
|||||||||||||||||
Cash dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,174
|
)
|
|
|
|
(8,174
|
)
|
|
|
|
(8,174
|
)
|
||||||||||||||||||
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||||||||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||||||||||||||
Share-based payment transactions
|
|
|
|
|
|
37
|
|
|
2
|
|
|
1,219
|
|
|
(8
|
)
|
|
(326
|
)
|
|
|
|
|
|
894
|
|
|
|
|
894
|
|
||||||||||||||
Purchases of common stock
|
|
|
|
|
|
|
|
|
|
|
|
(213
|
)
|
|
(8,865
|
)
|
|
|
|
|
|
(8,865
|
)
|
|
|
|
(8,865
|
)
|
|||||||||||||||||
Preferred stock conversions and redemptions
|
|
(47
|
)
|
|
(2
|
)
|
|
|
|
|
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
(4
|
)
|
||||||||||||||
Other(c)
|
|
|
|
|
|
|
|
|
|
|
(40
|
)
|
|
—
|
|
|
|
|
19
|
|
|
|
|
(21
|
)
|
|
(60
|
)
|
|
(81
|
)
|
||||||||||||||
Balance, December 31, 2019
|
|
431
|
|
|
$
|
17
|
|
|
9,369
|
|
|
$
|
468
|
|
|
$
|
87,428
|
|
|
(3,835
|
)
|
|
$
|
(110,801
|
)
|
|
$
|
97,670
|
|
|
$
|
(11,640
|
)
|
|
$
|
63,143
|
|
|
$
|
303
|
|
|
$
|
63,447
|
|
(a)
|
2017 treasury shares include the effect of the modification for a commitment to pay 15.2 million common-share equivalents that were scheduled for near-term settlement. These common share equivalents were paid in the first quarter of 2018.
|
(b)
|
Primarily 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.
|
(c)
|
The increase to Retained earnings in 2019 includes 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. The decrease in Equity attributable to noncontrolling interests resulted from the deconsolidation of our Consumer Healthcare business in connection with the formation of the GSK Consumer Healthcare joint venture. For additional information, see Note 2C. The decrease in Additional paid in capital relates to our buyout of the remaining 50% of noncontrolling interests in an oncology vaccines start up, which has historically been consolidated by us.
|
66
|
|
2019 Financial Report
|
|
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Activities
|
|
|
|
|
|
|
||||||
Net income before allocation to noncontrolling interests
|
|
$
|
16,302
|
|
|
$
|
11,188
|
|
|
$
|
21,355
|
|
Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
|
6,010
|
|
|
6,384
|
|
|
6,269
|
|
|||
Asset write-offs and impairments
|
|
2,953
|
|
|
3,398
|
|
|
634
|
|
|||
TCJA impact(a)
|
|
(323
|
)
|
|
(596
|
)
|
|
(10,660
|
)
|
|||
Gain on completion of Consumer Healthcare JV transaction, net of cash conveyed(b)
|
|
(8,233
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred taxes from continuing operations(c)
|
|
614
|
|
|
(2,205
|
)
|
|
(2,410
|
)
|
|||
Share-based compensation expense
|
|
718
|
|
|
949
|
|
|
840
|
|
|||
Benefit plan contributions in excess of expense/income
|
|
(336
|
)
|
|
(1,095
|
)
|
|
(961
|
)
|
|||
Other adjustments, net
|
|
(1,086
|
)
|
|
(1,269
|
)
|
|
399
|
|
|||
Other changes in assets and liabilities, net of acquisitions and divestitures:
|
|
|
|
|
|
|
||||||
Trade accounts receivable
|
|
(742
|
)
|
|
(644
|
)
|
|
259
|
|
|||
Inventories
|
|
(1,050
|
)
|
|
(717
|
)
|
|
(357
|
)
|
|||
Other assets
|
|
795
|
|
|
(16
|
)
|
|
7
|
|
|||
Trade accounts payable
|
|
(564
|
)
|
|
431
|
|
|
46
|
|
|||
Other liabilities
|
|
267
|
|
|
98
|
|
|
(67
|
)
|
|||
Other tax accounts, net
|
|
(2,737
|
)
|
|
(78
|
)
|
|
1,446
|
|
|||
Net cash provided by operating activities
|
|
12,588
|
|
|
15,827
|
|
|
16,802
|
|
|||
|
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
|
|
|
||||
Purchases of property, plant and equipment
|
|
(2,176
|
)
|
|
(2,042
|
)
|
|
(1,956
|
)
|
|||
Purchases of short-term investments
|
|
(6,835
|
)
|
|
(11,677
|
)
|
|
(14,596
|
)
|
|||
Proceeds from redemptions/sales of short-term investments
|
|
9,183
|
|
|
17,581
|
|
|
10,302
|
|
|||
Net (purchases of)/proceeds from redemptions/sales of short-term investments with original maturities of three months or less
|
|
6,925
|
|
|
(3,917
|
)
|
|
2,058
|
|
|||
Purchases of long-term investments
|
|
(201
|
)
|
|
(1,797
|
)
|
|
(3,537
|
)
|
|||
Proceeds from redemptions/sales of long-term investments
|
|
232
|
|
|
6,244
|
|
|
3,579
|
|
|||
Acquisitions of businesses, net of cash acquired
|
|
(10,861
|
)
|
|
—
|
|
|
(1,000
|
)
|
|||
Acquisitions of intangible assets
|
|
(418
|
)
|
|
(154
|
)
|
|
(261
|
)
|
|||
Other investing activities, net(b), (d)
|
|
205
|
|
|
288
|
|
|
671
|
|
|||
Net cash provided by/(used in) investing activities
|
|
(3,945
|
)
|
|
4,525
|
|
|
(4,740
|
)
|
|||
|
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
|
|
|
||||
Proceeds from short-term borrowings
|
|
16,455
|
|
|
3,711
|
|
|
8,464
|
|
|||
Principal payments on short-term borrowings
|
|
(8,378
|
)
|
|
(4,437
|
)
|
|
(9,947
|
)
|
|||
Net (payments on)/proceeds from short-term borrowings with original maturities of three months or less
|
|
2,551
|
|
|
(1,617
|
)
|
|
1,422
|
|
|||
Proceeds from issuance of long-term debt
|
|
4,942
|
|
|
4,974
|
|
|
5,274
|
|
|||
Principal payments on long-term debt
|
|
(6,806
|
)
|
|
(3,566
|
)
|
|
(6,154
|
)
|
|||
Purchases of common stock
|
|
(8,865
|
)
|
|
(12,198
|
)
|
|
(5,000
|
)
|
|||
Cash dividends paid
|
|
(8,043
|
)
|
|
(7,978
|
)
|
|
(7,659
|
)
|
|||
Proceeds from exercise of stock options
|
|
394
|
|
|
1,259
|
|
|
862
|
|
|||
Other financing activities, net
|
|
(736
|
)
|
|
(588
|
)
|
|
(611
|
)
|
|||
Net cash used in financing activities
|
|
(8,485
|
)
|
|
(20,441
|
)
|
|
(13,350
|
)
|
|||
Effect of exchange-rate changes on cash and cash equivalents and restricted cash and cash equivalents
|
|
(32
|
)
|
|
(116
|
)
|
|
53
|
|
|||
Net increase/(decrease) in cash and cash equivalents and restricted cash and cash equivalents
|
|
125
|
|
|
(205
|
)
|
|
(1,235
|
)
|
|||
Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period
|
|
1,225
|
|
|
1,431
|
|
|
2,666
|
|
|||
Cash and cash equivalents and restricted cash and cash equivalents, at end of period
|
|
$
|
1,350
|
|
|
$
|
1,225
|
|
|
$
|
1,431
|
|
|
||||||||||||
- Continued -
|
||||||||||||
|
2019 Financial Report
|
|
67
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
|
|
|
||||||
32% equity-method investment in GSK Consumer Healthcare JV in exchange for contributing Pfizer’s Consumer Healthcare business(b)
|
|
$
|
15,711
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity investment in Cerevel Therapeutics, Inc. in exchange for Pfizer’s portfolio of clinical and preclinical neuroscience assets(d)
|
|
—
|
|
|
343
|
|
|
—
|
|
|||
Equity investment in Allogene received in exchange for Pfizer's allogeneic CAR T developmental program assets(d)
|
|
—
|
|
|
92
|
|
|
—
|
|
|||
Exchange of $1.1 billion net book value 6.50% U.K. pound-denominated bonds maturing in 2038 for $1.8 billion of new 2.735% U.K. pound-denominated bonds maturing in 2043, resulting in a debt extinguishment loss of $747 million(e)
|
|
—
|
|
|
—
|
|
|
1,848
|
|
|||
Receipt of ICU Medical common stock(d)
|
|
—
|
|
|
—
|
|
|
428
|
|
|||
Promissory note from ICU Medical(d)
|
|
—
|
|
|
—
|
|
|
75
|
|
|||
Cash paid (received) during the period for:
|
|
|
|
|
|
|
|
|
||||
Income taxes
|
|
$
|
3,664
|
|
|
$
|
3,655
|
|
|
$
|
2,489
|
|
Interest
|
|
1,587
|
|
|
1,311
|
|
|
1,518
|
|
|||
Interest rate hedges
|
|
(42
|
)
|
|
(38
|
)
|
|
(199
|
)
|
(a)
|
As a result of the enactment of the TCJA in December 2017, Pfizer’s Provision/(benefit) for taxes on income (i) for the year ended December 31, 2017 was favorably impacted by approximately $10.7 billion, primarily reflecting the remeasurement of U.S. deferred tax liabilities, which includes the repatriation tax on deemed repatriated accumulated post-1986 earnings of foreign subsidiaries, (ii) for the year ended December 31, 2018 was favorably impacted by approximately $600 million, primarily related to certain tax initiatives associated with the TCJA, as well as favorable adjustments to the provisional estimates of the legislation and (iii) for the year ended December 31, 2019 was favorably impacted by approximately $323 million, primarily as a result of additional guidance issued by the U.S. Department of Treasury. See Note 5A.
|
(b)
|
The $8.2 billion Gain on completion of Consumer Healthcare JV transaction, net of cash conveyed reflects the receipt of a 32% equity-method investment in the new company initially valued at $15.7 billion in exchange for net assets contributed of $7.6 billion and is presented in operating activities net of $146 million cash conveyed that is reflected in Other investing activities, net. For additional information, see Note 2C.
|
(c)
|
Includes tax expense of approximately $2.7 billion associated with the gain related to the completion of the Consumer Healthcare joint venture transaction with GSK. For additional information, see Note 2C and Note 5A.
|
(d)
|
For additional information, see Note 2B.
|
(e)
|
The $747 million is included in the net loss of $846 million upon the exchange and early retirement of the U.K. pound-denominated debt. See Note 7D.
|
68
|
|
2019 Financial Report
|
|
•
|
License Agreement with Akcea Therapeutics, Inc.––In October 2019, we entered into a worldwide exclusive licensing agreement for AKCEA-ANGPTL3-LRx, an investigational antisense therapy being developed to treat patients with certain cardiovascular and metabolic diseases, with Akcea, a majority-owned affiliate of Ionis. The transaction closed in November 2019 and we made an upfront payment of $250 million to Akcea and Ionis, which was recorded in Research and development expenses in our fiscal fourth quarter of 2019.
|
•
|
Formation of a New Consumer Healthcare Joint Venture––On July 31, 2019, we completed 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. In accordance with our domestic and international reporting periods, our financial results, and our Consumer Healthcare segment’s operating results, for 2019 reflect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations. Assets and liabilities associated with our Consumer Healthcare business were reclassified as held for sale in the consolidated balance sheet as of December 31, 2018.
|
•
|
Acquisition of Array BioPharma Inc.––On July 30, 2019, we acquired Array for $48 per share in cash. The total fair value of the consideration transferred for Array was approximately $11.2 billion ($10.9 billion, net of cash acquired). Our financial statements for 2019 reflect the assets, liabilities, operating results and cash flows of Array, commencing from the acquisition date.
|
•
|
Agreement to Combine Upjohn with Mylan N.V.––On July 29, 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company, Viatris. 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, immediately thereafter, combined with Mylan. Pfizer shareholders would own 57% of the combined new company, and former Mylan shareholders would own 43%. Closing of the transaction is subject to Mylan shareholder approval and satisfaction of other customary closing conditions, including receipt of regulatory approvals.
|
•
|
Acquisition of Therachon Holding AG––On July 1, 2019, we acquired all the remaining shares of 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. The total fair value of the consideration transferred for Therachon was approximately $322 million. Our financial statements for 2019 reflect the assets, liabilities, operating results and cash flows of Therachon, commencing from the acquisition date and, in accordance with our international reporting period, reflect five months of Therachon operations and cash flows.
|
•
|
Sale of Hospira Infusion Systems Net Assets to ICU Medical, Inc.––On February 3, 2017, we completed the sale of our global infusion systems net assets, HIS, to ICU Medical for up to approximately $900 million, composed of cash and contingent cash consideration, ICU Medical common stock (all of which we sold during 2018) and seller financing. HIS includes IV pumps, solutions and devices. The operating results of HIS are included in our consolidated statement of income through February 2, 2017 and, therefore, our financial results for 2017 reflect one month of HIS domestic operations and two months of HIS international operations. Our financial results for 2019 and 2018 do not reflect any contribution from HIS global operations.
|
2019 Financial Report
|
|
69
|
|
•
|
Acquisition of AstraZeneca’s Small Molecule Anti-Infectives Business––On December 22, 2016, which fell in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business, primarily outside the U.S. for approximately $1.0 billion, composed of cash and contingent consideration. Our financial statements reflect the assets, liabilities, operating results and cash flows of this business, commencing from the acquisition date and, in accordance with our international reporting period, for 2017 reflect approximately 11 months of the small molecule anti-infectives business operations and cash flows acquired from AstraZeneca.
|
70
|
|
2019 Financial Report
|
|
•
|
Income approach, which is based on the present value of a future stream of net cash flows.
|
•
|
Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
|
•
|
Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.
|
•
|
Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).
|
•
|
Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).
|
•
|
Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).
|
2019 Financial Report
|
|
71
|
|
•
|
Customers––Our biopharmaceutical products are sold principally to wholesalers but we also sell directly to retailers, hospitals, clinics, government agencies and pharmacies, and, in the case of our vaccine products in the U.S., we primarily sell directly to the CDC, wholesalers, individual provider offices, retail pharmacies and integrated delivery networks. Customers for our consumer healthcare business, which were part of the business that was combined with GSK’s Consumer Healthcare business into a new consumer healthcare joint venture on July 31, 2019, included retailers and, to a lesser extent, wholesalers and distributors.
|
•
|
Our Sales Contracts––Sales on credit are typically under short-term contracts. Collections are based on market payment cycles common in various markets, with shorter cycles in the U.S. Sales are adjusted for sales allowances, chargebacks, rebates and sales returns and cash discounts. Sales returns occur due to loss of exclusivity, product recalls or a changing competitive environment.
|
•
|
Deductions from Revenues––Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, sales allowances and sales returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment is required when estimating the impact of these revenue deductions on gross sales for a reporting period.
|
•
|
In the U.S., we sell our products to distributors and hospitals under our sales contracts. However, we also have contracts with managed care or pharmacy benefit managers and legislatively mandated contracts with the federal and state governments under which we provide rebates to them based on medicines utilized by the lives they cover. We record provisions for Medicare, Medicaid, and performance-based contract pharmaceutical rebates based upon our experience ratio of rebates paid and actual prescriptions written during prior quarters. We apply the experience ratio to the respective period’s sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historical trends are as current as practicable. We estimate discounts on branded prescription drug sales to Medicare Part D participants in the Medicare “coverage gap,” also known as the “doughnut hole,” based on the historical experience of beneficiary prescriptions and consideration of the utilization that is expected to result from the discount in the coverage gap. We evaluate this estimate regularly to ensure that the historical trends and future expectations are as current as practicable. For performance-based contract rebates, we also consider current contract terms, such as changes in formulary status and rebate rates.
|
•
|
Outside the U.S., the majority of our pharmaceutical sales allowances are contractual or legislatively mandated and our estimates are based on actual invoiced sales within each period, which reduces the risk of variations in the estimation process. In certain European countries, rebates are calculated on the government’s total unbudgeted pharmaceutical spending or on specific product sales thresholds and we apply an estimated allocation factor against our actual invoiced sales to project the expected level of reimbursement. We obtain third-party information that helps us to monitor the adequacy of these accruals.
|
•
|
Provisions for pharmaceutical chargebacks (primarily reimbursements to U.S. wholesalers for honoring contracted prices to third parties) closely approximate actual amounts incurred, as we settle these deductions generally within two to five weeks of incurring the liability.
|
•
|
Provisions for pharmaceutical sales returns are based on a calculation for each market that incorporates the following, as appropriate: local returns policies and practices; historical returns as a percentage of sales; an understanding of the reasons for past returns; estimated shelf life by product; an estimate of the amount of time between shipment and return or lag time; and any other factors that could impact the estimate of future returns, such as loss of exclusivity, product recalls or a changing competitive environment. Generally, returned products are destroyed, and customers are refunded the sales price in the form of a credit.
|
•
|
We record sales incentives as a reduction of revenues at the time the related revenues are recorded or when the incentive is offered, whichever is later. We estimate the cost of our sales incentives based on our historical experience with similar incentives programs to predict customer behavior.
|
72
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
73
|
|
•
|
Property, plant and equipment, less accumulated depreciation—These assets are recorded at cost and are increased by the cost of any significant improvements after purchase. Property, plant and equipment assets, other than land and construction in progress, are depreciated on a straight-line basis over the estimated useful life of the individual assets. Depreciation begins when the asset is ready for its intended use. For tax purposes, accelerated depreciation methods are used as allowed by tax laws.
|
•
|
Identifiable intangible assets, less accumulated amortization—These acquired assets are recorded at fair value. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Intangible assets with indefinite lives that are associated with marketed products are not amortized until a useful life can be determined.
|
•
|
Goodwill—Goodwill represents the excess of the consideration transferred for an acquired business over the assigned values of its net assets. Goodwill is not amortized.
|
•
|
For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we reevaluate the remaining useful lives of the assets and modify them, as appropriate.
|
•
|
For indefinite-lived intangible assets, such as Brands and IPR&D assets, when necessary, we determine the fair value of the asset and record an impairment loss, if any, for the excess of book value over fair value. In addition, in all cases of an impairment review other than for IPR&D assets, we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate.
|
•
|
For goodwill, when necessary, we determine the fair value of each reporting unit and compare that value to its book value. If the carrying amount is found to be greater, we then determine the implied fair value of goodwill by subtracting the fair value of all the identifiable net assets other than goodwill from the fair value of the reporting unit and record an impairment loss, if any, for the excess of the book value of goodwill over the implied fair value.
|
74
|
|
2019 Financial Report
|
|
•
|
Public equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in Other (income)/deductions—net.
|
•
|
Available-for-sale debt securities are carried at fair value, with changes in fair value reported in Other comprehensive income/(loss) until realized.
|
•
|
Held-to-maturity debt securities are carried at amortized cost.
|
•
|
Private equity securities without readily determinable fair values and where we have no significant influence are measured at cost minus any impairment and plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
|
•
|
For equity investments in common stock or in-substance common stock where we have significant influence over the financial and operating policies of the investee, we use the equity-method of accounting. Under the equity-method, we record our share of the investee’s income and expenses in Other (income)/deductions—net. The excess of the cost of the investment over our share of the underlying equity in the net assets of the investee as of the acquisition date is allocated to the identifiable assets and liabilities of the investee, with any remaining excess amount allocated to goodwill. Such investments are initially recorded at cost, which is the fair value of consideration paid and typically does not include contingent consideration.
|
2019 Financial Report
|
|
75
|
|
76
|
|
2019 Financial Report
|
|
For operating leases, the ROU assets and liabilities are presented in our consolidated balance sheet as follows:
|
||||||
|
|
|
|
Balance at
|
|
|
(MILLIONS OF DOLLARS)
|
|
Balance Sheet Classification
|
|
December 31,
2019 |
|
|
ROU assets
|
|
Other noncurrent assets
|
|
$
|
1,313
|
|
Lease liabilities (short-term)
|
|
Other current liabilities
|
|
276
|
|
|
Lease liabilities (long-term)
|
|
Other noncurrent liabilities
|
|
1,048
|
|
(a)
|
Reflects lease payments due within 12 months subsequent to the balance sheet date.
|
2019 Financial Report
|
|
77
|
|
78
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
79
|
|
80
|
|
2019 Financial Report
|
|
(a)
|
Other assets held for sale consist of PP&E.
|
2019 Financial Report
|
|
81
|
|
Summarized financial information for our equity method investee, GSK Consumer Healthcare, as of and for the two months ending September 30, 2019, the most recent period available, is as follows:
|
||||
(MILLIONS OF DOLLARS)
|
|
September 30,
2019 |
|
|
Current assets
|
|
$
|
7,505
|
|
Noncurrent assets
|
|
38,575
|
|
|
Total assets
|
|
$
|
46,081
|
|
|
|
|
||
Current liabilities
|
|
$
|
5,241
|
|
Noncurrent liabilities
|
|
5,536
|
|
|
Total liabilities
|
|
$
|
10,776
|
|
|
|
|
||
Equity attributable to shareholders
|
|
$
|
35,199
|
|
Equity attributable to noncontrolling interests
|
|
105
|
|
|
Total net equity
|
|
$
|
35,304
|
|
(MILLIONS OF DOLLARS)
|
|
For the Two Months Ending
September 30,
2019
|
|
|
Net Sales
|
|
$
|
2,161
|
|
Cost of sales
|
|
(803
|
)
|
|
Gross profit
|
|
$
|
1,358
|
|
Income from continuing operations
|
|
152
|
|
|
Net income
|
|
152
|
|
|
Income attributable to shareholders
|
|
148
|
|
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Net Sales
|
|
$
|
6,139
|
|
|
$
|
6,219
|
|
|
$
|
5,504
|
|
Cost of sales
|
|
(516
|
)
|
|
(462
|
)
|
|
(381
|
)
|
|||
Gross profit
|
|
$
|
5,623
|
|
|
$
|
5,757
|
|
|
$
|
5,123
|
|
Income from continuing operations
|
|
3,398
|
|
|
2,154
|
|
|
1,867
|
|
|||
Net income
|
|
3,398
|
|
|
2,154
|
|
|
1,867
|
|
|||
Income attributable to shareholders
|
|
3,398
|
|
|
2,154
|
|
|
1,867
|
|
82
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
83
|
|
(a)
|
Represents sales to our partners of products manufactured by us.
|
(b)
|
Substantially all relates to amounts earned from our partners under co-promotion agreements. The increases in each of the periods presented reflect increases in alliance revenues from Eliquis and Xtandi.
|
(c)
|
Primarily relates to amounts paid to collaboration partners for their share of net sales or profits earned in collaboration arrangements where we are the principal in the transaction, and cost of sales associated with inventory purchased from our partners.
|
(d)
|
Represents net reimbursements to our partners for selling, informational and administrative expenses incurred.
|
(e)
|
Primarily relates to upfront payments and pre-approval milestone payments earned by our partners as well as net reimbursements. The upfront and milestone payments were as follows: $50 million in 2018 and $15 million in 2017. There were no upfront and milestone payments in 2019. Our collaboration with Lilly (see below) also includes reimbursements of $67 million in 2019, $98 million in 2018 and $147 million in 2017.
|
(f)
|
Primarily relates to royalties from our collaboration partners.
|
84
|
|
2019 Financial Report
|
|
•
|
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.
|
2019 Financial Report
|
|
85
|
|
(a)
|
The asset impairment charges for 2018 are largely associated with cost reduction initiatives not associated with acquisitions. The asset impairment charges for 2017 are largely associated with our acquisitions of Hospira and Medivation. The asset impairment charges included in restructuring charges for 2017 are primarily associated with abandoned assets. See (b) below for additional information.
|
86
|
|
2019 Financial Report
|
|
(b)
|
In 2019, restructuring charges mainly represent employee termination costs associated with cost-reduction and productivity initiatives, partially offset by 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 2018, restructuring charges were primarily related to employee termination costs and asset write downs. The employee termination costs for 2019 and 2018 were primarily associated with our improvements to operational effectiveness as part of the realignment of our organizational structure, and for 2019, also includes employee termination costs associated with the Transforming to a More Focused Company initiative. In 2017, restructuring charges were primarily associated with our acquisitions of Hospira and Medivation, partially offset by credits associated with cost-reduction and productivity initiatives not associated with acquisitions that mostly related to the reversal of previously recorded accruals for employee termination costs resulting from revisions of our severance benefit estimates. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination.
|
•
|
Biopharma ($118 million charge); Upjohn ($75 million charge); and Other ($180 million charge).
|
•
|
Total reportable segments ($207 million charge); and Other ($575 million charge).
|
•
|
Total reportable segments ($89 million credit); and Other ($119 million charge).
|
(c)
|
Transaction costs represent external costs for banking, legal, accounting and other similar services. In 2019, transaction costs relate to our acquisition of Array. In 2017, transaction costs were directly related to our acquisitions of Hospira, Anacor and Medivation.
|
(d)
|
Integration costs and other represent external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. In 2019, integration costs and other mainly related to our acquisitions of Array (including $157 million in payments to Array employees for the fair value of previously unvested stock options that was recognized as post-closing compensation expense (see Note 2A)) and Hospira. In 2018, integration costs and other mostly related to our acquisition of Hospira. In 2017, integration costs primarily related to our acquisitions of Hospira and Medivation, as well as a net gain of $12 million related to the settlement of the Hospira U.S. qualified defined benefit pension plan (see Note 11).
|
(e)
|
In 2018, primarily represents the net pension curtailments and settlements included in Other (income)/deductions––net upon the adoption of a new accounting standard in the first quarter of 2018. In 2017, mainly represents the net pension curtailments and settlements, partially offset by net periodic benefit credits, excluding service costs, related to our acquisition of Hospira, both of which were reclassified to Other (income)/deductions––net as a result of the retrospective adoption of a new accounting standard in the first quarter of 2018. These credits included a net settlement gain, partially offset by accelerated amortization of actuarial losses and prior service costs upon the settlement of the remaining obligation associated with the Hospira U.S. qualified defined benefit pension plan. For additional information, see Note 11.
|
(f)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
(g)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.
|
(a)
|
Includes adjustments for foreign currency translation.
|
(b)
|
Included in Other current liabilities ($823 million) and Other noncurrent liabilities ($428 million).
|
(c)
|
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 5D for additional information.
|
(d)
|
Included in Other current liabilities ($714 million) and Other noncurrent liabilities ($219 million).
|
2019 Financial Report
|
|
87
|
|
The following table provides components of Other (income)/deductions––net:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Interest income(a)
|
|
$
|
(226
|
)
|
|
$
|
(333
|
)
|
|
$
|
(391
|
)
|
Interest expense(a)
|
|
1,574
|
|
|
1,316
|
|
|
1,270
|
|
|||
Net interest expense
|
|
1,348
|
|
|
983
|
|
|
879
|
|
|||
Royalty-related income(b)
|
|
(648
|
)
|
|
(495
|
)
|
|
(499
|
)
|
|||
Net (gains)/losses on asset disposals(c)
|
|
(31
|
)
|
|
(71
|
)
|
|
45
|
|
|||
Net gains recognized during the period on equity securities(d)
|
|
(454
|
)
|
|
(586
|
)
|
|
(224
|
)
|
|||
Net realized (gains)/losses on sales of investments in debt securities(e)
|
|
—
|
|
|
141
|
|
|
(45
|
)
|
|||
Income from collaborations, out-licensing arrangements and sales of compound/product rights(f)
|
|
(168
|
)
|
|
(488
|
)
|
|
(217
|
)
|
|||
Net periodic benefit costs/(credits) other than service costs(g)
|
|
64
|
|
|
(288
|
)
|
|
101
|
|
|||
Certain legal matters, net(h)
|
|
554
|
|
|
157
|
|
|
240
|
|
|||
Certain asset impairments(i)
|
|
2,843
|
|
|
3,115
|
|
|
395
|
|
|||
Business and legal entity alignment costs(j)
|
|
338
|
|
|
63
|
|
|
71
|
|
|||
Net losses on early retirement of debt(k)
|
|
138
|
|
|
3
|
|
|
999
|
|
|||
GSK Consumer Healthcare JV equity method (income)/loss(l)
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net(m)
|
|
(388
|
)
|
|
(417
|
)
|
|
(328
|
)
|
|||
Other (income)/deductions––net
|
|
$
|
3,578
|
|
|
$
|
2,116
|
|
|
$
|
1,416
|
|
(a)
|
2019 v. 2018––Interest income decreased primarily driven by a lower investment balance. Interest expense increased mainly as a result of an increased commercial paper balance due to the acquisition of Array, 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 period. 2018 v. 2017––Interest income decreased primarily driven by a lower investment balance. Interest expense increased primarily as a result of higher short-term interest rates, offset, in part, by refinancing activity that occurred in the fourth quarter of 2017. Capitalized interest expense totaled $88 million in 2019, $73 million in 2018 and $72 million in 2017.
|
(b)
|
Royalty-related income increased in 2019, primarily due to a one-time favorable resolution in the second quarter of 2019 of a legal dispute for $82 million.
|
(c)
|
In 2018, primarily included a realized gain on sale of property of $60 million. In 2017, primarily included an $81 million realized loss related to the sale of our former 49%-owned equity-method investment in Hisun Pfizer and a realized net loss of $30 million related to the sale of our former 40% ownership investment in Teuto, including the extinguishment of a put option for the then remaining 60% ownership interest, partially offset by a realized gain on sale of property of $52 million.
|
(d)
|
The gains in 2019 include, among other things, unrealized gains of $295 million related to investments in Cortexyme, Inc. and SpringWorks Therapeutics, Inc. The gains in 2018 included unrealized gains on equity securities of $477 million, reflecting the adoption of a new accounting standard in the first quarter of 2018 and were primarily driven by unrealized gains of $466 million related to our investment in Allogene. For additional information, see Note 2B and Note 7B.
|
(e)
|
In 2018, primarily includes gross realized losses on sales of available-for-sale debt securities of $402 million and a net loss of $18 million from derivative financial instruments used to hedge the foreign exchange component of the matured available-for-sale debt securities, partially offset by gross realized gains on sales of available-for-sale debt securities of $280 million. Proceeds from the sale of available-for-sale debt securities were $5.7 billion in 2018. In 2017, primarily includes gross realized gains on sales of available-for-sale debt securities of $451 million, partially offset by gross realized losses on sales of available-for-sale debt securities of $281 million and a net loss of $120 million from derivative financial instruments used to hedge the foreign exchange component of the matured available-for-sale debt securities. Proceeds from the sale of available-for-sale debt securities were $5.1 billion in 2017.
|
(f)
|
Includes income from upfront and milestone payments from our collaboration partners and income from out-licensing arrangements and sales of compound/product rights. In 2019, mainly includes, among other things, $78 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) and $52 million in milestone income from multiple licensees. In 2018, primarily includes, among other things, (i) approximately $118 million in milestone income from multiple licensees, (ii) $110 million in milestone payments received from Shire, of which $75 million was received in the first quarter of 2018 related to their first dosing of a patient in a Phase 3 clinical trial for the treatment of ulcerative colitis and $35 million was received from Shire in the third quarter of 2018 related to their first dosing of a patient in a Phase 3 clinical trial for the treatment of Crohn’s disease, (iii) an upfront payment to us and a recognized milestone totaling $85 million for the sale of an AMPA receptor potentiator for CIAS to Biogen, (iv) $62 million in gains related to sales of compound/product rights and (v) a $40 million milestone payment from Merck in conjunction with the approval of ertugliflozin in the EU. For additional information, see Note 2B, Note 2D and Note 2E. In 2017, primarily includes, among other things, $101 million in milestone payments received from multiple licensees and an $85 million gain related to sales of compound/product rights.
|
(g)
|
In 2019, primarily includes settlement losses within the U.S. Pfizer Consolidated Pension Plan related to special restructuring initiatives, a small annuity buyout program and regular lump sum activity. Effective January 1, 2018, the U.S. Pfizer Consolidated Pension Plan was frozen to future benefit accruals and for 2018, resulted in the recognition of lower net periodic benefit costs due to the extension of the amortization period for the actuarial losses. There was also a greater than expected gain on plan assets due to a higher plan asset base compared to 2017. For additional information, see Note 11.
|
(h)
|
In 2019, mostly includes legal reserves for certain pending legal matters. In 2018, primarily includes legal reserves for certain pending legal matters, partially offset by the reversal of a legal accrual where a loss was no longer deemed probable. In 2017, primarily includes a $94 million charge to resolve a class action lawsuit filed by direct purchasers relating to Celebrex, which was approved by the court in April 2018, and a $79 million charge to reflect damages awarded by a jury in a patent matter.
|
(i)
|
In 2019, primarily includes intangible asset impairment charges of $2.8 billion, mainly composed of: (i) $2.6 billion, related to Eucrisa, a Biopharma finite-lived developed technology right acquired in connection with our acquisition of Anacor, and reflects updated commercial forecasts mainly reflecting competitive pressures; (ii) $90 million related to WRDM IPR&D, for a pre-clinical stage asset from our acquisition of Bamboo for gene therapies for the potential treatment of patients with certain rare diseases which was the result of a determination to not use certain Bamboo IPR&D acquired in future rare disease development; (iii) $40 million related to a Biopharma developed technology right, acquired in connection with our acquisition of King, for government defense products and reflects, among other things, updated commercial forecasts including manufacturing cost assumptions; (iv) $31 million related to a Biopharma IPR&D asset, acquired in connection with our acquisition of AstraZeneca’s anti-infectives business, which reflects updated commercial forecasts; (v) $10 million related to a Biopharma finite-lived developed technology right, acquired in connection with our acquisition of Anacor, for the treatment for toenail fungus marketed in the
|
88
|
|
2019 Financial Report
|
|
(j)
|
In 2019 and 2018, mainly 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 2017, 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.
|
(k)
|
In 2019 and 2017, represents net losses due to the early retirement of debt, inclusive of the related termination of cross currency swaps.
|
(l)
|
See Note 2C for additional information.
|
(m)
|
In 2019, includes, among other things, (i) dividend income of $220 million from our investment in ViiV, (ii) charges of $152 million for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity, associated with the formation of the GSK Consumer Healthcare joint venture and (iii) $50 million of income from insurance recoveries related to Hurricane Maria. In 2018, includes, among other things, (i) a non-cash $343 million pre-tax gain associated with our transaction with Bain Capital to create a new biopharmaceutical company, Cerevel, to continue development of a portfolio of clinical and preclinical stage neuroscience assets primarily targeting disorders of the central nervous system (see Note 2B), (ii) dividend income of $253 million from our investment in ViiV, (iii) a non-cash $50 million pre-tax gain on the contribution of Pfizer’s allogeneic CAR T therapy development program assets obtained from Cellectis and Servier in connection with our contribution agreement entered into with Allogene in which Pfizer obtained an ownership stake in Allogene (see Note 2B), (iv) a non-cash $17 million pre-tax gain on the cash settlement of a liability that we incurred in April 2018 upon the EU approval of Mylotarg (see Note 7E), (v) charges of $207 million, reflecting the change in the fair value of contingent consideration. and (vi) charges of $112 million for external incremental costs, such as transaction costs and costs to separate our Consumer Healthcare business into a separate legal entity, associated with the formation of the GSK Consumer Healthcare joint venture. In 2017, includes, among other things, dividend income of $266 million from our investment in ViiV, and income of $62 million from resolution of a contract disagreement.
|
(a)
|
The fair value amount is presented as of the date of impairment, as these assets are not measured at fair value on a recurring basis. See also Note 1E.
|
(b)
|
Reflects intangible assets written down to fair value in 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.
|
The following table provides the components of Income from continuing operations before provision/(benefit) for taxes on income:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
United States
|
|
$
|
7,931
|
|
|
$
|
(4,403
|
)
|
|
$
|
(6,879
|
)
|
International
|
|
9,751
|
|
|
16,288
|
|
|
19,184
|
|
|||
Income from continuing operations before provision/(benefit) for taxes on income(a), (b)
|
|
$
|
17,682
|
|
|
$
|
11,885
|
|
|
$
|
12,305
|
|
(a)
|
2019 v. 2018––The domestic income in 2019 versus domestic loss in 2018 was mainly related to the completion of the Consumer Healthcare joint venture transaction with GSK as well as lower certain asset impairments, partially offset by reduced Lyrica revenues in the U.S., higher business and legal entity
|
2019 Financial Report
|
|
89
|
|
(b)
|
2018 v. 2017––The decrease in the domestic loss was primarily due to lower interest expense paid to certain foreign subsidiaries, lower net losses on the retirement of debt, higher net gains on equity securities and increased revenue related to Eliquis, partially offset by higher certain asset impairments and lower revenue for Viagra and the legacy SIP portfolio. The decrease in international income was primarily related to lower interest income received primarily from intercompany borrowings from Pfizer Inc. and higher charges related to certain cost reduction initiatives, partially offset by increased revenue related to Ibrance and Eliquis.
|
(a)
|
The 2018 current tax benefit and deferred tax expense primarily relate to the utilization of tax credit carryforwards against the repatriation tax liability associated with the enactment of the TCJA. See discussion below and Note 5C.
|
•
|
tax expense of approximately $2.7 billion associated with the gain related to the completion of the Consumer Healthcare joint venture transaction with GSK;
|
•
|
tax benefits of approximately $1.6 billion, representing tax and interest resulting from the resolution of certain tax positions pertaining to prior years, primarily resulting from a favorable settlement with the IRS (see Note 5D below);
|
•
|
tax benefits of approximately $400 million related to certain tax initiatives associated with the implementation of our new organizational structure;
|
90
|
|
2019 Financial Report
|
|
•
|
tax benefits of approximately $325 million recorded as a result of additional guidance issued by the U.S. Department of Treasury related to the enactment of the TCJA; and
|
•
|
tax benefits of approximately $620 million related to certain asset impairments.
|
•
|
estimated U.S. net tax benefits of approximately $600 million associated with the enactment of the TCJA (see discussion above), primarily reflecting:
|
◦
|
approximately $500 million of tax benefits associated primarily with certain 2018 tax initiatives;
|
◦
|
approximately $100 million of tax benefits associated with adjustments to our provisional accounting for the tax effects of the TCJA, reported and disclosed within the applicable measurement period, in accordance with guidance issued by the SEC, mainly consisting of:
|
◦
|
$160 million of tax benefits related to the repatriation tax on deemed repatriated accumulated earnings of foreign subsidiaries; and
|
◦
|
$140 million of tax benefits associated with the remeasurement of other U.S. deferred tax liabilities,
|
◦
|
$200 million of tax expense related to future taxes on global intangible low-taxed income;
|
•
|
tax benefits of approximately $700 million representing tax and interest resulting from the resolution of certain tax positions pertaining to prior years mostly with various foreign tax authorities, and the expiration of certain statutes of limitations; and
|
•
|
tax benefits of approximately $740 million related to certain asset impairments.
|
•
|
estimated U.S. net tax benefits of $10.7 billion associated with the enactment of the TCJA (see discussion above), primarily reflecting:
|
◦
|
$22.8 billion of tax benefits associated with the remeasurement of U.S. deferred tax liabilities on unremitted earnings of foreign subsidiaries (see Note 5C);
|
◦
|
$1.6 billion of tax benefits associated with the remeasurement of other U.S. deferred tax liabilities, mainly associated with intangibles (see Note 5C);
|
◦
|
$12.9 billion of tax expense related to the repatriation tax on deemed repatriated accumulated pre-2017 post-1986 earnings of foreign subsidiaries;
|
◦
|
$1.0 billion of tax expense related to future taxes on global intangible low-taxed income (see Note 5C); and
|
◦
|
approximately $100 million of tax benefits mostly associated with certain tax initiatives;
|
•
|
U.S. tax expense of approximately $1.3 billion related to the repatriation tax on deemed repatriated current year earnings of foreign subsidiaries;
|
•
|
tax benefits of approximately $370 million related to net losses on early retirement of debt;
|
•
|
tax benefits of approximately $150 million representing tax and interest resulting from the resolution of certain tax positions pertaining to prior years primarily with various foreign tax authorities, and the expiration of certain statutes of limitations; and
|
•
|
the non-deductibility of a $307 million fee payable to the federal government as a result of the U.S. Healthcare Legislation.
|
The reconciliation of the U.S. statutory income tax rate to our effective tax rate for Income from continuing operations follows:
|
|||||||||
|
|
Year Ended December 31,
|
|||||||
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
U.S. statutory income tax rate
|
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
TCJA impact(a)
|
|
(1.8
|
)
|
|
(5.0
|
)
|
|
(86.6
|
)
|
Taxation of non-U.S. operations (b), (c)
|
|
(5.7
|
)
|
|
(6.1
|
)
|
|
(17.0
|
)
|
Tax settlements and resolution of certain tax positions(d)
|
|
(9.0
|
)
|
|
(5.8
|
)
|
|
(1.2
|
)
|
Completion of Consumer Healthcare joint venture transaction(d)
|
|
5.3
|
|
|
—
|
|
|
—
|
|
U.S. Healthcare Legislation(d), (e)
|
|
—
|
|
|
(0.4
|
)
|
|
0.9
|
|
U.S. R&D tax credit and manufacturing deduction
|
|
(0.5
|
)
|
|
(0.7
|
)
|
|
(0.7
|
)
|
Certain legal settlements and charges
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
All other, net(f)
|
|
(1.5
|
)
|
|
3.1
|
|
|
(3.9
|
)
|
Effective tax rate for income from continuing operations
|
|
7.8
|
%
|
|
5.9
|
%
|
|
(73.5
|
)%
|
(a)
|
For a discussion about the enactment of the TCJA, see Note 5A.
|
(b)
|
For taxation of non-U.S. operations, this rate impact reflects the income tax rates and relative earnings in the locations where we do business outside the U.S., together with the cost of repatriation decisions, which, for 2017, includes the repatriation tax on deemed repatriated 2017 earnings of foreign subsidiaries discussed in Note 5A, changes in uncertain tax positions not included in the reconciling item called “Tax settlements and resolution of certain tax positions,” as well as changes in valuation allowances. Specifically: (i) the jurisdictional location of earnings is a significant component of our effective tax rate each year, and the rate impact of this component is influenced by the specific location of non-U.S. earnings and the level of such earnings as compared to our total earnings; (ii) the cost of repatriation decisions, and other U.S. tax implications of our foreign operations, is a significant component of our effective tax rate each year and generally offsets some of the reduction to our effective tax rate each year resulting from the jurisdictional location of earnings; (iii)
|
2019 Financial Report
|
|
91
|
|
(c)
|
In all periods presented, the reduction in our effective tax rate resulting from the jurisdictional location of earnings is largely due to lower tax rates in certain jurisdictions, as well as manufacturing and other incentives associated with our subsidiaries in Puerto Rico and Singapore. We benefit from a Puerto Rican incentive grant that expires in 2029. Under the grant, we are partially exempt from income, property and municipal taxes. In Singapore, we benefit from incentive tax rates effective through 2045 on income from manufacturing and other operations.
|
(d)
|
For a discussion about tax settlements and resolution of certain tax positions, the impact of the gain on the completion of the Consumer Healthcare joint venture transaction and the impact of U.S. Healthcare Legislation, see Note 5A.
|
(e)
|
The favorable rate impact in 2018 is a result of the updated 2017 invoice received from the federal government, which reflected a lower expense than what was previously estimated for invoiced periods, as well as certain tax initiatives.
|
(f)
|
All other, net in 2019 is primarily due to routine business operations. 2018 is primarily due to routine business operations and the non-recurrence of tax benefits associated with certain tax initiatives. 2017 primarily relates to tax benefits associated with certain tax initiatives in the normal course of business.
|
The components of our deferred tax assets and liabilities, shown before jurisdictional netting, follow:
|
||||||||||||||||
|
|
2019 Deferred Tax*
|
|
2018 Deferred Tax*
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
Assets
|
|
(Liabilities)
|
|
Assets
|
|
(Liabilities)
|
||||||||
Prepaid/deferred items(a)
|
|
$
|
2,195
|
|
|
$
|
(204
|
)
|
|
$
|
1,655
|
|
|
$
|
(325
|
)
|
Inventories
|
|
373
|
|
|
(14
|
)
|
|
280
|
|
|
(10
|
)
|
||||
Intangible assets(b)
|
|
743
|
|
|
(7,099
|
)
|
|
532
|
|
|
(7,620
|
)
|
||||
Property, plant and equipment
|
|
179
|
|
|
(1,226
|
)
|
|
160
|
|
|
(1,011
|
)
|
||||
Employee benefits
|
|
2,217
|
|
|
(39
|
)
|
|
2,292
|
|
|
(134
|
)
|
||||
Restructurings and other charges
|
|
225
|
|
|
—
|
|
|
266
|
|
|
—
|
|
||||
Legal and product liability reserves
|
|
496
|
|
|
—
|
|
|
415
|
|
|
—
|
|
||||
Net operating loss/tax credit carryforwards(c)
|
|
2,427
|
|
|
—
|
|
|
2,512
|
|
|
—
|
|
||||
Unremitted earnings
|
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
(83
|
)
|
||||
State and local tax adjustments
|
|
152
|
|
|
—
|
|
|
264
|
|
|
—
|
|
||||
Investments(d)
|
|
11
|
|
|
(3,318
|
)
|
|
18
|
|
|
(162
|
)
|
||||
All other
|
|
196
|
|
|
(9
|
)
|
|
182
|
|
|
(112
|
)
|
||||
|
|
9,215
|
|
|
(11,988
|
)
|
|
8,576
|
|
|
(9,456
|
)
|
||||
Valuation allowances
|
|
(1,927
|
)
|
|
—
|
|
|
(2,068
|
)
|
|
—
|
|
||||
Total deferred taxes
|
|
$
|
7,288
|
|
|
$
|
(11,988
|
)
|
|
$
|
6,508
|
|
|
$
|
(9,456
|
)
|
Net deferred tax liability(e)
|
|
|
|
$
|
(4,700
|
)
|
|
|
|
$
|
(2,948
|
)
|
*
|
The deferred tax assets and liabilities associated with global intangible low-taxed income are included in the relevant categories above. See Note 5A.
|
(a)
|
The increase in 2019 is primarily related to the capitalization of certain R&D-related expenses.
|
(b)
|
The decrease in 2019 is primarily the result of amortization of intangible assets and certain impairment charges, mainly offset by deferred tax liabilities established on intangible assets from the acquisition of Array.
|
(c)
|
The amounts in 2019 and 2018 are reduced for unrecognized tax benefits of $2.9 billion and $3.3 billion, respectively, where we have net operating loss carryforwards, similar tax losses, and/or tax credit carryforwards that are available, under the tax law of the applicable jurisdiction, to settle any additional income taxes that would result from the disallowance of a tax position.
|
(d)
|
The increase in 2019 is primarily related to the Consumer Healthcare joint venture with GSK. See Note 2C for additional information.
|
(e)
|
In 2019, Noncurrent deferred tax assets and other noncurrent tax assets ($0.9 billion), and Noncurrent deferred tax liabilities ($5.6 billion). In 2018, Noncurrent deferred tax assets and other noncurrent tax assets ($0.8 billion), and Noncurrent deferred tax liabilities ($3.7 billion).
|
92
|
|
2019 Financial Report
|
|
•
|
Tax assets associated with uncertain tax positions primarily represent our estimate of the potential tax benefits in one tax jurisdiction that could result from the payment of income taxes in another tax jurisdiction. These potential benefits generally result from cooperative efforts among taxing authorities, as required by tax treaties to minimize double taxation, commonly referred to as the competent authority process. The recoverability of these assets, which we believe to be more likely than not, is dependent upon the actual payment of taxes in one tax jurisdiction and, in some cases, the successful petition for recovery in another tax jurisdiction. As of December 31, 2019, we had approximately $1.2 billion in assets associated with uncertain tax positions. These amounts were included in Noncurrent deferred tax assets and other noncurrent tax assets ($1.0 billion) and Noncurrent deferred tax liabilities ($109 million). As of December 31, 2018, we had approximately $1.1 billion in assets associated with uncertain tax positions. These amounts were included in Noncurrent deferred tax assets and other noncurrent tax assets ($1.0 billion) and Noncurrent deferred tax liabilities ($128 million).
|
•
|
Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in our financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. These unrecognized tax benefits relate primarily to issues common among multinational corporations. Substantially all of these unrecognized tax benefits, if recognized, would impact our effective income tax rate.
|
(a)
|
For 2019, primarily related to the acquisition of Array. For 2017, primarily related to the acquisitions of Medivation and Anacor. See also Note 2A.
|
(b)
|
Primarily included in Provision/(benefit) for taxes on income.
|
(c)
|
Primarily related to effectively settling certain issues with the U.S. and foreign tax authorities. See also Note 5A.
|
(d)
|
Primarily related to cash payments and reductions of tax attributes.
|
(e)
|
Primarily related to decreases as a result of a lapse of applicable statutes of limitations.
|
(f)
|
In 2019, included in Income taxes payable ($108 million), Current tax assets ($2 million), Noncurrent deferred tax assets and other noncurrent tax assets ($51 million), Noncurrent deferred tax liabilities ($2.8 billion) and Other taxes payable ($2.4 billion). In 2018, included in Income taxes payable ($11 million), Current tax assets ($1 million) Noncurrent deferred tax assets and other noncurrent tax assets ($47 million), Noncurrent deferred tax liabilities ($3.2 billion) and Other taxes payable ($3.0 billion).
|
•
|
Interest related to our unrecognized tax benefits is recorded in accordance with the laws of each jurisdiction and is recorded primarily in Provision/(benefit) for taxes on income in our consolidated statements of income. In 2019, we recorded a net decrease in interest of $564 million, resulting primarily from a settlement with the IRS. In 2018, we recorded a net increase in interest of $103 million; and in 2017, we recorded a net increase in interest of $208 million. Gross accrued interest totaled $485 million as of December 31, 2019 (reflecting a decrease of approximately $13 million as a result of cash payments) and gross accrued interest totaled $1.1 billion as of December 31, 2018 (reflecting a decrease of approximately $16 million as a result of cash payments). In 2019, this amount was included in Income taxes payable ($20 million) and Other taxes payable ($465 million). In 2018, this amount was included in Income taxes payable ($6 million) and Other taxes payable ($1.1 billion). Accrued penalties are not significant. See also Note 5A.
|
•
|
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.
|
2019 Financial Report
|
|
93
|
|
•
|
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.
|
(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.
|
94
|
|
2019 Financial Report
|
|
The following table provides the changes, net of tax, in Accumulated other comprehensive loss:
|
||||||||||||||||||||||||
|
|
Net Unrealized Gain/(Losses)
|
|
Benefit Plans
|
|
|
||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Foreign Currency Translation Adjustments
|
|
|
Derivative Financial Instruments
|
|
|
Available-For-Sale Securities
|
|
|
Actuarial Gains/(Losses)
|
|
|
Prior Service (Costs)/ Credits and Other
|
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
||||||
Balance, January 1, 2017
|
|
$
|
(6,659
|
)
|
|
$
|
348
|
|
|
$
|
(131
|
)
|
|
$
|
(5,473
|
)
|
|
$
|
879
|
|
|
$
|
(11,036
|
)
|
Other comprehensive income/(loss)(a)
|
|
1,479
|
|
|
(378
|
)
|
|
532
|
|
|
211
|
|
|
(129
|
)
|
|
1,715
|
|
||||||
Balance, December 31, 2017
|
|
(5,180
|
)
|
|
(30
|
)
|
|
401
|
|
|
(5,262
|
)
|
|
750
|
|
|
(9,321
|
)
|
||||||
Other comprehensive income/(loss) due to the adoption of new accounting standards(b)
|
|
(2
|
)
|
|
(1
|
)
|
|
(416
|
)
|
|
(637
|
)
|
|
144
|
|
|
(913
|
)
|
||||||
Other comprehensive income/(loss)(a)
|
|
(893
|
)
|
|
198
|
|
|
(53
|
)
|
|
(128
|
)
|
|
(166
|
)
|
|
(1,041
|
)
|
||||||
Balance, December 31, 2018
|
|
(6,075
|
)
|
|
167
|
|
|
(68
|
)
|
|
(6,027
|
)
|
|
728
|
|
|
(11,275
|
)
|
||||||
Other comprehensive income/(loss)(a)
|
|
123
|
|
|
(146
|
)
|
|
33
|
|
|
(231
|
)
|
|
(144
|
)
|
|
(365
|
)
|
||||||
Balance, December 31, 2019
|
|
$
|
(5,952
|
)
|
|
$
|
20
|
|
|
$
|
(35
|
)
|
|
$
|
(6,257
|
)
|
|
$
|
584
|
|
|
$
|
(11,640
|
)
|
(a)
|
Amounts do not include foreign currency translation adjustments attributable to noncontrolling interests of $11 million loss in 2019, $20 million loss in 2018 and $14 million income in 2017. Amounts in 2019 include after-tax gains of approximately $978 million related to foreign currency translation adjustments attributable to our equity method investment in GSK Consumer Healthcare (see Note 2C), partially offset by the strengthening of the U.S. dollar against the euro and the Australian dollar, and the results of our net investment hedging program.
|
(b)
|
Amounts represent the cumulative effect adjustments as of January 1, 2018 from the adoption of new accounting standards related to (i) financial assets and liabilities and (ii) the reclassification of certain tax effects from AOCI. 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.
|
2019 Financial Report
|
|
95
|
|
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 Note 1E:
|
||||||||||||||||||||||||
|
|
December 31, 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 with readily determinable fair values:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
$
|
705
|
|
|
$
|
—
|
|
|
$
|
705
|
|
|
$
|
1,571
|
|
|
$
|
—
|
|
|
$
|
1,571
|
|
Equity(a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
17
|
|
|
11
|
|
||||||
|
|
705
|
|
|
—
|
|
|
705
|
|
|
1,600
|
|
|
17
|
|
|
1,583
|
|
||||||
Classified as available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Government and agency—non-U.S.
|
|
4,863
|
|
|
—
|
|
|
4,863
|
|
|
9,609
|
|
|
—
|
|
|
9,609
|
|
||||||
Government and agency—U.S.
|
|
811
|
|
|
—
|
|
|
811
|
|
|
3,437
|
|
|
—
|
|
|
3,437
|
|
||||||
Corporate and other
|
|
1,013
|
|
|
—
|
|
|
1,013
|
|
|
2,045
|
|
|
—
|
|
|
2,045
|
|
||||||
|
|
6,687
|
|
|
—
|
|
|
6,687
|
|
|
15,091
|
|
|
—
|
|
|
15,091
|
|
||||||
Total short-term investments
|
|
7,392
|
|
|
—
|
|
|
7,392
|
|
|
16,691
|
|
|
17
|
|
|
16,674
|
|
||||||
Other current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
53
|
|
|
—
|
|
|
53
|
|
|
97
|
|
|
—
|
|
|
97
|
|
||||||
Foreign exchange contracts
|
|
413
|
|
|
—
|
|
|
413
|
|
|
477
|
|
|
—
|
|
|
477
|
|
||||||
Total other current assets
|
|
465
|
|
|
—
|
|
|
465
|
|
|
574
|
|
|
—
|
|
|
574
|
|
||||||
Long-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Classified as equity securities with readily determinable fair values(a)
|
|
1,902
|
|
|
1,863
|
|
|
39
|
|
|
1,273
|
|
|
1,243
|
|
|
30
|
|
||||||
Classified as available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Government and agency—non-U.S.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
||||||
Government and agency—U.S.
|
|
303
|
|
|
—
|
|
|
303
|
|
|
345
|
|
|
—
|
|
|
345
|
|
||||||
Corporate and other
|
|
11
|
|
|
—
|
|
|
11
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||
|
|
315
|
|
|
—
|
|
|
315
|
|
|
491
|
|
|
—
|
|
|
491
|
|
||||||
Total long-term investments
|
|
2,216
|
|
|
1,863
|
|
|
354
|
|
|
1,764
|
|
|
1,243
|
|
|
521
|
|
||||||
Other noncurrent assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
266
|
|
|
—
|
|
|
266
|
|
|
335
|
|
|
—
|
|
|
335
|
|
||||||
Foreign exchange contracts
|
|
261
|
|
|
—
|
|
|
261
|
|
|
232
|
|
|
—
|
|
|
232
|
|
||||||
Total derivative assets
|
|
526
|
|
|
—
|
|
|
526
|
|
|
566
|
|
|
—
|
|
|
566
|
|
||||||
Insurance contracts(b)
|
|
575
|
|
|
—
|
|
|
575
|
|
|
515
|
|
|
—
|
|
|
515
|
|
||||||
Total other noncurrent assets
|
|
1,102
|
|
|
—
|
|
|
1,102
|
|
|
1,082
|
|
|
—
|
|
|
1,082
|
|
||||||
Total assets
|
|
$
|
11,176
|
|
|
$
|
1,863
|
|
|
$
|
9,313
|
|
|
$
|
20,110
|
|
|
$
|
1,260
|
|
|
$
|
18,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial liabilities measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Foreign exchange contracts
|
|
114
|
|
|
—
|
|
|
114
|
|
|
78
|
|
|
—
|
|
|
78
|
|
||||||
Total other current liabilities
|
|
114
|
|
|
—
|
|
|
114
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||||
Other noncurrent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
378
|
|
|
—
|
|
|
378
|
|
||||||
Foreign exchange contracts
|
|
604
|
|
|
—
|
|
|
604
|
|
|
564
|
|
|
—
|
|
|
564
|
|
||||||
Total other noncurrent liabilities
|
|
604
|
|
|
—
|
|
|
604
|
|
|
942
|
|
|
—
|
|
|
942
|
|
||||||
Total liabilities
|
|
$
|
718
|
|
|
$
|
—
|
|
|
$
|
718
|
|
|
$
|
1,024
|
|
|
$
|
—
|
|
|
$
|
1,024
|
|
(a)
|
As of December 31, 2019, long-term equity securities of $176 million are held in restricted trusts for benefits attributable to various U.S. non-qualified employee benefit plans. As of December 31, 2018, short-term equity securities of $11 million and long-term equity securities of $132 million are held in restricted trusts for benefits attributable to various U.S. non-qualified employee benefit plans.
|
(b)
|
Other noncurrent assets include life insurance policies held in restricted trusts attributable to the funding of various U.S. non-qualified employee benefit plans. The underlying invested assets in these insurance contracts are marketable securities, which are carried at fair value, with changes in fair value recognized in Other (income)/deductions––net in the consolidated statements of income (see Note 4).
|
96
|
|
2019 Financial Report
|
|
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:
|
||||||||||||||||||||||||
|
|
December 31, 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
|
|
$
|
35,955
|
|
|
$
|
40,842
|
|
|
$
|
40,842
|
|
|
$
|
32,909
|
|
|
$
|
35,260
|
|
|
$
|
35,260
|
|
(a)
|
As of December 31, 2019 and December 31, 2018, equity securities with readily determinable fair values included money market funds primarily invested in U.S. Treasury and government debt.
|
•
|
Available-for-sale debt securities—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate yield curves.
|
•
|
Equity securities with readily determinable fair values—quoted market prices and observable net asset value prices.
|
•
|
Derivative assets and liabilities—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data. Where applicable, these models discount future cash flow amounts using market-based observable inputs, including interest rate yield curves, and forward and spot prices for currencies. The credit risk impact to our derivative financial instruments was not significant.
|
•
|
Money market funds—observable net asset value prices.
|
2019 Financial Report
|
|
97
|
|
At December 31, 2019, the investment securities portfolio consisted of debt securities that were virtually all investment-grade. Information on investments in debt securities at December 31, 2019 and December 31, 2018 is as follows, including, as of December 31, 2019, the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
December 31, 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
|
|
|
Amortized Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|||||||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Government and agency––non-U.S.
|
|
$
|
4,895
|
|
|
$
|
6
|
|
|
$
|
(38
|
)
|
|
$
|
4,863
|
|
|
$
|
4,863
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,754
|
|
|
$
|
7
|
|
|
$
|
(58
|
)
|
|
$
|
9,703
|
|
Government and agency––U.S.
|
|
1,120
|
|
|
—
|
|
|
(6
|
)
|
|
1,114
|
|
|
811
|
|
|
303
|
|
|
—
|
|
|
3,804
|
|
|
—
|
|
|
(23
|
)
|
|
3,782
|
|
|||||||||||
Corporate and other(a)
|
|
1,027
|
|
|
—
|
|
|
(2
|
)
|
|
1,025
|
|
|
1,014
|
|
|
11
|
|
|
—
|
|
|
2,101
|
|
|
—
|
|
|
(4
|
)
|
|
2,097
|
|
|||||||||||
Held-to-maturity debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Time deposits and other
|
|
535
|
|
|
—
|
|
|
—
|
|
|
535
|
|
|
498
|
|
|
7
|
|
|
30
|
|
|
668
|
|
|
—
|
|
|
—
|
|
|
668
|
|
|||||||||||
Government and agency––non-U.S.
|
|
803
|
|
|
—
|
|
|
—
|
|
|
803
|
|
|
798
|
|
|
—
|
|
|
4
|
|
|
592
|
|
|
—
|
|
|
—
|
|
|
592
|
|
|||||||||||
Total debt securities
|
|
$
|
8,380
|
|
|
$
|
6
|
|
|
$
|
(47
|
)
|
|
$
|
8,340
|
|
|
$
|
7,984
|
|
|
$
|
322
|
|
|
$
|
35
|
|
|
$
|
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, excluding equity method investments, still held at the reporting date, calculated as follows:
|
||||||||
(MILLIONS OF DOLLARS)
|
|
December 31, 2019
|
|
|
December 31,
2018 |
|
||
Net gains recognized during the period on equity securities(a)
|
|
$
|
(454
|
)
|
|
$
|
(586
|
)
|
Less: Net gains recognized during the period on equity securities sold during the period
|
|
(25
|
)
|
|
(109
|
)
|
||
Net unrealized gains during the reporting period on equity securities still held at the reporting date
|
|
$
|
(429
|
)
|
|
$
|
(477
|
)
|
(a)
|
The net gains on equity securities are reported in Other (income)/deductions––net. For additional information, see Note 4.
|
Short-term borrowings include:
|
||||||||
|
|
As of December 31,
|
||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
2018
|
||||
Commercial paper
|
|
$
|
13,915
|
|
|
$
|
3,100
|
|
Current portion of long-term debt, principal amount(a)
|
|
1,458
|
|
|
4,781
|
|
||
Other short-term borrowings, principal amount(b)
|
|
860
|
|
|
966
|
|
||
Total short-term borrowings, principal amount
|
|
16,233
|
|
|
8,847
|
|
||
Net fair value adjustments related to hedging and purchase accounting
|
|
5
|
|
|
(5
|
)
|
||
Net unamortized discounts, premiums and debt issuance costs
|
|
(43
|
)
|
|
(11
|
)
|
||
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted
|
|
$
|
16,195
|
|
|
$
|
8,831
|
|
(a)
|
For additional information, see Note 7D.
|
(b)
|
Other short-term borrowings primarily include cash collateral. For additional information, see Note 7F.
|
98
|
|
2019 Financial Report
|
|
In the first quarter of 2019, we issued the following senior unsecured notes:
|
||||||
(MILLIONS OF DOLLARS)
|
|
|
|
Principal
|
||
Interest Rate
|
|
Maturity Date
|
|
As of December 31, 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%.
|
(a)
|
At December 31, 2019, the debt issuances have been reclassified to the current portion of long-term debt.
|
2019 Financial Report
|
|
99
|
|
•
|
Generally, we recognize the gains and losses on foreign exchange contracts that are designated as fair value hedges in earnings upon the recognition of the change in fair value of the hedged risk. For certain foreign exchange contracts, we exclude an amount from the assessment of hedge effectiveness and recognize that excluded amount through an amortization approach. We also recognize the offsetting foreign exchange impact attributable to the hedged item in earnings.
|
•
|
Generally, we record in Other comprehensive income/(loss) gains or losses on foreign exchange contracts that are designated as cash flow hedges and reclassify those amounts, as appropriate, into earnings in the same period or periods during which the hedged transaction affects earnings. For certain foreign exchange contracts, we exclude an amount from the assessment of hedge effectiveness and recognize that excluded amount through an amortization approach.
|
•
|
We record in Other comprehensive income/(loss) the foreign exchange gains and losses related to foreign exchange-denominated debt and foreign exchange contracts designated as a hedge of our net investments in foreign subsidiaries and reclassify those amounts into earnings upon the sale or substantial liquidation of our net investments. For foreign exchange contracts, we exclude an amount from the assessment of hedge effectiveness and recognize that excluded amount through an amortization approach.
|
•
|
For certain foreign exchange contracts not designated as hedging instruments, we recognize the gains and losses on foreign currency exchange contracts that are used to offset the same foreign currency assets or liabilities immediately into earnings along with the earnings impact of the items they generally offset. These contracts essentially take the opposite currency position of that reflected in the month-end balance sheet to counterbalance the effect of any currency movement.
|
100
|
|
2019 Financial Report
|
|
•
|
We recognize the gains and losses on interest rate contracts that are designated as fair value hedges in earnings upon the recognition of the change in fair value of the hedged risk. We also recognize the offsetting earnings impact of fixed-rate debt attributable to the hedged risk in earnings.
|
(a)
|
The notional amount of outstanding foreign currency forward-exchange contracts hedging our intercompany forecasted inventory sales was $5.9 billion as of December 31, 2019 and $5.8 billion as of December 31, 2018.
|
2019 Financial Report
|
|
101
|
|
The following table provides information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:
|
||||||||||||||||||||||||
|
|
Amount of
Gains/(Losses) Recognized in OID(a) |
|
Amount of Gains/(Losses)
Recognized in OCI(a), (b) |
|
Amount of Gains/(Losses)
Reclassified from OCI into OID and COS(a), (b) |
||||||||||||||||||
|
|
As of December 31,
|
||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
||||||
Derivative Financial Instruments in Cash Flow Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts(c)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
339
|
|
|
$
|
80
|
|
|
$
|
525
|
|
|
$
|
(182
|
)
|
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach(d)
|
|
—
|
|
|
—
|
|
|
136
|
|
|
140
|
|
|
140
|
|
|
153
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments in Fair Value Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contracts
|
|
900
|
|
|
(348
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hedged item
|
|
(900
|
)
|
|
348
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange contracts
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hedged item
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
—
|
|
|
—
|
|
|
(313
|
)
|
|
175
|
|
|
—
|
|
|
—
|
|
||||||
The portion on foreign exchange contracts excluded from the assessment of hedge effectiveness(d)
|
|
—
|
|
|
—
|
|
|
188
|
|
|
77
|
|
|
144
|
|
|
68
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency short-term borrowings(e)
|
|
—
|
|
|
—
|
|
|
34
|
|
|
68
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency long-term debt(e)
|
|
—
|
|
|
—
|
|
|
36
|
|
|
149
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Financial Instruments Not Designated as Hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
(172
|
)
|
|
136
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
All other net(d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
2
|
|
||||||
|
|
$
|
(172
|
)
|
|
$
|
136
|
|
|
$
|
421
|
|
|
$
|
688
|
|
|
$
|
808
|
|
|
$
|
41
|
|
(a)
|
OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the consolidated statements of income. OCI = Other comprehensive income/(loss), included in the 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/(loss)––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 gains and losses are included in Other comprehensive income/(loss)––Foreign currency translation adjustments, net.
|
(c)
|
The amounts reclassified from OCI into COS were a net gain of $247 million in 2019 and a net loss of $13 million in 2018. The remaining amounts were reclassified from OCI into OID. Based on year-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax gain of $145 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)
|
These amounts were reclassified from OCI into OID.
|
(e)
|
Short-term borrowings include foreign currency short-term borrowings with carrying values of $1.1 billion as of December 31, 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 December 31, 2019, which are used as hedging instruments in net investment hedges.
|
102
|
|
2019 Financial Report
|
|
The following table provides the amounts recorded in our consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
|
||||||||||||||||||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
|
|
Cumulative Amount of Fair
Value Hedging Adjustment
Increase/(Decrease) to
Carrying Amount |
|
|
|
Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to
Carrying Amount |
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Carrying Amount of Hedged Assets/Liabilities(a)
|
|
|
Active
Hedging
Relationships
|
|
|
Discontinued Hedging Relationships
|
|
|
Carrying Amount of Hedged Assets/Liabilities(a)
|
|
|
Active Hedging Relationships
|
|
|
Discontinued Hedging Relationships
|
|
||||||
Long-term investments
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Short-term borrowings, including current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,499
|
|
|
(5
|
)
|
|
—
|
|
||||||
Long-term debt
|
|
7,092
|
|
|
266
|
|
|
690
|
|
|
9,952
|
|
|
(45
|
)
|
|
129
|
|
(a)
|
Carrying amounts exclude the cumulative amount of fair value hedging adjustments.
|
(a)
|
The change from December 31, 2018 reflects increases for certain products, including inventory build for new product launches, supply recovery and market demand, partially offset by a decrease due to foreign exchange and the write off of rivipansel inventory previously expected to be sold (see Note 2E).
|
(b)
|
Included in Other noncurrent assets. There are no recoverability issues associated with these amounts.
|
2019 Financial Report
|
|
103
|
|
The following table provides the components of Property, plant and equipment:
|
||||||||||
|
|
Useful Lives
|
|
As of December 31,
|
||||||
(MILLIONS OF DOLLARS)
|
|
(Years)
|
|
2019
|
|
|
2018
|
|
||
Land
|
|
-
|
|
$
|
516
|
|
|
$
|
500
|
|
Buildings
|
|
33-50
|
|
10,068
|
|
|
9,920
|
|
||
Machinery and equipment
|
|
8-20
|
|
12,281
|
|
|
11,871
|
|
||
Furniture, fixtures and other
|
|
3-12 1/2
|
|
4,930
|
|
|
4,693
|
|
||
Construction in progress
|
|
-
|
|
2,960
|
|
|
2,992
|
|
||
|
|
|
|
30,756
|
|
|
29,977
|
|
||
Less: Accumulated depreciation
|
|
|
|
16,789
|
|
|
16,591
|
|
||
Property, plant and equipment(a)
|
|
|
|
$
|
13,967
|
|
|
$
|
13,385
|
|
(a)
|
The increase in total property, plant and equipment is mainly due to capital additions, partially offset by depreciation, reductions due to asset impairments largely associated with cost reduction initiatives not associated with acquisitions (see Note 3), and the impact of foreign exchange.
|
The following table provides the components of Identifiable intangible assets:
|
||||||||||||||||||||||||
|
|
December 31, 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(a)
|
|
$
|
88,730
|
|
|
$
|
(63,106
|
)
|
|
$
|
25,625
|
|
|
$
|
89,430
|
|
|
$
|
(58,895
|
)
|
|
$
|
30,535
|
|
Brands
|
|
922
|
|
|
(741
|
)
|
|
181
|
|
|
923
|
|
|
(708
|
)
|
|
215
|
|
||||||
Licensing agreements and other(a)
|
|
1,772
|
|
|
(1,191
|
)
|
|
582
|
|
|
1,436
|
|
|
(1,140
|
)
|
|
296
|
|
||||||
|
|
91,425
|
|
|
(65,037
|
)
|
|
26,387
|
|
|
91,788
|
|
|
(60,743
|
)
|
|
31,045
|
|
||||||
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Brands
|
|
1,991
|
|
|
|
|
|
1,991
|
|
|
1,991
|
|
|
|
|
|
1,991
|
|
||||||
IPR&D(a)
|
|
5,919
|
|
|
|
|
|
5,919
|
|
|
2,171
|
|
|
|
|
|
2,171
|
|
||||||
Licensing agreements and other(a), (b)
|
|
1,073
|
|
|
|
|
|
1,073
|
|
|
3
|
|
|
|
|
3
|
|
|||||||
|
|
8,983
|
|
|
|
|
|
8,983
|
|
|
4,165
|
|
|
|
|
|
4,165
|
|
||||||
Identifiable intangible assets(a), (c)
|
|
$
|
100,408
|
|
|
$
|
(65,037
|
)
|
|
$
|
35,370
|
|
|
$
|
95,954
|
|
|
$
|
(60,743
|
)
|
|
$
|
35,211
|
|
(a)
|
The increase in the gross carrying amount of Identifiable intangible assets mainly reflects the impact of the acquisition of Array, including the addition of $1.8 billion of Developed technology rights, $340 million of finite-lived Licensing agreements, $4.0 billion of IPR&D and $1.1 billion of indefinite-lived Licensing agreements (see Note 2A), partially offset by intangible asset impairment charges, primarily for Eucrisa in Developed technology rights. See Note 4 for additional information on intangible asset impairments.
|
(b)
|
Reflects acquired licensing agreements for technology in development.
|
(c)
|
The increase in Identifiable intangible assets, less accumulated amortization, is mostly due to the additions noted in (a) above, partially offset by amortization and intangible asset impairment charges, primarily for Eucrisa in Developed technology rights. See Note 4 for additional information on intangible asset impairments.
|
104
|
|
2019 Financial Report
|
|
The following table provides the annual amortization expense expected for the years 2020 through 2024:
|
||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|||||
Amortization expense
|
|
$
|
3,477
|
|
|
$
|
3,391
|
|
|
$
|
3,151
|
|
|
$
|
2,851
|
|
|
$
|
2,602
|
|
2019 Financial Report
|
|
105
|
|
The following table provides the components of and changes in the carrying amount of Goodwill:
|
||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
Biopharma
|
|
|
Upjohn
|
|
|
Consumer Healthcare
|
|
|
Total
|
|
||||
Balance, January 1, 2018
|
|
$
|
43,359
|
|
|
$
|
10,600
|
|
|
$
|
1,993
|
|
|
$
|
55,952
|
|
Other(a)
|
|
(432
|
)
|
|
(116
|
)
|
|
(1,993
|
)
|
|
(2,541
|
)
|
||||
Balance, December 31, 2018
|
|
42,927
|
|
|
10,484
|
|
|
—
|
|
|
53,411
|
|
||||
Additions(b)
|
|
5,411
|
|
|
—
|
|
|
—
|
|
|
5,411
|
|
||||
Other(c)
|
|
(136
|
)
|
|
(33
|
)
|
|
—
|
|
|
(169
|
)
|
||||
Balance, December 31, 2019
|
|
$
|
48,202
|
|
|
$
|
10,451
|
|
|
$
|
—
|
|
|
$
|
58,653
|
|
(a)
|
Primarily reflects the reclassification of our Consumer Healthcare business as held for sale (see Note 2C), the impact of foreign exchange and the contribution of the allogeneic CAR T developmental program assets and operations to Allogene that constituted a business for accounting purposes (see Note 2B).
|
(b)
|
Biopharma additions relate to our acquisition of Array (see Note 2A).
|
(c)
|
Primarily reflects the impact of foreign exchange.
|
The following table provides the annual (credit)/cost and changes in Other comprehensive income/(loss) for our benefit plans:
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
|
U.S.
Qualified(a)
|
|
U.S.
Supplemental
(Non-Qualified)
|
|
International
|
|
Postretirement
Plans
|
||||||||||||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
||||||||||||
Service cost(b)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
269
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
125
|
|
|
$
|
136
|
|
|
$
|
171
|
|
|
$
|
37
|
|
|
$
|
39
|
|
|
$
|
42
|
|
Interest cost
|
|
629
|
|
|
598
|
|
|
634
|
|
|
47
|
|
|
55
|
|
|
54
|
|
|
215
|
|
|
212
|
|
|
204
|
|
|
75
|
|
|
72
|
|
|
90
|
|
||||||||||||
Expected return on plan assets
|
|
(890
|
)
|
|
(1,040
|
)
|
|
(1,005
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(317
|
)
|
|
(360
|
)
|
|
(345
|
)
|
|
(33
|
)
|
|
(37
|
)
|
|
(36
|
)
|
||||||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Actuarial losses(b)
|
|
147
|
|
|
120
|
|
|
393
|
|
|
11
|
|
|
13
|
|
|
50
|
|
|
80
|
|
|
101
|
|
|
116
|
|
|
3
|
|
|
7
|
|
|
31
|
|
||||||||||||
Prior service cost/(credit)
|
|
(3
|
)
|
|
2
|
|
|
3
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(173
|
)
|
|
(178
|
)
|
|
(182
|
)
|
||||||||||||
Curtailments
|
|
—
|
|
|
12
|
|
|
13
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
|
(4
|
)
|
|
—
|
|
|
(47
|
)
|
|
(17
|
)
|
|
(19
|
)
|
||||||||||||
Settlements
|
|
230
|
|
|
113
|
|
|
75
|
|
|
27
|
|
|
26
|
|
|
39
|
|
|
16
|
|
|
4
|
|
|
4
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
||||||||||||
Special termination benefits
|
|
4
|
|
|
6
|
|
|
—
|
|
|
17
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
—
|
|
||||||||||||
Net periodic benefit cost/(credit) reported in income(c)
|
|
116
|
|
|
(189
|
)
|
|
382
|
|
|
100
|
|
|
103
|
|
|
166
|
|
|
115
|
|
|
84
|
|
|
147
|
|
|
(146
|
)
|
|
(111
|
)
|
|
(75
|
)
|
||||||||||||
(Credit)/cost reported in Other comprehensive income/(loss)
|
|
(246
|
)
|
|
361
|
|
|
141
|
|
|
115
|
|
|
(189
|
)
|
|
23
|
|
|
570
|
|
|
84
|
|
|
(301
|
)
|
|
38
|
|
|
105
|
|
|
(8
|
)
|
||||||||||||
(Credit)/cost recognized in Comprehensive income
|
|
$
|
(129
|
)
|
|
$
|
171
|
|
|
$
|
523
|
|
|
$
|
215
|
|
|
$
|
(86
|
)
|
|
$
|
189
|
|
|
$
|
685
|
|
|
$
|
168
|
|
|
$
|
(154
|
)
|
|
$
|
(107
|
)
|
|
$
|
(6
|
)
|
|
$
|
(83
|
)
|
(a)
|
In the second quarter of 2017, we settled the remaining obligation associated with the Hospira U.S. qualified defined benefit pension plan. We purchased a group annuity contract on behalf of the remaining plan participants with a third-party insurance provider. As a result, we were relieved of the $156 million net pension benefit obligation and recorded a pretax settlement gain of $41 million, partially offset by the recognition of actuarial losses and prior service costs upon plan settlement of approximately $30 million in Other (income)/deductions—net (see Note 3).
|
(b)
|
Effective January 1, 2018, we froze two significant defined benefit pension plans to future benefit accruals in the U.S. and U.K. and as a result, service costs for those plans are eliminated. In addition, due to the plan freeze, the average amortization period for the U.S. qualified plans and U.S. supplemental (non-qualified) plans was extended to the expected life expectancy of the plan participants, whereas the average amortization period in prior years utilized the expected future service period of plan participants.
|
(c)
|
We adopted an accounting standard on January 1, 2018 that requires the net periodic pension and postretirement benefit costs other than service costs be presented in Other (income)/deductions––net on the consolidated statements of income. For additional information, see Note 4.
|
106
|
|
2019 Financial Report
|
|
The following table provides the amounts in Accumulated other comprehensive loss expected to be amortized into 2020 net periodic benefit costs:
|
||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
U.S.
Qualified |
|
U.S. Supplemental
(Non-Qualified) |
|
International
|
|
Postretirement Plans
|
||||||||
Actuarial (losses)/gains(a)
|
|
$
|
(127
|
)
|
|
$
|
(14
|
)
|
|
$
|
(124
|
)
|
|
$
|
1
|
|
Prior service credits and other
|
|
3
|
|
|
1
|
|
|
3
|
|
|
172
|
|
||||
Total
|
|
$
|
(124
|
)
|
|
$
|
(14
|
)
|
|
$
|
(121
|
)
|
|
$
|
172
|
|
(a)
|
Due to the U.S. Pfizer Consolidated Pension Plan freeze effective for January 1, 2018, the average amortization period for the U.S. qualified plans and U.S. supplemental (non-qualified) plans reflect the expected life expectancy of the plan participants, whereas prior years utilized the expected future service period of plan participants. The average amortization periods to be utilized for 2020 are 24.9 years for our U.S. qualified plans, 24.5 years for our U.S. supplemental (non-qualified) plans, 19.4 years for our international plans, and 9.2 years for our postretirement plans.
|
The following table provides the weighted-average actuarial assumptions of our benefit plans:
|
|||||||||
(PERCENTAGES)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Weighted-average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|||
Discount rate:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
3.3
|
%
|
|
4.4
|
%
|
|
3.8
|
%
|
U.S. non-qualified pension plans
|
|
3.2
|
%
|
|
4.3
|
%
|
|
3.7
|
%
|
International pension plans
|
|
1.7
|
%
|
|
2.5
|
%
|
|
2.3
|
%
|
Postretirement plans
|
|
3.2
|
%
|
|
4.3
|
%
|
|
3.7
|
%
|
Rate of compensation increase:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans(a)
|
|
—
|
|
|
—
|
|
|
2.8
|
%
|
U.S. non-qualified pension plans(a)
|
|
—
|
|
|
—
|
|
|
2.8
|
%
|
International pension plans
|
|
1.4
|
%
|
|
1.4
|
%
|
|
2.5
|
%
|
Weighted-average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|||
Discount rate:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
4.4
|
%
|
|
3.8
|
%
|
|
4.3
|
%
|
U.S. non-qualified pension plans
|
|
4.3
|
%
|
|
3.7
|
%
|
|
4.2
|
%
|
International pension plans interest cost
|
|
2.2
|
%
|
|
2.0
|
%
|
|
2.1
|
%
|
International pension plans service cost
|
|
2.4
|
%
|
|
2.3
|
%
|
|
2.3
|
%
|
Postretirement plans
|
|
4.3
|
%
|
|
3.7
|
%
|
|
4.2
|
%
|
Expected return on plan assets:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans
|
|
7.2
|
%
|
|
7.5
|
%
|
|
8.0
|
%
|
International pension plans
|
|
3.9
|
%
|
|
4.4
|
%
|
|
4.7
|
%
|
Postretirement plans
|
|
7.3
|
%
|
|
7.5
|
%
|
|
8.0
|
%
|
Rate of compensation increase:
|
|
|
|
|
|
|
|||
U.S. qualified pension plans(a)
|
|
—
|
|
|
2.8
|
%
|
|
2.8
|
%
|
U.S. non-qualified pension plans(a)
|
|
—
|
|
|
2.8
|
%
|
|
2.8
|
%
|
International pension plans
|
|
1.4
|
%
|
|
2.5
|
%
|
|
2.6
|
%
|
(a)
|
Effective January 1, 2018, we froze the defined benefit plans to future benefit accruals in the U.S. and members’ accrued benefits to that date no longer increase in line with future compensation increases. The rate of compensation increase is therefore no longer an assumption used to determine the benefit obligation and net periodic benefit cost.
|
2019 Financial Report
|
|
107
|
|
The following table provides the healthcare cost trend rate assumptions for our U.S. postretirement benefit plans:
|
||||||
|
|
2019
|
|
|
2018
|
|
Healthcare cost trend rate assumed for next year (up to age 65)
|
|
5.6
|
%
|
|
5.8
|
%
|
Healthcare cost trend rate assumed for next year (age 65 and older)
|
|
6.0
|
%
|
|
6.5
|
%
|
Rate to which the cost trend rate is assumed to decline
|
|
4.5
|
%
|
|
4.5
|
%
|
Year that the rate reaches the ultimate trend rate
|
|
2037
|
|
|
2037
|
|
The following table provides an analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans:
|
||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||||||||||||||||||
|
|
U.S. Qualified
|
|
U.S. Supplemental
(Non-Qualified)
|
|
International
|
|
Postretirement
Plans
|
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
||||||||
Change in benefit obligation(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Benefit obligation, beginning
|
|
$
|
15,141
|
|
|
$
|
16,702
|
|
|
$
|
1,280
|
|
|
$
|
1,495
|
|
|
$
|
9,952
|
|
|
$
|
10,607
|
|
|
$
|
1,870
|
|
|
$
|
2,028
|
|
Service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
|
136
|
|
|
37
|
|
|
39
|
|
||||||||
Interest cost
|
|
629
|
|
|
598
|
|
|
47
|
|
|
55
|
|
|
215
|
|
|
212
|
|
|
75
|
|
|
72
|
|
||||||||
Employee contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
84
|
|
|
102
|
|
||||||||
Plan amendments
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
18
|
|
|
29
|
|
|
(56
|
)
|
|
2
|
|
||||||||
Changes in actuarial assumptions and other
|
|
2,001
|
|
|
(1,219
|
)
|
|
152
|
|
|
(152
|
)
|
|
1,224
|
|
|
(169
|
)
|
|
(87
|
)
|
|
(122
|
)
|
||||||||
Foreign exchange impact
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
(457
|
)
|
|
(1
|
)
|
|
(4
|
)
|
||||||||
Acquisitions/divestitures/other, net
|
|
(4
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(55
|
)
|
|
(2
|
)
|
|
(36
|
)
|
|
—
|
|
||||||||
Curtailments
|
|
—
|
|
|
11
|
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
(3
|
)
|
|
—
|
|
|
(1
|
)
|
||||||||
Settlements
|
|
(692
|
)
|
|
(391
|
)
|
|
(70
|
)
|
|
(72
|
)
|
|
(34
|
)
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
||||||||
Special termination benefits
|
|
4
|
|
|
6
|
|
|
17
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||||
Benefits paid
|
|
(544
|
)
|
|
(546
|
)
|
|
(74
|
)
|
|
(58
|
)
|
|
(360
|
)
|
|
(373
|
)
|
|
(221
|
)
|
|
(249
|
)
|
||||||||
Benefit obligation, ending(a)
|
|
16,535
|
|
|
15,141
|
|
|
1,351
|
|
|
1,280
|
|
|
11,059
|
|
|
9,952
|
|
|
1,667
|
|
|
1,870
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fair value of plan assets, beginning
|
|
13,051
|
|
|
14,284
|
|
|
—
|
|
|
—
|
|
|
8,215
|
|
|
8,863
|
|
|
469
|
|
|
494
|
|
||||||||
Actual gain/(loss) on plan assets
|
|
2,760
|
|
|
(796
|
)
|
|
—
|
|
|
—
|
|
|
873
|
|
|
(77
|
)
|
|
50
|
|
|
(22
|
)
|
||||||||
Company contributions
|
|
11
|
|
|
500
|
|
|
144
|
|
|
129
|
|
|
230
|
|
|
209
|
|
|
137
|
|
|
145
|
|
||||||||
Employee contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
84
|
|
|
102
|
|
||||||||
Foreign exchange impact
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
(380
|
)
|
|
—
|
|
|
—
|
|
||||||||
Acquisitions/divestitures, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Settlements
|
|
(692
|
)
|
|
(391
|
)
|
|
(70
|
)
|
|
(72
|
)
|
|
(34
|
)
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
||||||||
Benefits paid
|
|
(544
|
)
|
|
(546
|
)
|
|
(74
|
)
|
|
(58
|
)
|
|
(360
|
)
|
|
(373
|
)
|
|
(221
|
)
|
|
(249
|
)
|
||||||||
Fair value of plan assets, ending
|
|
14,586
|
|
|
13,051
|
|
|
—
|
|
|
—
|
|
|
8,956
|
|
|
8,215
|
|
|
519
|
|
|
469
|
|
||||||||
Funded status—Plan assets less than benefit obligation
|
|
$
|
(1,949
|
)
|
|
$
|
(2,089
|
)
|
|
$
|
(1,351
|
)
|
|
$
|
(1,280
|
)
|
|
$
|
(2,103
|
)
|
|
$
|
(1,738
|
)
|
|
$
|
(1,148
|
)
|
|
$
|
(1,401
|
)
|
(a)
|
The PBO represents the present value of the benefit obligation earned through the end of the year and factors in future compensation increases. The ABO is similar to the PBO but does not factor in future compensation increases. For the U.S. qualified and supplemental (non-qualified) pension plans, the benefit obligation is the PBO, which is also equal to the ABO. Effective January 1, 2018, we froze the defined benefit plans to future benefit accruals in the U.S. and members’ accrued benefits to that date no longer increase in line with future compensation increases. The rate of compensation increase is therefore no longer an assumption used to determine the benefit obligation and net periodic benefit cost. For the international pension plans, the benefit obligation is the PBO. The ABO for our international pension plans was $10.6 billion in 2019 and $9.5 billion in 2018. For the postretirement plans, the benefit obligation is the ABO.
|
108
|
|
2019 Financial Report
|
|
The following table provides information as to how the funded status is recognized in our consolidated balance sheets:
|
||||||||||||||||||||||||||||||||
|
|
As of December 31,
|
||||||||||||||||||||||||||||||
|
|
Pension Plans
|
|
|
|
|
||||||||||||||||||||||||||
|
|
U.S. Qualified
|
|
U.S. Supplemental
(Non-Qualified) |
|
International
|
|
Postretirement
Plans |
||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
||||||||
Noncurrent assets(a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
453
|
|
|
$
|
401
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities(b)
|
|
—
|
|
|
(1
|
)
|
|
(189
|
)
|
|
(167
|
)
|
|
(30
|
)
|
|
(28
|
)
|
|
(24
|
)
|
|
(29
|
)
|
||||||||
Noncurrent liabilities(c)
|
|
(1,949
|
)
|
|
(2,088
|
)
|
|
(1,162
|
)
|
|
(1,113
|
)
|
|
(2,526
|
)
|
|
(2,111
|
)
|
|
(1,124
|
)
|
|
(1,371
|
)
|
||||||||
Funded status
|
|
$
|
(1,949
|
)
|
|
$
|
(2,089
|
)
|
|
$
|
(1,351
|
)
|
|
$
|
(1,280
|
)
|
|
$
|
(2,103
|
)
|
|
$
|
(1,738
|
)
|
|
$
|
(1,148
|
)
|
|
$
|
(1,401
|
)
|
(a)
|
Included in Other noncurrent assets.
|
(b)
|
Included in Accrued compensation and related items.
|
(c)
|
As of December 31, 2019, included in Pension benefit obligations, net and Postretirement benefit obligations, net, as appropriate. In 2018, included in Pension benefit obligations, net and Postretirement benefit obligations, net, as well as in Liabilities held for sale (see Note 2C), as appropriate.
|
(a)
|
The accumulated actuarial losses primarily represent the impact of changes in discount rates and other assumptions that result in cumulative changes in our PBO, as well as the cumulative difference between the expected return and actual return on plan assets. These accumulated actuarial losses are recognized in Accumulated other comprehensive loss and are amortized into net periodic benefit costs primarily over the average remaining service period for active participants for plans that are not frozen or the average life expectancy of plan participants for frozen plans, primarily using the corridor approach.
|
2019 Financial Report
|
|
109
|
|
The following table provides the components of plan assets:
|
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
Fair Value(a)
|
|
|
|
|
|
Fair Value(a)
|
|
|
||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS)
|
|
As of
December 31, 2019 |
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets Measured at NAV(b)
|
|
|
As of
December 31, 2018 |
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets Measured at NAV(b)
|
|
||||||||||||||||
U.S. qualified pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Cash and cash equivalents
|
|
$
|
363
|
|
|
$
|
80
|
|
|
$
|
284
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
443
|
|
|
$
|
53
|
|
|
$
|
390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Global equity securities
|
|
3,464
|
|
|
3,406
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
3,156
|
|
|
3,119
|
|
|
37
|
|
|
—
|
|
|
—
|
|
||||||||||
Equity commingled funds
|
|
1,179
|
|
|
—
|
|
|
819
|
|
|
—
|
|
|
360
|
|
|
933
|
|
|
—
|
|
|
634
|
|
|
—
|
|
|
299
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Corporate debt securities
|
|
5,292
|
|
|
10
|
|
|
5,281
|
|
|
1
|
|
|
—
|
|
|
4,654
|
|
|
1
|
|
|
4,650
|
|
|
3
|
|
|
—
|
|
||||||||||
Government and agency obligations
|
|
1,799
|
|
|
—
|
|
|
1,799
|
|
|
—
|
|
|
—
|
|
|
1,391
|
|
|
—
|
|
|
1,391
|
|
|
—
|
|
|
—
|
|
||||||||||
Fixed income commingled funds
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
||||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Partnership investments(c)
|
|
1,212
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,212
|
|
|
1,165
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,165
|
|
||||||||||
Insurance contracts
|
|
196
|
|
|
—
|
|
|
196
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
—
|
|
||||||||||
Other commingled funds(d)
|
|
1,075
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
1,066
|
|
|
1,021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,021
|
|
||||||||||
Total
|
|
$
|
14,586
|
|
|
$
|
3,496
|
|
|
$
|
8,451
|
|
|
$
|
1
|
|
|
$
|
2,638
|
|
|
$
|
13,051
|
|
|
$
|
3,173
|
|
|
$
|
7,294
|
|
|
$
|
3
|
|
|
$
|
2,581
|
|
International pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Cash and cash equivalents
|
|
$
|
221
|
|
|
$
|
33
|
|
|
$
|
187
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
246
|
|
|
$
|
39
|
|
|
$
|
208
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Global equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Equity commingled funds
|
|
1,922
|
|
|
—
|
|
|
1,548
|
|
|
—
|
|
|
374
|
|
|
1,876
|
|
|
—
|
|
|
1,413
|
|
|
—
|
|
|
463
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Corporate debt securities
|
|
796
|
|
|
—
|
|
|
796
|
|
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|
—
|
|
||||||||||
Government and agency obligations(e)
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|
—
|
|
|
—
|
|
|
1,305
|
|
|
—
|
|
|
1,305
|
|
|
—
|
|
|
—
|
|
||||||||||
Fixed income commingled funds
|
|
2,201
|
|
|
—
|
|
|
1,031
|
|
|
—
|
|
|
1,171
|
|
|
1,770
|
|
|
—
|
|
|
1,007
|
|
|
—
|
|
|
762
|
|
||||||||||
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Partnership investments(c)
|
|
66
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
63
|
|
|
57
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
53
|
|
||||||||||
Insurance contracts(f)
|
|
1,027
|
|
|
—
|
|
|
82
|
|
|
944
|
|
|
1
|
|
|
759
|
|
|
—
|
|
|
74
|
|
|
684
|
|
|
1
|
|
||||||||||
Other(d), (f)
|
|
1,524
|
|
|
—
|
|
|
82
|
|
|
398
|
|
|
1,043
|
|
|
1,473
|
|
|
—
|
|
|
71
|
|
|
382
|
|
|
1,020
|
|
||||||||||
Total
|
|
$
|
8,956
|
|
|
$
|
33
|
|
|
$
|
4,929
|
|
|
$
|
1,342
|
|
|
$
|
2,652
|
|
|
$
|
8,215
|
|
|
$
|
40
|
|
|
$
|
4,809
|
|
|
$
|
1,065
|
|
|
$
|
2,300
|
|
U.S. postretirement plans(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Insurance contracts
|
|
$
|
519
|
|
|
$
|
—
|
|
|
$
|
519
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
469
|
|
|
$
|
—
|
|
|
$
|
469
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 1E).
|
(b)
|
Certain investments that are measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The NAV amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
|
(c)
|
Mainly includes investments in private equity, private debt, public equity limited partnerships, and, to a lesser extent, real estate and venture capital.
|
(d)
|
Mostly includes, for U.S. plan assets, investments in hedge funds and, to a lesser extent, real estate and, for international plan assets, investments in real estate and hedge funds.
|
(e)
|
Government and agency obligations are inclusive of repurchase agreements.
|
(f)
|
See below for a tabular analysis of the changes in Level 3 investments valued using significant unobservable inputs.
|
(g)
|
Reflects postretirement plan assets, which support a portion of our U.S. retiree medical plans.
|
110
|
|
2019 Financial Report
|
|
The following table provides an analysis of the changes in our more significant investments valued using significant unobservable inputs:
|
||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||
|
|
International Pension Plans
|
||||||||||||||
|
|
Insurance contracts
|
|
Other
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
||||
Fair value, beginning
|
|
$
|
684
|
|
|
$
|
420
|
|
|
$
|
382
|
|
|
$
|
468
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
|
|
|||||||
Assets held, ending
|
|
50
|
|
|
1
|
|
|
6
|
|
|
15
|
|
||||
Purchases, sales, and settlements, net
|
|
(40
|
)
|
|
188
|
|
|
6
|
|
|
(31
|
)
|
||||
Transfer into/(out of) Level 3
|
|
247
|
|
|
107
|
|
|
—
|
|
|
(51
|
)
|
||||
Exchange rate changes
|
|
2
|
|
|
(31
|
)
|
|
4
|
|
|
(20
|
)
|
||||
Fair value, ending
|
|
$
|
944
|
|
|
$
|
684
|
|
|
$
|
398
|
|
|
$
|
382
|
|
•
|
Cash and cash equivalents: Level 1 investments may include cash, cash equivalents and foreign currency valued using exchange rates. Level 2 investments may include short-term investment funds which are commingled funds priced at a stable NAV by the administrator of the funds.
|
•
|
Equity securities: Level 1 investments may include individual securities that are valued at the closing price or last trade reported on the major market on which they are traded. Level 1 and Level 2 investments may include commingled funds that have a readily determinable fair value based on quoted prices on an exchange or a published NAV derived from the quoted prices in active markets of the underlying securities. Level 3 investments may include individual securities that are unlisted, delisted, suspended, or illiquid and are typically valued using their last available price.
|
•
|
Fixed income securities: Level 1 investments may include individual securities that are valued at the closing price or last trade reported on the major market on which they are traded. Level 2 investments may include commingled funds that have a readily determinable fair value based on observable prices of the underlying securities. Level 2 investments may include corporate bonds, government and government agency obligations and other fixed income securities valued using bid evaluation pricing models or quoted prices of securities with similar characteristics. Level 3 investments may include securities that are valued using alternative pricing sources, such as investment managers or brokers, which use proprietary pricing models that incorporate unobservable inputs.
|
•
|
Other investments: Level 1 investments may include individual securities that are valued at the closing price or last trade reported on the major market on which they are traded. Level 2 investments may include Insurance contracts which invest in interest bearing cash, U.S. government securities and corporate debt instruments.
|
2019 Financial Report
|
|
111
|
|
The following table provides the long-term target asset allocations ranges and the percentage of the fair value of plan assets for benefit plans:
|
|||||||||
|
|
As of December 31,
|
|||||||
|
|
Target
Allocation Percentage
|
|
|
Percentage of Plan Assets
|
||||
(PERCENTAGES)
|
|
2019
|
|
|
2019
|
|
|
2018
|
|
U.S. qualified pension plans
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
0-10%
|
|
|
2.5
|
%
|
|
3.4
|
%
|
Equity securities
|
|
35-55%
|
|
|
31.8
|
%
|
|
31.3
|
%
|
Fixed income securities
|
|
28-53%
|
|
|
48.7
|
%
|
|
47.1
|
%
|
Other investments
|
|
5-20%
|
|
|
17.0
|
%
|
|
18.2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
International pension plans
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
0-10%
|
|
|
2.5
|
%
|
|
3.0
|
%
|
Equity securities
|
|
20-40%
|
|
|
21.5
|
%
|
|
22.9
|
%
|
Fixed income securities
|
|
35-60%
|
|
|
46.9
|
%
|
|
46.3
|
%
|
Other investments
|
|
10-35%
|
|
|
29.2
|
%
|
|
27.9
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
U.S. postretirement plans
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
0-5%
|
|
|
—
|
|
|
—
|
|
Other investments
|
|
95-100%
|
|
|
100
|
%
|
|
100
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
112
|
|
2019 Financial Report
|
|
The following table provides the expected future cash flow information related to our benefit plans:
|
||||||||||||||||
|
|
Pension Plans
|
|
|
||||||||||||
(MILLIONS OF DOLLARS)
|
|
U.S. Qualified
|
|
U.S. Supplemental
(Non-Qualified)
|
|
International
|
|
Postretirement Plans
|
||||||||
Expected employer contributions:
|
|
|
|
|
|
|
|
|
||||||||
2020(a)
|
|
$
|
1,276
|
|
|
$
|
189
|
|
|
$
|
172
|
|
|
$
|
147
|
|
Expected benefit payments:
|
|
|
|
|
|
|
|
|
||||||||
2020
|
|
$
|
1,477
|
|
|
$
|
189
|
|
|
$
|
355
|
|
|
$
|
153
|
|
2021
|
|
1,089
|
|
|
113
|
|
|
358
|
|
|
137
|
|
||||
2022
|
|
1,048
|
|
|
115
|
|
|
364
|
|
|
137
|
|
||||
2023
|
|
1,046
|
|
|
110
|
|
|
366
|
|
|
136
|
|
||||
2024
|
|
1,028
|
|
|
103
|
|
|
375
|
|
|
134
|
|
||||
2025–2029
|
|
4,759
|
|
|
435
|
|
|
1,992
|
|
|
642
|
|
(a)
|
For the U.S. qualified plans, we plan to make a $1.25 billion voluntary contribution in the second half of 2020.
|
2019 Financial Report
|
|
113
|
|
(a)
|
Represents shares purchased pursuant to the accelerated share repurchase agreement with GS&Co. entered into on February 7, 2019, as well as other share repurchases. See above for additional information.
|
(b)
|
Represents shares purchased pursuant to the accelerated share repurchase agreement with Citibank entered into on March 12, 2018, as well as other share repurchases. See above for additional information.
|
(c)
|
Represents shares purchased pursuant to the accelerated share repurchase agreement with Citibank entered into on February 2, 2017. See above for additional information.
|
114
|
|
2019 Financial Report
|
|
The following table provides the components of share-based compensation expense and the associated tax benefit:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
TSRUs(a)
|
|
$
|
294
|
|
|
$
|
302
|
|
|
$
|
221
|
|
RSUs
|
|
275
|
|
|
286
|
|
|
301
|
|
|||
PPSs
|
|
114
|
|
|
276
|
|
|
209
|
|
|||
PSAs
|
|
28
|
|
|
62
|
|
|
47
|
|
|||
Stock options
|
|
7
|
|
|
12
|
|
|
55
|
|
|||
Directors’ compensation
|
|
—
|
|
|
10
|
|
|
7
|
|
|||
Share-based payment expense
|
|
718
|
|
|
949
|
|
|
840
|
|
|||
Tax benefit for share-based compensation expense
|
|
(137
|
)
|
|
(180
|
)
|
|
(163
|
)
|
|||
Share-based payment expense, net of tax
|
|
$
|
581
|
|
|
$
|
769
|
|
|
$
|
677
|
|
(a)
|
Determined using a constant dividend yield during the expected term of the TSRU.
|
(b)
|
Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
|
(c)
|
Determined using implied volatility, after consideration of historical volatility.
|
2019 Financial Report
|
|
115
|
|
The following table summarizes TSRU and PTU information as of December 31, 2019(a), (b):
|
||||||||||||||||
|
|
TSRUs
(Thousands)
|
|
|
PTUs
(Thousands)
|
|
|
Weighted-Average
Grant Price
Per TSRU
|
|
|
Weighted-Average
Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value (Millions)
|
|
||
TSRUs Outstanding
|
|
179,999
|
|
|
—
|
|
|
$
|
35.33
|
|
|
2.6
|
|
$
|
1,415
|
|
TSRUs Vested
|
|
57,345
|
|
|
—
|
|
|
31.04
|
|
|
1.3
|
|
775
|
|
||
TSRUs Expected to vest(c)
|
|
118,618
|
|
|
—
|
|
|
37.23
|
|
|
3.2
|
|
1,096
|
|
||
TSRUs exercised and converted to PTUs
|
|
—
|
|
|
1,299
|
|
|
$
|
—
|
|
|
0.7
|
|
$
|
51
|
|
(a)
|
In 2019, we settled 7,953,671 TSRUs with a weighted-average grant price of $27.33 per unit.
|
(b)
|
In 2019, 2,173,131 TSRUs with a weighted-average grant price of $30.68 per unit were converted into 844,871 PTUs.
|
(c)
|
The number of TSRUs expected to vest takes into account an estimate of expected forfeitures.
|
(a)
|
2017 includes the modification for a commitment to pay approximately 6.4 million RSUs to approximately 9,900 employees, including senior and key management employees, for 6.6 million RSUs. These shares were paid in the first quarter of 2018.
|
116
|
|
2019 Financial Report
|
|
(a)
|
Vested and non-vested shares outstanding, but not paid as of December 31, 2019 were 32.0 million.
|
2019 Financial Report
|
|
117
|
|
The following table provides data related to all PSA activity:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Total fair value of shares vested(a)
|
|
$
|
64
|
|
|
$
|
4
|
|
|
$
|
58
|
|
Total compensation cost related to nonvested PSA grants not yet recognized, pre-tax
|
|
$
|
34
|
|
|
$
|
41
|
|
|
$
|
34
|
|
Weighted-average period over which PSA cost is expected to be recognized (years)
|
|
1.8
|
|
|
1.8
|
|
|
1.8
|
|
(a)
|
2017 includes the modification for a commitment to pay 1.1 million PSAs to approximately 90 employees, including senior and key management employees, for 1.1 million PSAs. These shares were paid in the first quarter of 2018.
|
(a)
|
Determined using a constant dividend yield during the expected term of the option.
|
(b)
|
Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
|
(c)
|
Determined using implied volatility, after consideration of historical volatility.
|
(d)
|
Determined using historical exercise and post-vesting termination patterns.
|
(a)
|
Market price of our underlying common stock less exercise price.
|
(b)
|
The number of options expected to vest takes into account an estimate of expected forfeitures.
|
118
|
|
2019 Financial Report
|
|
The following table summarizes data related to all stock option activity:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER STOCK OPTION AMOUNTS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Weighted-average grant-date fair value per stock option
|
|
$
|
5.98
|
|
|
$
|
5.06
|
|
|
$
|
4.01
|
|
Aggregate intrinsic value on exercise
|
|
$
|
261
|
|
|
$
|
625
|
|
|
$
|
331
|
|
Cash received upon exercise
|
|
$
|
394
|
|
|
$
|
1,259
|
|
|
$
|
862
|
|
Tax benefits realized related to exercise
|
|
$
|
47
|
|
|
$
|
115
|
|
|
$
|
95
|
|
Total compensation cost related to nonvested stock options not yet recognized, pre-tax
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
10
|
|
Weighted-average period over which stock option compensation cost is expected to be recognized (years)
|
|
1.6
|
|
|
1.7
|
|
|
0.8
|
|
The following table provides the detailed calculation of Earnings per common share (EPS):
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(IN MILLIONS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
EPS Numerator––Basic
|
|
|
|
|
|
|
|
|||||
Income from continuing operations
|
|
$
|
16,298
|
|
|
$
|
11,179
|
|
|
$
|
21,353
|
|
Less: Net income attributable to noncontrolling interests
|
|
29
|
|
|
36
|
|
|
47
|
|
|||
Income from continuing operations attributable to Pfizer Inc.
|
|
16,269
|
|
|
11,143
|
|
|
21,306
|
|
|||
Less: Preferred stock dividends––net of tax
|
|
1
|
|
|
1
|
|
|
1
|
|
|||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
16,268
|
|
|
11,142
|
|
|
21,305
|
|
|||
Discontinued operations––net of tax
|
|
4
|
|
|
10
|
|
|
2
|
|
|||
Less: Discontinued operations––net of tax, attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders
|
|
4
|
|
|
10
|
|
|
2
|
|
|||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
16,272
|
|
|
$
|
11,152
|
|
|
$
|
21,307
|
|
EPS Numerator––Diluted
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
$
|
16,269
|
|
|
$
|
11,143
|
|
|
$
|
21,306
|
|
Discontinued operations––net of tax, attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
4
|
|
|
10
|
|
|
2
|
|
|||
Net income attributable to Pfizer Inc. common shareholders and assumed conversions
|
|
$
|
16,273
|
|
|
$
|
11,153
|
|
|
$
|
21,308
|
|
EPS Denominator
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of common shares outstanding––Basic(a)
|
|
5,569
|
|
|
5,872
|
|
|
5,970
|
|
|||
Common-share equivalents: stock options, stock issuable under employee compensation plans, convertible preferred stock and accelerated share repurchase agreements(a)
|
|
106
|
|
|
105
|
|
|
89
|
|
|||
Weighted-average number of common shares outstanding––Diluted
|
|
5,675
|
|
|
5,977
|
|
|
6,058
|
|
|||
Stock options that had exercise prices greater than the average market price of our common stock issuable under employee compensation plans(b)
|
|
2
|
|
|
2
|
|
|
36
|
|
|||
Cash dividends declared per share
|
|
$
|
1.46
|
|
|
$
|
1.38
|
|
|
$
|
1.30
|
|
(a)
|
2017 includes the effect of the modification for a commitment to pay 15.2 million common-share equivalents that were scheduled for near-term settlement. These common share equivalents were paid in the first quarter of 2018.
|
(b)
|
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.
|
2019 Financial Report
|
|
119
|
|
•
|
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.
|
120
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
121
|
|
122
|
|
2019 Financial Report
|
|
•
|
Antitrust Actions
|
•
|
Personal Injury Actions
|
2019 Financial Report
|
|
123
|
|
•
|
Personal Injury Actions
|
•
|
Mississippi Attorney General Government Investigation
|
124
|
|
2019 Financial Report
|
|
2019 Financial Report
|
|
125
|
|
•
|
U.S. Department of Justice Antitrust Division Investigation
|
•
|
State Attorneys General Generics Antitrust Litigation
|
126
|
|
2019 Financial Report
|
|
•
|
As of December 31, 2019, we had agreements totaling $2.5 billion to purchase goods and services that are enforceable and legally binding and include amounts relating to advertising, information technology services, employee benefit administration services, and potential milestone payments deemed reasonably likely to occur, as well as obligations to make guaranteed fixed annual payments over a seven-year period in connection with the U.S. and EU approvals for Besponsa ($412 million) and an obligation to make guaranteed fixed annual payments over an eight-year period for Bosulif ($217 million), both associated with R&D arrangements.
|
•
|
As of December 31, 2019, in connection with the TCJA, we have an estimated $15 billion repatriation tax liability on accumulated post-1986 earnings of foreign subsidiaries for which we elected, with the filing of our 2018 U.S. Federal Consolidated Income Tax Return, payment over eight years through 2026. With respect to the aforementioned repatriation tax liability, it is reported in current Income taxes payable (approximately $600 million due in April 2020) and the remaining liability is reported in noncurrent Other taxes payable in our consolidated balance sheet as of December 31, 2019. The first installment of $750 million was paid in April 2019. Our obligations may vary as a result of changes in our uncertain tax positions and/or availability of attributes such as foreign tax and other credit carryforwards. See Note 5A for additional information.
|
2019 Financial Report
|
|
127
|
|
Some additional information about our Biopharma and Upjohn business segments follows:
|
|||
|
Pfizer
Biopharmaceuticals
Group
|
|
|
Biopharma is a science-based medicines business that includes six business units – Oncology, Inflammation & Immunology, Rare Disease, Hospital, Vaccines and Internal Medicine. The Hospital unit commercializes our global portfolio of sterile injectable and anti-infective medicines and includes Pfizer’s contract manufacturing operation, Pfizer CentreOne. At the beginning of our 2019 fiscal year, we also incorporated our biosimilar portfolio into the Oncology and Inflammation & Immunology business units and certain legacy established products into the Internal Medicine business unit. Each business unit is committed to delivering breakthroughs that change patients’ lives.
|
|
Upjohn is a global, primarily off-patent branded and generic medicines business, which includes a portfolio of 20 globally recognized solid oral dose brands, as well as a U.S.-based generics platform, Greenstone.
|
|
Select products include:
- Prevnar 13/Prevenar 13 - Ibrance - Eliquis - Xeljanz - Enbrel (outside the U.S. and Canada) - Chantix/Champix - Sutent - Xtandi - Vyndaqel/Vyndamax |
|
Select products include:
- Lyrica - Lipitor - Norvasc - Celebrex - Viagra - Certain generic medicines |
•
|
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, through July 31, 2019, 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 gains on the completion of joint venture transactions, 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
|
128
|
|
2019 Financial Report
|
|
(a)
|
Income from continuing operations before provision/(benefit) for taxes on income. Biopharma’s earnings include dividend income from our investment in ViiV of $220 million in 2019, $253 million in 2018 and $266 million in 2017. For additional information, see Note 4.
|
(b)
|
Certain production facilities are shared. Depreciation is allocated based on estimates of physical production. Amounts here relate solely to the depreciation and amortization associated with continuing operations.
|
(c)
|
Certain significant items are substantive and/or unusual, and in some cases recurring, items (as noted above) 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.
|
2019 Financial Report
|
|
129
|
|
The following table provides revenues by geographic area:
|
||||||||||||
|
|
Year Ended December 31,
|
||||||||||
(MILLIONS OF DOLLARS)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
United States
|
|
$
|
23,852
|
|
|
$
|
25,329
|
|
|
$
|
26,026
|
|
Developed Europe(a)
|
|
8,701
|
|
|
9,116
|
|
|
8,508
|
|
|||
Developed Rest of World(b)
|
|
6,465
|
|
|
6,551
|
|
|
6,612
|
|
|||
Emerging Markets(c)
|
|
12,733
|
|
|
12,651
|
|
|
11,399
|
|
|||
Revenues
|
|
$
|
51,750
|
|
|
$
|
53,647
|
|
|
$
|
52,546
|
|
(a)
|
Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland. Revenues denominated in euros were $7.0 billion in 2019, $7.3 billion in 2018 and $6.8 billion in 2017.
|
(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, Africa, the Middle East, Central Europe and Turkey.
|
(a)
|
Developed Europe region includes the following markets: Western Europe, Scandinavian countries and Finland.
|
(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, Africa, the Middle East, Central Europe and Turkey.
|
130
|
|
2019 Financial Report
|
|
(MILLIONS OF DOLLARS)
|
|
|
|
Year Ended December 31,
|
||||||||||
PRODUCT
|
|
PRIMARY INDICATION OR CLASS
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
TOTAL REVENUES
|
|
|
|
$
|
51,750
|
|
|
$
|
53,647
|
|
|
$
|
52,546
|
|
PFIZER BIOPHARMACEUTICALS GROUP (BIOPHARMA)
|
|
$
|
39,419
|
|
|
$
|
37,558
|
|
|
$
|
35,530
|
|
||
Internal Medicine(a)
|
|
$
|
9,119
|
|
|
$
|
8,869
|
|
|
$
|
8,229
|
|
||
Eliquis alliance revenues and direct sales
|
|
Nonvalvular Atrial fibrillation, deep vein thrombosis, pulmonary embolism
|
|
4,220
|
|
|
3,434
|
|
|
2,523
|
|
|||
Chantix/Champix
|
|
An aid to smoking cessation treatment in adults 18 years of age or older
|
|
1,107
|
|
|
1,085
|
|
|
997
|
|
|||
Premarin family
|
|
Symptoms of menopause
|
|
734
|
|
|
832
|
|
|
977
|
|
|||
BMP2
|
|
Development of bone and cartilage
|
|
287
|
|
|
279
|
|
|
261
|
|
|||
Toviaz
|
|
Overactive bladder
|
|
250
|
|
|
271
|
|
|
257
|
|
|||
All other Internal Medicine
|
|
Various
|
|
2,521
|
|
|
2,969
|
|
|
3,213
|
|
|||
Oncology(b)
|
|
$
|
9,014
|
|
|
$
|
7,471
|
|
|
$
|
6,304
|
|
||
Ibrance
|
|
Metastatic breast cancer
|
|
4,961
|
|
|
4,118
|
|
|
3,126
|
|
|||
Sutent
|
|
Advanced and/or metastatic RCC, adjuvant RCC, refractory GIST (after disease progression on, or intolerance to, imatinib mesylate) and advanced pancreatic neuroendocrine tumor
|
|
936
|
|
|
1,049
|
|
|
1,081
|
|
|||
Xtandi alliance revenues
|
|
Non-metastatic and metastatic castration-resistant prostate cancer and non-metastatic castration-sensitive prostate cancer
|
|
838
|
|
|
699
|
|
|
590
|
|
|||
Xalkori
|
|
ALK-positive and ROS1-positive advanced NSCLC
|
|
530
|
|
|
524
|
|
|
594
|
|
|||
Inlyta
|
|
Advanced RCC
|
|
477
|
|
|
298
|
|
|
339
|
|
|||
Bosulif
|
|
Philadelphia chromosome–positive chronic myelogenous leukemia
|
|
365
|
|
|
296
|
|
|
233
|
|
|||
Retacrit(c)
|
|
Anemia
|
|
225
|
|
|
82
|
|
|
67
|
|
|||
Mektovi
|
|
In combination with Braftovi for metastatic melanoma for patients who test positive for a BRAF genetic mutation
|
|
49
|
|
|
—
|
|
|
—
|
|
|||
Braftovi
|
|
In combination with Mektovi for metastatic melanoma for patients who test positive for a BRAF genetic mutation
|
|
48
|
|
|
—
|
|
|
—
|
|
|||
All other Oncology
|
|
Various
|
|
585
|
|
|
406
|
|
|
274
|
|
|||
Hospital(d)
|
|
$
|
7,772
|
|
|
$
|
7,955
|
|
|
$
|
8,369
|
|
||
Sulperazon
|
|
Bacterial infections
|
|
684
|
|
|
613
|
|
|
471
|
|
|||
Medrol(e)
|
|
Anti-inflammatory glucocorticoid
|
|
469
|
|
|
493
|
|
|
540
|
|
|||
Vfend
|
|
Fungal infections
|
|
346
|
|
|
392
|
|
|
421
|
|
|||
Zithromax(e)
|
|
Bacterial infections
|
|
336
|
|
|
326
|
|
|
299
|
|
|||
EpiPen
|
|
Epinephrine injection used in treatment of life-threatening allergic reactions
|
|
303
|
|
|
303
|
|
|
290
|
|
|||
Fragmin
|
|
Treatment/prevention of venous thromboembolism
|
|
253
|
|
|
293
|
|
|
306
|
|
|||
Zyvox
|
|
Bacterial infections
|
|
251
|
|
|
236
|
|
|
281
|
|
|||
Zosyn/Tazocin
|
|
Bacterial infections
|
|
200
|
|
|
230
|
|
|
195
|
|
|||
Tygacil
|
|
Bacterial infections
|
|
197
|
|
|
249
|
|
|
260
|
|
|||
Diflucan
|
|
Fungal infections
|
|
190
|
|
|
189
|
|
|
180
|
|
|||
Panzyga
|
|
Primary humoral immunodeficiency
|
|
183
|
|
|
39
|
|
|
—
|
|
|||
Pfizer CentreOne(f)
|
|
Various
|
|
810
|
|
|
755
|
|
|
706
|
|
|||
All other Anti-infectives
|
|
Various
|
|
1,114
|
|
|
1,041
|
|
|
1,237
|
|
|||
All other Hospital(d)
|
|
Various
|
|
2,436
|
|
|
2,797
|
|
|
3,182
|
|
|||
Vaccines
|
|
$
|
6,504
|
|
|
$
|
6,332
|
|
|
$
|
6,001
|
|
||
Prevnar 13/Prevenar 13
|
|
Pneumococcal disease
|
|
5,847
|
|
|
5,802
|
|
|
5,601
|
|
|||
Nimenrix
|
|
Meningococcal disease
|
|
230
|
|
|
140
|
|
|
86
|
|
|||
FSME/IMMUN-TicoVac
|
|
Tick-borne encephalitis disease
|
|
220
|
|
|
184
|
|
|
134
|
|
|||
Trumenba
|
|
Meningococcal disease
|
|
135
|
|
|
116
|
|
|
88
|
|
|||
All other Vaccines
|
|
Various
|
|
73
|
|
|
90
|
|
|
91
|
|
|||
Inflammation & Immunology (I&I)(g)
|
|
$
|
4,733
|
|
|
$
|
4,720
|
|
|
$
|
4,386
|
|
||
Xeljanz
|
|
RA, PsA, UC
|
|
2,242
|
|
|
1,774
|
|
|
1,345
|
|
|||
Enbrel (Outside the U.S. and Canada)
|
|
RA, juvenile idiopathic arthritis, PsA, plaque psoriasis, pediatric plaque psoriasis, ankylosing spondylitis and nonradiographic axial spondyloarthritis
|
|
1,699
|
|
|
2,112
|
|
|
2,452
|
|
|||
Inflectra/Remsima(c), (g)
|
|
Crohn’s Disease, Pediatric Crohn’s Disease, UC, Pediatric UC, RA in combination with methotrexate, Ankylosing Spondylitis, PsA and Plaque Psoriasis
|
|
625
|
|
|
642
|
|
|
419
|
|
|||
Eucrisa
|
|
Mild-to-moderate atopic dermatitis (eczema) in adults and children 2 years of age and older
|
|
138
|
|
|
147
|
|
|
67
|
|
|||
All other I&I
|
|
Various
|
|
29
|
|
|
45
|
|
|
103
|
|
2019 Financial Report
|
|
131
|
|
(MILLIONS OF DOLLARS)
|
|
|
|
Year Ended December 31,
|
||||||||||
PRODUCT
|
|
PRIMARY INDICATION OR CLASS
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Rare Disease
|
|
$
|
2,278
|
|
|
$
|
2,211
|
|
|
$
|
2,240
|
|
||
Genotropin
|
|
Replacement of human growth hormone
|
|
498
|
|
|
558
|
|
|
532
|
|
|||
BeneFIX
|
|
Hemophilia B
|
|
488
|
|
|
554
|
|
|
604
|
|
|||
Vyndaqel/Vyndamax
|
|
ATTR-Cardiomyopathy and Polyneuropathy
|
|
473
|
|
|
148
|
|
|
124
|
|
|||
Refacto AF/Xyntha
|
|
Hemophilia A
|
|
426
|
|
|
514
|
|
|
551
|
|
|||
Somavert
|
|
Acromegaly
|
|
264
|
|
|
267
|
|
|
254
|
|
|||
All other Rare Disease
|
|
Various
|
|
129
|
|
|
170
|
|
|
176
|
|
|||
Upjohn(a)
|
|
$
|
10,233
|
|
|
$
|
12,484
|
|
|
$
|
13,447
|
|
||
Lyrica
|
|
Epilepsy, post-herepetic neuralgia and diabetic peripheral neuropathy, fibromyalgia, neuropathic pain due to spinal cord injury
|
|
3,321
|
|
|
4,970
|
|
|
5,065
|
|
|||
Lipitor
|
|
Reduction of LDL cholesterol
|
|
1,973
|
|
|
2,062
|
|
|
1,915
|
|
|||
Norvasc
|
|
Hypertension
|
|
950
|
|
|
1,029
|
|
|
932
|
|
|||
Celebrex
|
|
Arthritis pain and inflammation, acute pain
|
|
719
|
|
|
686
|
|
|
775
|
|
|||
Viagra
|
|
Erectile dysfunction
|
|
497
|
|
|
636
|
|
|
1,204
|
|
|||
Effexor
|
|
Depression and certain anxiety disorders
|
|
336
|
|
|
311
|
|
|
297
|
|
|||
Zoloft
|
|
Depression and certain anxiety disorders
|
|
294
|
|
|
298
|
|
|
291
|
|
|||
Xalatan/Xalacom
|
|
Glaucoma and ocular hypertension
|
|
281
|
|
|
318
|
|
|
335
|
|
|||
Xanax
|
|
Anxiety disorders
|
|
198
|
|
|
223
|
|
|
225
|
|
|||
Revatio
|
|
Pulmonary arterial hypertension
|
|
144
|
|
|
227
|
|
|
252
|
|
|||
All other Upjohn
|
|
Various
|
|
1,519
|
|
|
1,725
|
|
|
2,158
|
|
|||
Consumer Healthcare Business(h)
|
|
$
|
2,098
|
|
|
$
|
3,605
|
|
|
$
|
3,472
|
|
||
Other(i)
|
|
Various
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97
|
|
Total Alliance revenues
|
|
Various
|
|
$
|
4,648
|
|
|
$
|
3,838
|
|
|
$
|
2,927
|
|
Total Biosimilars(c)
|
|
Various
|
|
$
|
911
|
|
|
$
|
769
|
|
|
$
|
531
|
|
Total Sterile Injectable Pharmaceuticals(j)
|
|
$
|
5,035
|
|
|
$
|
5,214
|
|
|
$
|
5,673
|
|
(a)
|
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 and 2017 product revenues to the current presentation.
|
(b)
|
We performed certain reclassifications in the All other Oncology category to conform 2018 and 2017 product revenues to the current presentation.
|
(c)
|
Biosimilars are highly similar versions of approved and authorized biological medicines and primarily include revenues from Inflectra/Remsima and Retacrit.
|
(d)
|
Hospital is a business unit that commercializes our global portfolio of sterile injectable and anti-infective medicines. We performed certain reclassifications, primarily from the legacy 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 and 2017 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 and 2017 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 and 2017 product revenues to the current presentation.
|
(h)
|
On July 31, 2019, Pfizer’s Consumer Healthcare business, an over-the-counter medicines business, was combined with GSK’s consumer healthcare business to form a new consumer healthcare joint venture. For additional information, see Note 1A and Note 2C.
|
(i)
|
Represents HIS revenues through February 2, 2017, which includes Medication Management Systems products composed of infusion pumps and related software and services, as well as IV Infusion Products, including large volume IV solutions and their associated administration sets. On February 3, 2017, we completed the sale of HIS to ICU Medical. For additional information, see Note 1A and Note 2B.
|
(j)
|
Sterile Injectable Pharmaceuticals represents the total of all branded and generic injectable products in the Hospital business, including anti-infective sterile injectable pharmaceuticals.
|
132
|
|
2019 Financial Report
|
|
|
|
Quarter
|
||||||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
2019(a)
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
13,118
|
|
|
$
|
13,264
|
|
|
$
|
12,680
|
|
|
$
|
12,688
|
|
Costs and expenses(b)
|
|
8,749
|
|
|
9,239
|
|
|
9,676
|
|
|
13,743
|
|
||||
Restructuring charges and certain acquisition-related costs(c), (d)
|
|
46
|
|
|
(115
|
)
|
|
365
|
|
|
452
|
|
||||
(Gain) on completion of Consumer Healthcare JV transaction(d)
|
|
—
|
|
|
—
|
|
|
(8,087
|
)
|
|
1
|
|
||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income/(loss)
|
|
4,323
|
|
|
4,141
|
|
|
10,727
|
|
|
(1,508
|
)
|
||||
Provision/(benefit) for taxes on income/(loss)(e)
|
|
433
|
|
|
(915
|
)
|
|
3,047
|
|
|
(1,181
|
)
|
||||
Income/(loss) from continuing operations
|
|
3,889
|
|
|
5,056
|
|
|
7,680
|
|
|
(326
|
)
|
||||
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Net income/(loss) before allocation to noncontrolling interests
|
|
3,889
|
|
|
5,056
|
|
|
7,684
|
|
|
(326
|
)
|
||||
Less: Net income attributable to noncontrolling interests
|
|
6
|
|
|
10
|
|
|
4
|
|
|
10
|
|
||||
Net income/(loss) attributable to Pfizer Inc.
|
|
$
|
3,884
|
|
|
$
|
5,046
|
|
|
$
|
7,680
|
|
|
$
|
(337
|
)
|
Earnings/(loss) per common share—basic:
|
|
|
|
|
|
|
|
|
||||||||
Income/(loss) from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.69
|
|
|
$
|
0.91
|
|
|
$
|
1.38
|
|
|
$
|
(0.06
|
)
|
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income/(loss) attributable to Pfizer Inc. common shareholders
|
|
$
|
0.69
|
|
|
$
|
0.91
|
|
|
$
|
1.38
|
|
|
$
|
(0.06
|
)
|
Earnings/(loss) per common share—diluted:
|
|
|
|
|
|
|
|
|
||||||||
Income/(loss) from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.68
|
|
|
$
|
0.89
|
|
|
$
|
1.36
|
|
|
$
|
(0.06
|
)
|
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income/(loss) attributable to Pfizer Inc. common shareholders
|
|
$
|
0.68
|
|
|
$
|
0.89
|
|
|
$
|
1.36
|
|
|
$
|
(0.06
|
)
|
(a)
|
As described in Notes to Consolidated Financial Statements—Note 1A. Basis of Presentation and Significant Accounting Policies: Basis of Presentation, acquisitions and the contribution of our Consumer Healthcare business to the GSK Consumer Healthcare joint venture impacted our results of operations in 2019.
|
(b)
|
The fourth quarter historically reflects higher costs in Cost of sales, Selling, informational and administrative expenses and Research and development expenses. The fourth quarter of 2019 includes $2.8 billion in certain asset impairments recorded in Other (income)/deductions—net. For additional information, see Notes to Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net.
|
(c)
|
The second quarter of 2019 includes the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit from multiple tax years (see Notes to Consolidated Financial Statements—Note 5D. Tax Matters: Tax Contingencies). The third quarter of 2019 includes $217 million of integration costs and other, primarily including $157 million in payments to Array employees for the fair value of previously unvested stock options that was recognized as post-closing compensation expense. The fourth quarter of 2019 primarily includes employee termination costs, asset impairments and other exit costs associated with cost reduction initiatives. The employee termination costs are mostly associated with (i) our improvements to operational effectiveness as part of the realignment of our organizational structure effective at the beginning of 2019 and (ii) our initiatives in connection with transforming to a more focused company. For additional information, see Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
(d)
|
See Notes to Consolidated Financial Statements—Note 2C. Acquisitions, Divestitures, Equity-Method Investments and Assets and Liabilities Held for Sale, Licensing Arrangements and Research and Development and Collaborative Arrangements: Equity-Method Investments and Assets and Liabilities Held for Sale.
|
(e)
|
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. The third quarter of 2019 reflects tax expense of approximately $2.7 billion associated with the gain related to the completion of the Consumer Healthcare joint venture with GSK.
|
2019 Financial Report
|
|
133
|
|
|
|
Quarter
|
||||||||||||||
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
12,906
|
|
|
$
|
13,466
|
|
|
$
|
13,298
|
|
|
$
|
13,976
|
|
Costs and expenses(a)
|
|
8,736
|
|
|
8,895
|
|
|
9,035
|
|
|
14,051
|
|
||||
Restructuring charges and certain acquisition-related costs(b)
|
|
43
|
|
|
44
|
|
|
85
|
|
|
872
|
|
||||
Income/(loss) from continuing operations before provision/(benefit) for taxes on income/(loss)
|
|
4,127
|
|
|
4,527
|
|
|
4,177
|
|
|
(946
|
)
|
||||
Provision/(benefit) for taxes on income/(loss)(c)
|
|
556
|
|
|
648
|
|
|
66
|
|
|
(563
|
)
|
||||
Income/(loss) from continuing operations
|
|
3,571
|
|
|
3,879
|
|
|
4,111
|
|
|
(383
|
)
|
||||
Discontinued operations—net of tax
|
|
(1
|
)
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
Net income/(loss) before allocation to noncontrolling interests
|
|
3,570
|
|
|
3,879
|
|
|
4,122
|
|
|
(383
|
)
|
||||
Less: Net income attributable to noncontrolling interests
|
|
9
|
|
|
7
|
|
|
8
|
|
|
11
|
|
||||
Net income/(loss) attributable to Pfizer Inc.
|
|
$
|
3,561
|
|
|
$
|
3,872
|
|
|
$
|
4,114
|
|
|
$
|
(394
|
)
|
Earnings/(loss) per common share—basic:
|
|
|
|
|
|
|
|
|
||||||||
Income/(loss) from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.60
|
|
|
$
|
0.66
|
|
|
$
|
0.70
|
|
|
$
|
(0.07
|
)
|
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income/(loss) attributable to Pfizer Inc. common shareholders
|
|
$
|
0.60
|
|
|
$
|
0.66
|
|
|
$
|
0.70
|
|
|
$
|
(0.07
|
)
|
Earnings/(loss) per common share—diluted:
|
|
|
|
|
|
|
|
|
||||||||
Income/(loss) from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
0.59
|
|
|
$
|
0.65
|
|
|
$
|
0.69
|
|
|
$
|
(0.07
|
)
|
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income/(loss) attributable to Pfizer Inc. common shareholders
|
|
$
|
0.59
|
|
|
$
|
0.65
|
|
|
$
|
0.69
|
|
|
$
|
(0.07
|
)
|
(a)
|
The fourth quarter historically reflects higher costs in Cost of sales, Selling, informational and administrative expenses and Research and development expenses. The fourth quarter of 2018 included $3.1 billion in certain asset impairments recorded in Other (income)/deductions––net. For additional information, see Notes to Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net.
|
(b)
|
The fourth quarter of 2018 included restructuring charges that were primarily related to employee termination costs and asset write downs. The employee termination costs were associated with our improvements to operational effectiveness as part of the realignment of our organizational structure effective at the beginning of 2019. For additional information, see Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives.
|
(c)
|
The third and fourth quarters of 2018 reflect the impact of the TCJA on the Provision/(benefit) for taxes on income/(loss). For additional information, see Notes to Consolidated Financial Statements—Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
|
134
|
|
2019 Financial Report
|
|
|
|
Year Ended/As of December 31,(a)
|
||||||||||||||||||
(MILLIONS, EXCEPT PER COMMON SHARE DATA)
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||||
Revenues
|
|
$
|
51,750
|
|
|
$
|
53,647
|
|
|
$
|
52,546
|
|
|
$
|
52,824
|
|
|
$
|
48,851
|
|
Income from continuing operations
|
|
16,298
|
|
|
11,179
|
|
|
21,353
|
|
|
7,229
|
|
|
6,975
|
|
|||||
Total assets
|
|
167,489
|
|
|
159,422
|
|
|
171,797
|
|
|
171,615
|
|
|
167,381
|
|
|||||
Long-term obligations(b)
|
|
66,739
|
|
|
63,807
|
|
|
69,714
|
|
|
80,660
|
|
|
72,985
|
|
|||||
Earnings per common share—basic(c)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
2.92
|
|
|
$
|
1.90
|
|
|
$
|
3.57
|
|
|
$
|
1.18
|
|
|
$
|
1.13
|
|
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
2.92
|
|
|
$
|
1.90
|
|
|
$
|
3.57
|
|
|
$
|
1.18
|
|
|
$
|
1.13
|
|
Earnings per common share—diluted(c)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
|
$
|
2.87
|
|
|
$
|
1.86
|
|
|
$
|
3.52
|
|
|
$
|
1.17
|
|
|
$
|
1.11
|
|
Discontinued operations—net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to Pfizer Inc. common shareholders
|
|
$
|
2.87
|
|
|
$
|
1.87
|
|
|
$
|
3.52
|
|
|
$
|
1.17
|
|
|
$
|
1.11
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
|
$
|
1.46
|
|
|
$
|
1.38
|
|
|
$
|
1.30
|
|
|
$
|
1.22
|
|
|
$
|
1.14
|
|
(a)
|
As described in Notes to Consolidated Financial Statements—Note 1A. Basis of Presentation and Significant Accounting Policies: Basis of Presentation, acquisitions impacted our results of operations in 2019 and 2017, the contribution of our Consumer Healthcare business to the GSK Consumer Healthcare joint venture impacted our results of operations in 2019 and divestitures impacted our results of operations in 2017. 2016 reflects the acquisition of Medivation on September 28, 2016 and the acquisition of Anacor on June 24, 2016, and 2015 reflects the acquisition of Hospira on September 3, 2015.
|
(b)
|
Defined as Long-term debt, Pension benefit obligations, net, Postretirement benefit obligations, net, Noncurrent deferred tax liabilities, Other taxes payable and Other noncurrent liabilities.
|
(c)
|
2019, 2018 and 2017 reflect the impact of the TCJA on the Provision/(benefit) for taxes on income. For additional information, see Notes to Consolidated Financial Statements—Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
|
2019 Financial Report
|
|
135
|
|
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
PFIZER
|
|
$100.0
|
|
$107.1
|
|
$111.9
|
|
$129.5
|
|
$161.7
|
|
$150.5
|
PEER GROUP
|
|
$100.0
|
|
$101.6
|
|
$102.4
|
|
$120.0
|
|
$129.8
|
|
$157.7
|
S&P 500
|
|
$100.0
|
|
$101.4
|
|
$113.5
|
|
$138.3
|
|
$132.2
|
|
$173.8
|
136
|
|
2019 Financial Report
|
Company Name
|
Where Incorporated or Organized
|
Agouron Pharmaceuticals, LLC
|
California
|
AH Robins LLC
|
Delaware
|
AHP Holdings B.V.
|
Netherlands
|
AHP Manufacturing B.V.
|
Netherlands
|
Alpharma Pharmaceuticals LLC
|
Delaware
|
Alpharma Specialty Pharma LLC
|
Delaware
|
American Food Industries LLC
|
Delaware
|
Anacor Pharmaceuticals, Inc.
|
Delaware
|
Array BioPharma Inc.
|
Delaware
|
Array BioPharma Limited
|
Ireland
|
Array BioPharma Ltd.
|
United Kingdom
|
Bamboo Therapeutics, Inc.
|
Delaware
|
BINESA 2002, S.L.
|
Spain
|
Bioren, LLC
|
Delaware
|
Blue Whale Re Ltd.
|
Vermont
|
C.P. Pharmaceuticals International C.V.
|
Netherlands
|
CICL Corporation
|
Delaware
|
COC I Corporation
|
Delaware
|
Coley Pharmaceutical GmbH
|
Germany
|
Coley Pharmaceutical Group, Inc.
|
Delaware
|
Continental Pharma, Inc.
|
Delaware
|
Covx Technologies Ireland Limited
|
Ireland
|
Cyanamid de Argentina S.A.
|
Delaware
|
Cyanamid de Colombia, S.A.
|
Delaware
|
Distribuidora Mercantil Centro Americana, S.A.
|
Delaware
|
Encysive Pharmaceuticals Inc.
|
Delaware
|
Excaliard Pharmaceuticals, Inc.
|
Delaware
|
Farminova Produtos Farmaceuticos de Inovacao, Lda.
|
Portugal
|
Farmogene Productos Farmaceuticos Lda
|
Portugal
|
FoldRx Pharmaceuticals, Inc.
|
Delaware
|
Fort Dodge Manufatura Ltda.
|
Brazil
|
G. D. Searle & Co. Limited
|
United Kingdom
|
G. D. Searle International Capital LLC
|
Delaware
|
G. D. Searle LLC
|
Delaware
|
Genetics Institute, LLC
|
Delaware
|
GenTrac, Inc.
|
Wisconsin
|
GI Europe, Inc.
|
Delaware
|
GI Japan, Inc.
|
Delaware
|
Greenstone LLC
|
Delaware
|
Hospira Adelaide Pty Ltd
|
Australia
|
Hospira Australia Pty Ltd
|
Australia
|
Hospira Benelux BVBA
|
Belgium
|
Hospira Enterprises B.V.
|
Netherlands
|
Hospira France SAS
|
France
|
Hospira Holdings (S.A.) Pty Ltd
|
Australia
|
Hospira Invicta, S.A.
|
Spain
|
Hospira Ireland Holdings Unlimited Company
|
Ireland
|
Hospira Limited
|
Hong Kong
|
Hospira Malaysia Sdn Bhd
|
Malaysia
|
Hospira Nordic AB
|
Sweden
|
Hospira Philippines, Inc.
|
Philippines
|
Hospira Pte. Ltd.
|
Singapore
|
Hospira Pty Limited
|
Australia
|
Hospira Puerto Rico, LLC
|
Delaware
|
Hospira Singapore Pte Ltd
|
Singapore
|
Hospira UK Limited
|
United Kingdom
|
Hospira Worldwide, LLC
|
Delaware
|
Hospira Zagreb d.o.o.
|
Croatia
|
Hospira, Inc.
|
Delaware
|
Ignite Immunotherapy, Inc.
|
Delaware
|
Industrial Santa Agape, S.A.
|
Guatemala
|
InnoPharma, Inc.
|
Delaware
|
International Affiliated Corporation LLC
|
Delaware
|
IP Pharmaceuticals India Private Limited
|
India
|
JMI-Daniels Pharmaceuticals, Inc.
|
Florida
|
John Wyeth & Brother Limited
|
United Kingdom
|
Kiinteistö oy Espoon Pellavaniementie 14
|
Finland
|
King Pharmaceuticals Holdings LLC
|
Delaware
|
King Pharmaceuticals LLC
|
Delaware
|
King Pharmaceuticals Research and Development, LLC
|
Delaware
|
Korea Pharma Holding Company Limited
|
Hong Kong
|
Laboratoires Pfizer, S.A.
|
Morocco
|
Laboratorios Parke Davis, S.L.
|
Spain
|
Laboratorios Pfizer Ltda.
|
Brazil
|
Laboratórios Pfizer, Lda.
|
Portugal
|
Laboratorios Wyeth LLC
|
Pennsylvania
|
Laboratorios Wyeth S.A.
|
Venezuela
|
Mayne Pharma IP Holdings (Euro) Pty Ltd
|
Australia
|
Medivation Field Solutions LLC
|
Delaware
|
Medivation LLC
|
Delaware
|
Medivation Neurology LLC
|
Delaware
|
Medivation Prostate Therapeutics LLC
|
Delaware
|
Medivation Services LLC
|
Delaware
|
Medivation Technologies LLC
|
Delaware
|
Meridian Medical Technologies Limited
|
United Kingdom
|
Meridian Medical Technologies, Inc.
|
Delaware
|
Monarch Pharmaceuticals, LLC
|
Tennessee
|
MTG Divestitures LLC
|
Delaware
|
Neusentis Limited
|
United Kingdom
|
PAH USA IN8 LLC
|
Delaware
|
Parke Davis Limited
|
Hong Kong
|
Parke Davis Productos Farmaceuticos Lda
|
Portugal
|
Parke, Davis & Company LLC
|
Michigan
|
Parkedale Pharmaceuticals, Inc.
|
Michigan
|
PBG Puerto Rico LLC
|
Puerto Rico
|
PCH SpinCo B.V.
|
Netherlands
|
P-D Co., LLC
|
Delaware
|
Peak Enterprises LLC
|
Delaware
|
PEMB OFG Spain Holding, S.L.
|
Spain
|
PF Asia Manufacturing B.V.
|
Netherlands
|
PF Consumer Healthcare Austria GmbH
|
Austria
|
PF Consumer Healthcare Holdings LLC
|
Delaware
|
PF Consumer Healthcare Holdings US Inc.
|
Delaware
|
PF Consumer Healthcare Poland sp. z.o.o.
|
Poland
|
PF Consumer Taiwan LLC
|
Delaware
|
PF Czech Republic Holdings B.V.
|
Netherlands
|
PF Finland Holdings B.V.
|
Netherlands
|
PF OFG Ireland 1 B.V.
|
Netherlands
|
PF OFG Ireland 2 B.V.
|
Netherlands
|
PF OFG Mexico B.V.
|
Netherlands
|
PF OFG Philippines B.V.
|
Netherlands
|
PF OFG Philippines, Inc.
|
Philippines
|
PF OFG Sdn. Bhd.
|
Malaysia
|
PF OFG South Korea 1 B.V.
|
Netherlands
|
PF OFG South Korea 2 B.V.
|
Netherlands
|
PF OFG Spain B.V.
|
Netherlands
|
PF PR Holdings C.V.
|
Netherlands
|
PF PRISM C.V.
|
Netherlands
|
PF PRISM Holdings B.V.
|
Netherlands
|
PF PRISM IMB B.V.
|
Netherlands
|
PF Prism S.á.r.l.
|
Luxembourg
|
PFE Holdings G.K.
|
Japan
|
PFE Pfizer Holdings 1 LLC
|
Delaware
|
PFE PHAC Holdings 1 LLC
|
Delaware
|
PFE Wyeth Holdings LLC
|
Delaware
|
PFE Wyeth-Ayerst (Asia) LLC
|
Delaware
|
Pfizer
|
France
|
Pfizer (China) Research and Development Co. Ltd.
|
People's Republic of China
|
Pfizer (Malaysia) Sdn Bhd
|
Malaysia
|
Pfizer (Perth) Pty Ltd
|
Australia
|
Pfizer (Thailand) Limited
|
Thailand
|
Pfizer (Wuhan) Research and Development Co. Ltd.
|
People's Republic of China
|
Pfizer AB
|
Sweden
|
Pfizer Advanced Pharmaceutical Company Limited
|
Taiwan
|
Pfizer Africa & Middle East for Pharmaceuticals, Veterinarian Products & Chemicals S.A.E.
|
Egypt
|
Pfizer Afrique de L'Ouest
|
Senegal
|
Pfizer AG
|
Switzerland
|
Pfizer Anti-Infectives AB
|
Sweden
|
Pfizer ApS
|
Denmark
|
Pfizer AS
|
Norway
|
Pfizer Asia Manufacturing Pte. Ltd.
|
Singapore
|
Pfizer Asia Pacific Pte Ltd.
|
Singapore
|
Pfizer Australia Holdings B.V.
|
Netherlands
|
Pfizer Australia Holdings Pty Limited
|
Australia
|
Pfizer Australia Investments Pty Ltd
|
Australia
|
Pfizer Australia Pty Ltd
|
Australia
|
Pfizer B.V.
|
Netherlands
|
Pfizer BH D.o.o.
|
Bosnia and Herzegovina
|
Pfizer Biofarmacêutica, Sociedade Unipessoal Lda
|
Portugal
|
Pfizer Biologics (Hangzhou) Co. Ltd
|
People's Republic of China
|
Pfizer Biologics Ireland Holdings Limited
|
Ireland
|
Pfizer Biopharma Egypt Import LLC
|
Egypt
|
Pfizer Biopharmaceuticals Egypt LLC
|
Egypt
|
Pfizer Biotech Corporation
|
Taiwan
|
Pfizer Bolivia S.A.
|
Bolivia
|
Pfizer Canada ULC / Pfizer Canada SRI
|
Canada
|
Pfizer CentreSource Asia Pacific Pte. Ltd.
|
Singapore
|
Pfizer Chile S.A.
|
Chile
|
Pfizer Cia. Ltda.
|
Ecuador
|
Pfizer Colombia Spinco I LLC
|
Pennsylvania
|
Pfizer Commercial Holdings TRAE Kft.
|
Hungary
|
Pfizer Commercial TRAE Trading Kft.
|
Hungary
|
Pfizer Consumer Healthcare
|
United Kingdom
|
Pfizer Corporation Austria Gesellschaft m.b.H.
|
Austria
|
Pfizer Corporation Hong Kong Limited
|
Hong Kong
|
Pfizer Corporation S. de R.L.
|
Panama
|
Pfizer Croatia d.o.o.
|
Croatia
|
Pfizer Deutschland GmbH
|
Germany
|
Pfizer Development B.V.
|
Netherlands
|
Pfizer Development LLC
|
Delaware
|
Pfizer Development LP
|
United Kingdom
|
Pfizer Development Services (UK) Limited
|
United Kingdom
|
Pfizer Dominicana, S.R.L
|
Dominican Republic
|
Pfizer East India B.V.
|
Netherlands
|
Pfizer Eastern Investments B.V.
|
Netherlands
|
Pfizer Egypt S.A.E.
|
Egypt
|
Pfizer Enterprise Holdings B.V.
|
Netherlands
|
Pfizer Enterprises LLC
|
Delaware
|
Pfizer Enterprises SARL
|
Luxembourg
|
Pfizer ESP Pty. Ltd.
|
Australia
|
Pfizer Established Medicine Italy S.r.l.
|
Italy
|
Pfizer Europe Finance B.V.
|
Netherlands
|
Pfizer Export B.V.
|
Netherlands
|
Pfizer Export Company
|
Ireland
|
Pfizer Export Holding Company B.V
|
Netherlands
|
Pfizer Finance Share Service (Dalian) Co., Ltd.
|
People's Republic of China
|
Pfizer Financial Services
|
Belgium
|
Pfizer France International Investments
|
France
|
Pfizer Free Zone Panama, S. de R.L.
|
Panama
|
Pfizer GEP, S.L.
|
Spain
|
Pfizer Global Holdings B.V.
|
Netherlands
|
Pfizer Global Supply Japan Inc.
|
Japan
|
Pfizer Global Trading
|
Ireland
|
Pfizer Group Luxembourg SARL
|
Luxembourg
|
Pfizer Gulf FZ-LLC
|
United Arab Emirates
|
Pfizer H.C.P. Corporation
|
New York
|
Pfizer Health AB
|
Sweden
|
Pfizer Health Solutions Inc.
|
Delaware
|
Pfizer Healthcare India Private Limited
|
India
|
Pfizer Healthcare Ireland
|
Ireland
|
Pfizer Hellas, A.E.
|
Greece
|
Pfizer Himalaya Holdings Coöperatief U.A.
|
Netherlands
|
Pfizer Holding France
|
France
|
Pfizer Holding Ventures
|
Ireland
|
Pfizer Holdings Corporation
|
Delaware
|
Pfizer Holdings Europe Unlimited Company
|
Ireland
|
Pfizer Holdings G.K.
|
Japan
|
Pfizer Holdings International Corporation
|
Delaware
|
Pfizer Holdings International Luxembourg (PHIL) SARL
|
Luxembourg
|
Pfizer Hungary Holdings TRAE Kft.
|
Hungary
|
Pfizer Ilaclari Limited Sirketi
|
Turkey
|
Pfizer Innovations AB
|
Sweden
|
Pfizer Innovations LLC
|
Russia
|
Pfizer Innovative Supply Point International BVBA
|
Belgium
|
Pfizer International LLC
|
New York
|
Pfizer International Markets B.V.
|
Netherlands
|
Pfizer International Operations
|
France
|
Pfizer International S. de R.L.
|
Panama
|
Pfizer International Trading (Shanghai) Limited
|
People's Republic of China
|
Pfizer Investment Capital Unlimited Company
|
Ireland
|
Pfizer Investment Co. Ltd.
|
People's Republic of China
|
Pfizer Investment Holdings S.a.r.l.
|
Luxembourg
|
Pfizer Ireland Investments Limited
|
Ireland
|
Pfizer Ireland PFE Holding 1 LLC
|
Delaware
|
Pfizer Ireland PFE Holding 2 LLC
|
Delaware
|
Pfizer Ireland Pharmaceuticals
|
Ireland
|
Pfizer Ireland Ventures Unlimited Company
|
Ireland
|
Pfizer Italia S.r.l.
|
Italy
|
Pfizer Italy Group Holding S.r.l.
|
Italy
|
Pfizer Japan Inc.
|
Japan
|
Pfizer Laboratories (Pty) Limited
|
South Africa
|
Pfizer Laboratories Limited
|
Kenya
|
Pfizer Leasing Ireland Limited
|
Ireland
|
Pfizer Leasing UK Limited
|
United Kingdom
|
Pfizer Limited
|
India
|
Pfizer Limited
|
Taiwan
|
Pfizer Limited
|
United Kingdom
|
Pfizer LLC
|
Russia
|
Pfizer Luxco Holdings SARL
|
Luxembourg
|
Pfizer Luxembourg Global Holdings S.à r.l.
|
Luxembourg
|
Pfizer Luxembourg SARL
|
Luxembourg
|
Pfizer Manufacturing Austria G.m.b.H.
|
Austria
|
Pfizer Manufacturing Belgium N.V.
|
Belgium
|
Pfizer Manufacturing Deutschland GmbH
|
Germany
|
Pfizer Manufacturing Deutschland Grundbesitz GmbH & Co. KG
|
Germany
|
Pfizer Manufacturing Holdings LLC
|
Delaware
|
Pfizer Manufacturing Ireland Unlimited Company
|
Ireland
|
Pfizer Manufacturing LLC
|
Delaware
|
Pfizer Manufacturing Services
|
Ireland
|
Pfizer MAP Holding, Inc.
|
Delaware
|
Pfizer Medical Technology Group (Belgium) N.V.
|
Belgium
|
Pfizer Medicamentos Genericos e Participacoes Ltda.
|
Brazil
|
Pfizer Mexico Holding 2 B.V.
|
Netherlands
|
Pfizer Mexico Holding B.V.
|
Netherlands
|
Pfizer Mexico, S.A. de C.V.
|
Mexico
|
Pfizer Middle East for Pharmaceuticals, Animal Health and Chemicals S.A.E.
|
Egypt
|
Pfizer New Zealand Limited
|
New Zealand
|
Pfizer Norge AS
|
Norway
|
Pfizer North America Services LLC
|
Delaware
|
Pfizer OFG Germany GmbH
|
Germany
|
Pfizer OTC B.V.
|
Netherlands
|
Pfizer Overseas LLC
|
Delaware
|
Pfizer Oy
|
Finland
|
Pfizer Pakistan Limited
|
Pakistan
|
Pfizer Parke Davis (Thailand) Ltd.
|
Thailand
|
Pfizer Parke Davis Sdn. Bhd.
|
Malaysia
|
Pfizer Pharmaceuticals Tunisie Sarl
|
Tunisia
|
Pfizer Pigments Inc.
|
Delaware
|
Pfizer Polska Sp. z.o.o.
|
Poland
|
Pfizer Private Limited
|
Singapore
|
Pfizer Production LLC
|
Delaware
|
Pfizer Products Inc.
|
Connecticut
|
Pfizer Products India Private Limited
|
India
|
Pfizer R&D Holding B.V.
|
Netherlands
|
Pfizer R&D Japan G.K.
|
Japan
|
Pfizer R&D UK Limited
|
United Kingdom
|
Pfizer Research (NC), Inc.
|
Delaware
|
Pfizer Romania SRL
|
Romania
|
Pfizer S.A.
|
Peru
|
Pfizer S.A. (Belgium)
|
Belgium
|
Pfizer S.A.S.
|
Colombia
|
Pfizer S.G.P.S. Lda.
|
Portugal
|
Pfizer S.r.l.
|
Italy
|
Pfizer S.R.L.
|
Argentina
|
Pfizer Saidal Manufacturing
|
Algeria
|
Pfizer Saudi Limited
|
Saudi Arabia
|
Pfizer Service Company BVBA
|
Belgium
|
Pfizer Service Company Ireland Unlimited Company
|
Ireland
|
Pfizer Services 1
|
France
|
Pfizer Services LLC
|
Delaware
|
Pfizer Shared Services Unlimited Company
|
Ireland
|
Pfizer Shareholdings Intermediate SARL
|
Luxembourg
|
Pfizer Singapore Holding Pte. Ltd.
|
Singapore
|
Pfizer Specialties Limited
|
Nigeria
|
Pfizer SRB d.o.o.
|
Serbia
|
Pfizer Strategic Investment Holdings LLC
|
Delaware
|
Pfizer Trading Polska sp.z.o.o.
|
Poland
|
Pfizer TRAE Holdings Kft.
|
Hungary
|
Pfizer Transactions Ireland Unlimited Company
|
Ireland
|
Pfizer Transactions LLC
|
Delaware
|
Pfizer Tunisie SA
|
Tunisia
|
Pfizer UPJ G.K.
|
Japan
|
Pfizer Upjohn Hong Kong Limited
|
Hong Kong
|
Pfizer Upjohn Korea Limited
|
Korea
|
Pfizer Upjohn Management Co., Ltd.
|
People's Republic of China
|
Pfizer Upjohn Medical Trading Co., Ltd.
|
People's Republic of China
|
Pfizer Vaccines LLC
|
Delaware
|
Pfizer Venezuela, S.A.
|
Venezuela
|
Pfizer Venture Investments LLC
|
Delaware
|
Pfizer Ventures (US) LLC
|
Delaware
|
Pfizer Ventures LLC
|
Delaware
|
Pfizer Worldwide Services Unlimited Company
|
Ireland
|
Pfizer Zona Franca, S.A.
|
Costa Rica
|
Pfizer, Inc.
|
Philippines
|
Pfizer, S.A.
|
Costa Rica
|
Pfizer, S.A. de C.V.
|
Mexico
|
Pfizer, S.L.
|
Spain
|
Pfizer, spol. s r.o.
|
Czech Republic
|
Pharmacia & Upjohn Company LLC
|
Delaware
|
Pharmacia & Upjohn LLC
|
Delaware
|
Pharmacia & Upjohn, S.A. de C.V.
|
Mexico
|
Pharmacia Brasil Ltda.
|
Brazil
|
Pharmacia Hepar LLC
|
Delaware
|
Pharmacia Holding AB
|
Sweden
|
Pharmacia Inter-American LLC
|
Pennsylvania
|
Pharmacia International B.V.
|
Netherlands
|
Pharmacia Limited
|
United Kingdom
|
Pharmacia LLC
|
Delaware
|
Pharmacia Nostrum, S.A.
|
Spain
|
PHIVCO Corp.
|
Delaware
|
PHIVCO Holdco S.à r.l.
|
Luxembourg
|
PHIVCO Luxembourg S.à r.l.
|
Luxembourg
|
PIMB OFG Spain Holding, S.L.
|
Spain
|
PRISM Holdings B.V.
|
Netherlands
|
PT. Pfizer Indonesia
|
Indonesia
|
PT. Pfizer Parke Davis
|
Indonesia
|
Purepac Pharmaceutical Holdings LLC
|
Delaware
|
Renrall LLC
|
Wyoming
|
Rinat Neuroscience Corp.
|
Delaware
|
Roerig Produtos Farmaceuticos, Lda.
|
Portugal
|
Roerig S.A.
|
Chile
|
Searle Laboratorios, Lda.
|
Portugal
|
Servicios P&U, S. de R.L. de C.V.
|
Mexico
|
Shiley LLC
|
California
|
Sinergis Farma-Produtos Farmaceuticos, Lda.
|
Portugal
|
Solinor LLC
|
Delaware
|
Sugen LLC
|
Delaware
|
Tabor LLC
|
Delaware
|
The Pfizer Incubator LLC
|
Delaware
|
Therachon
|
France
|
Therachon Holding GmbH
|
Switzerland
|
Upjohn (Thailand) Limited
|
Thailand
|
Upjohn Australia Pty Ltd.
|
Australia
|
Upjohn Belgium B.V.
|
Netherlands
|
Upjohn Canada ULC
|
Canada
|
Upjohn Europe Holdings B.V.
|
Netherlands
|
Upjohn Export B.V.
|
Netherlands
|
Upjohn Global Holdings B.V.
|
Netherlands
|
Wyeth Pharmaceuticals FZ-LLC
|
United Arab Emirates
|
Wyeth Pharmaceuticals India Private Limited
|
India
|
Wyeth Pharmaceuticals LLC
|
Delaware
|
Wyeth Subsidiary Illinois Corporation
|
Illinois
|
Wyeth Whitehall Export GmbH
|
Austria
|
Wyeth-Ayerst (Asia) LLC
|
Delaware
|
Wyeth-Ayerst International LLC
|
Delaware
|
Wyeth-Ayerst Promotions Limited
|
Delaware
|
Yarra Therapeutics, LLC
|
Delaware
|
/s/ ALBERT BOURLA
|
|
|
Albert Bourla
|
|
|
Chairman and 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
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
February 27, 2020
|
|
|
/s/ FRANK A. D'AMELIO
|
|
|
Frank A. D'Amelio
|
|
|
Chief Financial Officer, Executive Vice President,
Business Operations and Global Supply
|
||
|
|
|
February 27, 2020
|
|
|