Second-Quarter 2010 Reported Diluted EPS(1) of $0.31, Adjusted Diluted EPS(2) of $0.62
Reaffirms 2010 Financial Guidance and 2012 Financial Targets
Strong Quarterly Performance Reflects More Balanced Business Mix and Product Portfolio
($ in millions, except per share amounts)
Second-Quarter Year-to-Date
-------------- ------------
2010 2009 Change 2010 2009 Change
---- ---- ---- ------
Reported Revenues $17,327 $10,984 58% $34,077 $21,851 56%
Reported Net
Income(1) 2,475 2,261 9% 4,501 4,990 (10%)
Reported Diluted
EPS(1) 0.31 0.34 (9%) 0.56 0.74 (24%)
Adjusted Income(2) 4,959 3,249 53% 9,841 6,916 42%
Adjusted Diluted
EPS(2) 0.62 0.48 29% 1.22 1.03 18%
See end of text prior to tables for notes.
Pfizer Inc. /quotes/comstock/13*!pfe/quotes/nls/pfe (PFE 15.48, +0.48, +3.20%) today reported financial results for second-quarter 2010. Since the acquisition of Wyeth was completed on October 15, 2009, legacy Wyeth products and operations are reflected in the first two quarters of 2010, but not reflected in the first two quarters of 2009. Second-quarter 2010 revenues were $17.3 billion, an increase of 58% compared with $11.0 billion in the year-ago quarter. Revenues for second-quarter 2010 compared with the year-ago quarter were favorably impacted by $5.4 billion, or 50%, due to the addition of the legacy Wyeth products, by $315 million, or 3%, due to legacy Pfizer products, and by $584 million, or 5%, due to foreign exchange. For second-quarter 2010, U.S. revenues were $7.4 billion, an increase of 63% compared with the year-ago quarter. International revenues were $9.9 billion, an increase of 54% compared with the prior-year quarter, which reflected 45% operational growth and a 9% favorable impact of foreign exchange. U.S. revenues represented 43% of total revenues in second-quarter 2010 compared with 41% in the year-ago quarter, while international revenues represented 57% of total revenues in second-quarter 2010 compared with 59% in the year-ago quarter.
For first-half 2010, revenues were $34.1 billion, an increase of 56% compared with $21.9 billion in the same period in 2009. Revenues for first-half 2010 compared with the year-ago period were favorably impacted by $10.7 billion, or 49%, due to the addition of the legacy Wyeth products, by $173 million, or 1%, due to legacy Pfizer products, and by $1.3 billion, or 6%, due to foreign exchange. U.S. revenues were $14.7 billion, an increase of 55% compared with first-half 2009. International revenues were $19.4 billion, an increase of 57% compared with the same period last year, which reflected 46% operational growth and an 11% favorable impact of foreign exchange. U.S. revenues represented 43% and international revenues represented 57% of the total in first-half 2010, both comparable with first-half 2009.
Business Revenues
Pfizer operates two distinct commercial organizations: Biopharmaceutical and Diversified. Biopharmaceutical includes the Primary Care, Specialty Care, Established Products, Emerging Markets and Oncology customer-focused units, while Diversified includes Animal Health, Consumer Healthcare, Nutrition and Capsugel.
Second-Quarter(13)
-----------------
($ in millions) 2010 2009(13) Change
---- ------- ------
Primary Care(3) $5,923 $5,160 15%
Specialty
Care(4) 3,769 1,423 165%
Established
Products(5) 2,730 1,670 63%
Emerging
Markets(6) 2,250 1,455 55%
Oncology(7) 349 355 (2%)
--- --- ----
Biopharmaceutical 15,021 10,063 49%
------ ------ ---
Animal Health(8) 893 648 38%
Consumer
Healthcare(9) 678 -- N/A
Nutrition(10) 476 -- N/A
Capsugel(11) 195 185 5%
Diversified 2,242 833 169%
----- --- ---
Other(12) 64 88 (27%)
--- --- -----
Total $17,327 $10,984 58%
======= ======= ===
Second-Quarter(13)
-----------------
Operational
-----------
Legacy
($ in millions) Foreign Total Pfizer
Exchange ----- -------
--------
Primary Care(3) 3% 12% 5%
Specialty
Care(4) 5% 160% 8%
Established
Products(5) 5% 58% (10%)
Emerging
Markets(6) 11% 44% 11%
Oncology(7) 2% (4%) (14%)
--- ---- -----
Biopharmaceutical 5% 44% 3%
--- --- ---
Animal Health(8) 7% 31% 2%
Consumer
Healthcare(9) N/A N/A N/A
Nutrition(10) N/A N/A N/A
Capsugel(11) 1% 4% 4%
Diversified 12% 157% 3%
--- --- ---
Other(12) (3%) (24%) (24%)
---- ----- -----
Total 5% 53% 3%
=== === ===
See end of text prior to tables for notes.
N/A - Not applicable
For second-quarter 2010, revenues from Biopharmaceutical were $15.0 billion, an increase of 49% compared with $10.1 billion in the year-ago quarter. Operationally, revenues increased $4.5 billion, or 44%, which included $4.2 billion, or 41%, attributable to legacy Wyeth products, primarily Premarin in the Primary Care unit, Enbrel and the Prevnar/Prevenar franchise in the Specialty Care unit, Effexor in the Established Products unit as well as Enbrel and Prevenar in the Emerging Markets unit, and $313 million, or 3%, due to legacy Pfizer products. In addition, foreign exchange favorably impacted Biopharmaceutical revenues by 5% or $485 million.
Within the Biopharmaceutical units, legacy Pfizer operational performance was impacted in second-quarter 2010 compared with the year-ago quarter by the loss of exclusivity of certain products and by the resulting reclassification of Camptosar revenues among the units. Legacy Pfizer Oncology unit revenues no longer include Camptosar's European revenues due to its loss of exclusivity in July 2009. Camptosar's European revenues are included in the Established Products unit beginning in first-quarter 2010. This reclassification of revenues negatively impacted the Oncology unit's performance by 20% in second-quarter 2010 compared with the prior-year quarter. Further, legacy Pfizer Established Products unit revenues in second-quarter 2010 were adversely impacted by 5% due to the loss of exclusivity for Norvasc in Canada in July 2009, partially offset by the favorable impact of 1% due to the addition of Camptosar's European revenues.
For second-quarter 2010, revenues from Diversified were $2.2 billion, an increase of 169% compared with $833 million in the year-ago quarter. Operationally, revenues increased $1.3 billion, or 157%, which was primarily attributable to legacy Wyeth products, principally Centrum, Advil and Caltrate in Consumer Healthcare and infant and toddler Nutrition products. Additionally, foreign exchange favorably impacted Diversified revenues by 12% or $102 million.
Reported Net Income(1) and Reported Diluted EPS(1)
For second-quarter 2010, Pfizer posted reported net income(1) of $2.5 billion, an increase of 9% compared with $2.3 billion in the prior-year quarter, and reported diluted EPS(1) of $0.31, a decrease of 9% compared with $0.34 in the prior-year quarter. For first-half 2010, Pfizer posted reported net income(1) of $4.5 billion, a decrease of 10% compared with $5.0 billion in first-half 2009, and reported diluted EPS(1) of $0.56, a decline of 24% compared with $0.74 in the prior-year period. Results were favorably impacted by revenues from legacy Wyeth products and foreign exchange, and negatively impacted by the expenses associated with the legacy Wyeth operations as well as purchase accounting adjustments, integration charges and restructuring charges associated with the Wyeth acquisition, higher net interest expense primarily due to the borrowings used to partially fund the Wyeth acquisition and an increase in the effective tax rate.
The effective tax rate on reported results increased to approximately 37% in second-quarter 2010 from approximately 26% in second-quarter 2009, and approximately 37% in first-half 2010 compared with approximately 27% in first-half 2009. These increases were primarily the result of higher charges incurred as a result of the acquisition of Wyeth and the mix of jurisdictions in which those charges were incurred.
Additionally, reported diluted EPS(1) in second-quarter 2010 and first-half 2010 was impacted by the increased number of shares outstanding in comparison with the corresponding periods in 2009 resulting from shares issued to partially fund the Wyeth acquisition.
Adjusted Income(2) and Adjusted Diluted EPS(2)
Second-quarter 2010 adjusted income(2) was $5.0 billion, an increase of 53% compared with $3.2 billion in the year-ago quarter, and adjusted diluted EPS(2) was $0.62, an increase of 29% compared with $0.48 in the year-ago quarter. For first-half 2010, Pfizer posted adjusted income(2) of $9.8 billion, an increase of 42% compared with $6.9 billion in first-half 2009, and adjusted diluted EPS(2) of $1.22, an increase of 18% compared with $1.03 in the prior-year period. Results were favorably impacted by revenues from legacy Wyeth products and foreign exchange, which were partially offset by the expenses associated with the legacy Wyeth operations as well as higher net interest expense primarily due to the borrowings used to partially fund the acquisition of Wyeth and an increase in the effective tax rate.
The effective tax rate on adjusted income(2) increased to approximately 32% in second-quarter 2010 compared with approximately 28% in second-quarter 2009, and approximately 31% in first-half 2010 compared with approximately 29% in first-half 2009. These increases were primarily the result of certain business decisions made in connection with the acquisition of Wyeth and the change in the jurisdictional mix of earnings.
Additionally, adjusted diluted EPS(2) in second-quarter 2010 and first-half 2010 was impacted by the increased number of shares outstanding in comparison with the corresponding periods in 2009 resulting from shares issued to partially fund the Wyeth acquisition.
In second-quarter 2010, adjusted cost of sales(2) as a percentage of revenues was 17.0% compared with 15.4% in second-quarter 2009. This increase primarily reflects the change in the mix of products and businesses as a result of the Wyeth acquisition. Excluding the impact of foreign exchange, adjusted cost of sales(2) as a percentage of revenues was 18.2% in second-quarter 2010.
Adjusted SI&A expenses(2) were $4.7 billion in second-quarter 2010, an increase of 45% compared with $3.3 billion in the prior-year quarter. This increase was attributable primarily to the addition of the legacy Wyeth operations. Foreign exchange increased second-quarter 2010 adjusted SI&A expenses(2) by $126 million compared with the year-ago quarter.
Adjusted R&D expenses(2) were $2.2 billion in second-quarter 2010, an increase of 32% compared with $1.7 billion in the prior-year period. This increase was attributable primarily to the addition of the legacy Wyeth operations and continued investment in the late-stage development portfolio. Foreign exchange increased second-quarter 2010 adjusted R&D expenses(2) by $21 million compared with the year-ago quarter.
Overall, foreign exchange increased adjusted total costs(14) by $48 million, or 1%, in second-quarter 2010 compared with the prior-year period.
Executive Commentary
Jeff Kindler, Chairman and Chief Executive Officer, stated, "During the quarter, Pfizer's more balanced global portfolio, which includes small molecules, biologics and vaccines as well as off-patent pharmaceuticals and diversified products generated strong performance in a period of notable worldwide economic uncertainty. Within our Biopharmaceutical businesses, our recently launched vaccine for the prevention of pneumococcal disease in children, Prevnar/Prevenar 13, was a strong contributor, while many key products in our Primary Care, Specialty Care and Oncology units also performed well on a global basis. The Emerging Markets unit continued to benefit from our on-going investment, with year-over-year operational growth on a legacy Pfizer basis of 11%(13). Within that unit, revenues in our six key markets, led by China, increased a combined 19% on a legacy Pfizer operational basis to approximately $800 million."
"We continue to make solid progress on the Wyeth integration while we remain focused on delivering strong business performance. We expect to receive phase three clinical data for tasocitinib in rheumatoid arthritis, Sutent in lung cancer, Prevnar 13 for the prevention of pneumococcal disease in adults, axitinib in renal cell carcinoma and bosutinib in chronic myelogenous leukemia during the balance of this year. Within the Established Products unit, we anticipate continued new product launches, and within the Emerging Markets unit, we plan to continue our expansion in China and other key markets. Within our Diversified businesses, we plan to continue launching new innovations in markets around the world to grow and strengthen our product offerings, such as in our vitamin and infant formula product lines. We believe that these actions, in addition to a modest level of business development, will continue to support consistent, solid financial results," continued Mr. Kindler.
Frank D'Amelio, Chief Financial Officer, stated, "Based on our year-to-date performance, continued confidence in the business, progress on both our cost-reduction initiatives and the Wyeth integration as well as our future outlook, we are reaffirming our 2010 financial guidance and our 2012 financial targets. At this point, we anticipate that 2010 adjusted diluted EPS(2) will be at the upper-end of our guidance range, with expenses at the lower-end of our ranges. Given the continued strength of our balance sheet and significant operating cash flow, we remain confident that we have the financial wherewithal to successfully execute our strategies and continue to meet our financial objectives. Additionally, during the second quarter, we repurchased approximately $500 million, or 31 million shares, of our common stock."
2010 Financial Guidance(16)
For full-year 2010, Pfizer's financial guidance, at current exchange rates(15), is summarized below.
Reported Revenues $67.0 to $69.0 billion
Adjusted Cost of Sales(2) as a Percentage
of Revenues 19.0% to 20.0%
Adjusted SI&A Expenses(2) $19.0 to $20.0 billion
Adjusted R&D Expenses(2) $9.1 to $9.6 billion
Adjusted Other (Income)/Deductions(2) $1.2 to $1.4 billion
Effective Tax Rate on Adjusted Income(2) Approximately 30%
Reported Diluted EPS(1) $0.95 to $1.10
---------------------- --------------
Adjusted Diluted EPS(2) $2.10 to $2.20
---------------------- --------------
2012 Financial Targets
The Company is reaffirming all elements of its 2012 financial targets. As previously stated, given the longer-term nature of these targets, they are subject to greater variability and less certainty as a result of potential material impacts related to foreign exchange fluctuations, macroeconomic activity including inflation, and industry-specific challenges including changes to government healthcare policy, among others.
For 2012, at current exchange rates(15), Pfizer is targeting reported revenues between $65.2 and $67.7 billion, reported diluted EPS(1) between $1.58 and $1.73, adjusted diluted EPS(2) between $2.25 and $2.35, adjusted R&D expenses(2) between $8.0 and $8.5 billion, adjusted operating margin(2) in a range of the high 30%s to low 40%s and adjusted other (income)/deductions(2) between $1.0 and $1.2 billion in deductions. The effective tax rate on adjusted income(2) is targeted at approximately 30%, while operating cash flow is expected to be at least $19.0 billion.
Additionally, the Company remains on-track to achieve the cost-reduction target of approximately $4 to $5 billion, by the end of 2012, at 2008 average foreign exchange rates, in comparison with the 2008 pro-forma adjusted total costs(14) of Pfizer and the legacy Wyeth operations.
For additional details, please see the attached financial schedules, product revenue tables, supplemental information and disclosure notice.
"Reported Net Income" is defined as net income attributable to Pfizer Inc. in accordance with U.S. generally accepted accounting principles. "Reported Diluted EPS" is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. generally accepted accounting principles.
"Adjusted Income" and its components and "Adjusted Diluted Earnings Per Share (EPS)" are defined as reported net income(1) and its components and reported diluted EPS(1) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Cost of Sales, Adjusted SI&A expenses, Adjusted R&D expenses and Adjusted Other (Income)/Deductions are income statement line items prepared on the same basis, and therefore, components of the overall adjusted income measure. As described under Adjusted Income in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer's Form 10-Q for the fiscal quarter ended April 4, 2010, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors' understanding of our performance is enhanced by disclosing this measure. Reconciliations of second-quarter 2010 and 2009 and first-half 2010 and 2009 adjusted income and its components and adjusted diluted EPS to reported net income(1) and its components and reported diluted EPS(1), as well as reconciliations of full-year 2010 guidance and 2012 targets for adjusted income and adjusted diluted EPS to full-year 2010 guidance and 2012 targets for reported net income(1) and reported diluted EPS(1), are provided in the materials accompanying this report. The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.
The Primary Care unit includes revenues from human pharmaceutical products primarily prescribed by primary-care physicians, and may include, but are not limited to, products in the following therapeutic and disease areas: Alzheimer's disease, anxiety, cardiovascular (excluding pulmonary arterial hypertension), diabetes, pain, genitourinary, obesity, osteoporosis and respiratory. Examples of products in this unit include, but are not limited to, Celebrex, Lipitor, Lyrica, Premarin, Pristiq and Viagra. All revenues for such products are allocated to the Primary Care unit, except those generated in emerging markets(6) and those that are managed by the Established Products(5) unit.
The Specialty Care unit includes revenues from human pharmaceutical products primarily prescribed by physicians who are specialists, and may include, but are not limited to, products in the following therapeutic and disease areas: antibacterials, antifungals, antivirals, bone, inflammation, gastrointestinal, growth hormones, multiple sclerosis, ophthalmology, pulmonary arterial hypertension and psychosis. Examples of products in this unit include, but are not limited to, Enbrel, Genotropin, Geodon, the Prevnar/Prevenar franchise, Xalatan and Zyvox. All revenues for such products are allocated to the Specialty Care unit, except those generated in emerging markets(6) and those that are managed by the Established Products(5) unit.
The Established Products unit generally includes revenues from human prescription pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. In certain situations, products may be transferred to this unit before losing patent protection or marketing exclusivity in order to maximize their value. This unit also excludes revenues generated in emerging markets(6). Examples of products in this unit include, but are not limited to, Arthrotec, Effexor, Medrol, Norvasc and Relpax.
The Emerging Markets unit includes revenues from all human prescription pharmaceutical products sold in emerging markets, including, but not limited to, Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe, Russia and Turkey.
The Oncology unit includes revenues from human oncology and oncology-related products. Examples of products in this unit include, but are not limited to, Aromasin, Sutent and Torisel. All revenues for such products are allocated to the Oncology unit, except those generated in emerging markets(6) and those that are managed by the Established Products(5) unit.
Animal Health includes worldwide revenues from products to prevent and treat disease in livestock and companion animals, including vaccines, paraciticides and anti-infectives.
Consumer Healthcare generally includes worldwide revenues from non-prescription medicines and vitamins and may include, but are not limited to, products in the following therapeutic categories: pain management, nutritionals, respiratory and GI-topicals. Examples of products in Consumer Healthcare include, but are not limited to, Advil, Centrum, Caltrate, ChapStick and Robitussin.
Nutrition generally includes revenues from a full line of infant and toddler nutritional products sold outside of North America. Examples of products in Nutrition include, but are not limited to, the S-26 and SMA product lines as well as formula for infants with special nutritional needs.
Capsugel generally includes worldwide revenues from capsule products and services for the pharmaceutical and associated healthcare industries.
Includes revenues generated primarily from Pfizer Centersource.
In Biopharmaceutical, revenues from South Korea in 2009 have been reclassified from the Emerging Markets unit to the appropriate developed market units to conform to the current-year presentation, which reflects the fact that the commercial operations of South Korea, effective January 1, 2010, are managed within the appropriate developed market units.
Represents the total of Adjusted Cost of Sales(2), Adjusted SI&A expenses(2) and Adjusted R&D expenses(2).
The current exchange rates assumed in connection with the 2010 financial guidance are a blend of the average of the actual exchange rates in effect during first-half 2010 and the mid-July 2010 exchange rates for the remainder of the year. The current exchanges rates assumed in connection with the 2012 financial targets are the mid-July 2010 exchange rates.
This guidance does not assume the completion of any business-development transactions not completed as of July 4, 2010. This guidance also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of July 4, 2010.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(millions, except per common share data)
% Incr.
Second Quarter /
--------------
2010 2009 (Decr.)
---- ---- -------
Revenues $17,327 $10,984 58
Costs and expenses:
Cost of sales (a) 3,795 1,756 116
Selling, informational and
administrative expenses (a) 4,807 3,350 43
Research and development expenses
(a) 2,187 1,695 29
Amortization of intangible assets 1,407 583 141
Acquisition-related in-process
research and development charges - 20 *
Restructuring charges and certain
acquisition-related costs 886 459 93
Other (income)/deductions--net 271 72 276
--- ---
Income from continuing operations
before provision
for taxes on income 3,974 3,049 30
Provision for taxes on income 1,488 786 89
---
Income from continuing operations 2,486 2,263 10
Discontinued operations--net of
tax (1) 3 (133)
---
Net income before allocation to
noncontrolling interests 2,485 2,266 10
Less: Net income attributable
to noncontrolling interests 10 5 100
Net income attributable to Pfizer
Inc. $2,475 $2,261 9
====== ======
Earnings per share - basic:
Income from continuing operations
attributable to Pfizer Inc.
common shareholders $0.31 $0.34 (9)
Discontinued operations--net of
tax - - --
--- ---
Net income attributable to Pfizer
Inc. common shareholders $0.31 $0.34 (9)
===== =====
Earnings per share - diluted:
Income from continuing operations
attributable to Pfizer Inc.
common shareholders $0.31 $0.34 (9)
Discontinued operations--net of
tax - - --
--- ---
Net income attributable to Pfizer
Inc. common shareholders $0.31 $0.34 (9)
===== =====
Weighted-average shares used to
calculate earnings per common
share:
Basic 8,046 6,728
===== =====
Diluted 8,072 6,752
===== =====
% Incr.
Six Months /
----------
2010 2009 (Decr.)
---- ---- -------
Revenues $34,077 $21,851 56
Costs and expenses:
Cost of sales (a) 8,101 3,164 156
Selling, informational and
administrative expenses (a) 9,243 6,226 48
Research and development expenses
(a) 4,413 3,400 30
Amortization of intangible assets 2,816 1,161 143
Acquisition-related in-process
research and development charges 74 20 270
Restructuring charges and certain
acquisition-related costs 1,592 1,013 57
Other (income)/deductions--net 685 15 *
--- ---
Income from continuing operations
before provision
for taxes on income 7,153 6,852 4
Provision for taxes on income 2,634 1,860 42
----- -----
Income from continuing operations 4,519 4,992 (9)
Discontinued operations--net of
tax 1 4 (75)
--- ---
Net income before allocation to
noncontrolling interests 4,520 4,996 (10)
Less: Net income attributable to
noncontrolling interests 19 6 217
---
Net income attributable to Pfizer
Inc. $4,501 $4,990 (10)
====== ======
Earnings per share - basic:
Income from continuing operations
attributable to Pfizer Inc. common
shareholders $0.56 $0.74 (24)
Discontinued operations--net of
tax - - --
--- ---
Net income attributable to Pfizer
Inc. common shareholders $0.56 $0.74 (24)
===== =====
Earnings per share - diluted:
Income from continuing operations
attributable to Pfizer Inc. common
shareholders $0.56 $0.74 (24)
Discontinued operations--net of
tax - - --
--- ---
Net income attributable to Pfizer
Inc. common shareholders $0.56 $0.74 (24)
===== =====
Weighted-average shares used to
calculate earnings per common
share:
Basic 8,053 6,726
===== =====
Diluted 8,085 6,752
===== =====
(a) Exclusive of amortization of intangible assets, except as discussed
in footnote 5 below.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
1. The above financial statements present the three-month and six-
month periods ended July 4, 2010 and June 28, 2009. Subsidiaries
operating outside the United States are included for the three-month
and six-month periods ended May 31, 2010 and May 24, 2009.
Wyeth's results are included in our consolidated financial statements
commencing from the acquisition date of October 15, 2009,
in accordance with Pfizer's domestic and international year-ends.
Therefore, our results of operations for the three-month and six-
month periods ended June 28, 2009 do not include Wyeth's results of
operations. Cost of sales for 2010 includes the significant impacts
of purchase accounting adjustments associated with inventory acquired
from Wyeth that was sold in 2010. Amortization of intangible assets
for 2010 includes the amortization of intangible assets acquired from
Wyeth.
2. The financial results for the three-month and six-month periods
ended July 4, 2010, are not necessarily indicative of the results
which
could ultimately be achieved for the current year.
3. Included in Restructuring charges and certain acquisition-related
costs for the three-month and six-month periods ended June 28,
2009 are $184 million
and $553 million, respectively, of transaction costs, such as
banking, legal, accounting and other similar costs, directly related
to our acquisition of Wyeth.
4. In the first six months of 2010, we recorded $74 million of
Acquisition-related in-process research and development charges
(IPR&D) due to the
resolution of contingencies associated with our 2008 acquisition of
CovX. In the second quarter of 2009, we recorded $20 million of
IPR&D due to the resolution of contingencies associated with our 2008
acquisition of CovX.
5. Amortization expense related to acquired intangible assets that
contribute to our ability to sell, manufacture, research, market and
distribute our products is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions.
Amortization expense related to acquired intangible assets that are
associated with a single function is included in Cost of sales,
Selling, informational and administrative expenses or Research and
development expenses, as appropriate.
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND
ITS COMPONENTS
AND REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON SHAREHOLDERS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS (a)
(UNAUDITED)
(millions of dollars, except per common share data)
Quarter Ended July 4, 2010
--------------------------
Purchase Acquisition-
Accounting Related
Reported Adjustments Costs(2)
-------- ----------- -------
Revenues $17,327 $ - $ -
Costs and expenses:
Cost of sales (b) 3,795 (727) (113)
Selling, informational
and administrative
expenses (b) 4,807 10 (102)
Research and development
expenses (b) 2,187 (5) -
Amortization of
intangible assets 1,407 (1,373) -
Acquisition-related in-
process research and
development charges - - -
Restructuring charges and
certain acquisition-
related costs 886 - (886)
Other
(income)/deductions--
net 271 (3) -
--- --- ---
Income from continuing
operations before
provision
for taxes on income 3,974 2,098 1,101
Provision for taxes on
income 1,488 540 237
----- --- ---
Income from continuing
operations 2,486 1,558 864
Discontinued operations-
-net of tax (1) - -
Net income before
allocation to
noncontrolling interests 2,485 1,558 864
Less: Net income
attributable to
noncontrolling interests 10 - -
--- --- ---
Net income attributable
to Pfizer Inc. $2,475 $1,558 $864
====== ====== ====
Earnings per common share
-diluted:
Income from continuing
operations attributable
to Pfizer Inc.
common shareholders $0.31 $0.19 $0.11
Discontinued operations-
-net of tax - - -
--- --- ---
Net income attributable
to Pfizer Inc. common
shareholders $0.31 $0.19 $0.11
===== ===== =====
Quarter Ended July 4, 2010
--------------------------
Certain
Discontinued Significant
Operations Items(3) Adjusted
---------- ------- --------
Revenues $ - $(6) $17,321
Costs and expenses:
Cost of sales (b) - (4) 2,951
Selling, informational and
administrative expenses
(b) - 12 4,727
Research and development
expenses (b) - - 2,182
Amortization of intangible
assets - - 34
Acquisition-related in-
process research and
development charges - - -
Restructuring charges and
certain acquisition-
related costs - - -
Other (income)/deductions-
-net - (111) 157
--- ---- ---
Income from continuing
operations before
provision
for taxes on income - 97 7,270
Provision for taxes on
income - 36 2,301
--- --- -----
Income from continuing
operations - 61 4,969
Discontinued operations--
net of tax 1 - -
---
Net income before
allocation to
noncontrolling interests 1 61 4,969
Less: Net income
attributable to
noncontrolling interests - - 10
--- --- ---
Net income attributable to
Pfizer Inc. $1 $61 $4,959
=== === ======
Earnings per common share -
diluted:
Income from continuing
operations attributable to
Pfizer Inc.
common shareholders $ - $0.01 $0.62
Discontinued operations--
net of tax - - -
--- --- ---
Net income attributable to
Pfizer Inc. common
shareholders $ - $0.01 $0.62
=== ===== =====
Six Months Ended July 4, 2010
-----------------------------
Purchase Acquisition-
Accounting Related
Reported Adjustments Costs(2)
-------- ----------- -------
Revenues $34,077 $ - $ -
Costs and expenses:
Cost of sales (b) 8,101 (2,077) (126)
Selling, informational and
administrative expenses
(b) 9,243 9 (162)
Research and development
expenses (b) 4,413 (15) (20)
Amortization of intangible
assets 2,816 (2,756) -
Acquisition-related in-
process research and
development charges 74 (74) -
Restructuring charges and
certain acquisition-
related costs 1,592 - (1,592)
Other (income)/deductions-
-net 685 (26) -
--- --- ---
Income from continuing
operations before
provision
for taxes on income 7,153 4,939 1,900
Provision for taxes on
income 2,634 1,252 463
----- ----- ---
Income from continuing
operations 4,519 3,687 1,437
Discontinued operations--
net of tax 1 - -
--- --- ---
Net income before
allocation to
noncontrolling interests 4,520 3,687 1,437
Less: Net income
attributable to
noncontrolling interests 19 - -
--- --- ---
Net income attributable to
Pfizer Inc. $4,501 $3,687 $1,437
====== ====== ======
Earnings per common share
-diluted:
Income from continuing
operations attributable
to Pfizer Inc.
common shareholders $0.56 $0.45 $0.18
Discontinued operations--
net of tax - - -
--- --- ---
Net income attributable to
Pfizer Inc. common
shareholders $0.56 $0.45 $0.18
===== ===== =====
Six Months Ended July 4, 2010
-----------------------------
Certain
Discontinued Significant
Operations Items(3) Adjusted
---------- ------- --------
Revenues $ - $(13) $34,064
Costs and expenses:
Cost of sales (b) - (12) 5,886
Selling, informational and
administrative expenses
(b) - 12 9,102
Research and development
expenses (b) - - 4,378
Amortization of intangible
assets - - 60
Acquisition-related in-
process research and
development charges - - -
Restructuring charges and
certain acquisition-
related costs - - -
Other (income)/deductions-
-net - (292) 367
--- ---- ---
Income from continuing
operations before
provision
for taxes on income - 279 14,271
Provision for taxes on
income - 62 4,411
--- --- -----
Income from continuing
operations - 217 9,860
Discontinued operations--
net of tax (1) - -
--- --- ---
Net income before
allocation to
noncontrolling interests (1) 217 9,860
Less: Net income
attributable to
noncontrolling interests - - 19
--- --- ---
Net income attributable to
Pfizer Inc. $(1) $217 $9,841
=== ==== ======
Earnings per common share -
diluted:
Income from continuing
operations attributable to
Pfizer Inc.
common shareholders $ - $0.03 $1.22
Discontinued operations--
net of tax - - -
--- --- ---
Net income attributable to
Pfizer Inc. common
shareholders $ - $0.03 $1.22
=== ===== =====
(a) Adjusted income and its components and adjusted diluted EPS are not,
and should not be viewed as, substitutes for U.S. GAAP net income
and
its components and diluted EPS.
(b) Exclusive of amortization of intangible assets, except as discussed
in note 1.
See end of tables for notes.
Certain amounts may reflect rounding adjustments.
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND
ITS COMPONENTS
AND REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON SHAREHOLDERS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS (a)
(UNAUDITED)
(millions of dollars, except per common share data)
Quarter Ended June 28, 2009
---------------------------
Purchase Acquisition-
Accounting Related
Reported Adjustments Costs(2)
-------- ----------- -------
Revenues $10,984 $ - $ -
Costs and expenses:
Cost of sales (b) 1,756 - -
Selling, informational
and administrative
expenses (b) 3,350 3 -
Research and development
expenses (b) 1,695 (7) -
Amortization of
intangible assets 583 (556) -
Acquisition-related in-
process research and
development charges 20 (20) -
Restructuring charges and
certain acquisition-
related costs 459 - (285)
Other
(income)/deductions--
net 72 (1) -
--- --- ---
Income from continuing
operations before
provision
for taxes on income 3,049 581 285
Provision for taxes on
income 786 165 100
--- --- ---
Income from continuing
operations 2,263 416 185
Discontinued operations-
-net of tax 3 - -
Net income before
allocation to
noncontrolling interests 2,266 416 185
Less: Net income
attributable to
noncontrolling interests 5 - -
--- --- ---
Net income attributable
to Pfizer Inc. $2,261 $416 $185
====== ==== ====
Earnings per common share
-diluted:
Income from continuing
operations attributable
to Pfizer Inc.
common shareholders $0.34 $0.06 $0.02
Discontinued operations-
-net of tax - - -
--- --- ---
Net income attributable
to Pfizer Inc. common
shareholders $0.34 $0.06 $0.02
===== ===== =====
Quarter Ended June 28, 2009
---------------------------
Certain
Discontinued Significant
Operations Items(3) Adjusted
---------- ------- --------
Revenues $ - $(18) $10,966
Costs and expenses:
Cost of sales (b) - (70) 1,686
Selling, informational and
administrative expenses
(b) - (89) 3,264
Research and development
expenses (b) - (32) 1,656
Amortization of intangible
assets - - 27
Acquisition-related in-
process research and
development charges - - -
Restructuring charges and
certain acquisition-
related costs - (174) -
Other (income)/deductions-
-net - (263) (192)
--- ---- ----
Income from continuing
operations before
provision
for taxes on income - 610 4,525
Provision for taxes on
income - 220 1,271
--- --- -----
Income from continuing
operations - 390 3,254
Discontinued operations--
net of tax (3) - -
---
Net income before
allocation to
noncontrolling interests (3) 390 3,254
Less: Net income
attributable to
noncontrolling interests - - 5
--- --- ---
Net income attributable to
Pfizer Inc. $(3) $390 $3,249
=== ==== ======
Earnings per common share
-diluted:
Income from continuing
operations attributable
to Pfizer Inc.
common shareholders $ - $0.06 $0.48
Discontinued operations--
net of tax - - -
--- --- ---
Net income attributable to
Pfizer Inc. common
shareholders $ - $0.06 $0.48
=== ===== =====
Six Months Ended June 28, 2009
------------------------------
Purchase Acquisition-
Accounting Related
Reported Adjustments Costs(2)
-------- ----------- -------
Revenues $21,851 $ - $ -
Costs and expenses:
Cost of sales (b) 3,164 - -
Selling, informational
and administrative
expenses (b) 6,226 6 -
Research and development
expenses (b) 3,400 (14) -
Amortization of
intangible assets 1,161 (1,096) -
Acquisition-related in-
process research and
development charges 20 (20) -
Restructuring charges and
certain acquisition-
related costs 1,013 - (682)
Other
(income)/deductions--
net 15 (3) -
--- --- ---
Income from continuing
operations before
provision
for taxes on income 6,852 1,127 682
Provision for taxes on
income 1,860 357 245
----- --- ---
Income from continuing
operations 4,992 770 437
Discontinued operations-
-net of tax 4 - -
--- ---
Net income before
allocation to
noncontrolling interests 4,996 770 437
Less: Net income
attributable to
noncontrolling interests 6 - -
--- --- ---
Net income attributable
to Pfizer Inc. $4,990 $770 $437
====== ==== ====
Earnings per common share
-diluted:
Income from continuing
operations attributable
to Pfizer Inc.
common shareholders $0.74 $0.11 $0.07
Discontinued operations-
-net of tax - - -
--- --- ---
Net income attributable
to Pfizer Inc. common
shareholders $0.74 $0.11 $0.07
===== ===== =====
Six Months Ended June 28, 2009
------------------------------
Certain
Discontinued Significant
Operations Items(3) Adjusted
---------- ------- --------
Revenues $ - $(40) $21,811
Costs and expenses:
Cost of sales (b) - (164) 3,000
Selling, informational
and administrative
expenses (b) - (135) 6,097
Research and development
expenses (b) - (65) 3,321
Amortization of
intangible assets - - 65
Acquisition-related in-
process research and
development charges - - -
Restructuring charges and
certain acquisition-
related costs - (331) -
Other
(income)/deductions--
net - (428) (416)
--- ---- ----
Income from continuing
operations before
provision
for taxes on income - 1,083 9,744
Provision for taxes on
income - 360 2,822
--- --- -----
Income from continuing
operations - 723 6,922
Discontinued operations-
-net of tax (4) - -
--- --- ---
Net income before
allocation to
noncontrolling interests (4) 723 6,922
Less: Net income
attributable to
noncontrolling interests - - 6
--- --- ---
Net income attributable
to Pfizer Inc. $(4) $723 $6,916
=== ==== ======
Earnings per common share
-diluted:
Income from continuing
operations attributable
to Pfizer Inc.
common shareholders $ - $0.11 $1.03
Discontinued operations-
-net of tax - - -
--- --- ---
Net income attributable
to Pfizer Inc. common
shareholders $ - $0.11 $1.03
=== ===== =====
(a) Adjusted income and its components and adjusted diluted EPS are not,
and should not be viewed as, substitutes for U.S. GAAP net income
and
its components and diluted EPS.
(b) Exclusive of amortization of intangible assets, except as discussed
in note 1.
See end of tables for notes.
Certain amounts may reflect rounding adjustments.
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND
ITS COMPONENTS
AND REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON SHAREHOLDERS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
1) Amortization expense related to acquired intangible assets that
contribute to our ability to sell, manufacture, research, market and
distribute our products is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions.
Amortization expense related to acquired intangible assets that are
associated with a single function is included in Cost of sales,
Selling, informational and administrative expenses or Research and
development expenses, as appropriate.
2) Acquisition-related costs includes the following:
Second Quarter Six Months
-------------- ----------
(millions of dollars) 2010 2009 2010 2009
--------------------- ---- ---- ---- ----
Transaction costs(a) $4 $184 $13 $553
Integration costs(a) 211 101 419 129
Restructuring
charges(a) 671 - 1,160 -
Additional depreciation
-asset
restructuring(b) 215 - 308 -
--- --- --- ---
Total acquisition-
related costs --
pre-tax 1,101 285 1,900 682
Income taxes(c) (237) (100) (463) (245)
Total acquisition-
related costs -- net
of tax $864 $185 $1,437 $437
==== ==== ====== ====
(a)Transaction costs include costs directly related to our acquisition
of Wyeth, such as banking, legal, accounting
and other similar costs. Integration costs represent external,
incremental costs directly related to integrating
Wyeth and primarily include expenditures for consulting and systems
integration. Restructuring charges relate to our
acquisition of Wyeth and include employee termination costs, asset
impairments and exit costs.
(b)Represents the impact of changes in the estimated useful lives of
assets involved in restructuring actions related to our
acquisition of Wyeth. Included in Cost of Sales ($113 million) and
Selling, informational and administrative expenses ($102
million) for the three months ended July 4, 2010. Included in Cost of
Sales ($126 million), Selling, informational and
administrative expenses ($162 million) and Research and development
expenses ($20 million) for the six months ended
July 4, 2010.
(c) Included in Provision for taxes on income.
3) Certain significant items includes the following:
Second Quarter Six Months
-------------- ----------
(millions of dollars) 2010 2009 2010 2009
--------------------- ---- ---- ---- ----
Restructuring charges -
Cost-reduction
initiatives(a) $- $174 $- $331
Implementation costs -
Cost-reduction
initiatives(b) - 156 - 330
Certain legal matters(c) - (2) 142 130
Net interest expense(d) - 206 - 229
Asset impairment charges(e) 207 66 207 66
Other(f) (110) 10 (70) (3)
---- --- --- ---
Total certain significant
items -- pre-tax 97 610 279 1,083
Income taxes(g) (36) (220) (62) (360)
Total certain significant
items --net of tax $61 $390 $217 $723
=== ==== ==== ====
(a) Included in Restructuring charges and certain acquisition-related
costs.
(b) Included in Cost of sales ($45 million), Selling, informational and
administrative expenses ($85 million), Research and
development expenses ($32 million), and Other (income)/deductions -
net ($6 million income) for the three months ended
June 28, 2009. Included in Cost of sales ($121 million), Selling,
informational and administrative expenses ($131 million),
Research and development expenses ($73 million), and Other
(income)/deductions -net ($5 million) for the six months ended
June 28, 2009.
(c) Included in Other (income)/deductions - net.
(d) Included in Other (income)/deductions -net. Includes interest
expense on the senior unsecured notes issued in connection
with our acquisition of Wyeth less interest income earned on the
proceeds of those notes.
(e) Included in Other (income)/deductions - net. Primarily represents
impairment charges related to in-process research and
development ("IPR&D") intangible assets which were acquired in
connection with our acquisition of Wyeth.
(f) Included in Other (income)/deductions -net. 2010 primarily
represents gain on sale of certain Pfizer Animal Health
products.
(g) Included in Provision for taxes on income.
PFIZER INC.
BUSINESS REVENUES(1),(2)
FIRST SIX MONTHS OF 2010 and 2009
(UNAUDITED)
(millions of dollars)
Operational
-----------
2010 2009(2) Change Foreign Total Legacy
---- ------ ------ Exchange ----- Pfizer
-------- ------
Primary Care $11,789 $10,500 12% 4% 8% 2%
Specialty Care 7,292 2,888 152% 7% 145% 3%
Established Products 5,514 3,329 66% 6% 60% -11%
Emerging Markets 4,222 2,741 54% 10% 44% 9%
Oncology 710 707 - 3% -3% -14%
--- --- --- --- --- ---
Biopharmaceutical 29,527 20,165 46% 5% 41% -
Animal Health 1,739 1,185 47% 9% 38% 8%
Consumer Healthcare 1,341 - * * * *
Nutrition 934 - * * * *
Capsugel 369 339 9% 3% 6% 6%
--- --- --- --- --- ---
Diversified 4,383 1,524 188% 14% 174% 8%
Other 167 162 3% 1% 2% 2%
--- --- --- --- --- ---
TOTAL $34,077 $21,851 56% 6% 50% 1%
======= ======= === === === ===
* - Calculation not meaningful
(1) See notes 3-12 in the accompanying earnings release for a
description of each business unit and of "Other".
(2) In Biopharmaceutical, revenues from South Korea in 2009 have been
reclassified from the Emerging Markets unit
to the appropriate developed market units to conform to the current-
year presentation, which reflects the fact that
the commercial operations of South Korea, effective January 1, 2010,
are managed within the appropriate developed market units.
PFIZER INC.
REVENUES
SECOND QUARTER 2010
(UNAUDITED)
(millions of dollars)
WORLDWIDE
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL REVENUES $17,327 $10,984 58% 52%
-------------- ------- ------- - -
TOTAL BIOPHARMACEUTICAL: $15,021 $10,063 49% 44%
------------------------ ------- ------- - -
Lipitor 2,813 2,685 5% -
Enbrel (Outside the U.S. and
Canada)*** 808 - * *
Lyrica 762 629 21% 19%
Effexor*** 621 - * *
Celebrex 604 548 10% 7%
Viagra 491 423 16% 12%
Xalatan / Xalacom 449 395 14% 10%
Prevnar / Prevenar 13*** 569 - * *
Prevnar / Prevenar 7*** 331 - * *
Norvasc 422 518 (19%) (23%)
Zyvox 299 257 16% 14%
Detrol / Detrol LA 260 273 (5%) (7%)
Premarin Family*** 260 - * *
Sutent 255 223 14% 11%
Geodon / Zeldox 247 231 7% 6%
Zosyn / Tazocin*** 230 - * *
Genotropin 233 207 13% 10%
Vfend 207 180 15% 12%
Chantix / Champix 170 192 (11%) (16%)
Benefix*** 164 - * *
Zoloft 144 125 15% 9%
Caduet 126 128 (2%) (6%)
Aromasin 122 114 7% 4%
Revatio 122 94 30% 27%
Pristiq*** 113 - * *
Medrol 113 110 3% 1%
Cardura 110 114 (4%) (7%)
Zithromax / Zmax 110 100 10% 5%
Aricept** 103 108 (5%) (11%)
Refacto / Xyntha*** 98 - * *
Alliance Revenue 1,061 598 77% 75%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 2,604 1,811 44% 38%
All Other Established Products 2,022 1,524 33% 27%
Legacy Pfizer Other Established
Products 1,590 1,524 4% -
TOTAL DIVERSIFIED: $2,242 $833 169% 157%
------------------ ------ ---- --- ---
ANIMAL HEALTH*** 893 648 38% 31%
CONSUMER HEALTHCARE*** 678 - * *
NUTRITION*** 476 - * *
CAPSUGEL 195 185 5% 4%
OTHER**** $64 $88 (27%) (24%)
--------- --- --- ----- -----
UNITED STATES
2010 2009 % Change
--------
Total
-----
TOTAL REVENUES $7,381 $4,524 63%
-------------- ------ ------ -
TOTAL BIOPHARMACEUTICAL: $6,649 $4,190 59%
------------------------ ------ ------ -
Lipitor 1,313 1,314 -
Enbrel (Outside the U.S. and
Canada)*** - - *
Lyrica 365 324 13%
Effexor*** 492 - *
Celebrex 398 390 2%
Viagra 234 207 13%
Xalatan / Xalacom 151 118 28%
Prevnar / Prevenar 13*** 483 - *
Prevnar / Prevenar 7*** 33 - *
Norvasc 11 16 (31%)
Zyvox 154 138 12%
Detrol / Detrol LA 176 192 (8%)
Premarin Family*** 238 - *
Sutent 62 56 11%
Geodon / Zeldox 205 192 7%
Zosyn / Tazocin*** 150 - *
Genotropin 60 50 20%
Vfend 63 54 17%
Chantix / Champix 72 116 (38%)
Benefix*** 77 - *
Zoloft 19 22 (14%)
Caduet 84 99 (15%)
Aromasin 41 39 5%
Revatio 75 59 27%
Pristiq*** 99 - *
Medrol 30 35 (14%)
Cardura 2 2 -
Zithromax / Zmax 2 4 (50%)
Aricept** - - *
Refacto / Xyntha*** 18 - *
Alliance Revenue 750 352 113%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 792 411 93%
All Other Established Products 540 373 45%
Legacy Pfizer Other Established
Products 359 373 (4%)
TOTAL DIVERSIFIED: $713 $316 126%
------------------ ---- ---- ---
ANIMAL HEALTH*** 338 261 30%
CONSUMER HEALTHCARE*** 327 - *
NUTRITION*** - - *
CAPSUGEL 48 55 (13%)
OTHER**** $19 $18 6%
--------- --- --- -
TOTAL INTERNATIONAL(1)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL REVENUES $9,946 $6,460 54% 45%
-------------- ------ ------ - -
TOTAL BIOPHARMACEUTICAL: $8,372 $5,873 43% 34%
------------------------ ------ ------ - -
Lipitor 1,500 1,371 9% 1%
Enbrel (Outside the U.S. and
Canada)*** 808 - * *
Lyrica 397 305 30% 25%
Effexor*** 129 - * *
Celebrex 206 158 30% 21%
Viagra 257 216 19% 11%
Xalatan / Xalacom 298 277 8% 2%
Prevnar / Prevenar 13*** 86 - * *
Prevnar / Prevenar 7*** 298 - * *
Norvasc 411 502 (18%) (23%)
Zyvox 145 119 22% 18%
Detrol / Detrol LA 84 81 4% (3%)
Premarin Family*** 22 - * *
Sutent 193 167 16% 11%
Geodon / Zeldox 42 39 8% 2%
Zosyn / Tazocin*** 80 - * *
Genotropin 173 157 10% 6%
Vfend 144 126 14% 10%
Chantix / Champix 98 76 29% 19%
Benefix*** 87 - * *
Zoloft 125 103 21% 14%
Caduet 42 29 45% 23%
Aromasin 81 75 8% 3%
Revatio 47 35 34% 26%
Pristiq*** 14 - * *
Medrol 83 75 11% 8%
Cardura 108 112 (4%) (8%)
Zithromax / Zmax 108 96 13% 6%
Aricept** 103 108 (5%) (11%)
Refacto / Xyntha*** 80 - * *
Alliance Revenue 311 246 26% 19%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 1,812 1,400 29% 22%
All Other Established Products 1,482 1,151 29% 22%
Legacy Pfizer Other Established
Products 1,231 1,151 7% -
TOTAL DIVERSIFIED: $1,529 $517 196% 175%
------------------ ------ ---- --- ---
ANIMAL HEALTH*** 555 387 43% 32%
CONSUMER HEALTHCARE*** 351 - * *
NUTRITION*** 476 - * *
CAPSUGEL 147 130 13% 10%
OTHER**** $45 $70 (36%) (33%)
--------- --- --- ----- -----
* - Calculation not meaningful.
** - Includes direct sales under license agreement with Eisai
Co., Ltd.
*** - Legacy Wyeth products and operations. Animal Health
results for the second quarter of 2010 also reflect the
addition of legacy Wyeth products.
Wyeth's results are included in our financial statements
commencing from the acquisition date of October 15, 2009,
in accordance with Pfizer's domestic and international
year-ends.
Therefore, our results for the second quarter of 2009 do not
include Wyeth's results of operations.
**** - Includes revenues generated primarily from Pfizer
Centersource.
Certain amounts and percentages may reflect rounding adjustments.
(1) Total International represents Developed Europe region +
Developed Rest of World region + Emerging Markets region.
Details for these regions are located on the following page.
PFIZER INC.
REVENUES
DETAIL OF INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
SECOND QUARTER 2010
(UNAUDITED)
(millions of dollars)
DEVELOPED EUROPE(1)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL INTERNATIONAL REVENUES $4,142 $2,909 42% 41%
---------------------------- ------ ------ - -
TOTAL INTERNATIONAL
BIOPHARMACEUTICAL: $3,670 $2,621 40% 38%
------------------- ------ ------ --- ---
Lipitor 664 675 (2%) (3%)
Enbrel (Outside the U.S. and
Canada)*** 547 - * *
Lyrica 268 221 21% 20%
Effexor*** 63 - * *
Celebrex 43 49 (12%) (9%)
Viagra 97 100 (3%) (5%)
Xalatan / Xalacom 146 141 4% 2%
Prevnar / Prevenar 13*** 69 - * *
Prevnar / Prevenar 7*** 101 - * *
Norvasc 55 58 (5%) (8%)
Zyvox 73 64 14% 14%
Detrol / Detrol LA 43 47 (9%) (12%)
Premarin Family*** 3 - * *
Sutent 103 108 (5%) (5%)
Geodon / Zeldox 23 23 - (3%)
Zosyn / Tazocin*** 28 - * *
Genotropin 92 86 7% 6%
Vfend 72 69 4% 3%
Chantix / Champix 44 38 16% 13%
Benefix*** 62 - * *
Zoloft 21 22 (5%) (6%)
Caduet 5 3 67% 108%
Aromasin 50 49 2% -
Revatio 32 26 23% 19%
Pristiq*** - - * *
Medrol 26 25 4% 1%
Cardura 37 42 (12%) (11%)
Zithromax / Zmax 21 26 (19%) (20%)
Aricept** 58 64 (9%) (12%)
Refacto / Xyntha*** 73 - * *
Alliance Revenue 133 127 5% 2%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 618 558 11% 10%
All Other Established Products 464 388 20% 18%
Legacy Pfizer Other Established
Products 383 388 (1%) (3%)
-------------------------------
TOTAL INTERNATIONAL DIVERSIFIED: $444 $246 80% 79%
-------------------------------- ---- ---- - -
OTHER INTERNATIONAL**** $28 $42 (33%) 11%
----------------------- --- --- ----- -
DEVELOPED REST OF WORLD(2)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL INTERNATIONAL REVENUES $2,709 $1,910 42% 25%
---------------------------- ------ ------ - -
TOTAL INTERNATIONAL
BIOPHARMACEUTICAL: $2,452 $1,797 36% 25%
------------------- ------ ------ --- ---
Lipitor 571 475 20% 2%
Enbrel (Outside the U.S. and
Canada)*** 106 - * *
Lyrica 51 34 50% 25%
Effexor*** 41 - * *
Celebrex 84 55 53% 35%
Viagra 49 38 29% 11%
Xalatan / Xalacom 102 92 11% 1%
Prevnar / Prevenar 13*** 2 - * *
Prevnar / Prevenar 7*** 61 - * *
Norvasc 232 327 (29%) (34%)
Zyvox 35 29 21% 15%
Detrol / Detrol LA 25 21 19% 8%
Premarin Family*** 4 - * *
Sutent 36 21 71% 56%
Geodon / Zeldox 4 3 33% 16%
Zosyn / Tazocin*** 3 - * *
Genotropin 52 45 16% 6%
Vfend 34 27 26% 15%
Chantix / Champix 46 31 48% 28%
Benefix*** 22 - * *
Zoloft 72 52 38% 27%
Caduet 24 15 60% 17%
Aromasin 18 14 29% 15%
Revatio 9 5 80% 51%
Pristiq*** 10 - * *
Medrol 12 13 (8%) (5%)
Cardura 45 45 - (8%)
Zithromax / Zmax 48 37 30% 20%
Aricept** 36 31 16% 1%
Refacto / Xyntha*** 7 - * *
Alliance Revenue 160 105 52% 40%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 451 282 60% 45%
All Other Established Products 395 244 62% 45%
Legacy Pfizer Other Established
Products 277 244 14% 1%
-------------------------------
TOTAL INTERNATIONAL DIVERSIFIED: $251 $104 141% 98%
-------------------------------- ---- ---- --- -
OTHER INTERNATIONAL**** $6 $9 (33%) 3%
----------------------- --- --- ----- -
EMERGING MARKETS(3)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL INTERNATIONAL REVENUES $3,095 $1,641 89% 76%
---------------------------- ------ ------ - -
TOTAL INTERNATIONAL
BIOPHARMACEUTICAL: $2,250 $1,455 55% 44%
------------------- ------ ------ --- ---
Lipitor 265 221 20% 11%
Enbrel (Outside the U.S. and
Canada)*** 155 - * *
Lyrica 78 50 56% 47%
Effexor*** 25 - * *
Celebrex 79 54 46% 34%
Viagra 111 78 42% 30%
Xalatan / Xalacom 50 44 14% 3%
Prevnar / Prevenar 13*** 15 - * *
Prevnar / Prevenar 7*** 136 - * *
Norvasc 124 117 6% 3%
Zyvox 37 26 42% 30%
Detrol / Detrol LA 16 13 23% 12%
Premarin Family*** 15 - * *
Sutent 54 38 42% 33%
Geodon / Zeldox 15 13 15% 8%
Zosyn / Tazocin*** 49 - * *
Genotropin 29 26 12% 5%
Vfend 38 30 27% 21%
Chantix / Champix 8 7 14% 11%
Benefix*** 3 - * *
Zoloft 32 29 10% 4%
Caduet 13 11 18% 12%
Aromasin 13 12 8% -
Revatio 6 4 50% 42%
Pristiq*** 4 - * *
Medrol 45 37 22% 18%
Cardura 26 25 4% (1%)
Zithromax / Zmax 39 33 18% 11%
Aricept** 9 13 (31%) (37%)
Refacto / Xyntha*** - - * *
Alliance Revenue 18 14 29% 44%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 743 560 33% 24%
All Other Established Products 623 519 20% 13%
Legacy Pfizer Other Established
Products 571 519 10% 4%
-------------------------------
TOTAL INTERNATIONAL DIVERSIFIED: $834 $167 * *
-------------------------------- ---- ---- - -
OTHER INTERNATIONAL**** $11 $19 (42%) 4%
----------------------- --- --- ----- -
* - Calculation not meaningful.
** - Includes direct sales under license agreement with Eisai
Co., Ltd.
*** - Legacy Wyeth products and operations. Animal Health
results for the second quarter of 2010 also reflect the
addition of legacy Wyeth products.
Wyeth's results are included in our financial statements
commencing from the acquisition date of October 15, 2009,
in accordance with Pfizer's domestic and international
year-ends.
Therefore, our results for the second quarter of 2009 do not
do not include Wyeth's results of operations.
**** - Includes revenues generated primarily from Pfizer
Centersource.
Certain amounts and percentages may reflect rounding adjustments.
(1) Developed Europe region includes the following markets: Western
Europe and the Scandinavian countries.
(2) Developed Rest of World region includes the following markets:
Australia, Canada, Japan, New Zealand, and South Korea.
(3) Emerging Markets region includes, but is not limited to, the
following markets: Asia (excluding Japan and South Korea), Latin
America, Middle East, Africa, Central and Eastern Europe,
Russia and Turkey. In Biopharmaceutical, revenues from South Korea in
2009 have been reclassified from the Emerging Markets unit to the
appropriate developed market units to conform to the current-year
presentation, which reflects the fact that the commercial operations
of South Korea, effective January 1, 2010, are managed within the
appropriate developed market units.
PFIZER INC.
REVENUES
FIRST SIX MONTHS OF 2010 and 2009
(UNAUDITED)
(millions of dollars)
WORLDWIDE
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL REVENUES $34,077 $21,851 56% 50%
-------------- ------- ------- - -
TOTAL BIOPHARMACEUTICAL: $29,527 $20,165 46% 41%
------------------------ ------- ------- - -
Lipitor 5,570 5,406 3% (2%)
Enbrel (Outside the U.S. and
Canada)*** 1,610 - * *
Lyrica 1,485 1,312 13% 10%
Effexor*** 1,337 - * *
Celebrex 1,174 1,112 6% 3%
Viagra 970 877 11% 6%
Xalatan / Xalacom 871 802 9% 4%
Prevnar / Prevenar 13*** 855 - * *
Prevnar / Prevenar 7*** 851 - * *
Norvasc 790 999 (21%) (24%)
Zyvox 591 540 9% 7%
Detrol / Detrol LA 521 562 (7%) (10%)
Premarin Family*** 516 - * *
Sutent 514 425 21% 16%
Geodon / Zeldox 501 461 9% 7%
Zosyn / Tazocin*** 494 - * *
Genotropin 439 404 9% 4%
Vfend 395 359 10% 6%
Chantix / Champix 359 369 (3%) (7%)
Benefix*** 318 - * *
Zoloft 264 240 10% 5%
Caduet 261 262 - (5%)
Aromasin 250 224 12% 8%
Revatio 236 208 13% 11%
Pristiq*** 223 - * *
Medrol 222 228 (3%) (6%)
Cardura 217 221 (2%) (6%)
Zithromax / Zmax 213 214 - (5%)
Aricept** 210 203 3% (6%)
Refacto / Xyntha*** 188 - * *
Alliance Revenue 2,065 1,180 75% 72%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 5,017 3,557 41% 35%
All Other Established Products 3,904 2,983 31% 27%
Legacy Pfizer Other Established
Products 3,083 2,983 3% (2%)
TOTAL DIVERSIFIED: $4,383 $1,524 188% 174%
------------------ ------ ------ --- ---
ANIMAL HEALTH*** 1,739 1,185 47% 38%
CONSUMER HEALTHCARE*** 1,341 - * *
NUTRITION*** 934 - * *
CAPSUGEL 369 339 9% 6%
OTHER**** $167 $162 3% 2%
--------- ---- ---- - -
UNITED STATES
2010 2009 % Change
--------
Total
-----
TOTAL REVENUES $14,695 $9,493 55%
-------------- ------- ------ -
TOTAL BIOPHARMACEUTICAL: $13,256 $8,899 49%
------------------------ ------- ------ -
Lipitor 2,623 2,766 (5%)
Enbrel (Outside the U.S. and
Canada)*** - - *
Lyrica 717 742 (3%)
Effexor*** 1,084 - *
Celebrex 786 809 (3%)
Viagra 487 465 5%
Xalatan / Xalacom 296 271 9%
Prevnar / Prevenar 13*** 691 - *
Prevnar / Prevenar 7*** 214 - *
Norvasc 24 35 (31%)
Zyvox 315 313 1%
Detrol / Detrol LA 352 403 (13%)
Premarin Family*** 472 - *
Sutent 131 123 7%
Geodon / Zeldox 418 387 8%
Zosyn / Tazocin*** 328 - *
Genotropin 105 104 1%
Vfend 123 116 6%
Chantix / Champix 178 228 (22%)
Benefix*** 144 - *
Zoloft 36 43 (16%)
Caduet 170 203 (16%)
Aromasin 83 81 2%
Revatio 144 141 2%
Pristiq*** 199 - *
Medrol 55 76 (28%)
Cardura 10 3 233%
Zithromax / Zmax 6 8 (25%)
Aricept** - - *
Refacto / Xyntha*** 39 - *
Alliance Revenue 1,470 711 107%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 1,556 871 79%
All Other Established Products 1,084 778 39%
Legacy Pfizer Other Established
Products 743 778 (4%)
TOTAL DIVERSIFIED: $1,376 $554 148%
------------------ ------ ---- ---
ANIMAL HEALTH*** 637 455 40%
CONSUMER HEALTHCARE*** 642 - *
NUTRITION*** - - *
CAPSUGEL 97 99 (2%)
OTHER**** $63 $40 58%
--------- --- --- -
TOTAL INTERNATIONAL(1)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL REVENUES $19,382 $12,358 57% 46%
-------------- ------- ------- - -
TOTAL BIOPHARMACEUTICAL: $16,271 $11,266 44% 35%
------------------------ ------- ------- - -
Lipitor 2,947 2,640 12% 2%
Enbrel (Outside the U.S.
and Canada)*** 1,610 - * *
Lyrica 768 570 35% 26%
Effexor*** 253 - * *
Celebrex 388 303 28% 18%
Viagra 483 412 17% 8%
Xalatan / Xalacom 575 531 8% 1%
Prevnar / Prevenar 13*** 164 - * *
Prevnar / Prevenar 7*** 637 - * *
Norvasc 766 964 (21%) (24%)
Zyvox 276 227 22% 16%
Detrol / Detrol LA 169 159 6% (2%)
Premarin Family*** 44 - * *
Sutent 383 302 27% 20%
Geodon / Zeldox 83 74 12% 5%
Zosyn / Tazocin*** 166 - * *
Genotropin 334 300 11% 6%
Vfend 272 243 12% 6%
Chantix / Champix 181 141 28% 16%
Benefix*** 174 - * *
Zoloft 228 197 16% 9%
Caduet 91 59 54% 31%
Aromasin 167 143 17% 10%
Revatio 92 67 37% 29%
Pristiq*** 24 - * *
Medrol 167 152 10% 6%
Cardura 207 218 (5%) (10%)
Zithromax / Zmax 207 206 - (4%)
Aricept** 210 203 3% (6%)
Refacto / Xyntha*** 149 - * *
Alliance Revenue 595 469 27% 19%
(Enbrel (in the U.S. and
Canada)***, Aricept,
Rebif, and Exforge)
All Other Biopharmaceutical 3,461 2,686 29% 21%
All Other Established
Products 2,820 2,205 28% 20%
Legacy Pfizer Other
Established Products 2,340 2,205 6% -
TOTAL DIVERSIFIED: $3,007 $970 210% 188%
------------------ ------ ---- --- ---
ANIMAL HEALTH*** 1,102 730 51% 37%
CONSUMER HEALTHCARE*** 699 - * *
NUTRITION*** 934 - * *
CAPSUGEL 272 240 13% 9%
OTHER**** $104 $122 (15%) (3%)
--------- ---- ---- ----- ----
* - Calculation not meaningful.
** - Includes direct sales under license agreement with Eisai
Co., Ltd.
*** - Legacy Wyeth products and operations. Animal Health
results for the first six months of 2010 also reflect the
addition of legacy Wyeth products.
Wyeth's results are included in our financial statements
commencing from the acquisition date of October 15, 2009,
in accordance with Pfizer's domestic and international
year-ends.
Therefore, our results for the first six months of 2009 do not
include Wyeth's results of operations.
**** - Includes revenues generated primarily from Pfizer
Centersource.
Certain amounts and percentages may reflect rounding adjustments.
(1) Total International represents Developed Europe region +
Developed Rest of World region + Emerging Markets region.
Details for these regions are located on the following page.
PFIZER INC.
REVENUES
DETAIL OF INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
FIRST SIX MONTHS OF 2010 and 2009
(UNAUDITED)
(millions of dollars)
DEVELOPED EUROPE(1)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL INTERNATIONAL REVENUES $8,473 $5,591 52% 45%
---------------------------- ------ ------ - -
TOTAL INTERNATIONAL
BIOPHARMACEUTICAL: $7,508 $5,041 49% 43%
------------------- ------ ------ --- ---
Lipitor 1,359 1,297 5% -
Enbrel (Outside the U.S. and
Canada)*** 1,128 - * *
Lyrica 534 410 30% 24%
Effexor*** 129 - * *
Celebrex 90 89 1% (2%)
Viagra 204 190 7% 2%
Xalatan / Xalacom 296 269 10% 5%
Prevnar / Prevenar 13*** 145 - * *
Prevnar / Prevenar 7*** 207 - * *
Norvasc 109 113 (4%) (8%)
Zyvox 146 123 19% 15%
Detrol / Detrol LA 90 93 (3%) (8%)
Premarin Family*** 5 - * *
Sutent 218 196 11% 7%
Geodon / Zeldox 47 42 12% 8%
Zosyn / Tazocin*** 61 - * *
Genotropin 187 166 13% 7%
Vfend 149 135 10% 6%
Chantix / Champix 88 71 24% 17%
Benefix*** 125 - * *
Zoloft 45 45 - (3%)
Caduet 10 8 25% 23%
Aromasin 102 93 10% 5%
Revatio 64 50 28% 22%
Pristiq*** - - * *
Medrol 52 49 6% 1%
Cardura 78 81 (4%) (8%)
Zithromax / Zmax 46 64 (28%) (32%)
Aricept** 119 125 (5%) (9%)
Refacto / Xyntha*** 136 - * *
Alliance Revenue 269 240 12% 7%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 1,270 1,092 16% 12%
All Other Established Products 960 766 25% 20%
Legacy Pfizer Other Established
Products 793 766 4% (1%)
-------------------------------
TOTAL INTERNATIONAL DIVERSIFIED: $902 $480 88% 80%
-------------------------------- ---- ---- - -
OTHER INTERNATIONAL**** $63 $70 (10%) 15%
----------------------- --- --- ----- -
DEVELOPED REST OF WORLD(2)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL INTERNATIONAL REVENUES $5,024 $3,688 36% 21%
---------------------------- ------ ------ - -
TOTAL INTERNATIONAL
BIOPHARMACEUTICAL: $4,541 $3,484 30% 17%
------------------- ------ ------ --- ---
Lipitor 1,108 938 18% -
Enbrel (Outside the U.S. and
Canada)*** 191 - * *
Lyrica 99 65 52% 27%
Effexor*** 76 - * *
Celebrex 159 106 50% 34%
Viagra 96 77 25% 8%
Xalatan / Xalacom 184 180 2% (7%)
Prevnar / Prevenar 13*** 2 - * *
Prevnar / Prevenar 7*** 116 - * *
Norvasc 423 629 (33%) (36%)
Zyvox 61 56 9% 4%
Detrol / Detrol LA 49 40 23% 7%
Premarin Family*** 14 - * *
Sutent 64 35 83% 63%
Geodon / Zeldox 8 6 33% 25%
Zosyn / Tazocin*** 7 - * *
Genotropin 91 86 6% -
Vfend 62 53 17% 7%
Chantix / Champix 78 56 39% 18%
Benefix*** 41 - * *
Zoloft 124 97 28% 19%
Caduet 57 31 84% 43%
Aromasin 30 26 15% 5%
Revatio 16 10 60% 53%
Pristiq*** 17 - * *
Medrol 22 25 (12%) (12%)
Cardura 80 89 (10%) (14%)
Zithromax / Zmax 81 76 7% 2%
Aricept** 72 56 29% 6%
Refacto / Xyntha*** 13 - * *
Alliance Revenue 289 201 44% 34%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 811 546 49% 36%
All Other Established Products 711 472 51% 37%
Legacy Pfizer Other Established
Products 499 472 6% (5%)
-------------------------------
TOTAL INTERNATIONAL DIVERSIFIED: $468 $184 154% 112%
-------------------------------- ---- ---- --- ---
OTHER INTERNATIONAL**** $15 $20 (25%) 3%
----------------------- --- --- ----- -
EMERGING MARKETS(3)
2010 2009 % Change
--------
Total Oper.
----- -----
TOTAL INTERNATIONAL REVENUES $5,885 $3,079 91% 79%
---------------------------- ------ ------ - -
TOTAL INTERNATIONAL
BIOPHARMACEUTICAL: $4,222 $2,741 54% 44%
------------------- ------ ------ --- ---
Lipitor 480 405 19% 9%
Enbrel (Outside the U.S. and
Canada)*** 291 - * *
Lyrica 135 95 42% 34%
Effexor*** 48 - * *
Celebrex 139 108 29% 18%
Viagra 183 145 26% 17%
Xalatan / Xalacom 95 82 16% 6%
Prevnar / Prevenar 13*** 17 - * *
Prevnar / Prevenar 7*** 314 - * *
Norvasc 234 222 5% 2%
Zyvox 69 48 44% 31%
Detrol / Detrol LA 30 26 15% 9%
Premarin Family*** 25 - * *
Sutent 101 71 42% 33%
Geodon / Zeldox 28 26 8% (6%)
Zosyn / Tazocin*** 98 - * *
Genotropin 56 48 17% 8%
Vfend 61 55 11% 3%
Chantix / Champix 15 14 7% 3%
Benefix*** 8 - * *
Zoloft 59 55 7% 3%
Caduet 24 20 20% 15%
Aromasin 35 24 46% 36%
Revatio 12 7 71% 50%
Pristiq*** 7 - * *
Medrol 93 78 19% 14%
Cardura 49 48 2% (4%)
Zithromax / Zmax 80 66 21% 16%
Aricept** 19 22 (14%) (20%)
Refacto / Xyntha*** - - * *
Alliance Revenue 37 28 32% 29%
(Enbrel (in the U.S. and
Canada)***, Aricept, Rebif, and
Exforge)
All Other Biopharmaceutical 1,380 1,048 32% 23%
All Other Established Products 1,149 967 19% 12%
Legacy Pfizer Other Established
Products 1,048 967 8% 2%
-------------------------------
TOTAL INTERNATIONAL DIVERSIFIED: $1,637 $306 * *
-------------------------------- ------ ---- - -
OTHER INTERNATIONAL**** $26 $32 (19%) 12%
----------------------- --- --- ----- -
* - Calculation not meaningful.
** - Includes direct sales under license agreement with Eisai
Co., Ltd.
*** - Legacy Wyeth products and operations. Animal Health
results for the first six months of 2010 also reflect the
addition of legacy Wyeth products.
Wyeth's results are included in our financial statements
commencing from the acquisition date of October 15, 2009,
in accordance with Pfizer's domestic and international
year-ends.
Therefore, our results for the first six months of 2009 do
not include Wyeth's results of operations.
**** - Includes revenues generated primarily from Pfizer
Centersource.
Certain amounts and percentages may reflect rounding adjustments.
(1) Developed Europe region includes the following markets: Western
Europe and the Scandinavian countries.
(2) Developed Rest of World region includes the following markets:
Australia, Canada, Japan, New Zealand, and South Korea.
(3) Emerging Markets region includes, but is not limited to, the
following markets: Asia (excluding Japan and South Korea), Latin
America, Middle East, Africa, Central and Eastern Europe,
Russia and Turkey. In Biopharmaceutical, revenues from South Korea in
2009 have been reclassified from the Emerging Markets unit to the
appropriate developed market units to conform to the current-year
presentation, which reflects the fact that the commercial operations
of South Korea, effective January 1, 2010, are managed within the
appropriate developed market units.
PFIZER INC.
SUPPLEMENTAL INFORMATION
1. Change in Reported Cost of Sales
Reported cost of sales increased 116% in the second quarter of 2010, compared to the same period in 2009, and increased 156% in the first six months of 2010, compared to the same period in 2009. The increases primarily reflect purchase accounting adjustments associated with the Wyeth acquisition, the addition of Wyeth manufacturing costs, as well as the change in the mix of products and businesses as a result of the Wyeth acquisition. In addition, the impact of foreign exchange had a favorable impact on reported cost of sales in the second quarter of 2010 and an unfavorable impact for the first six months of 2010.
Reported cost of sales as a percentage of revenues increased 5.9 percentage points to 21.9% in second-quarter 2010, compared to the same period in 2009, reflecting the aforementioned factors.
2. Change in Reported Selling, Informational & Administrative (SI&A) Expenses and Reported Research & Development (R&D) Expenses and Reported In-Process R&D (IPR&D) Charges
Reported SI&A expenses increased 43% in the second quarter of 2010, compared to the same period in 2009, and increased 48% in the first six months of 2010, compared to the same period in 2009. The increases primarily reflect the addition of Wyeth operating costs and the unfavorable impact of foreign exchange.
Reported R&D expenses increased 29% in the second quarter of 2010, compared to the same period in 2009, and increased 30% in the first six months of 2010, compared to the same period in 2009. The increases are primarily due to the addition of legacy Wyeth operations, continued investment in the late-stage development portfolio and the unfavorable impact of foreign exchange.
Reported IPR&D charges of $74 million recorded in the first six months of 2010 relate to the resolution of contingencies associated with our 2008 acquisition of CovX.
3. Other (Income)/Deductions - Net
($ in millions) Second Quarter Six Months
-------------- ----------
2010 2009 2010 2009
---- ---- ---- ----
Interest income(a) $(85) $(204) $(197) $(449)
Interest income
Interest expense(a) 389 270 911 400
--- --- --- ---
Net interest
(income)/expense 304 66 714 (49)
--- --- --- ---
Royalty-related income (95) (50) (237) (107)
Net gain on asset
disposals (185) (29) (230) (41)
Legal matters, net 37 (19) 174 77
Asset impairment
charges 196 71 232 89
Other, net 14 33 32 46
--- --- --- ---
Other
(income)/deductions-
net $271 $72 $685 $15
===================== ==== === ==== ===
(a) Interest expense increased in 2010 due to our issuance of $13.5
billion of senior unsecured notes on March 24, 2009 and $10.5
billion of senior unsecured notes on June 3, 2009, primarily related
to the acquisition of Wyeth. Interest income decreased in 2010 due
to lower interest rates coupled with lower average cash balances.
4. Effective Tax Rate
The effective tax rate on reported Income from continuing operations before provision for taxes on income for second-quarter 2010 was 37.4% compared to 25.8% in the second quarter of 2009, and in the first six months of 2010 was 36.8% compared to 27.1% in the first six months of 2009. The increases in the effective tax rate primarily are the result of higher charges, incurred as a result of our acquisition of Wyeth, and the mix of jurisdictions in which those charges were incurred. In addition, the increases in the effective tax rate were impacted by the expiration of the U.S. research tax credit and, in the first six months of 2010 compared to the first six months of 2009, the write-off of the deferred tax asset of approximately $270 million related the Medicare Part D subsidy for retiree prescription drug coverage resulting from changes in the recently enacted U.S. healthcare legislation concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012, partially offset by $410 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax authorities.
The effective tax rate on adjusted income(1) was 31.7% in second-quarter 2010 compared to 28.1% in second-quarter 2009, and in the first six months of 2010 was 30.9% compared to 29.0% in the first six months of 2009. The increases in the tax rate on adjusted income(1) primarily are the result of certain business decisions made in connection with the acquisition of Wyeth and the change in jurisdictional mix of earnings. In addition, the increases in the effective tax rate were impacted by the expiration of the U.S. research tax credit and, in the first six months of 2010 compared to the first six months of 2009, the write-off of the deferred tax asset of approximately $270 million related the Medicare Part D subsidy for retiree prescription drug coverage resulting from changes in the recently enacted U.S. healthcare legislation concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012, largely offset by $410 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax authorities.
5. Reconciliation of 2010 Adjusted Income(1) and Adjusted Diluted EPS(1) Guidance to 2010 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Guidance (a)
Full-Year 2010 Guidance
-----------------------
($ billions, except per-share
amounts) Net Income(b) Diluted EPS(b)
------------ -------------
Income/(Expense)
-----------------------------
Adjusted Income/Diluted EPS(1)
Guidance ~$17.0 - $17.8 ~$2.10 - $2.20
Purchase Accounting Impacts of
Transactions Completed as of
7/4/10 (6.3) (0.78)
Acquisition-Related Costs (2.4 - 2.8) (0.29-0.34)
Certain Significant Items (0.2) (0.03)
---- -----
Reported Net Income Attributable
to Pfizer Inc./Diluted EPS
Guidance ~$7.7 - $8.9 ~$0.95 - $1.10
============ ==============
(a) The current exchange rates assumed in connection with the 2010
financial guidance are a blend of the average of the actual exchange
rates in effect during first-half 2010 and the mid-July 2010
exchange rates for the remainder of the year.
(b) Does not assume the completion of any business-development
transactions not completed as of July 4, 2010. Amounts exclude the
potential effects of the resolution of litigation-related matters
not substantially resolved as of July 4, 2010.
6. Reconciliation of 2012 Adjusted Income(1) and Adjusted Diluted EPS(1) Targets to 2012 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Targets (a)
Full-Year 2012 Targets
----------------------
($ billions, except per-share amounts) Net Income(b) Diluted EPS(b)
------------ -------------
Income/(Expense)
----------------
Adjusted Income/Diluted EPS(1) Targets ~$18.3 - $19.1 ~$2.25 - $2.35
Purchase Accounting Impacts of
Transactions Completed as of 7/4/10 (3.8) (0.47)
Acquisition-Related Costs (1.2 - 1.6) (0.15 - 0.20)
----------- -------------
Reported Net Income Attributable to
Pfizer Inc./Diluted EPS Targets ~$12.9 - $14.1 ~$1.58 - $1.73
============== ==============
(a) The current exchange rates assumed in connection with the 2012
financial targets are the mid-July 2010 exchange rates.
(b)Given the longer-term nature of these targets, they are subject
to greater variability and less certainty as a result of potential
material impacts related to foreign exchange fluctuations,
macroeconomic activity including inflation, and industry-specific
challenges including changes to government healthcare policy, among
others.
(1) "Adjusted income" and "adjusted diluted earnings per share (EPS)" are defined as reported net income attributable to Pfizer Inc. and reported diluted EPS attributable to Pfizer Inc. common shareholders excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. As described under Adjusted Income in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer's Form 10-Q for the fiscal quarter ended April 4, 2010, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors' understanding of our performance is enhanced by disclosing this measure. The adjusted income and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and diluted EPS.
DISCLOSURE NOTICE: The information contained in this earnings release and the attachments is as of August 3, 2010. The Company assumes no obligation to update forward-looking statements contained in this earnings release or the attachments as a result of new information or future events or developments.
This earnings release and the attachments contain forward-looking information about the Company's financial results and estimates, business plans and prospects, in-line products and product candidates that involves substantial risks and uncertainties. You can identify these statements by the fact that they use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects. Among the factors that could cause actual results to differ materially are the following: the success of research and development activities; decisions by regulatory authorities regarding whether and when to approve our drug applications as well as their decisions regarding labeling, ingredients and other matters that could affect the availability or commercial potential of our products; the speed with which regulatory authorizations, pricing approvals and product launches may be achieved; the success of external business-development activities; competitive developments, including the impact on our competitive position of new product entrants, in-line branded products, generic products, private label products and product candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates; the ability to meet generic and branded competition after the loss of patent protection for our products or competitor products; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; trade buying patterns; the impact of existing and future legislation and regulatory provisions on product exclusivity; trends toward managed care and healthcare cost containment; the impact of U.S. healthcare legislation enacted in 2010 - the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act; U.S. legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs, the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries, direct-to-consumer advertising and interactions with healthcare professionals, and the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines; legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access; contingencies related to actual or alleged environmental contamination; claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates; significant breakdown, infiltration, or interruption of our information technology systems and infrastructure; legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent protection, governmental investigations, ongoing efforts to explore various means for resolving asbestos litigation, and other legal proceedings; the Company's ability to protect its patents and other intellectual property both domestically and internationally; interest rate and foreign currency exchange rate fluctuations; governmental laws and regulations affecting domestic and foreign operations, including tax obligations and changes affecting the taxation by the U.S. of income earned outside of the U.S. that may result from pending and possible future proposals; changes in U.S. generally accepted accounting principles; uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our lenders, our customers, our suppliers and counterparties to our foreign-exchange and interest-rate agreements of weak global economic conditions and recent and possible future changes in global financial markets; any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. and other parts of the world, and related U.S. military action overseas; growth in costs and expenses; changes in our product, segment and geographic mix; and the impact of acquisitions, divestitures, restructurings, product withdrawals and other unusual items, including our ability to realize the projected benefits of our acquisition of Wyeth and of our cost-reduction initiatives. A further list and description of risks, uncertainties and other matters can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and in its reports on Forms 10-Q and 8-K.
This earnings release may include discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data.
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SOURCE Pfizer Inc.
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