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|
DELAWARE
(State of Incorporation)
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13-5315170
(I.R.S. Employer Identification No.)
|
| Large Accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
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41
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79
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79
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79
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79
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80
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80
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80
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80
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81
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Three Months Ended
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Nine Months Ended
|
|||||||||||||||
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(MILLIONS, EXCEPT PER COMMON SHARE DATA)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
|
||||||||||||||||
|
Revenues
|
$ | 17,193 | $ | 15,995 | $ | 50,679 | $ | 49,703 | ||||||||
|
Costs and expenses:
|
||||||||||||||||
|
Cost of sales
(a)
|
3,679 | 3,790 | 11,177 | 11,676 | ||||||||||||
|
Selling, informational and administrative expenses
(a)
|
4,621 | 4,599 | 14,097 | 13,776 | ||||||||||||
|
Research and development expenses
(a)
|
2,188 | 2,188 | 6,516 | 6,590 | ||||||||||||
|
Amortization of intangible assets
|
1,397 | 1,156 | 4,168 | 3,972 | ||||||||||||
|
Acquisition-related in-process research and development
charges
|
–– | –– | –– | 74 | ||||||||||||
|
Restructuring charges and certain acquisition-related costs
|
1,101 | 499 | 2,474 | 2,090 | ||||||||||||
|
Other deductions––net
|
538 | 2,349 | 1,778 | 3,036 | ||||||||||||
|
Income from continuing operations before provision for taxes on income
|
3,669 | 1,414 | 10,469 | 8,489 | ||||||||||||
|
Provision for taxes on income
|
1,235 | 558 | 3,223 | 3,165 | ||||||||||||
|
Income from continuing operations
|
2,434 | 856 | 7,246 | 5,324 | ||||||||||||
|
Discontinued operations:
|
||||||||||||||||
|
(Loss)/income from discontinued operations––net of tax
|
(13 | ) | 26 | 39 | 76 | |||||||||||
|
Gain/(loss) on sale of discontinued operations––net of tax
|
1,328 | (11 | ) | 1,316 | (9 | ) | ||||||||||
|
Discontinued operations––net of tax
|
1,315 | 15 | 1,355 | 67 | ||||||||||||
|
Net income before allocation to noncontrolling interests
|
3,749 | 871 | 8,601 | 5,391 | ||||||||||||
|
Less: net income attributable to noncontrolling interests
|
11 | 5 | 31 | 24 | ||||||||||||
|
Net income attributable to Pfizer Inc.
|
$ | 3,738 | $ | 866 | $ | 8,570 | $ | 5,367 | ||||||||
|
Earnings per share––basic:
(b)
|
||||||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
common shareholders
|
$ | 0.31 | $ | 0.11 | $ | 0.92 | $ | 0.66 | ||||||||
|
Discontinued operations––net of tax
|
0.17 | –– | 0.17 | 0.01 | ||||||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.48 | $ | 0.11 | $ | 1.09 | $ | 0.67 | ||||||||
|
Earnings per share––diluted:
(b)
|
||||||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
common shareholders
|
$ | 0.31 | $ | 0.11 | $ | 0.91 | $ | 0.66 | ||||||||
|
Discontinued operations––net of tax
|
0.17 | –– | 0.17 | 0.01 | ||||||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.48 | $ | 0.11 | $ | 1.08 | $ | 0.66 | ||||||||
|
Weighted-average shares used to calculate earnings per common share:
|
||||||||||||||||
|
Basic
|
7,770 | 8,027 | 7,877 | 8,045 | ||||||||||||
|
Diluted
|
7,810 | 8,057 | 7,925 | 8,079 | ||||||||||||
|
Cash dividends paid per common share
|
$ | 0.20 | $ | 0.18 | $ | 0.60 | $ | 0.54 | ||||||||
|
(a)
|
Exclusive of amortization of intangible assets, except as disclosed in
Note 11B. Goodwill and Other Intangible Assets: Other Intangible Assets.
|
|
(b)
|
EPS amounts may not add due to rounding.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
(Unaudited)
|
||||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$ | 3,706 | $ | 1,735 | ||||
|
Short-term investments
|
25,257 | 26,277 | ||||||
|
Accounts receivable, less allowance for doubtful accounts
|
15,749 | 14,426 | ||||||
|
Short-term loans
|
184 | 467 | ||||||
|
Inventories
|
8,426 | 8,275 | ||||||
|
Taxes and other current assets
|
9,288 | 8,394 | ||||||
|
Assets of discontinued operations and other assets held for sale
|
122 | 1,439 | ||||||
|
Total current assets
|
62,732 | 61,013 | ||||||
|
Long-term investments and loans
|
9,468 | 9,747 | ||||||
|
Property, plant and equipment, less accumulated depreciation
|
17,721 | 18,645 | ||||||
|
Goodwill
|
45,409 | 43,928 | ||||||
|
Identifiable intangible assets, less accumulated amortization
|
55,597 | 57,555 | ||||||
|
Taxes and other noncurrent assets
|
5,205 | 4,126 | ||||||
|
Total assets
|
$ | 196,132 | $ | 195,014 | ||||
|
Liabilities and Shareholders’ Equity
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 5,637 | $ | 5,603 | ||||
|
Accounts payable
|
3,765 | 3,994 | ||||||
|
Dividends payable
|
–– | 1,601 | ||||||
|
Income taxes payable
|
2,215 | 951 | ||||||
|
Accrued compensation and related items
|
1,999 | 2,080 | ||||||
|
Other current liabilities
|
14,240 | 14,256 | ||||||
|
Liabilities of discontinued operations
|
–– | 151 | ||||||
|
Total current liabilities
|
27,856 | 28,636 | ||||||
|
Long-term debt
|
35,399 | 38,410 | ||||||
|
Pension benefit obligations
|
5,734 | 6,194 | ||||||
|
Postretirement benefit obligations
|
3,059 | 3,035 | ||||||
|
Noncurrent deferred tax liabilities
|
20,415 | 18,628 | ||||||
|
Other taxes payable
|
6,900 | 6,245 | ||||||
|
Other noncurrent liabilities
|
6,239 | 5,601 | ||||||
|
Total liabilities
|
105,602 | 106,749 | ||||||
|
Commitments and Contingencies
|
||||||||
|
Preferred stock
|
46 | 52 | ||||||
|
Common stock
|
445 | 444 | ||||||
|
Additional paid-in capital
|
71,235 | 70,760 | ||||||
|
Employee benefit trusts
|
(3 | ) | (7 | ) | ||||
|
Treasury stock
|
(28,586 | ) | (22,712 | ) | ||||
|
Retained earnings
|
48,121 | 42,716 | ||||||
|
Accumulated other comprehensive loss
|
(1,211 | ) | (3,440 | ) | ||||
|
Total Pfizer Inc. shareholders’ equity
|
90,047 | 87,813 | ||||||
|
Equity attributable to noncontrolling interests
|
483 | 452 | ||||||
|
Total shareholders’ equity
|
90,530 | 88,265 | ||||||
|
Total liabilities and shareholders’ equity
|
$ | 196,132 | $ | 195,014 | ||||
|
Nine Months Ended
|
||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||
|
Operating Activities:
|
||||||||
|
Net income before allocation to noncontrolling interests
|
$ | 8,601 | $ | 5,391 | ||||
|
Adjustments to reconcile net income before allocation to noncontrolling interests to net
cash provided by operating activities:
|
||||||||
|
Depreciation and amortization
|
6,656 | 6,493 | ||||||
|
Share-based compensation expense
|
347 | 351 | ||||||
|
Asset write-offs and impairment charges
|
773 | 2,956 | ||||||
|
Acquisition-related in-process research and development charges
|
–– | 74 | ||||||
|
(Gain)/loss on sale of discontinued operations
|
(1,683 | ) | 9 | |||||
|
Deferred taxes from continuing operations
|
693 | 1,277 | ||||||
|
Other deferred taxes
|
175 | –– | ||||||
|
Other non-cash adjustments
|
26 | (135 | ) | |||||
|
Benefit plan contributions in excess of expense
|
(283 | ) | (706 | ) | ||||
|
Other changes in assets and liabilities, net of acquisitions and divestitures
|
(326 | ) | (10,514 | ) | ||||
|
Net cash provided by operating activities
|
14,979 | 5,196 | ||||||
|
Investing Activities:
|
||||||||
|
Purchases of property, plant and equipment
|
(1,062 | ) | (966 | ) | ||||
|
Purchases of short-term investments
|
(13,456 | ) | (5,018 | ) | ||||
|
Proceeds from redemptions and sales of short-term investments––net
|
17,458 | 9,493 | ||||||
|
Purchases of long-term investments
|
(3,446 | ) | (2,674 | ) | ||||
|
Proceeds from redemptions and sales of long-term investments
|
2,001 | 3,822 | ||||||
|
Acquisitions, net of cash acquired
|
(3,188 | ) | –– | |||||
|
Proceeds from sale of business
|
2,376 | –– | ||||||
|
Other investing activities
|
618 | 496 | ||||||
|
Net cash provided by investing activities
|
1,301 | 5,153 | ||||||
|
Financing Activities:
|
||||||||
|
Increase in short-term borrowings
|
9,613 | 4,686 | ||||||
|
Principal payments on short-term borrowings––net
|
(10,069 | ) | (9,265 | ) | ||||
|
Principal payments on long-term debt
|
(3,486 | ) | (4 | ) | ||||
|
Purchases of common stock
|
(5,789 | ) | (1,000 | ) | ||||
|
Cash dividends paid
|
(4,710 | ) | (4,544 | ) | ||||
|
Other financing activities
|
84 | 32 | ||||||
|
Net cash used in financing activities
|
(14,357 | ) | (10,095 | ) | ||||
|
Effect of exchange-rate changes on cash and cash equivalents
|
48 | (56 | ) | |||||
|
Net increase in cash and cash equivalents
|
1,971 | 198 | ||||||
|
Cash and cash equivalents at beginning of period
|
1,735 | 1,978 | ||||||
|
Cash and cash equivalents at end of period
|
$ | 3,706 | $ | 2,176 | ||||
|
Supplemental Cash Flow Information:
Cash paid during the period for:
|
||||||||
|
Income taxes
|
$ | 1,539 | $ | 11,519 | ||||
|
Interest
|
1,872 | 2,039 | ||||||
|
●
|
New guidelines that address the recognition and presentation of the annual fee paid by pharmaceutical companies beginning on January 1, 2011 to the U.S. Treasury as a result of U.S. Healthcare Legislation. As a result of adopting this new standard, we are recording the annual fee ratably throughout the year in the
Selling, informational and administrative expense
s line item in our condensed consolidated statement of income.
|
|
●
|
An amendment to the guidelines that address the accounting for multiple-deliverable arrangements to enable companies to account for certain products or services separately rather than as a combined unit.
|
|
(millions of dollars)
|
Amounts
Recognized as of
Acquisition Date
(Provisional)
|
|||
|
Working capital, excluding inventories
|
$ | 174 | ||
|
Inventories
|
340 | |||
|
Property, plant and equipment
|
412 | |||
|
Identifiable intangible assets, excluding in-process research and development
|
1,822 | |||
|
In-process research and development
|
312 | |||
|
Net tax accounts
|
(389 | ) | ||
|
All other long-term assets and liabilities, net
|
101 | |||
|
Total identifiable net assets
|
2,772 | |||
|
Goodwill
|
783 | |||
|
Net assets acquired/total consideration transferred
|
$ | 3,555 | ||
|
●
|
the expected synergies and other benefits that we believe will result from combining the operations of King with the operations of Pfizer;
|
|
●
|
any intangible assets that do not qualify for separate recognition, as well as future, yet unidentified projects and products; and
|
|
●
|
the value of the going-concern element of King’s existing businesses (the higher rate of return on the assembled collection of net assets versus if Pfizer had acquired all of the net assets separately).
|
|
●
|
Amounts for intangibles and inventory, pending finalization of valuation efforts;
|
|
●
|
Amounts for income tax assets, receivables and liabilities pending the filing of King’s pre-acquisition tax returns and the receipt of information from taxing authorities, which may change certain estimates and assumptions used; and
|
|
●
|
The allocation of goodwill among reporting units.
|
|
Pro Forma Consolidated Results
|
||||||||||||
|
Three Months
Ended
|
Nine Months Ended
|
|||||||||||
|
(millions of dollars, except per share data)
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
|||||||||
|
Revenues
|
$ | 16,335 | $ | 50,788 | $ | 50,749 | ||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
854 | 8,769 | 5,163 | |||||||||
|
Diluted earnings per share attributable to Pfizer Inc. common shareholders
|
0.11 | 1.11 | 0.64 | |||||||||
|
●
|
Elimination of King’s historical intangible asset amortization expense (approximately $18 million in the third quarter of 2010, $6 million in the first nine months of 2011 and $98 million in the first nine months of 2010).
|
|
●
|
Additional amortization expense (approximately $48 million in the third quarter of 2010, $15 million in the first nine months of 2011 and $136 million in the first nine months of 2010) related to the fair value of identifiable intangible assets acquired.
|
|
●
|
Additional depreciation expense (approximately $9 million in the third quarter of 2010, $3 million in the first nine months of 2011 and $26 million in the first nine months of 2010) related to the fair value adjustment to property, plant and equipment acquired.
|
|
●
|
Adjustment related to the fair value adjustments to acquisition-date inventory estimated to have been sold (addition of $33 million charge in the third quarter of 2010, elimination of $146 million charge in the first nine months of 2011 and addition of $146 million charge in the first nine months of 2010).
|
|
●
|
Adjustment for acquisition-related costs directly attributable to the acquisition (addition of $11 million of charges in the third quarter of 2010, elimination of $205 million of charges in the first nine months of 2011 and addition of $205 million of charges in the first nine months of 2010, reflecting charges incurred by both King and Pfizer).
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Revenues
|
$ | 116 | $ | 176 | $ | 507 | $ | 545 | ||||||||
|
Pre-tax (loss)/income from discontinued operations
|
$ | (7 | ) | $ | 29 | $ | 78 | $ | 106 | |||||||
|
Provision for taxes on income
(a)
|
6 | 3 | 39 | 30 | ||||||||||||
|
(Loss)/income from discontinued operations––net of tax
|
(13 | ) | 26 | 39 | 76 | |||||||||||
|
Pre-tax gain/(loss) on sale of discontinued operations
|
1,695 | (12 | ) | 1,683 | (9 | ) | ||||||||||
|
Provision/(benefit) for taxes on income
(b)
|
367 | (1 | ) | 367 | –– | |||||||||||
|
Discontinued operations––net of tax
|
$ | 1,315 | $ | 15 | $ | 1,355 | $ | 67 | ||||||||
|
(a)
|
Includes a deferred tax expense of $13 million for the first nine months of 2011.
|
|
(b)
|
Includes a deferred tax expense of $162 million for the third quarter and first nine months of 2011.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Accounts receivable
|
$ | –– | $ | 186 | ||||
|
Inventories
|
–– | 130 | ||||||
|
Taxes and other current assets
|
12 | 47 | ||||||
|
Property, plant and equipment
|
110 | 1,009 | ||||||
|
Goodwill
|
–– | 19 | ||||||
|
Identifiable intangible assets
|
–– | 3 | ||||||
|
Taxes and other noncurrent assets
|
–– | 45 | ||||||
|
Assets of discontinued operations and other assets held for sale
|
$ | 122 | $ | 1,439 | ||||
|
Current liabilities
|
$ | –– | $ | 124 | ||||
|
Other liabilities
|
–– | 27 | ||||||
|
Liabilities of discontinued operations
|
$ | –– | $ | 151 | ||||
|
●
|
for our cost-reduction and 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; and
|
|
●
|
for our acquisition activity, we typically incur costs that can include transaction costs, integration costs (such as expenditures for consulting and the integration of systems and processes) and restructuring charges, related to employees, assets and activities that will not continue in the combined company.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Transaction costs
(a)
|
$ | 5 | $ | –– | $ | 28 | $ | 13 | ||||||||
|
Integration costs
(b)
|
187 | 231 | 567 | 650 | ||||||||||||
|
Restructuring charges
(c)
:
|
||||||||||||||||
|
Employee termination costs
|
770 | 27 | 1,626 | 603 | ||||||||||||
|
Asset impairments
|
99 | 174 | 157 | 677 | ||||||||||||
|
Other
|
40 | 67 | 96 | 147 | ||||||||||||
|
Restructuring charges and certain acquisition-related costs
|
1,101 | 499 | 2,474 | 2,090 | ||||||||||||
|
Additional depreciation––asset restructuring
(d)
:
|
||||||||||||||||
|
Cost of sales
|
68 | 241 | 411 | 367 | ||||||||||||
|
Selling, informational and administrative expenses
|
39 | 27 | 69 | 190 | ||||||||||||
|
Research and development expenses
|
146 | 25 | 378 | 45 | ||||||||||||
|
Total additional depreciation––asset restructuring
|
253 | 293 | 858 | 602 | ||||||||||||
|
Implementation costs
(e)
:
|
||||||||||||||||
| Selling, informational and administrative expenses | 11 | –– | 11 | –– | ||||||||||||
|
Research and development expenses
|
8 | –– | 28 | –– | ||||||||||||
|
Total implementation costs
|
19 | –– | 39 | –– | ||||||||||||
|
Total costs associated with cost-reduction and productivity initiatives and
acquisition activity
|
$ | 1,373 | $ | 792 | $ | 3,371 | $ | 2,692 | ||||||||
|
(a)
|
Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services.
|
|
(b)
|
Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes.
|
|
(c)
|
From the beginning of our cost-reduction and transformation initiatives in 2005 through October 2, 2011,
Employee termination costs
represent the expected reduction of the workforce by approximately 57,800 employees, mainly in manufacturing and sales and research, of which approximately 41,000 employees have been terminated as of October 2, 2011.
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.
Asset impairments
primarily include charges to write down property, plant and equipment to fair value.
Other
primarily includes costs to exit certain assets and activities.
|
|
|
●
|
For the three months ended October 2, 2011, Primary Care operating segment ($473 million), Specialty Care and Oncology operating segment ($186 million), Established Products and Emerging Markets operating segment ($65 million), Animal Health and Consumer Healthcare operating segment ($30 million), Nutrition operating segment ($2 million), research and development operations ($47 million income), manufacturing operations ($47 million) and Corporate ($153 million).
|
|
|
●
|
For the nine months ended October 2, 2011, Primary Care operating segment ($606 million), Specialty Care and Oncology operating segment ($228 million), Established Products and Emerging Markets operating segment ($80 million), Animal Health and Consumer Healthcare operating segment ($44 million), Nutrition operating segment ($4 million), research and development operations ($426 million), manufacturing operations ($203 million) and Corporate ($288 million).
|
|
|
●
|
For the three months ended October 3, 2010, Primary Care operating segment ($14 million), Specialty Care and Oncology operating segment ($53 million), Established Products and Emerging Markets operating segment ($14 million), Nutrition operating segment ($1 million), research and development operations ($17 million), manufacturing operations ($161 million) and Corporate ($8 million).
|
|
|
●
|
For the nine months ended October 3, 2010, Primary Care operating segment ($1 million), Specialty Care and Oncology operating segment ($99 million), Established Products and Emerging Markets operating segment ($23 million), Animal Health and Consumer Healthcare operating segment ($33 million), Nutrition operating segment ($12 million income), research and development operations ($239 million), manufacturing operations ($970 million) and Corporate ($74 million).
|
|
(d)
|
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
|
|
(e)
|
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productivity initiatives.
|
|
Costs Incurred
|
Activity
|
Accrual
|
||||||||||
|
(millions of dollars)
|
2005-2011 |
Through
Oct. 2,
2011
(a)
|
As of
Oct. 2,
2011
(b)
|
|||||||||
|
Employee termination costs
|
$ | 10,437 | $ | 7,720 | $ | 2,717 | ||||||
|
Asset impairments
|
2,465 | 2,465 | –– | |||||||||
|
Other
|
996 | 889 | 107 | |||||||||
|
Total restructuring charges
|
$ | 13,898 | $ | 11,074 | $ | 2,824 | ||||||
|
(a)
|
Includes adjustments for foreign currency translation.
|
|
(b)
|
Included in
Other current liabilities
($1.7 billion) and
Other noncurrent liabilities
($1.1 billion).
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Interest income
(a)
|
$ | (110 | ) | $ | (100 | ) | $ | (332 | ) | $ | (297 | ) | ||||
|
Interest expense
(a)
|
423 | 427 | 1,285 | 1,338 | ||||||||||||
|
Net interest expense
|
313 | 327 | 953 | 1,041 | ||||||||||||
|
Royalty-related income
|
(135 | ) | (158 | ) | (447 | ) | (395 | ) | ||||||||
|
Net losses/(gains) on asset disposals
|
18 | (13 | ) | (8 | ) | (243 | ) | |||||||||
|
Certain legal matters, net
(b)
|
132 | 712 | 619 | 886 | ||||||||||||
|
Certain asset impairment charges
(c)
|
105 | 1,478 | 585 | 1,710 | ||||||||||||
|
Other, net
|
105 | 3 | 76 | 37 | ||||||||||||
|
Other deductions
––
net
|
$ | 538 | $ | 2,349 | $ | 1,778 | $ | 3,036 | ||||||||
|
(a)
|
Interest income increased in both periods of 2011 primarily due to higher cash balances. Interest expense decreased in both periods of 2011 due to lower long- and short-term debt balances and the conversion of some fixed-rate liabilities to floating-rate liabilities.
|
|
(b)
|
In the first nine months of 2011, primarily relates to charges for hormone-replacement therapy litigation (
see
Note 14. Legal Proceedings and Contingencies
). In both periods of 2010, primarily includes a charge for asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc.
(
See Note 14. Legal Proceedings and Contingencies
)
.
|
|
(c)
|
Substantially all of these asset impairment charges are related to intangible assets, including in-process research and development (IPR&D) assets, that were acquired as part of our acquisition of Wyeth. The impairment charges are determined by comparing the estimated fair value of the assets as of the date of the impairment to their carrying values as of the same date. In the first nine months of 2011, we recorded impairment charges of $585 million, which included approximately $440 million of IPR&D assets, primarily related to two compounds for the treatment of certain autoimmune and inflammatory diseases, and approximately $145 million of Developed Technology Rights. These impairment charges reflect, among other things, the impact of new scientific findings and updated commercial forecasts. In the first nine months of 2010, we recorded impairment charges of $1.7 billion, which include (i) approximately $900 million of IPR&D assets, primarily Prevnar/Prevenar 13 Adult, a compound for the prevention of pneumococcal disease in adults age 50 and older, and Neratinib, a compound for the treatment of breast cancer; (ii) approximately $600 million of indefinite-lived Brands, related to Third Age, infant formulas for the first 12-36 months of age, and Robitussin, a cough suppressant; and (iii) approximately $200 million of Developed Technology Rights, primarily Protonix, a product that treats erosive gastroesophageal reflux disease. These impairment charges, most of which occurred in the third quarter of 2010, reflect, among other things, the following: for IPR&D assets, the impact of changes to the development programs, the projected development and regulatory timeframes and the risk associated with these assets; for Brand assets, the current competitive environment and planned investment support; and, for Developed Technology Rights, an increased competitive environment.
|
|
●
|
the extension of the U.S. research and development credit, which was signed into law on December 17, 2010;
|
|
●
|
the decrease and jurisdictional mix of certain impairment charges related to assets acquired in connection with the Wyeth acquisition; and
|
|
●
|
the change in the jurisdictional mix of earnings.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Net income before allocation to noncontrolling interests
|
$ | 3,749 | $ | 871 | $ | 8,601 | $ | 5,391 | ||||||||
|
Other comprehensive income/(loss):
|
||||||||||||||||
|
Currency translation adjustment and other
|
(68 | ) | 786 | 2,479 | (4,105 | ) | ||||||||||
|
Net unrealized (losses)/gains on derivative financial instruments
|
(230 | ) | (59 | ) | (354 | ) | (300 | ) | ||||||||
|
Net unrealized (losses)/gains on available-for-sale securities
|
(36 | ) | 26 | (48 | ) | (86 | ) | |||||||||
|
Benefit plan adjustments
|
72 | (45 | ) | 151 | 239 | |||||||||||
|
Total other comprehensive (loss)/income
|
(262 | ) | 708 | 2,228 | (4,252 | ) | ||||||||||
|
Total comprehensive income before allocation to noncontrolling interests
|
3,487 | 1,579 | 10,829 | 1,139 | ||||||||||||
|
Less: comprehensive income attributable to noncontrolling interests
|
7 | 5 | 35 | 23 | ||||||||||||
|
Comprehensive income attributable to Pfizer Inc.
|
$ | 3,480 | $ | 1,574 | $ | 10,794 | $ | 1,116 | ||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Selected financial assets measured at fair value on a recurring basis
(a)
:
|
||||||||
|
Trading securities
|
$ | 148 | $ | 173 | ||||
|
Available-for-sale debt securities
(b)
|
31,368 | 32,699 | ||||||
|
Available-for-sale money market funds
|
1,320 | 1,217 | ||||||
|
Available-for-sale equity securities, excluding money market funds
(b)
|
317 | 230 | ||||||
|
Derivative financial instruments in receivable positions
(c)
:
|
||||||||
|
Interest rate swaps
|
963 | 603 | ||||||
|
Foreign currency swaps
|
133 | 128 | ||||||
|
Foreign currency forward-exchange contracts
|
123 | 494 | ||||||
|
Total
|
34,372 | 35,544 | ||||||
|
Other selected financial assets
(d)
:
|
||||||||
|
Held-to-maturity debt securities, carried at amortized cost
(b)
|
1,204 | 1,178 | ||||||
|
Private equity securities, carried at cost or equity method
|
1,016 | 1,134 | ||||||
|
Short-term loans, carried at cost
|
184 | 467 | ||||||
|
Long-term loans, carried at cost
|
383 | 299 | ||||||
|
Total
|
2,787 | 3,078 | ||||||
|
Total selected financial assets
(e)
|
$ | 37,159 | $ | 38,622 | ||||
|
Selected financial liabilities measured at fair value on a recurring basis
(a)
:
|
||||||||
|
Derivative financial instruments in a liability position
(f)
:
|
||||||||
|
Foreign currency swaps
|
$ | 1,671 | $ | 623 | ||||
|
Foreign currency forward-exchange contracts
|
426 | 257 | ||||||
|
Interest rate swaps
|
15 | 4 | ||||||
|
Total
|
2,112 | 884 | ||||||
|
Other selected financial liabilities:
|
||||||||
|
Short-term borrowings, carried at historical proceeds, as adjusted
(d)
|
5,637 | 5,603 | ||||||
|
Long-term debt, carried at historical proceeds, as adjusted
(g), (h)
|
35,399 | 38,410 | ||||||
|
Total
|
41,036 | 44,013 | ||||||
|
Total selected financial liabilities
|
$ | 43,148 | $ | 44,897 | ||||
|
(a)
|
Fair values are determined based on valuation techniques categorized as follows: Level 1 means the use of quoted prices for identical instruments in active markets; Level 2 means the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; Level 3 means the use of unobservable inputs. All of our financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except that included in available-for-sale equity securities, excluding money market funds, are $84 million as of October 2, 2011 and $105 million as of December 31, 2010 of investments that use Level 1 inputs in the calculation of fair value and $26 million that use Level 3 inputs as of October 2, 2011.
|
|
(b)
|
Gross unrealized gains and losses are not significant.
|
|
(c)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $68 million and foreign currency swaps with fair values of $27 million at October 2, 2011; and foreign currency forward-exchange contracts with fair values of $326 million and foreign currency swaps with fair values of $17 million at December 31, 2010.
|
|
(d)
|
The differences between the estimated fair values and carrying values of our financial assets and liabilities not measured at fair value on a recurring basis were not significant at October 2, 2011 or December 31, 2010.
|
|
(e)
|
The decrease in selected financial assets is primarily due to redemptions of investments, the proceeds from which were used to fund our acquisition of King (see
Note 3. Acquisition of King Pharmaceuticals, Inc.
)
|
|
(f)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $113 million and foreign currency swaps with fair values of $82 million at October 2, 2011; and foreign currency forward-exchange contracts with fair values of $186 million and foreign currency swaps with fair values of $93 million at December 31, 2010.
|
|
(g)
|
Includes foreign currency debt with fair values of $919 million at October 2, 2011 and $880 million at December 31, 2010, which are used to hedge the exposure of certain foreign currency denominated net investments.
|
|
(h)
|
The fair value of our long-term debt is $40.1 billion at October 2, 2011 and $42.3 billion at December 31, 2010.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$ | 1,031 | $ | 906 | ||||
|
Short-term investments
|
25,257 | 26,277 | ||||||
|
Short-term loans
|
184 | 467 | ||||||
|
Long-term investments and loans
|
9,468 | 9,747 | ||||||
|
Taxes and other current assets
(a)
|
232 | 515 | ||||||
|
Taxes and other noncurrent assets
(b)
|
987 | 710 | ||||||
|
Total selected financial assets
|
$ | 37,159 | $ | 38,622 | ||||
|
Liabilities
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 5,637 | $ | 5,603 | ||||
|
Other current liabilities
(c)
|
701 | 339 | ||||||
|
Long-term debt
|
35,399 | 38,410 | ||||||
|
Other noncurrent liabilities
(d)
|
1,411 | 545 | ||||||
|
Total selected financial liabilities
|
$ | 43,148 | $ | 44,897 | ||||
|
(a)
|
At October 2, 2011, derivative instruments at fair value include foreign currency forward-exchange contracts ($123 million), foreign currency swaps ($88 million) and interest rate swaps ($21 million) and at December 31, 2010, include foreign currency forward-exchange contracts ($494 million) and foreign currency swaps ($21 million).
|
|
(b)
|
At October 2, 2011, derivative instruments at fair value include interest rate swaps ($942 million) and foreign currency swaps ($45 million) and at December 31, 2010, include interest rate swaps ($603 million) and foreign currency swaps ($107 million).
|
|
(c)
|
At October 2, 2011, derivative instruments at fair value include foreign currency forward-exchange contracts ($426 million) and foreign currency swaps ($275 million) and at December 31, 2010, include foreign currency forward-exchange contracts ($257 million), foreign currency swaps ($79 million) and interest rate swaps ($3 million).
|
|
(d)
|
At October 2, 2011, derivative instruments at fair value include foreign currency swaps ($1.4 billion) and interest rate swaps ($15 million) and at December 31, 2010, include foreign currency swaps ($544 million) and interest rate swaps ($1 million).
|
|
Years
|
||||||||||||||||
|
(millions of dollars)
|
Within 1
|
Over 1
to 5
|
Over 10
|
Total at
Oct. 2,
2011
|
||||||||||||
|
Available-for-sale debt securities:
|
||||||||||||||||
|
Western
European, U.S., Scandinavian and other government debt
|
$ | 15,215 | $ | 1,361 | $ | –– | $ | 16,576 | ||||||||
|
Corporate debt
|
1,675 | 2,495 | –– | 4,170 | ||||||||||||
|
Western European, Scandinavian and other government agency debt
|
3,661 | 253 | –– | 3,914 | ||||||||||||
|
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association asset-backed securities
|
–– | 2,240 | –– | 2,240 | ||||||||||||
|
Supranational debt
|
2,338 | 514 | 2,852 | |||||||||||||
|
Reverse repurchase agreements
|
783 | –– | –– | 783 | ||||||||||||
|
U.S. government Federal Deposit Insurance Corporation
guaranteed debt
|
623 | 13 | 16 | 652 | ||||||||||||
|
Other asset-backed securities
|
2 | 74 | 10 | 86 | ||||||||||||
|
Certificates of deposit
|
95 | –– | –– | 95 | ||||||||||||
|
Held-to-maturity debt securities:
|
||||||||||||||||
|
Certificates of deposit and other
|
1,198 | 6 | –– | 1,204 | ||||||||||||
|
Total debt securities
|
$ | 25,590 | $ | 6,956 | $ | 26 | $ | 32,572 | ||||||||
|
Amount of
Gains/(Losses)
Recognized in OID
(a) (b) (c)
|
Amount of
Gains/(Losses)
Recognized in OCI
(Effective Portion)
(a) (d)
|
Amount of
Gains/(Losses)
Reclassified from
OCI into OID
(Effective Portion)
(a) (d)
|
||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||
|
Derivative Financial Instruments in Fair Value
Hedge Relationships
(b)
|
||||||||||||||||||||||||
|
Interest rate swaps
|
$ | –– | $ | –– | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency swaps
|
(1 | ) | (1 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Derivative Financial Instruments in Cash Flow
Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | –– | $ | –– | $ | (1,047 | ) | $ | 656 | $ | (654 | ) | $ | 815 | ||||||||||
|
Foreign currency forward-exchange contracts
|
–– | –– | 1 | (1 | ) | 1 | –– | |||||||||||||||||
|
Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | (1 | ) | $ | 1 | $ | (118 | ) | $ | (39 | ) | $ | –– | $ | –– | |||||||||
|
Derivative Financial Instruments Not
Designated as Hedges
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 29 | $ | 6 | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency forward-exchange contracts
|
(75 | ) | 419 | –– | –– | –– | –– | |||||||||||||||||
|
Non-Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency short-term borrowings
|
$ | –– | $ | –– | $ | –– | $ | (96 | ) | $ | –– | $ | –– | |||||||||||
|
Foreign currency long-term debt
|
–– | –– | (42 | ) | (38 | ) | –– | –– | ||||||||||||||||
|
Total
|
$ | (48 | ) | $ | 425 | $ | (1,206 | ) | $ | 482 | $ | (653 | ) | $ | 815 | |||||||||
|
Nine Months Ended:
|
||||||||||||||||||||||||
|
Derivative Financial Instruments in Fair Value
Hedge Relationships
(b)
|
||||||||||||||||||||||||
|
Interest rate swaps
|
$ | –– | $ | –– | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency swaps
|
(1 | ) | (1 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Derivative Financial Instruments in Cash Flow
Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | –– | $ | –– | $ | (516 | ) | $ | (1,000 | ) | $ | 76 | $ | (440 | ) | |||||||||
|
Foreign currency forward-exchange contracts
|
–– | –– | 4 | (2 | ) | 5 | 2 | |||||||||||||||||
|
Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 14 | $ | –– | $ | (1,076 | ) | $ | (78 | ) | $ | –– | $ | –– | ||||||||||
|
Derivative Financial Instruments Not
Designated as Hedges
|
||||||||||||||||||||||||
|
Foreign currency swaps
|
$ | 72 | $ | 6 | $ | –– | $ | –– | $ | –– | $ | –– | ||||||||||||
|
Foreign currency forward-exchange contracts
|
(392 | ) | (943 | ) | –– | –– | –– | –– | ||||||||||||||||
|
Non-Derivative Financial Instruments in Net
Investment Hedge Relationships
|
||||||||||||||||||||||||
|
Foreign currency short-term borrowings
|
$ | –– | $ | –– | $ | 940 | $ | (195 | ) | $ | –– | $ | –– | |||||||||||
|
Foreign currency long-term debt
|
–– | –– | (47 | ) | (72 | ) | –– | –– | ||||||||||||||||
|
Total
|
$ | (307 | ) | $ | (938 | ) | $ | (695 | ) | $ | (1,347 | ) | $ | 81 | $ | (438 | ) | |||||||
|
(a)
|
OID = Other (income)/deductions—net,
included in the income statement account,
Other deductions—net.
OCI = Other comprehensive income/(loss), included in the
balance sheet account
Accumulated other comprehensive loss.
|
|
(b)
|
Also includes gains and losses attributable to the hedged risk in fair value hedge relationships.
|
|
(c)
|
There was no significant ineffectiveness in the third quarter and first nine months of 2011 or 2010.
|
|
(d)
|
Amounts presented represent the effective portion of the gain or loss. For derivative financial instruments in cash flow hedge relationships, the effective portion is included in
Other comprehensive income/(loss)––Net unrealized (losses)/gains on derivative financial instruments
. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in
Other comprehensive income/(loss)––Currency translation adjustment and other.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Finished goods
|
$ | 3,975 | $ | 3,665 | ||||
|
Work-in-process
|
3,577 | 3,727 | ||||||
|
Raw materials and supplies
|
874 | 883 | ||||||
|
Total inventories
(a)
|
$ | 8,426 | $ | 8,275 | ||||
|
(a)
|
Certain amounts of inventories are in excess of one year’s supply. There are no recoverability issues associated with these amounts.
|
|
(millions of dollars)
|
Primary Care | Specialty Care and Oncology | Established Products and Emerging Markets | Animal Health and Consumer Healthcare | Nutrition |
To be
allocated
(a)
|
Total | |||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||
|
Balance, December 31, 2010
|
$ | 2,449 | $ | 496 | $ | 40,983 | $ | 43,928 | ||||||||||||||||||||
|
Additions
(b)
|
— | — | 825 | 825 | ||||||||||||||||||||||||
|
Other
(c)
|
15 | 11 | 630 | 656 | ||||||||||||||||||||||||
|
Balance, October 2, 2011
|
$ | $ | 2,464 | $ | 507 | $ | 42,438 | $ | 45,409 | |||||||||||||||||||
|
(a)
|
The amount to be allocated includes the former Biopharmaceutical goodwill (see below), as well as newly acquired goodwill, substantially all from our acquisition of King, for which the allocation to reporting units is pending (see
Note 3. Acquisition of King Pharmaceuticals, Inc.
for additional information).
|
|
(b)
|
Substantially all of the amount relates to our acquisition of King and is subject to change until we complete the recording of the assets acquired and liabilities assumed from King (see
Note 3. Acquisition of King Pharmaceuticals, Inc.
). The allocation of King goodwill among our reporting units has not yet been completed, but will be completed within one year of the acquisition date.
|
|
(c)
|
Primarily reflects the impact of foreign exchange.
|
|
Oct. 2, 2011
|
December 31, 2010
|
|||||||||||||||||||||||
|
(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
|
$ | 71,288 | $ | (30,932 | ) | $ | 40,356 | $ | 68,432 | $ | (26,223 | ) | $ | 42,209 | ||||||||||
|
Brands
|
1,693 | (569 | ) | 1,124 | 1,626 | (607 | ) | 1,019 | ||||||||||||||||
|
License agreements
|
589 | (284 | ) | 305 | 637 | (248 | ) | 389 | ||||||||||||||||
|
Trademarks and other
|
558 | (441 | ) | 117 | 533 | (324 | ) | 209 | ||||||||||||||||
|
Total amortized finite-lived intangible assets
|
74,128 | (32,226 | ) | 41,902 | 71,228 | (27,402 | ) | 43,826 | ||||||||||||||||
|
Indefinite-lived intangible assets:
|
||||||||||||||||||||||||
|
Brands
|
10,291 | — | 10,291 | 10,219 | — | 10,219 | ||||||||||||||||||
|
In-process research and development
|
3,332 | — | 3,332 | 3,438 | — | 3,438 | ||||||||||||||||||
|
Trademarks
|
72 | — | 72 | 72 | — | 72 | ||||||||||||||||||
|
Total indefinite-lived intangible assets
|
13,695 | — | 13,695 | 13,729 | — | 13,729 | ||||||||||||||||||
|
Total identifiable intangible assets
(a)
|
$ | 87,823 | $ | (32,226 | ) | $ | 55,597 | $ | 84,957 | $ | (27,402 | ) | $ | 57,555 | ||||||||||
|
(a)
|
The decrease is primarily related to amortization as well as impairment charges (see
Note 6. Other (Income)/Deductions
—
Net
), partially offset by the assets acquired as part of the acquisition of King (see
Note 3. Acquisition of King Pharmaceuticals, Inc.
) and the impact of foreign exchange.
|
|
●
|
Developed Technology Rights: Specialty Care (62%); Established Products (18%); Primary Care (16%); Animal Health (2%); Oncology (1%); and Nutrition (1%)
|
|
●
|
Finite-Lived Brands: Consumer Healthcare (57%); Established Products (29%); and Animal Health (14%)
|
|
●
|
Indefinite-Lived Brands: Consumer Healthcare (50%); Established Products (28%); and Nutrition (22%)
|
|
●
|
IPR&D: Specialty Care (75%); Worldwide Research and Development (13%); Primary Care (6%); Established Products (3%); Oncology (2%); and Animal Health (1%)
|
|
Pension Plans
|
||||||||||||||||||||||||||||||||
|
U.S. Qualified
(a)
|
U.S. Supplemental
(Non-Qualified)
(b)
|
International
(c)
|
Postretirement
Plans
(d)
|
|||||||||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 87 | $ | 83 | $ | 9 | $ | 7 | $ | 63 | $ | 55 | $ | 17 | $ | 18 | ||||||||||||||||
|
Interest cost
|
181 | 183 | 17 | 19 | 115 | 103 | 49 | 52 | ||||||||||||||||||||||||
|
Expected return on plan assets
|
(216 | ) | (193 | ) | –– | –– | (115 | ) | (105 | ) | (9 | ) | (7 | ) | ||||||||||||||||||
|
Amortization of:
|
||||||||||||||||||||||||||||||||
|
Actuarial losses
|
33 | 38 | 9 | 7 | 23 | 17 | 4 | 7 | ||||||||||||||||||||||||
|
Prior service (credits)/costs
|
(2 | ) | –– | (1 | ) | (1 | ) | (2 | ) | (1 | ) | (13 | ) | (15 | ) | |||||||||||||||||
|
Curtailments and settlements
––
net
|
20 | (3 | ) | 3 | 8 | 3 | –– | (14 | ) | (4 | ) | |||||||||||||||||||||
|
Special termination benefits
|
7 | 7 | 5 | 3 | 1 | 1 | 1 | 1 | ||||||||||||||||||||||||
|
Net periodic benefit costs
|
$ | 110 | $ | 115 | $ | 42 | $ | 43 | $ | 88 | $ | 70 | $ | 35 | $ | 52 | ||||||||||||||||
|
Nine Months Ended:
|
||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 266 | $ | 266 | $ | 28 | $ | 22 | $ | 190 | $ | 172 | $ | 52 | $ | 61 | ||||||||||||||||
|
Interest cost
|
550 | 562 | 54 | 59 | 340 | 319 | 146 | 160 | ||||||||||||||||||||||||
|
Expected return on plan assets
|
(657 | ) | (595 | ) | –– | –– | (336 | ) | (324 | ) | (26 | ) | (23 | ) | ||||||||||||||||||
|
Amortization of:
|
||||||||||||||||||||||||||||||||
|
Actuarial losses
|
103 | 114 | 27 | 22 | 66 | 50 | 12 | 7 | ||||||||||||||||||||||||
|
Prior service (credits)/costs
|
(6 | ) | 1 | (2 | ) | (2 | ) | (4 | ) | (3 | ) | (40 | ) | (24 | ) | |||||||||||||||||
|
Curtailments and settlements
––
net
|
71 | (72 | ) | 21 | (1 | ) | 7 | (5 | ) | (40 | ) | (6 | ) | |||||||||||||||||||
|
Special termination benefits
|
17 | 57 | 18 | 155 | 4 | 4 | 2 | 13 | ||||||||||||||||||||||||
|
Net periodic benefit costs
|
$ | 344 | $ | 333 | $ | 146 | $ | 255 | $ | 267 | $ | 213 | $ | 106 | $ | 188 | ||||||||||||||||
|
(a)
|
The increase in net periodic benefit costs in the first nine months of 2011, compared to the first nine months of 2010, for our U.S. qualified plans was primarily driven by higher settlement charges and lower curtailment gains associated with restructuring initiatives partially offset by higher expected return on plan assets and special termination benefits recognized in the prior-year period for certain executives as part of restructuring initiatives.
|
|
(b)
|
The decrease in net periodic benefit costs in the first nine months of 2011, compared to the first nine months of 2010, for our U.S. supplemental (non-qualified) pension plans was primarily driven by special termination benefits recognized in the prior-year period for certain executives as part of restructuring initiatives.
|
|
(c)
|
The increase in net periodic benefit costs in the first nine months of 2011, compared to the first nine months of 2010, for our international pension plans was primarily driven by the decrease in the discount rate partially offset by higher expected return on plan assets.
|
|
(d)
|
The decrease in net periodic benefit costs in the first nine months of 2011, compared to the first nine months of 2010, for our postretirement plans was primarily driven by the harmonization of the postretirement plans and by higher curtailment gains and lower settlement charges associated with restructuring initiatives.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(in millions)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
EPS Numerator––Basic:
|
||||||||||||||||
|
Income from continuing operations
|
$ | 2,434 | $ | 856 | $ | 7,246 | $ | 5,324 | ||||||||
|
Less: net income attributable to noncontrolling interests
|
11 | 5 | 31 | 24 | ||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
|
2,423 | 851 | 7,215 | 5,300 | ||||||||||||
|
Less: preferred stock dividends––net of tax
|
–– | 1 | 1 | 2 | ||||||||||||
|
Income from continuing operations attributable to Pfizer Inc.
common shareholders
|
2,423 | 850 | 7,214 | 5,298 | ||||||||||||
|
Discontinued operations––net of tax
|
1,315 | 15 | 1,355 | 67 | ||||||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 3,738 | $ | 865 | $ | 8,569 | $ | 5,365 | ||||||||
|
EPS Numerator––Diluted:
|
||||||||||||||||
|
Income from continuing operations attributable to Pfizer Inc. common
shareholders and assumed conversions
|
$ | 2,423 | $ | 851 | $ | 7,215 | $ | 5,300 | ||||||||
|
Discontinued operations––net of tax
|
1,315 | 15 | 1,355 | 67 | ||||||||||||
|
Net income attributable to Pfizer Inc. common shareholders and assumed
conversions
|
$ | 3,738 | $ | 866 | $ | 8,570 | $ | 5,367 | ||||||||
|
EPS Denominator:
|
||||||||||||||||
|
Weighted-average number of common shares outstanding––Basic
|
7,770 | 8,027 | 7,877 | 8,045 | ||||||||||||
|
Common-share equivalents: stock options, stock issuable under employee
compensation plans and convertible preferred stock
|
40 | 30 | 48 | 34 | ||||||||||||
|
Weighted-average number of common shares outstanding––Diluted
|
7,810 | 8,057 | 7,925 | 8,079 | ||||||||||||
|
Stock options that had exercise prices greater than the average market price
of our common stock issuable under employee compensation plans
(a)
|
342 | 419 | 279 | 419 | ||||||||||||
|
(a)
|
These common stock equivalents were outstanding during the three and nine months ended October 2, 2011 and October 3, 2010, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
|
|
●
|
Patent litigation, which typically involves challenges to the coverage and/or validity of our patents on various products or processes. We are the plaintiff in the vast majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in a loss of patent protection for the drug at issue, a significant loss of revenues from that drug and impairments of any associated assets.
|
|
●
|
Product liability and other product-related litigation, which can include personal injury, consumer, off-label promotion, securities-law 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 litigation, which can include merger-related and product pricing claims and environmental claims and proceedings, can involve complexities that will vary from matter to matter.
|
|
●
|
Government investigations, which often are related to the extensive regulation of pharmaceutical companies by national, state and local government agencies in the U.S. and in other countries.
|
|
●
|
Guarantees and indemnifications, which generally arise in connection with the sale of assets and businesses and typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims.
|
|
●
|
Actions in Which We Are the Plaintiff and Certain Related Actions
|
|
●
|
Action in Which We Are the Defendant and a Related Action
|
|
●
|
Quigley
|
|
●
|
the payment to the Ad Hoc Committee, for the benefit of the Ad Hoc Committee claimants, of a first installment of $500 million upon receipt by Pfizer of releases of asbestos-related claims against Pfizer Inc. from Ad Hoc Committee claimants holding $500 million in the aggregate of claims (Pfizer began paying this first installment in June 2011);
|
|
●
|
the payment to the Ad Hoc Committee, for the benefit of the Ad Hoc Committee claimants, of a second installment of $300 million upon Pfizer’s receipt of releases of asbestos-related claims against Pfizer Inc. from Ad Hoc Committee claimants holding an additional $300 million in the aggregate of claims following the earlier of the effective date of a revised plan of reorganization and April 6, 2013;
|
|
●
|
the payment of the Ad Hoc Committee’s legal fees and expenses incurred in this matter up to a maximum of $19 million (Pfizer began paying these legal fees and expenses in May 2011); and
|
|
●
|
the procurement by Pfizer of insurance for the benefit of certain Ad Hoc Committee claimants to the extent such claimants with non-malignant diseases have a future disease progression to a malignant disease (Pfizer procured this insurance in August 2011).
|
|
●
|
Other Matters
|
|
●
|
Securities and ERISA Actions
|
|
●
|
Securities Action in New Jersey
|
|
●
|
Other
|
|
●
|
Securities Action
|
|
●
|
Actions by Health Care Service Corporation
|
|
●
|
Government Inquiries; Action by State of Nevada
|
|
●
|
In February 2009, special masters of the U.S. Court of Federal Claims rejected the three cases brought on the theory that a combination of MMR and thimerosal-containing vaccines caused petitioners’ conditions. After these rulings were affirmed by the U.S. Court of Federal Claims, two of them were appealed by petitioners to the U.S. Court of Appeals for the Federal Circuit. In 2010, the Federal Circuit affirmed the decisions of the special masters in both of these cases.
|
|
●
|
In March 2010, special masters of the U.S. Court of Federal Claims rejected the three additional test cases brought on the theory that thimerosal-containing vaccines alone caused petitioners’ conditions. Petitioners did not seek review by the U.S. Court of Federal Claims of the decisions of the special masters in these latter three test cases, and judgments were entered dismissing the cases in April 2010.
|
|
●
|
Petitioners in each of the six test cases have filed an election to bring a civil action.
|
|
●
|
Primary Care operating segment (PC)––includes revenues and earnings, as defined by management, from human pharmaceutical products primarily prescribed by primary-care physicians, and may include products in the following therapeutic and disease areas: Alzheimer’s disease, diabetes, cardiovascular (excluding pulmonary arterial hypertension), erectile dysfunction, major depressive disorder, genitourinary, pain, respiratory and smoking cessation. Examples of products in this unit include Celebrex, Chantix/Champix, Lipitor, Lyrica, Premarin, Pristiq and Viagra. All revenues and earnings for such products are allocated to the Primary Care unit, except those generated in emerging markets and those that are managed by the Established Products unit.
|
|
●
|
Specialty Care and Oncology operating segment (SC&O)––comprises the Specialty Care business unit and the Oncology business unit.
|
|
|
●
|
Specialty Care––includes revenues and earnings, as defined by management, from most human pharmaceutical products primarily prescribed by physicians who are specialists, and may include products in the following therapeutic and disease areas: anti-infectives, endocrine disorders, hemophilia, inflammation, multiple sclerosis, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. Examples of products in this unit include BeneFIX, Enbrel, Genotropin, Geodon, the Prevnar/Prevenar franchise, Rebif, ReFacto, Revatio, Xalatan, Xyntha and Zyvox. All revenues and earnings for such products are allocated to the Specialty Care unit, except those generated in emerging markets and those that are managed by the Established Products unit.
|
|
|
●
|
Oncology––includes revenues and earnings, as defined by management, from human pharmaceutical products addressing oncology and oncology-related illnesses. Examples of products in this unit include Aromasin, Sutent, Torisel and Xalkori. All revenues and earnings for such products are allocated to the Oncology unit, except those generated in emerging markets and those that are managed by the Established Products unit.
|
|
●
|
Established Products and Emerging Markets operating segment (EP&EM)––comprises the Established Products business unit and the Emerging Markets business unit.
|
|
|
●
|
Established Products––generally includes revenues and earnings, as defined by management, from most human pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. Typically, products are transferred to this unit in the beginning of the fiscal year following losing patent protection or marketing exclusivity. In certain situations, products may be transferred to this unit at a different point than the beginning of the fiscal year following losing patent protection or marketing exclusivity in order to maximize their value. This unit also excludes revenues and earnings generated in emerging markets. Examples of products in this unit include Arthrotec, Effexor XR, Medrol, Norvasc, Protonix, Relpax and Zosyn/Tazocin.
|
|
|
●
|
Emerging Markets––includes revenues and earnings, as defined by management, from all human 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 and Turkey.
|
|
●
|
Animal Health and Consumer Healthcare operating segment (AH&CH)—comprises the Animal Health business unit and the Consumer Healthcare business unit.
|
|
|
●
|
Animal Health––includes worldwide revenues and earnings, as defined by management, from products and services to prevent and treat disease in livestock and companion animals, including vaccines, paraciticides and anti-infectives.
|
|
|
●
|
Consumer Healthcare––generally includes worldwide revenues and earnings, as defined by management, from non-prescription medicines and vitamins, including products in the following therapeutic categories: GI-topicals, nutritionals, pain management and respiratory. Examples of products in Consumer Healthcare are Advil, Caltrate, Centrum, ChapStick and Robitussin.
|
|
●
|
Nutrition operating segment––generally includes revenues and earnings, as defined by management, from a full line of infant and toddler nutritional products sold outside the U.S. and Canada.
|
|
●
|
Worldwide Research and Development (WRD), which is generally responsible for human health research projects until proof-of-concept is achieved and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based platform services, which provide technical expertise and other services to the various research and development projects.
|
|
●
|
Pfizer Medical, which is responsible for all human-health-related regulatory submissions and interactions with regulatory agencies. This organization is also responsible for the collection, evaluation and reporting of all safety event information related to our human health products and for conducting clinical trial audits and readiness reviews and for providing Pfizer-related medical information to healthcare providers.
|
|
●
|
Corporate, which is responsible for platform functions such as finance, global real estate operations, human resources, legal, worldwide procurement, worldwide public affairs and policy and worldwide technology. These costs include payroll charges and associated operating expenses, as well as interest income and expense.
|
|
●
|
Certain transactions and events such as (1) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (2) acquisition-related activities, where we incur costs for restructuring, integration and executing the transaction; and (3) certain significant items, which include non-acquisition-related restructuring costs, as well as costs incurred for legal settlements, asset impairments and sales of assets or businesses.
|
|
Revenues
|
R&D Expenses
|
Earnings
(a)
|
||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||
|
Primary Care
|
$ | 5,948 | $ | 5,653 | $ | 285 | $ | 353 | $ | 4,156 | $ | 3,817 | ||||||||||||
|
Specialty Care and Oncology
|
4,131 | 4,052 | 400 | 388 | 2,678 | 2,730 | ||||||||||||||||||
|
Established Products and Emerging Markets
|
4,668 | 4,240 | 71 | 100 | 2,432 | 2,158 | ||||||||||||||||||
|
Animal Health and Consumer Healthcare
|
1,815 | 1,533 | 97 | 93 | 595 | 423 | ||||||||||||||||||
|
Total reportable segments
|
16,562 | 15,478 | 853 | 934 | 9,861 | 9,128 | ||||||||||||||||||
|
Nutrition and other business activities
(b)
|
631 | 517 | 844 | 861 | (697 | ) | (749 | ) | ||||||||||||||||
|
Reconciling Items:
|
||||||||||||||||||||||||
|
Corporate
(c)
|
–– | –– | 337 | 360 | (1,866 | ) | (1,893 | ) | ||||||||||||||||
|
Purchase accounting adjustments
(d)
|
–– | –– | –– | 8 | (1,711 | ) | (1,625 | ) | ||||||||||||||||
|
Acquisition-related costs
(e)
|
–– | –– | 5 | 25 | (301 | ) | (792 | ) | ||||||||||||||||
|
Certain significant items
(f)
|
–– | –– | 149 | –– | (1,310 | ) | (2,413 | ) | ||||||||||||||||
|
Other unallocated
(g)
|
–– | –– | –– | –– | (307 | ) | (242 | ) | ||||||||||||||||
| $ | 17,193 | $ | 15,995 | $ | 2,188 | $ | 2,188 | $ | 3,669 | $ | 1,414 | |||||||||||||
|
Nine Months Ended:
|
||||||||||||||||||||||||
|
Primary Care
|
$ | 17,259 | $ | 17,442 | $ | 912 | $ | 1,128 | $ | 11,513 | $ | 11,954 | ||||||||||||
|
Specialty Care and Oncology
|
12,407 | 12,054 | 1,122 | 1,129 | 8,137 | 8,120 | ||||||||||||||||||
|
Established Products and Emerging Markets
|
13,945 | 13,976 | 206 | 197 | 7,397 | 8,074 | ||||||||||||||||||
|
Animal Health and Consumer Healthcare
|
5,318 | 4,613 | 304 | 296 | 1,598 | 1,302 | ||||||||||||||||||
|
Total reportable segments
|
48,929 | 48,085 | 2,544 | 2,750 | 28,645 | 29,450 | ||||||||||||||||||
|
Nutrition and other business activities
(b)
|
1,750 | 1,618 | 2,568 | 2,630 | (2,178 | ) | (2,270 | ) | ||||||||||||||||
|
Reconciling Items:
|
||||||||||||||||||||||||
|
Corporate
(c)
|
–– | –– | 998 | 1,142 | (5,553 | ) | (5,911 | ) | ||||||||||||||||
|
Purchase accounting adjustments
(d)
|
–– | –– | –– | 23 | (5,232 | ) | (6,564 | ) | ||||||||||||||||
|
Acquisition-related costs
(e)
|
–– | –– | 9 | 45 | (1,471 | ) | (2,692 | ) | ||||||||||||||||
|
Certain significant items
(f)
|
–– | –– | 397 | –– | (3,176 | ) | (2,691 | ) | ||||||||||||||||
|
Other unallocated
(g)
|
–– | –– | –– | –– | (566 | ) | (833 | ) | ||||||||||||||||
| $ | 50,679 | $ | 49,703 | $ | 6,516 | $ | 6,590 | $ | 10,469 | $ | 8,489 | |||||||||||||
|
(a)
|
Income from continuing operations before provision for taxes on income.
|
|
(b)
|
Other business activities includes the revenues and operating results of Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales operation, and the research and development costs managed by our Worldwide Research and Development organization and our Pfizer Medical organization.
|
|
(c)
|
Corporate
for R&D expenses includes, among other things, administration expenses and share-based compensation expenses associated with our research and development activities and for Earnings includes, among other things, administration expenses, interest income/(expense), certain performance-based and all share-based compensation expenses
.
|
|
(d)
|
Purchase accounting adjustments include charges related to the fair value adjustments to inventory, intangible assets and property, plant and equipment.
|
|
(e)
|
Acquisition-related costs can include costs associated with acquiring businesses and integrating and restructuring acquired businesses, such as transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring (see
Note 5. Costs Associated with Cost-Reduction and Productivity Initiatives and Acquisition Activity
for additional information).
|
|
(f)
|
Certain significant items are substantive, unusual items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis. Such items primarily include restructuring charges and implementation costs associated with our cost-reduction and productivity initiatives that are not associated with an acquisition, the impact of certain tax and/or legal settlements and certain asset impairments.
|
|
|
For the third quarter of 2011, certain significant items for R&D expenses includes implementation costs and additional depreciation - asset restructuring associated with our cost-reduction and productivity initiatives that are not associated with an acquistion, and for Earnings includes (i) restructuring charges and implementation costs of $1.1 billion associated with our cost-reduction and productivity initiatives that are not associated with an acquisition, (ii) charges for certain legal matters of $132 million and (iii) certain asset impairment charges of $105 million (see
Note 5. Costs Associated with Cost-Reduction and Productivity Initiatives and Acquisition Activity
and
Note 6. Other (Income)/Deductions––Net
for additional information).
|
|
|
For the third quarter of 2010, certain significant items for Earnings includes (i) asset impairment charges of $1.5 billion (ii) charges for certain legal matters of $701 million and (iii) Wyeth-related inventory write-off of $212 million (which included a purchase accounting fair value adjustment of $104 million), primarily related to biopharmaceutical inventory.
|
|
|
For the first nine months of 2011, certain significant items for R&D expenses includes implementation costs and additional depreciation - asset restructuring associated with our cost-reduction and productivity initiatives that are not associated with an acquisition, and for Earnings includes (i) restructuring charges and implementation costs of $1.9 billion associated with our cost-reduction and productivity initiatives that are not associated with an acquisition, (ii) charges for certain legal matters of $657 million and (iii) certain asset impairment charges of $582 million (see
Note 5. Costs Associated with Cost-Reduction and Productivity Initiatives and Acquisition Activity
and
Note 6. Other (Income)/Deductions––Net
for additional information).
|
|
|
For the first nine months of 2010, certain significant items for Earnings includes (i) asset impairment charges of $1.7 billion, (ii) charges for certain legal matters of $843 million and (iii) Wyeth-related inventory write-off of $212 million (which included a purchase accounting fair value adjustment of $104 million), primarily related to biopharmaceutical inventory.
|
|
(g)
|
Includes overhead expenses associated with our manufacturing and commercial operations not directly attributable to an operating segment.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Revenues from biopharmaceutical products:
|
||||||||||||||||
|
Lipitor
|
$ | 2,602 | $ | 2,534 | $ | 7,578 | $ | 8,104 | ||||||||
|
Prevnar/Prevenar 13
|
1,006 | 735 | 2,823 | 1,590 | ||||||||||||
|
Enbrel
(a)
|
957 | 799 | 2,741 | 2,409 | ||||||||||||
|
Lyrica
|
961 | 757 | 2,695 | 2,242 | ||||||||||||
|
Celebrex
|
643 | 578 | 1,856 | 1,752 | ||||||||||||
|
Viagra
|
493 | 459 | 1,458 | 1,429 | ||||||||||||
|
Norvasc
|
350 | 330 | 1,081 | 1,120 | ||||||||||||
|
Zyvox
|
321 | 285 | 965 | 876 | ||||||||||||
|
Xalatan/Xalacom
|
277 | 416 | 960 | 1,287 | ||||||||||||
|
Sutent
|
298 | 257 | 870 | 771 | ||||||||||||
|
Premarin family
|
267 | 263 | 757 | 779 | ||||||||||||
|
Geodon/Zeldox
|
263 | 262 | 753 | 763 | ||||||||||||
|
Detrol/Detrol LA
|
213 | 237 | 668 | 758 | ||||||||||||
|
Genotropin
|
215 | 211 | 654 | 650 | ||||||||||||
|
Vfend
|
171 | 200 | 558 | 595 | ||||||||||||
|
Chantix/Champix
|
156 | 163 | 545 | 522 | ||||||||||||
|
Effexor XR
|
165 | 175 | 537 | 1,512 | ||||||||||||
|
BeneFIX
|
178 | 156 | 518 | 474 | ||||||||||||
|
Zosyn/Tazocin
|
149 | 255 | 490 | 749 | ||||||||||||
|
Caduet
|
150 | 127 | 435 | 388 | ||||||||||||
|
Pristiq
|
146 | 118 | 422 | 341 | ||||||||||||
|
Zoloft
|
139 | 126 | 420 | 390 | ||||||||||||
|
Prevnar/Prevenar (7-valent)
|
98 | 179 | 406 | 1,030 | ||||||||||||
|
Revatio
|
140 | 116 | 393 | 352 | ||||||||||||
|
Medrol
|
127 | 119 | 383 | 341 | ||||||||||||
|
ReFacto AF/Xyntha
|
140 | 102 | 380 | 290 | ||||||||||||
|
Zithromax/Zmax
|
93 | 90 | 335 | 303 | ||||||||||||
|
Aricept
(b)
|
117 | 106 | 335 | 337 | ||||||||||||
|
Aromasin
|
85 | 111 | 294 | 361 | ||||||||||||
|
Cardura
|
92 | 95 | 289 | 312 | ||||||||||||
|
Rapamune
|
96 | 104 | 285 | 292 | ||||||||||||
|
Fragmin
|
95 | 84 | 283 | 258 | ||||||||||||
|
BMP2
|
83 | 101 | 277 | 298 | ||||||||||||
|
Relpax
|
86 | 75 | 250 | 239 | ||||||||||||
|
Xanax XR
|
77 | 72 | 232 | 224 | ||||||||||||
|
Tygacil
|
76 | 78 | 224 | 250 | ||||||||||||
|
Neurontin
|
67 | 80 | 222 | 238 | ||||||||||||
|
Diflucan
|
72 | 74 | 201 | 205 | ||||||||||||
|
Arthrotec
|
61 | 61 | 182 | 185 | ||||||||||||
|
Unasyn
|
58 | 61 | 172 | 182 | ||||||||||||
|
Protonix
|
65 | 203 | 168 | 535 | ||||||||||||
|
EpiPen
(c)
|
59 | - | 160 | - | ||||||||||||
|
Sulperazon
|
51 | 49 | 155 | 153 | ||||||||||||
|
Skelaxin
(c)
|
58 | - | 145 | - | ||||||||||||
|
Inspra
|
51 | 37 | 142 | 113 | ||||||||||||
|
Dalacin/Cleocin
|
51 | 54 | 139 | 168 | ||||||||||||
|
Alliance revenues
(d)
|
919 | 1,042 | 2,678 | 3,107 | ||||||||||||
|
All other biopharmaceutical products
|
1,710 | 1,409 | 5,097 | 4,198 | ||||||||||||
|
Total revenues from biopharmaceutical products
|
14,747 | 13,945 | 43,611 | 43,472 | ||||||||||||
|
Revenues from other products:
|
||||||||||||||||
|
Animal Health
|
1,041 | 860 | 3,078 | 2,599 | ||||||||||||
|
Consumer Healthcare
|
774 | 673 | 2,240 | 2,014 | ||||||||||||
|
Nutrition
|
577 | 441 | 1,540 | 1,375 | ||||||||||||
|
Pfizer CentreSource
|
54 | 76 | 210 | 243 | ||||||||||||
|
Total revenues
|
$ | 17,193 | $ | 15,995 | $ | 50,679 | $ | 49,703 | ||||||||
|
(a)
|
Outside the U.S. and Canada.
|
|
(b)
|
Represents direct sales under license agreement with Eisai Co., Ltd.
|
|
(c)
|
Legacy King product. King’s results are included in our financial statements commencing from the acquisition date of January 31,
2011, in accordance with Pfizer’s domestic and international year-ends. Therefore, our results for both periods in 2010 do not include King’s results of operations.
|
|
(d)
|
Enbrel (in the U.S. and Canada), Aricept, Exforge, Rebif and Spiriva.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Change
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Change
|
||||||||||||||||||
|
Revenues
|
||||||||||||||||||||||||
|
United States
|
$ | 6,879 | $ | 7,063 | (3 | ) | $ | 20,603 | $ | 21,661 | (5 | ) | ||||||||||||
|
Developed Europe
(a)
|
4,074 | 3,762 | 8 | 12,223 | 12,079 | 1 | ||||||||||||||||||
|
Developed Rest of World
(b)
|
2,840 | 2,349 | 21 | 8,059 | 7,344 | 10 | ||||||||||||||||||
|
Emerging Markets
(c)
|
3,400 | 2,821 | 21 | 9,794 | 8,619 | 14 | ||||||||||||||||||
|
Total Revenues
|
$ | 17,193 | $ | 15,995 | 7 | $ | 50,679 | $ | 49,703 | 2 | ||||||||||||||
|
(a)
|
Developed Europe region includes the following markets: Western Europe and the Scandinavian countries.
|
|
(b)
|
Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.
|
|
(c)
|
Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea),
Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.
|
|
●
|
Overview of Our Performance, Operating Environment and Outlook.
This section, beginning on page 43, provides information about the following: our business; our performance during the third quarter and first nine months of 2011; our operating environment; our business development initiatives; our financial guidance for 2011; and our financial targets for 2012.
|
|
●
|
Analysis of Our Condensed Consolidated Statements of Income.
This section begins on page 50, and consists of the following sub-sections:
|
|
|
o
|
Revenues.
This sub-section, beginning on page 50, provides an analysis of our products and revenues for the third quarter and first nine months of 2011 and 2010, as well as an overview of research and development expenses and important biopharmaceutical product developments.
|
|
|
o
|
Costs and Expenses.
This sub-section, beginning on page 65, provides a discussion about our costs and expenses.
|
|
|
o
|
Provision for Taxes on Income.
This sub-section, on page 68, provides a discussion of items impacting our tax provision for
the periods presented.
|
|
|
o
|
Discontinued Operations.
This sub-section, beginning on page 69, provides an analysis of the financial statement impact of our discontinued operations during the periods presented.
|
|
|
o
|
Adjusted Income.
This sub-section, beginning on page 69, provides a discussion of an alternative view of performance used
by management.
|
|
●
|
Analysis of Our Condensed Consolidated Balance Sheets.
This section, on page 73, provides a discussion of changes in certain balance sheet accounts.
|
|
●
|
Analysis of Our Condensed Consolidated Statements of Cash Flows.
This section, beginning on page 73, provides an analysis of our cash flows for the first nine months of 2011 and 2010.
|
|
●
|
Financial Condition, Liquidity and Capital Resources.
This section, beginning on page 74, provides an analysis of our financial assets and liabilities as of October 2, 2011 and December 31, 2010 and a discussion of our outstanding debt and commitments that existed as of October 2, 2011 and December 31, 2010. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future activities.
|
|
●
|
New Accounting Standards.
This section, beginning on page 76, discusses recently adopted and recently issued accounting standards.
|
|
●
|
Forward-Looking Information and Factors That May Affect Future Results
. This section, beginning on page 77, provides a description of the risks and uncertainties that could cause actual results to differ materially from those discussed in forward
-
looking statements set forth in this MD&A relating to our financial and operating performance, business plans and prospects, in-line products and product candidates, and share-repurchase and dividend-rate plans. Such forward-looking statements are inherently susceptible to uncertainty and changes in circumstances.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
|
(MILLIONS OF DOLLARS, EXCEPT PER COMMON SHARE DATA
)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
||||||||||||||||||
|
Revenues
|
$ | 17,193 | $ | 15,995 | 7 | % | $ | 50,679 | $ | 49,703 | 2 | % | ||||||||||||
|
|
||||||||||||||||||||||||
|
Cost of sales
|
3,679 | 3,790 | (3 | ) | 11,177 | 11,676 | (4 | ) | ||||||||||||||||
|
% of revenues
|
21.4 | % | 23.7 | % | 22.1 | % | 23.5 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Selling, informational and administrative expenses
|
4,621 | 4,599 | — | 14,097 | 13,776 | 2 | ||||||||||||||||||
|
% of revenues
|
26.9 | % | 28.8 | % | 27.8 | % | 27.7 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Research and development expenses
|
2,188 | 2,188 | — | 6,516 | 6,590 | (1 | ) | |||||||||||||||||
|
% of revenues
|
12.7 | % | 13.7 | % | 12.9 | % | 13.3 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Amortization of intangible assets
|
1,397 | 1,156 | 21 | 4,168 | 3,972 | 5 | ||||||||||||||||||
|
% of revenues
|
8.1 | % | 7.2 | % | 8.2 | % | 8.0 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Acquisition-related in-process research and development charges
|
–– | — | — | –– | 74 | (100 | ) | |||||||||||||||||
|
% of revenues
|
–– | % | — | % | –– | % | 0.1 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Restructuring charges and certain acquisition-related costs
|
1,101 | 499 | 121 | 2,474 | 2,090 | 18 | ||||||||||||||||||
|
% of revenues
|
6.4 | % | 3.1 | % | 4.9 | % | 4.2 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Other deductions––net
|
538 | 2,349 | (77 | ) | 1,778 | 3,036 | (41 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Income from continuing operations before provision for taxes on income
|
3,669 | 1,414 | 159 | 10,469 | 8,489 | 23 | ||||||||||||||||||
|
% of revenues
|
21.3 | % | 8.8 | % | 20.7 | % | 17.1 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Provision for taxes on income
|
1,235 | 558 | 121 | 3,223 | 3,165 | 2 | ||||||||||||||||||
|
Effective tax rate
|
33.7 | % | 39.5 | % | 30.8 | % | 37.3 | % | ||||||||||||||||
|
Income from continuing operations
|
2,434 | 856 | 184 | 7,246 | 5,324 | 36 | ||||||||||||||||||
|
% of revenues
|
14.2 | % | 5.4 | % | 14.3 | % | 10.7 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Discontinued operations––net of tax
|
1,315 | 15 | * | 1,355 | 67 | * | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net income before allocation to noncontrolling interests
|
3,749 | 871 | * | 8,601 | 5,391 | 60 | ||||||||||||||||||
|
% of revenues
|
21.8 | % | 5.4 | % | 17.0 | % | 10.8 | % | ||||||||||||||||
|
Less: net income attributable to noncontrolling interests
|
11 | 5 | 120 | 31 | 24 | 29 | ||||||||||||||||||
|
Net income attributable to Pfizer Inc.
|
$ | 3,738 | $ | 866 | * | $ | 8,570 | $ | 5,367 | 60 | ||||||||||||||
|
% of revenues
|
21.7 | % | 5.4 | % | 16.9 | % | 10.8 | % | ||||||||||||||||
|
Earnings per common share––basic:
(a)
|
||||||||||||||||||||||||
|
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
$ | 0.31 | $ | 0.11 | 182 | $ | 0.92 | $ | 0.66 | 39 | ||||||||||||||
|
Discontinued operations––net of tax
|
0.17 | — | * | 0.17 | 0.01 | * | ||||||||||||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.48 | $ | 0.11 | * | $ | 1.09 | $ | 0.67 | 63 | ||||||||||||||
|
Earnings per common share––diluted:
(a)
|
||||||||||||||||||||||||
|
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
$ | 0.31 | $ | 0.11 | 182 | $ | 0.91 | $ | 0.66 | 38 | ||||||||||||||
|
Discontinued operations––net of tax
|
0.17 | — | * | 0.17 | 0.01 | * | ||||||||||||||||||
|
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.48 | $ | 0.11 | * | $ | 1.08 | $ | 0.66 | 64 | ||||||||||||||
|
|
||||||||||||||||||||||||
|
Cash dividends paid per common share
|
$ | 0.20 | $ | 0.18 | $ | 0.60 | $ | 0.54 | ||||||||||||||||
| (a) | EPS amounts may not add due to rounding. |
| * | Calculation not meaningful. |
|
|
●
|
growth in certain key biopharmaceutical products, such as Lipitor in the U.S. as well as Lyrica, the Prevenar franchise and Enbrel, and growth in our Animal Health, Consumer Healthcare and Nutrition businesses;
|
|
|
●
|
the favorable impact of foreign exchange, which increased revenues by approximately $951 million, or 6%; and
|
|
|
●
|
the inclusion of revenues from legacy King products of $357 million, which favorably impacted revenues by 2%,
|
|
|
●
|
lower revenues of approximately $950 million, or 6%, due to the impact of the loss of exclusivity for several biopharmaceutical products in certain geographies; and
|
|
|
●
|
a reduction in revenues of $151 million, or 1%, due to U.S. healthcare reform.
|
|
|
●
|
growth in certain key biopharmaceutical products, such as Lipitor in the U.S. as well as Lyrica, the Prevenar franchise and Enbrel, and growth in our Animal Health, Consumer Healthcare and Nutrition businesses;
|
|
|
●
|
the favorable impact of foreign exchange, which increased revenues by approximately $1.8 billion, or 4%; and
|
|
|
●
|
the inclusion of revenues from legacy King products of $938 million, which favorably impacted revenues by 2%,
|
|
|
●
|
lower revenues of $3.8 billion, or 8%, due to the impact of the loss of exclusivity for several biopharmaceutical products in certain geographies; and
|
|
|
●
|
a reduction in revenues of $357 million, or 1%, due to U.S. healthcare reform.
|
|
(millions of dollars)
|
Oct. 2, 2011
vs.
Oct. 3, 2010
Worldwide
Incr./(Decr.)
|
% Change
Worldwide
|
% Change
U.S.
|
% Change
International
|
||||||||||||
|
For the Three Months Ended:
|
||||||||||||||||
|
Prevnar/Prevenar 13
|
$ | 271 | 37 | (16 | ) | 183 | ||||||||||
|
Lyrica
|
204 | 27 | 6 | 45 | ||||||||||||
|
Enbrel (outside the U.S. and Canada)
|
158 | 20 | - | 20 | ||||||||||||
|
EpiPen
(a)
|
59 | * | * | * | ||||||||||||
|
Skelaxin
(a)
|
58 | * | * | * | ||||||||||||
|
Celebrex
|
65 | 11 | 4 | 27 | ||||||||||||
|
Sutent
|
41 | 16 | 16 | 16 | ||||||||||||
|
ReFacto AF/Xyntha
|
38 | 37 | 45 | 35 | ||||||||||||
|
Zyvox
|
36 | 13 | 4 | 22 | ||||||||||||
|
Pristiq
|
28 | 24 | 17 | 69 | ||||||||||||
|
Caduet
|
23 | 18 | (7 | ) | 71 | |||||||||||
|
Norvasc
|
20 | 6 | 100 | 5 | ||||||||||||
|
Aromasin
(b)
|
(26 | ) | (23 | ) | (79 | ) | 7 | |||||||||
|
Detrol/Detrol LA
|
(24 | ) | (10 | ) | (17 | ) | 4 | |||||||||
|
Zosyn/Tazocin
|
(106 | ) | (42 | ) | (58 | ) | (5 | ) | ||||||||
|
Xalatan/Xalacom
(b)
|
(139 | ) | (33 | ) | (94 | ) | 3 | |||||||||
|
Protonix
(b)
|
(138 | ) | (68 | ) | (68 | ) | - | |||||||||
|
Lipitor
(b)
|
68 | 3 | 13 | (8 | ) | |||||||||||
|
Prevnar/Prevenar (7-valent)
|
(81 | ) | (45 | ) | - | (45 | ) | |||||||||
|
Effexor XR
(b)
|
(10 | ) | (6 | ) | (10 | ) | (3 | ) | ||||||||
|
Alliance revenues
(b)
|
(123 | ) | (12 | ) | (23 | ) | 16 | |||||||||
|
All other biopharmaceutical products
(c)
|
301 | 21 | 56 | 11 | ||||||||||||
|
Animal Health products
|
181 | 21 | 17 | 24 | ||||||||||||
|
Consumer Healthcare products
|
101 | 15 | 9 | 22 | ||||||||||||
|
Nutrition products
|
136 | 31 | - | 31 | ||||||||||||
|
For the Nine Months Ended:
|
||||||||||||||||
|
Prevnar/Prevenar 13
|
$ | 1,233 | 78 | 25 | 259 | |||||||||||
|
Lyrica
|
453 | 20 | 4 | 35 | ||||||||||||
|
Enbrel (outside the U.S. and Canada)
|
332 | 14 | - | 14 | ||||||||||||
|
EpiPen
(a)
|
160 | * | * | * | ||||||||||||
|
Skelaxin
(a)
|
145 | * | * | * | ||||||||||||
|
Celebrex
|
104 | 6 | - | 18 | ||||||||||||
|
Sutent
|
99 | 13 | 10 | 14 | ||||||||||||
|
ReFacto AF/Xyntha
|
90 | 31 | 23 | 33 | ||||||||||||
|
Zyvox
|
89 | 10 | 5 | 16 | ||||||||||||
|
Pristiq
|
81 | 24 | 16 | 85 | ||||||||||||
|
Caduet
|
47 | 12 | (8 | ) | 52 | |||||||||||
|
Norvasc
|
(39 | ) | (3 | ) | (4 | ) | (3 | ) | ||||||||
|
Aromasin
(b)
|
(67 | ) | (19 | ) | (57 | ) | 1 | |||||||||
|
Detrol/Detrol LA
|
(90 | ) | (12 | ) | (18 | ) | 1 | |||||||||
|
Zosyn/Tazocin
|
(259 | ) | (35 | ) | (47 | ) | (9 | ) | ||||||||
|
Xalatan/Xalacom
(b)
|
(327 | ) | (25 | ) | (65 | ) | (4 | ) | ||||||||
|
Protonix
(b)
|
(367 | ) | (69 | ) | (69 | ) | - | |||||||||
|
Lipitor
(b)
|
(526 | ) | (6 | ) | 7 | (19 | ) | |||||||||
|
Prevnar/Prevenar (7-valent)
|
(624 | ) | (61 | ) | (100 | ) | (50 | ) | ||||||||
|
Effexor XR
(b)
|
(975 | ) | (64 | ) | (82 | ) | (11 | ) | ||||||||
|
Alliance revenues
(b)
|
(429 | ) | (14 | ) | (26 | ) | 17 | |||||||||
|
All other biopharmaceutical products
(c)
|
899 | 21 | 85 | 5 | ||||||||||||
|
Animal Health products
|
479 | 18 | 20 | 18 | ||||||||||||
|
Consumer Healthcare products
|
226 | 11 | 7 | 16 | ||||||||||||
|
Nutrition products
|
165 | 12 | - | 12 | ||||||||||||
| (a) |
Third quarter and first nine months of 2011 reflect the inclusion of revenues from legacy King products.
|
| (b) | Aromasin lost exclusivity in the U.S. in April 2011. Xalatan lost exclusivity in the U.S. in March 2011. The basic U.S. patent (including the six-month pediatric exclusivity period) for Protonix expired in January 2011. Lipitor lost exclusivity in Canada in May 2010, Spain in July 2010, Brazil in August 2010 and Mexico in December 2010. Effexor XR lost exclusivity in the U.S. in July 2010. We lost exclusivity for Aricept 5mg and 10mg tablets, which are included in Alliance revenues, in November 2010. |
| (c) | Relates to “All other biopharmaceutical products” category included in the “Selected Revenues from Biopharmaceutical Products” table presented in this MD&A. |
| * | Calculation not meaningful. |
|
|
●
|
higher impairment charges of $1.5 billion (pre-tax) in the third quarter of 2010, and $1.7 billion (pre-tax) in the first nine months of 2010 related to certain intangible assets acquired as part of the Wyeth acquisition, and a $701 million (pre-tax) charge in the third quarter and first nine months of 2010 for asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc. (see further discussion in Notes to Condensed Consolidated Financial Statements––
Note 6. Other(Income)/Deductions
––
Net
); and
|
|
|
●
|
a decrease in the effective tax rate to 33.7% in the third quarter of 2011 from 39.5% in the third quarter of 2010 and to 30.8% in first nine months of 2011 from 37.3% in the first nine months of 2010 (see discussion in the “Provision for Taxes on Income” section of this MD&A),
|
|
|
●
|
higher charges related to our non-acquisition related cost-reduction and productivity initiatives in the third quarter and first nine months of 2011 compared to the same periods in 2010.
|
|
●
|
approximately $215 million in the third quarter of 2011 and approximately $539 million in the first nine months of 2011, recorded as a reduction to
Revenues
; and
|
|
●
|
approximately $45 million in the third quarter of 2011 and approximately $183 million in the first nine months of 2011, recorded in
Selling, informational and administrative expenses
, related to the annual fee payable to the federal government (which is not deductible for U.S. income tax purposes) based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs (the total fee to be paid each year by the pharmaceutical industry will increase annually through 2018). We are recording the annual fee ratably throughout the year.
|
|
●
|
Lipitor and Caduet in the U.S. on November 30, 2011 (see additional Lipitor discussion below);
|
|
●
|
Xalatan and Xalacom in 15 major European markets in January 2012. The exclusivity period in these markets was extended from July 2011 to January 2012 as a result of pediatric extensions;
|
|
●
|
Geodon in the U.S. in March 2012;
|
|
●
|
Revatio (tablet) in the U.S. in March 2012. We are pursuing a pediatric extension for Revatio in the U.S. If we are successful, the exclusivity period for Revaio (tablet) in the U.S. will be extended by six months to September 2012; and
|
|
●
|
Detrol IR in the U.S. in September 2012.
|
|
●
|
On September 20, 2011, we completed our cash tender offer for all of the outstanding shares of Icagen, Inc. (Icagen), resulting in an approximately 70% ownership of the outstanding shares of Icagen, a biopharmaceutical company focused on discovery, development and commercialization of novel orally-administered small molecule drugs that modulate ion channel targets. On October 27, 2011, we acquired all of the remaining shares of Icagen, which is now a wholly-owned subsidiary of Pfizer, Inc. The allocation of the consideration transferred has not been finalized.
|
|
●
|
On April 4, 2011, we announced that we entered into an agreement to sell our Capsugel business for approximately $2.4 billion in cash. The transaction closed on August 1, 2011. For additional information, see Notes to Condensed Consolidated Financial Statements—
Note 4. Discontinued Operations.
|
|
●
|
Earlier this year, we announced that we were conducting a strategic review of all of our other businesses and assets. On July 7, 2011, we announced our decisions to explore strategic alternatives for our Animal Health and Nutrition businesses that may include, among other things, a full or partial separation of each of these businesses through a spin-off, sale, or other transaction.
|
|
●
|
On February 7, 2011, we announced that we entered into an agreement to purchase the Ferrosan consumer healthcare business, which is principally comprised of dietary supplement products, including multivitamins, probiotics and Omega-3 fish oils. Ferrosan markets its products in the Nordic region, as well as in Russia and many countries in Central and Eastern Europe. The transaction, which is subject to customary closing conditions, including regulatory approval in certain jurisdictions, is expected to close in December 2011 (which falls in our first fiscal quarter of 2012 for our international operations).
|
|
●
|
On January 31, 2011 (the acquisition date), we completed our tender offer for all of the outstanding shares of common stock of King at a purchase price of $14.25 per share in cash and acquired approximately 92.5% of the outstanding shares. On February 28, 2011, we acquired all of the remaining shares of King for $14.25 per share in cash. As a result, the total fair value of consideration transferred for King was approximately $3.6 billion in cash ($3.2 billion, net of cash acquired). For additional information on our acquisition of King, see Notes to Condensed Consolidated Financial Statements—
Note 3. Acquisition of King Pharmaceuticals, Inc.
|
|
|
King’s principal businesses consist of a prescription pharmaceutical business focused on delivering new formulations of pain treatments designed to discourage common methods of misuse and abuse; the Meridian auto-injector business for emergency drug delivery, which develops and manufactures the EpiPen; an established products portfolio; and an animal health business that offers a variety of feed-additive products for a wide range of species.
|
|
|
As a result of our acquisition of King, we recorded Inventories of $340 million, Property, plant and equipment (PP&E) of $412 million, Identifiable intangible assets of $2.1 billion and Goodwill of $783 million. For additional information related to the provisional recording of assets acquired and liabilities assumed, see Notes to Condensed Consolidated Financial Statements—
Note 3. Acquisition of King Pharmaceuticals, Inc.
|
|
|
o
|
Developed technology rights of approximately $1.8 billion, which includes EpiPen, Thrombin, Levoxyl, Bicillin, Skelaxin and Flector Patch, among others.
|
|
|
o
|
IPR&D of approximately $300 million, which includes Embeda, Vanquix and Remoxy, among others.
|
|
|
o
|
Amounts for intangibles and inventory, pending finalization of valuation efforts.
|
|
|
o
|
Amounts for income tax assets, receivables and liabilities, pending the filing of King’s pre-acquisition tax returns and the receipt of information from taxing authorities, which may change certain estimates and assumptions used.
|
|
|
o
|
The allocation of goodwill among reporting units.
|
|
Full-Year 2011 Guidance
|
||
|
($ billions, except per share amounts)
|
Net Income
(a)
|
Diluted EPS
(a)
|
|
Adjusted income/diluted EPS
(b)
guidance
|
~$17.7-$18.1
|
~$2.24-$2.29
|
|
Purchase accounting impacts of transactions completed as of 10/2/11
|
(4.8)
|
(0.62)
|
|
Acquisition-related costs
|
(1.5-1.7)
|
(0.19-0.21)
|
|
Non-acquisition-related restructuring costs
(c)
|
(2.0-2.2)
|
(0.25-0.28)
|
|
Gain on sale of and income from Capsugel discontinued operations
(d)
|
1.3
|
0.17
|
|
Other Certain Significant Items
|
(0.8)
|
(0.10)
|
|
Reported Net income attributable to Pfizer Inc./diluted EPS guidance
|
~$9.5-$10.3
|
~$1.20-$1.30
|
| (a) | Does not assume the completion of any business-development transactions not completed as of October 2, 2011, including any one-time upfront payments associated with such transactions. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of October 2, 2011. |
| (b) | For an understanding of Adjusted income, see the “Adjusted Income” section of this MD&A. |
| (c) | Includes amounts related to our initiatives to reduce R&D spending, including our realigned R&D footprint, and amounts related to other cost-reduction and productivity initiatives. In our reconciliation between Net income attributable to Pfizer Inc. , as reported under accounting principles generally accepted in the United States of America (U.S. GAAP), and Adjusted income, and in our reconciliation between diluted EPS, as reported under U.S. GAAP, and Adjusted diluted EPS, these amounts are categorized as Certain Significant Items (see the “Adjusted Income––Reconciliation” section of this MD&A). |
| (d) | Includes revenues and expenses related to the Capsugel business as a discontinued operation through July 31, 2011. |
|
Full-Year 2012 Targets
|
||
|
($ billions, except per share amounts)
|
Net Income
(a)
|
Diluted EPS
(a)
|
|
Adjusted income/diluted EPS
(b)
targets
|
~$17.2-$17.9
|
~$2.25-$2.35
|
|
Purchase accounting impacts of transactions completed as of 10/2/11
|
(3.8)
|
(0.50)
|
|
Acquisition-related costs
|
(0.7-1.0)
|
(0.09-0.12)
|
|
Non-acquisition-related restructuring costs
(c)
|
(0.3-0.4)
|
(0.03-0.05)
|
|
Reported Net income attributable to Pfizer Inc./diluted EPS targets
|
~$12.0-$13.1
|
~$1.58-$1.73
|
| (a) |
Does not assume the completion of any business-development transactions not completed as of October 2, 2011, including any one-time upfront payments associated with such transactions. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of October 2, 2011.
|
| (b) |
For an understanding of Adjusted income, see the “Adjusted Income” section of this MD&A.
|
| (c) |
Includes amounts related to our initiatives to reduce R&D spending, including our realigned R&D footprint, and amounts related to other cost- reduction and productivity initiatives. In our reconciliation between
Net income attributable to Pfizer Inc.
, as reported under U.S. GAAP, and Adjusted income, and in our reconciliation between diluted EPS, as reported under U.S. GAAP, and Adjusted diluted EPS, these amounts are categorized as Certain Significant Items (see the “Adjusted Income––Reconciliation” section of this MD&A).
|
|
% Change in Revenues
|
||||||||||||||||||||||||||||||||||||
|
World-
|
Inter-
|
|||||||||||||||||||||||||||||||||||
|
Worldwide
|
U.S.
|
International
|
wide
|
U.S.
|
national
|
|||||||||||||||||||||||||||||||
|
Oct. 2,
|
Oct. 3,
|
Oct. 2,
|
Oct. 3,
|
Oct. 2,
|
Oct. 3,
|
|||||||||||||||||||||||||||||||
|
(millions of dollars)
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||||||||||||||
|
Three Months Ended:
|
||||||||||||||||||||||||||||||||||||
|
Biopharmaceutical revenues:
|
||||||||||||||||||||||||||||||||||||
|
Primary Care Operating
Segment
|
$ | 5,948 | $ | 5,653 | $ | 3,451 | $ | 3,373 | $ | 2,497 | $ | 2,280 | 5 | 2 | 10 | |||||||||||||||||||||
|
Specialty Care
|
3,799 | 3,717 | 1,636 | 1,925 | 2,163 | 1,792 | 2 | (15 | ) | 21 | ||||||||||||||||||||||||||
|
Oncology
|
332 | 335 | 97 | 119 | 235 | 216 | (1 | ) | (18 | ) | 9 | |||||||||||||||||||||||||
|
SC&O Operating Segment
|
4,131 | 4,052 | 1,733 | 2,044 | 2,398 | 2,008 | 2 | (15 | ) | 19 | ||||||||||||||||||||||||||
|
Established Products
|
2,230 | 2,168 | 835 | 881 | 1,395 | 1,287 | 3 | (5 | ) | 8 | ||||||||||||||||||||||||||
|
Emerging Markets
|
2,438 | 2,072 | — | — | 2,438 | 2,072 | 18 | — | 18 | |||||||||||||||||||||||||||
|
EP&EM Operating Segment
|
4,668 | 4,240 | 835 | 881 | 3,833 | 3,359 | 10 | (5 | ) | 14 | ||||||||||||||||||||||||||
|
|
14,747 | 13,945 | 6,019 | 6,298 | 8,728 | 7,647 | 6 | (4 | ) | 14 | ||||||||||||||||||||||||||
|
Other product revenues:
|
||||||||||||||||||||||||||||||||||||
|
Animal Health
|
1,041 | 860 | 433 | 369 | 608 | 491 | 21 | 17 | 24 | |||||||||||||||||||||||||||
|
Consumer Healthcare
|
774 | 673 | 408 | 374 | 366 | 299 | 15 | 9 | 22 | |||||||||||||||||||||||||||
|
AH&CH Operating Segment
|
1,815 | 1,533 | 841 | 743 | 974 | 790 | 18 | 13 | 23 | |||||||||||||||||||||||||||
|
Nutrition Operating Segment
|
577 | 441 | — | — | 577 | 441 | 31 | — | 31 | |||||||||||||||||||||||||||
|
Pfizer CentreSource
(a)
|
54 | 76 | 19 | 22 | 35 | 54 | (29 | ) | (14 | ) | (35 | ) | ||||||||||||||||||||||||
| 631 | 517 | 19 | 22 | 612 | 495 | 22 | (14 | ) | 24 | |||||||||||||||||||||||||||
|
Total revenues
|
$ | 17,193 | $ | 15,995 | $ | 6,879 | $ | 7,063 | $ | 10,314 | $ | 8,932 | 7 | (3 | ) | 15 | ||||||||||||||||||||
|
Nine Months Ended:
|
||||||||||||||||||||||||||||||||||||
|
Biopharmaceutical revenues:
|
||||||||||||||||||||||||||||||||||||
|
Primary Care Operating
Segment
|
$ | 17,259 | $ | 17,442 | $ | 10,007 | $ | 10,183 | $ | 7,252 | $ | 7,259 | (1 | ) | (2 | ) | — | |||||||||||||||||||
|
Specialty Care
|
11,425 | 11,009 | 5,226 | 5,479 | 6,199 | 5,530 | 4 | (5 | ) | 12 | ||||||||||||||||||||||||||
|
Oncology
|
982 | 1,045 | 274 | 380 | 708 | 665 | (6 | ) | (28 | ) | 6 | |||||||||||||||||||||||||
|
SC&O Operating Segment
|
12,407 | 12,054 | 5,500 | 5,859 | 6,907 | 6,195 | 3 | (6 | ) | 11 | ||||||||||||||||||||||||||
|
Established Products
|
6,914 | 7,682 | 2,739 | 3,512 | 4,175 | 4,170 | (10 | ) | (22 | ) | — | |||||||||||||||||||||||||
|
Emerging Markets
|
7,031 | 6,294 | — | — | 7,031 | 6,294 | 12 | — | 12 | |||||||||||||||||||||||||||
|
EP&EM Operating Segment
|
13,945 | 13,976 | 2,739 | 3,512 | 11,206 | 10,464 | — | (22 | ) | 7 | ||||||||||||||||||||||||||
|
|
43,611 | 43,472 | 18,246 | 19,554 | 25,365 | 23,918 | — | (7 | ) | 6 | ||||||||||||||||||||||||||
|
Other product revenues:
|
||||||||||||||||||||||||||||||||||||
|
Animal Health
|
3,078 | 2,599 | 1,205 | 1,006 | 1,873 | 1,593 | 18 | 20 | 18 | |||||||||||||||||||||||||||
|
Consumer Healthcare
|
2,240 | 2,014 | 1,087 | 1,016 | 1,153 | 998 | 11 | 7 | 16 | |||||||||||||||||||||||||||
|
AH&CH Operating Segment
|
5,318 | 4,613 | 2,292 | 2,022 | 3,026 | 2,591 | 15 | 13 | 17 | |||||||||||||||||||||||||||
|
Nutrition Operating Segment
|
1,540 | 1,375 | — | — | 1,540 | 1,375 | 12 | — | 12 | |||||||||||||||||||||||||||
|
Pfizer CentreSource
(a)
|
210 | 243 | 65 | 85 | 145 | 158 | (14 | ) | (24 | ) | (8 | ) | ||||||||||||||||||||||||
| 1,750 | 1,618 | 65 | 85 | 1,685 | 1,533 | 8 | (24 | ) | 10 | |||||||||||||||||||||||||||
|
Total revenues
|
$ | 50,679 | $ | 49,703 | $ | 20,603 | $ | 21,661 | $ | 30,076 | $ | 28,042 | 2 | (5 | ) | 7 | ||||||||||||||||||||
| (a) | Our contract manufacturing and bulk pharmaceutical chemical sales organization. |
|
|
●
|
the solid performance from Lipitor in the U.S. and from the Prevenar franchise, Lyrica and Enbrel;
|
|
|
●
|
revenues from legacy King biopharmaceutical products of approximately $263 million; and
|
|
|
●
|
the favorable impact of foreign exchange of 6%,
|
|
|
●
|
lower revenues from Lipitor in international markets and from Effexor XR, Protonix, Xalatan/Xalacom and Zosyn and lower Alliance revenues for Aricept, all due to loss of exclusivity in certain markets; and
|
|
|
●
|
a reduction in revenues of $151 million due to the U.S. Healthcare Legislation.
|
|
|
●
|
lower revenues from Lipitor in international markets and from Effexor XR, Protonix, Xalatan/Xalacom and Zosyn and lower Alliance revenues for Aricept, all due to loss of exclusivity in certain markets; and
|
|
|
●
|
a reduction in revenues of $357 million due to the U.S. Healthcare Legislation;
|
|
|
●
|
the solid performance from Lipitor in the U.S. and from the Prevnar/Prevenar franchise, Lyrica and Enbrel;
|
|
|
●
|
revenues from legacy King biopharmaceutical products of approximately $707 million; and
|
|
|
●
|
the favorable impact of foreign exchange of 3%.
|
|
|
●
|
in the U.S., revenues from biopharmaceutical products decreased 4% in the third quarter of 2011 and 7% in the first nine months of 2011, compared to the same periods in 2010.
|
|
|
o
|
The decreases in U.S. revenues from biopharmaceutical products in the third quarter and first nine months of 2011 reflect lower revenues from Protonix, Effexor XR, Zosyn, Xalatan, Vfend and Aromasin, all due to loss of exclusivity, lower Alliance revenues due to loss of exclusivity of Aricept 5mg and 10mg tablets in November 2010 and lower revenues from Detrol/Detrol LA, as well as the reduction in revenues of $151 million in the third quarter of 2011 and $357 million in the first nine months of 2011 due to the U.S. Healthcare Legislation. Also, Prevnar 13 revenues in the U.S. were lower in the third quarter of 2011 than in the third quarter of 2010 as fewer patients received the Prevnar 13 catch-up dose as the timeframe for eligibility has nearly expired. The impact of these adverse factors was partially offset by the strong performance of certain other biopharmaceutical products and the addition of U.S. revenues from legacy King products of approximately $250 million in the third quarter and approximately $677 million in the first nine months of 2011.
|
|
|
·
|
in our international markets, revenues from biopharmaceutical products increased 14% in the third quarter of 2011 and 6% in the first nine months of 2011, compared to the same periods in 2010.
|
|
|
o
|
The increases in international revenues from biopharmaceutical products in the third quarter and first nine months of 2011 reflect the favorable impact of foreign exchange of 11% in the third quarter of 2011 and 6% in the first nine months of 2011, as well as an operational increase of 3% in the third quarter of 2011. Operational revenues were flat in the first nine months of 2011. Operationally, revenues were favorably impacted by increases in the Prevenar franchise, Enbrel, Celebrex, Alliance revenues and, in the first nine months of 2011, Lyrica, and unfavorably impacted by declines in Lipitor and Effexor XR and, in the first nine months of 2011, Norvasc and Xalatan/Xalacom. International revenues from legacy King products were not significant to our international revenues in the third quarter or first nine months of 2011.
|
|
|
o
|
During the third quarter of 2011, revenues from international biopharmaceutical products represented 59% of total revenues from biopharmaceutical products, compared to 55% in the third quarter of 2010. During the first nine months of 2011, revenues from international biopharmaceutical products represented 58% of total revenues from biopharmaceutical products, compared to 55% in the first nine months of 2010.
|
|
|
●
|
increased 3% in the third quarter of 2011, compared to the same period last year, due to the favorable impact of foreign exchange of 7%, partially offset by lower operational revenues of 4%. For the third quarter of 2011, Established Product unit revenues were mainly impacted by the loss of exclusivity of Protonix and Zosyn in the U.S., which taken together reduced Established Products unit revenues by $242 million, or 11%, in comparison with third-quarter 2010. This decline was more than offset by the favorable impact of foreign exchange and by $144 million, or 7%, from the addition of legacy King products.
|
|
|
●
|
decreased 10% in the first nine months of 2011, compared to the same period last year, due to lower operational revenues of 14%, partially offset by a 4% favorable impact of foreign exchange. The decrease in Established Products unit operational revenues in the first nine months of 2011 was mainly due to the U.S. loss of exclusivity of Effexor XR, Protonix and Zosyn. Taken together, the loss of exclusivity for these products decreased Established Products unit revenues by $1.5 billion, or 20%, in comparison with the first nine months of 2010. These declines were partially offset by the addition of revenues from legacy King products of $396 million, or 5%, in the first nine months of 2011.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Medicaid and related state program rebates
(a)
|
$ | 307 | $ | 314 | $ | 1,081 | $ | 955 | ||||||||
|
Medicare rebates
(a)
|
372 | 343 | 1,099 | 912 | ||||||||||||
|
Performance-based contract rebates
(a), (b)
|
723 | 597 | 2,227 | 1,891 | ||||||||||||
|
Chargebacks
(c)
|
813 | 744 | 2,416 | 2,224 | ||||||||||||
|
Total
|
$ | 2,215 | $ | 1,998 | $ | 6,823 | $ | 5,982 | ||||||||
| (a) | Rebates are product-specific and, therefore, for any given year are impacted by the mix of products sold as well as the loss of exclusivity of branded products. |
| (b) | Performance-based contracts are with managed care customers, including health maintenance organizations and pharmacy benefit managers, who receive rebates based on the achievement of contracted performance terms for products. |
| (c) | Chargebacks primarily represent reimbursements to wholesalers for honoring contracted prices to third parties. |
|
|
●
|
the impact of increased Medicaid rebate rates due to the U.S. Healthcare Legislation, in addition to higher rates for certain products that are subject to rebates;
|
|
|
●
|
the impact of increased Medicare rebates under the U.S. Healthcare Legislation due to discounts to Medicare Part D participants who are in the Medicare “Coverage Gap”; and
|
|
|
●
|
an increase in chargebacks for our branded products as a result of increasing competitive pressures and increasing sales for certain branded products and certain generic products sold by our Greenstone unit that are subject to chargebacks,
|
|
|
●
|
changes in product mix;
|
|
|
●
|
the impact of decreased Medicare rebates for certain products that have lost exclusivity; and
|
|
|
●
|
the impact on chargebacks of decreased sales for products that have lost exclusivity, among other factors.
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||||
|
% Change
|
% Change
|
||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
|
From Oct. 3,
|
Oct. 2,
|
From Oct. 3,
|
|||||||||||||
|
Product
|
Primary Indications
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
|
Lipitor
|
Reduction of LDL cholesterol
|
$ | 2,602 | 3 | $ | 7,578 | (6 | ) | |||||||||
|
Prevnar/Prevenar 13
|
Vaccine for prevention of invasive pneumococcal disease
|
1,006 | 37 | 2,823 | 78 | ||||||||||||
|
Enbrel
(a)
|
Rheumatoid, juvenile rheumatoid and psoriatic arthritis,
plaque psoriasis and ankylosing spondylitis
|
957 | 20 | 2,741 | 14 | ||||||||||||
|
Lyrica
|
Epilepsy, post-herpetic neuralgia and diabetic peripheral
neuropathy, fibromyalgia
|
961 | 27 | 2,695 | 20 | ||||||||||||
|
Celebrex
|
Arthritis pain and inflammation, acute pain
|
643 | 11 | 1,856 | 6 | ||||||||||||
|
Viagra
|
Erectile dysfunction
|
493 | 7 | 1,458 | 2 | ||||||||||||
|
Norvasc
|
Hypertension
|
350 | 6 | 1,081 | (3 | ) | |||||||||||
|
Zyvox
|
Bacterial infections
|
321 | 13 | 965 | 10 | ||||||||||||
|
Xalatan/Xalacom
|
Glaucoma and ocular hypertension
|
277 | (33 | ) | 960 | (25 | ) | ||||||||||
|
Sutent
|
Advanced and/or metastatic renal cell carcinoma (mRCC),
refractory gastrointestinal stromal tumors (GIST) and
advanced pancreatic neuroendocrine tumor
|
298 | 16 | 870 | 13 | ||||||||||||
|
Premarin family
|
Menopause
|
267 | 2 | 757 | (3 | ) | |||||||||||
|
Geodon/Zeldox
|
Schizophrenia; acute manic or mixed episodes associated
with bipolar disorder; maintenance treatment of bipolar
mania
|
263 | - | 753 | (1 | ) | |||||||||||
|
Detrol/Detrol LA
|
Overactive bladder
|
213 | (10 | ) | 668 | (12 | ) | ||||||||||
|
Genotropin
|
Replacement of human growth hormone
|
215 | 2 | 654 | 1 | ||||||||||||
|
Vfend
|
Fungal infections
|
171 | (15 | ) | 558 | (6 | ) | ||||||||||
|
Chantix/Champix
|
An aid to smoking cessation
|
156 | (4 | ) | 545 | 4 | |||||||||||
|
Effexor XR
|
Depression and certain anxiety disorders
|
165 | (6 | ) | 537 | (64 | ) | ||||||||||
|
BeneFIX
|
Hemophilia
|
178 | 14 | 518 | 9 | ||||||||||||
|
Zosyn/Tazocin
|
Antibiotic
|
149 | (42 | ) | 490 | (35 | ) | ||||||||||
|
Caduet
|
Reduction of LDL cholesterol and hypertension
|
150 | 18 | 435 | 12 | ||||||||||||
|
Pristiq
|
Depression
|
146 | 24 | 422 | 24 | ||||||||||||
|
Zoloft
|
Depression and certain anxiety disorders
|
139 | 10 | 420 | 8 | ||||||||||||
|
Prevnar/Prevenar (7-valent)
|
Vaccine for prevention of invasive pneumococcal disease
|
98 | (45 | ) | 406 | (61 | ) | ||||||||||
|
Revatio
|
Pulmonary arterial hypertension (PAH)
|
140 | 21 | 393 | 12 | ||||||||||||
|
Medrol
|
Inflammation
|
127 | 7 | 383 | 12 | ||||||||||||
|
ReFacto AF/Xyntha
|
Hemophilia
|
140 | 37 | 380 | 31 | ||||||||||||
|
Zithromax/Zmax
|
Bacterial infections
|
93 | 3 | 335 | 11 | ||||||||||||
|
Aricept
(b)
|
Alzheimer’s disease
|
117 | 10 | 335 | (1 | ) | |||||||||||
|
Aromasin
|
Breast cancer
|
85 | (23 | ) | 294 | (19 | ) | ||||||||||
|
Cardura
|
Hypertension/Benign prostatic hyperplasia
|
92 | (3 | ) | 289 | (7 | ) | ||||||||||
|
Rapamune
|
Immunosuppressant
|
96 | (8 | ) | 285 | (2 | ) | ||||||||||
|
Fragmin
|
Anticoagulant
|
95 | 13 | 283 | 10 | ||||||||||||
|
BMP2
|
Development of bone and cartilage
|
83 | (18 | ) | 277 | (7 | ) | ||||||||||
|
Relpax
|
Treat the symptoms of migraine headache
|
86 | 15 | 250 | 5 | ||||||||||||
|
Xanax XR
|
Anxiety disorders
|
77 | 7 | 232 | 4 | ||||||||||||
|
Tygacil
|
Antibiotic
|
76 | (3 | ) | 224 | (10 | ) | ||||||||||
|
Neurontin
|
Seizures
|
67 | (16 | ) | 222 | (7 | ) | ||||||||||
|
Diflucan
|
Fungal infections
|
72 | (3 | ) | 201 | (2 | ) | ||||||||||
|
Arthrotec
|
Osteoarthritis and rheumatoid arthritis
|
61 | - | 182 | (2 | ) | |||||||||||
|
Unasyn
|
Injectable antibacterial
|
58 | (5 | ) | 172 | (5 | ) | ||||||||||
|
Protonix
|
Erosive gastroesophageal reflux disease
|
65 | (68 | ) | 168 | (69 | ) | ||||||||||
|
EpiPen
(c)
|
Epinephrine injection used in treatment of life-threatening
allergic reactions
|
59 | * | 160 | * | ||||||||||||
|
Sulperazon
|
Antibiotic
|
51 | 4 | 155 | 1 | ||||||||||||
|
Skelaxin
(c)
|
Muscle relaxant
|
58 | * | 145 | * | ||||||||||||
|
Inspra
|
High blood pressure
|
51 | 38 | 142 | 26 | ||||||||||||
|
Dalacin/Cleocin
|
Antibiotic for bacterial infections
|
51 | (6 | ) | 139 | (17 | ) | ||||||||||
|
Alliance revenues
(d)
|
Various
|
919 | (12 | ) | 2,678 | (14 | ) | ||||||||||
|
All other biopharmaceutical
products
|
Various
|
1,710 | 21 | 5,097 | 21 | ||||||||||||
| (a) | Outside the U.S. and Canada. |
| (b) | Represents direct sales under license agreement with Eisai Co., Ltd. |
| (c) | Legacy King product. King’s results are included in our financial statements commencing from the acquisition date of January 31, 2011, in accordance with Pfizer’s domestic and international year-ends. Therefore, our results for both periods in 2010 do not include King’s results of operations. |
| (d) | Enbrel (in the U.S. and Canada), Aricept, Exforge, Rebif and Spiriva. |
| * | Calculation not meaningful. |
|
●
|
Lipitor
, for the treatment of elevated LDL cholesterol levels in the blood, is the most widely used branded prescription treatment for lowering cholesterol. Lipitor recorded worldwide revenues of $2.6 billion, or an increase of 3%, in the third quarter of 2011 compared to the same period in 2010 due to:
|
|
|
o
|
the favorable impact of foreign exchange, which increased revenues by $124 million in the third quarter of 2011; and
|
|
|
o
|
continued brand promotion in the U.S. to maximize opportunities both pre- and post-loss of exclusivity,
|
|
|
o
|
the impact of loss of exclusivity in Canada in May 2010, Spain in July 2010, Brazil in August 2010 and Mexico in December 2010;
|
|
|
o
|
the continuing impact of an intensely competitive lipid-lowering market, with competition from generics and branded products worldwide; and
|
|
|
o
|
increased payer pressure worldwide, including the need for flexible rebate policies.
|
|
|
o
|
in the U.S., Lipitor revenues were $1.5 billion, or an increase of 13%, in the third quarter of 2011, and $4.2 billion, or an increase of 7%, in the first nine months of 2011, compared to the same periods in 2010. These increases were driven by price increases on January 1 and July 1, 2011; and
|
|
|
o
|
in our international markets, Lipitor revenues were $1.1 billion, or a decrease of 8%, in the third quarter of 2011, and $3.4 billion, or a decrease of 19%, in the first nine months of 2011, compared to the same periods in 2010. The decreases were primarily due to the loss of exclusivity in several markets in 2010 referred to above. The impact of foreign exchange increased international revenues by 10% in the third quarter of 2011 and 5% in the first nine months of 2011, compared to the same periods in 2010.
|
|
●
|
Prevnar/Prevenar 13 Pediatric
is our 13-valent pneumococcal conjugate vaccine for preventing invasive pneumococcal disease in infants and young children. Prevnar/Prevenar 13 recorded increases in worldwide revenues of 37% in the third quarter of 2011 and 78% in the first nine months of 2011, compared to the same periods in 2010. In the U.S., Prevnar 13 revenues declined 16% in the third quarter of 2011 compared to the year-ago quarter as fewer patients received the Prevnar 13 catch-up dose as the timeframe for eligibility has nearly expired. To date, Prevnar/Prevenar 13 has been approved in over 110 countries and launched in over 100 of those countries. The launch of Prevnar/Prevenar 13 has resulted in a reduction of our Prevnar/Prevenar (7-valent) revenues (see discussion below). We expect this trend to continue.
|
|
●
|
Enbrel
, for the
treatment of moderate-to-severe rheumatoid arthritis, polyarticular juvenile rheumatoid arthritis, psoriatic arthritis, plaque psoriasis and ankylosing spondylitis, a type of arthritis affecting the spine, recorded increases in worldwide revenues, excluding the U.S. and Canada, of 20% in the third quarter of 2011 and 14% in the first nine months of 2011, compared to the same periods in 2010, primarily due to increased penetration of Enbrel in developed Europe and developed Asia. Enbrel revenues from the U.S. and Canada are included in Alliance revenues.
|
|
●
|
Lyrica
, indicated for the management of post-herpetic neuralgia (PHN), diabetic peripheral neuropathy (DPN), fibromyalgia, and as adjunctive therapy for adult patients with partial onset seizures in the U.S., and for peripheral and dental neuropathic pain, adjunctive treatment of epilepsy and general anxiety disorder (GAD) in certain countries outside the U.S., recorded increases in worldwide revenues of 27% in the third quarter of 2011 and 20% in the first nine months of 2011, compared to the same periods in 2010. Lyrica had a strong operational performance in international markets in the third quarter of 2011, including Japan, where Lyrica was launched in 2010 as the first product approved for the peripheral neuropathic pain indication. In the U.S., revenues increased 6% in the third quarter of 2011 and 4% in the first nine months of 2011, compared to the same periods in 2010. Notwithstanding these increases, U.S. revenues continue to be affected by increased competition from generic versions of competitive medicines, as well as managed care pricing and formulary pressures.
|
|
●
|
Celebrex,
indicated
for the treatment of the signs and symptoms of osteoarthritis and rheumatoid arthritis worldwide and for the management of acute pain in adults in the U.S. and certain markets in the EU, recorded increases in worldwide revenues of 11% in the third quarter of 2011 and 6% in the first nine months of 2011, compared to the same periods in 2010. In the U.S., revenues were up 4% in the third quarter of 2011 and were flat in the first nine months of 2011, compared to the same periods in 2010, reflecting increased competition from generic versions of competitive medicines and managed care formulary pressures. Celebrex is supported by continued educational and promotional efforts highlighting its efficacy and safety profile for appropriate patients.
|
|
●
|
Viagra
remains the leading treatment for erectile dysfunction. Viagra worldwide revenues increased 7% in the third quarter of 2011 and 2% in the first nine months of 2011, compared to the same periods in 2010. In the U.S., Viagra revenues increased 1% in the third quarter of 2011 and were relatively flat in the first nine months of 2011, compared to the same periods in 2010. Internationally, Viagra revenues increased 15% in the third quarter of 2011, primarily due to the favorable impact of foreign exchange, and 4% in the first nine months of 2011, due to the favorable impact of foreign exchange, compared to the same periods in 2010.
|
|
●
|
Norvasc
, for treating hypertension, lost exclusivity in the U.S. and other major markets a few years ago. Norvasc worldwide revenues increased 6% in the third quarter of 2011, due to the favorable impact of foreign exchange, and decreased 3% in the first nine months of 2011, compared to the same periods in 2010.
|
|
●
|
Zyvox
is the world’s best-selling branded agent for the treatment of certain serious Gram-positive pathogens, including Methicillin-Resistant Staphylococcus-Aureus (MRSA). Zyvox worldwide revenues increased 13% in the third quarter and 10% in the first nine months of 2011, compared to the same periods in 2010, primarily due to growth in emerging markets as well as growth in certain other markets driven by secondary bacterial infections arising from the stronger flu season in 2011.
|
|
●
|
Xalabrands
consists of
Xalatan
, a prostaglandin, the world’s leading branded agent to reduce elevated eye pressure in patients with open-angle glaucoma or ocular hypertension, and
Xalacom,
a fixed combination prostaglandin (Xalatan) and beta blocker (timolol) that is available outside the U.S. Xalatan/Xalacom worldwide revenues decreased 33% in the third quarter of 2011 and 25% in the first nine months of 2011, compared to the same periods in 2010. Lower revenues in the U.S. are due to the loss of exclusivity in March 2011. Lower operational revenues internationally are due to the launch of generic latanoprost (generic Xalatan) in Japan in May 2010 and in Italy in July 2010. As a result of pediatric extensions, the exclusivity period for Xalatan and Xalacom has been extended from July 2011 to January 2012 in 15 major European markets.
|
|
●
|
Sutent
is for the treatment of advanced renal cell carcinoma and gastrointestinal stromal tumors after disease progression on, or intolerance to, imatinib mesylate, and advanced pancreatic neuroendocrine tumor. Sutent worldwide revenues increased 16% in the third quarter of 2011 and 13% in the first nine months of 2011, compared to the same periods in 2010, due to strong operational performance and the favorable impact of foreign exchange. We continue to drive total revenue and prescription growth, supported by cost-effectiveness data and efficacy data in first-line metastatic renal cell carcinoma (mRCC)––including two-year survival data, which represent the first time that overall survival of two years has been seen in the treatment of advanced kidney cancer, as well as through increasing access and healthcare coverage. As of October 2, 2011, Sutent was the best-selling medicine in the world for the treatment of first-line mRCC.
|
|
●
|
Our
Premarin
family of products remains the leading therapy to help women address moderate-to-severe menopausal symptoms. It recorded an increase in worldwide revenues of 2% in the third quarter of 2011 and a decrease of 3% in the first nine months of 2011, compared to the same periods in 2010.
|
|
●
|
Geodon/Zeldox
, an atypical antipsychotic, is indicated for the treatment of schizophrenia, as monotherapy for the acute treatment of bipolar manic or mixed episodes, and as an adjunct to lithium or valproate for the maintenance treatment of bipolar disorder. Geodon worldwide revenues were relatively flat in the third quarter of 2011 and decreased 1% in the first nine months of 2011, compared to the same periods in 2010, which reflects higher rebates in the first nine months of 2011 due to the impact of the U.S. Healthcare Legislation and moderate growth in the U.S. antipsychotic market.
|
|
●
|
Detrol/Detrol LA,
a muscarinic receptor antagonist, is the most prescribed branded medicine worldwide for overactive bladder. Detrol LA is an extended-release formulation taken once a day. Detrol/Detrol LA worldwide revenues declined 10% in the third quarter of 2011 and 12% in the first nine months of 2011, compared to the same periods in 2010, primarily due to increased competition from other branded medicines and a shift in promotional focus to our Toviaz product in most major markets.
|
|
●
|
Genotropin
, the world’s leading human growth hormone, is used in children for the treatment of short stature with growth hormone deficiency, Prader-Willi Syndrome, Turner Syndrome, Small for Gestational Age Syndrome, Idiopathic Short Stature (in the U.S. only) and Chronic Renal Insufficiency (outside the U.S. only), as well as in adults with growth hormone deficiency. Genotropin is supported by a broad platform of innovative injection-delivery devices. Genotropin worldwide revenues increased 2% in the third quarter of 2011 and 1% in the first nine months of 2011, compared to the same periods in 2010, due to the favorable impact of foreign exchange.
|
|
●
|
Vfend
is
the only branded antifungal agent available in intravenous and oral forms. Vfend worldwide revenues decreased 15% in the third quarter of 2011 and 6% in the first nine months of 2011, compared to the same periods in 2010. While international revenues of Vfend continued to be driven in 2011 by its acceptance as an excellent broad-spectrum agent for treating yeast and molds, revenues in the U.S. declined primarily due to a loss of exclusivity of Vfend tablets and the launch of generic voriconazole (generic Vfend) in February 2011.
|
|
●
|
Chantix/Champix
is a treatment for smoking cessation in adults. Chantix/Champix worldwide revenues decreased 4% in the third quarter of 2011 and increased 4% in the first nine months of 2011, compared to the same periods in 2010. Revenues in the first nine months of 2011 were favorably impacted by strong operational performance in international markets, and revenues in the third quarter and first nine months of 2011 were favorably impacted by foreign exchange, partially offset by the impact of changes to the product’s label and other factors, especially in the U.S. We are continuing our educational and promotional efforts, which are focused on the Chantix benefit-risk proposition, the significant health consequences of smoking and the importance of the physician-patient dialogue in helping patients quit smoking.
|
|
●
|
Effexor XR (extended release capsules)
, an antidepressant for treating adult patients with major depressive disorder, GAD, social anxiety disorder and panic disorder, recorded decreases in worldwide revenues of 6% in the third quarter of 2011 and 64% in the first nine months of 2011, compared to the same periods in 2010. Effexor XR faces generic competition outside the U.S., and it has faced generic competition in the U.S. since July 1, 2010. This generic competition had a negative impact in the third quarter and first nine months of 2011, and will continue to have a significant adverse impact on our revenues for Effexor XR.
|
|
●
|
BeneFIX and ReFacto AF/Xyntha
are hemophilia products that use state-of-the-art manufacturing to assist patients with this lifelong bleeding disorder. BeneFIX is the only available recombinant factor IX product for the treatment of hemophilia B, while ReFacto AF/Xyntha are recombinant factor VIII products for the treatment of hemophilia A. Both products are indicated for the control and prevention of bleeding in patients with these disorders and in some countries also are indicated for prophylaxis in certain situations, such as surgery. BeneFIX recorded increases in worldwide revenues of 14% in the third quarter and 9% in the first nine months of 2011, compared to the same periods in 2010. ReFacto AF/Xyntha recorded increases in worldwide revenue of 37% in the third quarter of 2011 and 31% in the first nine months of 2011, compared to the same periods in 2010. The increases for all of these products were due to strong operational performance and the favorable impact of foreign exchange.
|
|
●
|
Zosyn
/
Tazocin
, our broad-spectrum intravenous antibiotic, faces generic competition in the U.S. and certain other markets. It recorded decreases in worldwide revenues of 42% in the third quarter of 2011 and 35% in the first nine months of 2011, compared to the same periods in 2010.
|
|
●
|
Caduet
is a single-pill therapy combining Norvasc and Lipitor. Caduet worldwide revenues increased 18% in the third quarter of 2011 and 12% in the first nine months of 2011, compared to the same periods in 2010, due to strong operational performance in international markets and the favorable impact of foreign exchange, partially offset by increased generic competition, as well as an overall decline in U.S. hypertension market volume. We expect that Caduet will lose exclusivity in the U.S. on November 30, 2011.
|
|
●
|
Pristiq
was approved for the treatment of major depressive disorder in the U.S. in February 2008 and subsequently was approved for that indication in 29 other countries. Pristiq has also been approved for treatment of moderate-to-severe vasomotor symptoms (VMS) associated with menopause in Thailand, Mexico, Ecuador and the Philippines. Pristiq recorded increases in worldwide revenues of 24% in the third quarter and in the first nine months of 2011, compared to the same periods in 2010. These increases were driven by promotional activities in the U.S., and targeted international markets where Pristiq was recently launched. The activities are designed to educate physicians and pharmacists about the benefit-risk profile of Pristiq.
|
|
●
|
Prevnar/Prevenar (7-valent),
our 7-valent pneumococcal conjugate vaccine for preventing invasive pneumococcal disease in infants and young children, recorded decreases in worldwide revenues of 45% in the third quarter of 2011 and 61% in the first nine months of 2011, compared to the same periods in 2010. Many markets have transitioned from the use of Prevnar/Prevenar (7-valent) to Prevnar/Prevenar 13 (see discussion above), resulting in lower revenues for Prevnar/Prevenar (7-valent). We expect this trend to continue.
|
|
●
|
Revatio
, for the treatment of PAH, had increases in worldwide revenues of 21% in the third quarter and 12% in the first nine months of 2011, compared to the same periods in 2010, due in part to increased PAH awareness driving earlier diagnosis in the U.S. and EU and the favorable impact of foreign exchange.
|
|
●
|
Protonix
, our proton pump inhibitor for erosive gastroesophageal reflux disease, recorded decreases in revenues of 68% in the third quarter of 2011 and 69% in the first nine months of 2011, compared to the same periods in 2010. We have an exclusive license from Nycomed GmbH to sell Protonix in the U.S., where it faces generic competition as the result of at-risk launches by certain generic manufacturers that began in December 2007 and the expiration of the basic U.S. patent (including the six-month pediatric exclusivity period) in January 2011.
|
|
Research and Development Expenses
|
||||||||||||||||||||||||
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
||||||||||||||||||
|
Primary Care Operating Segment
(a)
|
$ | 285 | $ | 353 | (19 | ) | $ | 912 | $ | 1,128 | (19 | ) | ||||||||||||
|
Specialty Care and Oncology Operating Segment
(a)
|
400 | 388 | 3 | 1,122 | 1,129 | (1 | ) | |||||||||||||||||
|
Established Products and Emerging Markets Operating Segment
(a)
|
71 | 100 | (29 | ) | 206 | 197 | 5 | |||||||||||||||||
|
Animal Health and Consumer Healthcare Operating Segment
(a)
|
97 | 93 | 4 | 304 | 296 | 3 | ||||||||||||||||||
|
Nutrition and Pfizer CentreSource
(a)
|
11 | 10 | 10 | 32 | 25 | 28 | ||||||||||||||||||
|
Worldwide Research and Development/Pfizer Medical
(b)
|
833 | 851 | (2 | ) | 2,536 | 2,605 | (3 | ) | ||||||||||||||||
|
Corporate and other
(c)
|
491 | 393 | 25 | 1,404 | 1,210 | 16 | ||||||||||||||||||
| $ | 2,188 | $ | 2,188 | — | $ | 6,516 | $ | 6,590 | (1 | ) | ||||||||||||||
| (a) |
Our operating segments, in addition to their sales and marketing responsibilities, are responsible for certain development activities. Generally, these responsibilities relate to additional indications for in-line products and IPR&D projects that have achieved proof-of-concept. R&D spending may include upfront and milestone payments for intellectual property rights.
|
| (b) |
Worldwide Research and Development is generally responsible for human health research projects until proof-of-concept is achieved, and then for transitioning those projects to the appropriate business unit for possible clinical and commercial development. R&D spending may include upfront and milestone payments for intellectual property rights. This organization also has responsibility for certain science-based and other platform-services organizations, which provide technical expertise and other services to the various R&D projects. Pfizer Medical is responsible for all human-health-related regulatory submissions and interactions with regulatory agencies, including all safety event activities, for conducting clinical trial audits and readiness reviews and for providing Pfizer-related medical information to healthcare providers.
|
| (c) |
Corporate and other includes unallocated costs, primarily facility costs, information technology, share-based compensation, and restructuring related costs.
|
|
Recent FDA approvals:
|
||
|
PRODUCT
|
INDICATION
|
DATE APPROVED
|
|
Xalkori (Crizotinib)
|
Treatment of ALK-positive advanced non-small cell lung cancer
|
August 2011
|
|
Oxecta––Immediate release oxycodone with Aversion technology (formerly Acurox) (without niacin)
(a)
|
Management of moderate-to-severe pain where the use of an opioid analgesic is appropriate
|
June 2011
|
|
Sutent
|
Treatment of unresectable pancreatic neuroendocrine tumor
|
May 2011
|
| (a) | In early 2011, we acquired King, which has an exclusive license from Acura Pharmaceuticals, Inc. (Acura) to sell Oxecta in the U.S., Canada and Mexico. |
|
Pending U.S. new drug applications (NDA) and supplemental filings:
|
||
|
PRODUCT
|
INDICATION
|
DATE FILED*
|
|
Axitinib
|
Treatment of advanced renal cell carcinoma
|
June 2011
|
|
Prevnar 13 Adult
(a)
|
Prevention of pneumococcal disease in adults 50 years of age and older
|
February 2011
|
|
Taliglucerase alfa
(b)
|
Treatment of Gaucher disease
|
April 2010
|
|
Genotropin
(c)
|
Replacement of human growth hormone deficiency (Mark VII multidose disposable device)
|
December 2009
|
|
Celebrex
(d)
|
Chronic pain
|
October 2009
|
|
Geodon
(e)
|
Treatment of bipolar disorder––pediatric filing
|
December 2008
|
|
Remoxy
(f)
|
Management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time
|
August 2008
|
|
Spiriva
(g)
|
Respimat device for chronic obstructive pulmonary disease
|
January 2008
|
|
Zmax
(h)
|
Treatment of bacterial infections––sustained release––acute otitis media (AOM) and sinusitis––pediatric filing
|
January 2007
|
|
Viviant
(i)
|
Osteoporosis treatment and prevention
|
August 2006
|
|
Pristiq
(j)
|
Vasomotor symptoms of menopause
|
August 2006
|
|
Vfend
(k)
|
Treatment of fungal infections––pediatric filing
|
August 2005
|
|
(a)
|
In July 2011, we announced that the FDA issued a 90-day extension to the action date with respect to Prevnar 13 in adults age 50 and older. This extends the review period to January 2012. The extension is due to additional data that we elected to submit to further assess the immune responses to Prevnar 13 from two studies that were part of our original submission. These data, which are derived from an additional immune response assay method, were submitted to support the FDA in the evaluation of the concomitant use of Prevnar 13 and trivalent inactivated influenza vaccine.
|
|
(b)
|
In November 2009, we entered into a license and supply agreement with Protalix BioTherapeutics (Protalix), which provides us exclusive worldwide rights, except in Israel, to develop and commercialize taliglucerase alfa for the treatment of Gaucher disease. In April 2010, Protalix completed a rolling NDA with the FDA for taliglucerase alfa. Taliglucerase alfa was granted orphan drug designation in the U.S. in September 2009. In February 2011, Protalix received a “complete response” letter from the FDA for the taliglucerase alfa NDA that set forth additional requirements for approval. On August 1, 2011, Protalix announced that it had submitted its response to the FDA letter.
|
|
(c)
|
In April 2010, we received a “complete response” letter from the FDA for the Genotropin Mark VII multidose disposable device submission. In August 2010, we submitted our response to address the requests and recommendations included in the FDA letter. In April 2011, we received a second “complete response” letter from the FDA, requesting additional information. We are assessing the requests and recommendations included in the FDA’s letter.
|
|
(d)
|
In June 2010, we received a “complete response” letter from the FDA for the Celebrex chronic pain supplemental NDA. The supplemental NDA remains pending while we await the completion of ongoing studies to determine next steps.
|
|
(e)
|
In October 2009, we received a “complete response” letter from the FDA with respect to the supplemental NDA for Geodon for the treatment of acute bipolar mania in children and adolescents aged 10 to 17 years. In October 2010, we submitted our response. In April 2010, we received a “warning letter” from the FDA with respect to the clinical trial in support of this supplemental NDA. We are working to address the issues raised in the letter. In April 2011, we received a second “complete response” letter from the FDA in which the FDA indicated that, in its view, the reliability of the data supporting the filing had not yet been demonstrated. We are working to better understand the issues raised in the letter.
|
|
(f)
|
In 2005, King entered into an agreement with Pain Therapeutics, Inc. (PT) to develop and commercialize Remoxy. In August 2008, the FDA accepted the NDA for Remoxy that had been submitted by King and PT. In December 2008, the FDA issued a “complete response” letter. In March 2009, King exercised its right under the agreement with PT to assume sole control and responsibility for the development of Remoxy. In December 2010, King resubmitted the NDA for Remoxy with the FDA. In June 2011, we and PT announced that a “complete response” letter was received from the FDA with regard to the resubmission of the NDA. We are working to address the issues raised in the letter, which primarily relate to manufacturing, and we plan to engage in further discussions with the FDA.
|
|
(g)
|
Boehringer Ingelheim (BI), our alliance partner, holds the NDAs for Spiriva Handihaler and Spiriva Respimat. In September 2008, BI received a “complete response” letter from the FDA for the Spiriva Respimat submission. The FDA is seeking additional data, and we are coordinating with BI, which is working with the FDA to provide the additional information. A full response will be submitted to the FDA upon the completion of planned and ongoing studies.
|
|
(h)
|
In September 2007, we received an “approvable” letter from the FDA for Zmax that set forth requirements to obtain approval for the pediatric acute otitis media (AOM) indication based on pharmacokinetic data. In January 2010, we filed a supplemental NDA, which proposed the inclusion of the new indications for AOM and acute bacterial sinusitis (ABS) in pediatric patients. In May 2011, we received a “complete response” letter from the FDA with respect to the supplemental NDA. We are working to determine the next steps.
|
|
(i)
|
Two “approvable” letters were received by Wyeth in April and December 2007 from the FDA for Viviant (bazedoxifene), for the prevention of post-menopausal osteoporosis, that set forth the additional requirements for approval. In May 2008, Wyeth received an “approvable” letter from the FDA for the treatment of post-menopausal osteoporosis. The FDA is seeking additional data, and we have been systematically working through these requirements and seeking to address the FDA’s concerns. A full response will be provided to the FDA. In February 2008, the FDA advised Wyeth that it expects to convene an advisory committee to review the pending NDAs for both the treatment and prevention indications after we submit our response to the “approvable” letters. In April 2009, Wyeth received approval in the EU for CONBRIZA (the EU trade name for Viviant) for the treatment of post-menopausal osteoporosis in women at increased risk of fracture. Viviant was also approved in Japan in July 2010 for the treatment of post-menopausal osteoporosis.
|
|
(j)
|
In July 2007, Wyeth received an “approvable” letter from the FDA with respect to its NDA for the use of Pristiq in the treatment of moderate-to-severe vasomotor symptoms (VMS) associated with menopause. The FDA requested an additional one-year study of the safety of Pristiq for this indication. This study was completed, and the results were provided to the FDA in December 2010. In September 2011, we received a “complete response” letter from the FDA regarding our supplemental NDA. We are evaluating the content of the letter and will determine the next steps.
|
|
(k)
|
In December 2005, we received an “approvable” letter from the FDA for our Vfend pediatric filing that set forth the additional requirements for approval. In April 2010, based on data from a new pharmacokinetics study, we and the FDA agreed on a Vfend dosing regimen for pediatric patients in three ongoing trials. We continue to work to determine the next steps.
|
|
Regulatory approvals and filings in the EU and Japan:
|
|||
|
PRODUCT
|
DESCRIPTION OF EVENT
|
DATE APPROVED
|
DATE FILED*
|
|
Prevenar 13 Adult
|
Approval in the EU for prevention of invasive pneumococcal disease in adults 50 years of age and older
|
October 2011
|
—
|
|
Lyrica
|
Application filed in Japan for treatment of fibromyalgia
|
—
|
October 2011
|
|
ELIQUIS (Apixaban)
(a)
|
Application filed in the EU for prevention of stroke in patients with atrial fibrillation
|
—
|
October 2011
|
|
Bosutinib
|
Application filed in the EU for treatment of chronic myelogenous leukemia
|
—
|
August 2011
|
|
Xalkori (Crizotinib)
|
Application filed in the EU for treatment of previously treated ALK-positive advanced non-small cell lung cancer
|
—
|
August 2011
|
|
ELIQUIS
(Apixaban)
(b)
|
Approval in the EU for prevention of venous thromboembolism following elective hip or knee-replacement surgery
|
May 2011
|
—
|
|
Axitinib
|
Application filed in the EU for treatment of advanced renal cell carcinoma after failure of prior systemic treatment
|
—
|
May 2011
|
|
Xalkori (Crizotinib)
|
Application filed in Japan for treatment of ALK-positive advanced non-small cell lung cancer
|
—
|
May 2011
|
|
Revatio
|
Approval in the EU for pediatric PAH
|
May 2011
|
—
|
|
Celebrex
|
Application filed in Japan for treatment of acute pain
|
—
|
March 2011
|
|
Xiapex
|
Approval in the EU for treatment of Dupuytren’s contracture
|
February 2011
|
—
|
|
Sutent
|
Approval in the EU for treatment of unresectable pancreatic neuroendocrine tumor
|
December 2010
|
—
|
|
Taliglucerase alfa
|
Application filed in the EU for treatment of Gaucher disease
|
—
|
November 2010
|
|
Vyndaqel (Tafamidis)
(c)
|
Application filed in the EU for TTR-FAP
|
—
|
August 2010
|
|
Prevenar 13 Infant
|
Application filed in Japan for prevention of invasive pneumococcal disease in infants and young children
|
—
|
December 2009
|
|
*
|
For applications in the EU, the dates set forth in this column are the dates on which the European Medicines Agency (EMA) validated our submissions.
|
|
(a)
|
This indication for ELIQUIS is being developed in collaboration with our alliance partner, Bristol-Myers Squibb Company (BMS).
|
|
(b)
|
This indication for ELIQUIS was developed and is being commercialized in collaboration with BMS.
|
|
(c)
|
In July 2011, the Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion recommending that the European Commission approve Vyndaqel (Tafamidis) for the treatment of transthyretin amyloidosis in adult patients with stage 1 symptomatic polyneuropathy to delay peripheral neurologic impairment.
|
|
Late-stage clinical trials for additional uses and dosage forms for in-line and in-registration products:
|
|
|
PRODUCT
|
INDICATION
|
|
Axitinib
|
Oral and selective inhibitor of vascular endothelial growth factor (VEGF) receptor 1, 2 & 3 for the treatment of renal cell carcinoma in treatment-naïve patients
|
| Eraxis/Vfend Combination | Aspergillosis fungal infections |
|
Lyrica
|
Central neuropathic pain due to spinal cord injury; peripheral neuropathic pain; CR (once-a-day) dosing
|
|
Revatio
|
Pediatric PAH
|
|
Sutent
|
Adjuvant renal cell carcinoma
|
|
Torisel
|
Renal cell carcinoma
|
|
Xalkori (Crizotinib)
|
An oral ALK and c-Met inhibitor for the treatment of ALK-positive 1
st
and 2
nd
line non-small cell lung cancer
|
|
Xiapex
|
Peyronie’s disease
|
|
Zithromax/chloroquine
|
Malaria
|
|
New drug candidates in late-stage development:
|
|
|
CANDIDATE
|
INDICATION
|
|
ALO-02
|
A Mu-type opioid receptor agonist for the management of moderate-to-severe pain when a continuous, around-the-clock opioid analgesic is needed for an extended period of time
|
|
Bapineuzumab
(a)
|
A beta amyloid inhibitor for the treatment of mild-to-moderate Alzheimer’s disease being developed in collaboration with Janssen Alzheimer Immunotherapy Research & Development, LLC (Janssen AI), a subsidiary of Johnson & Johnson
|
|
Bazedoxifene-conjugated estrogens
|
A tissue-selective estrogen complex for the treatment of menopausal vasomotor symptoms
|
|
Bosutinib
|
An Abl and src kinase inhibitor for the treatment of chronic myelogenous leukemia (An application has been filed in the EU.)
|
|
Dacomitinib
|
A pan-HER tyrosine kinase inhibitor for the treatment of advanced non-small cell lung cancer
|
|
Dimebon (latrepirdine)
(b)
|
A novel mitochondrial protectant and enhancer being developed in collaboration with Medivation, Inc., for the treatment of mild-to-moderate Alzheimer’s disease
|
|
ELIQUIS (Apixaban)
(c)
|
For the prevention and treatment of venous thromboembolism and prevention of stroke in patients with atrial fibrillation, which is being developed in collaboration with BMS (An application for stroke prevention in atrial fibrillation patients has been filed in the EU.)
|
|
Inotuzumab ozogamicin
|
An antibody drug conjugate, consisting of an anti-CD22 monotherapy antibody linked to a cytotoxic agent, calicheamycin, for the treatment of aggressive Non-Hodgkin’s Lymphoma
|
|
Tanezumab
(d)
|
An anti-nerve growth factor monoclonal antibody for the treatment of pain
(on clinical hold)
|
|
Tofacitinib
|
A JAK kinase inhibitor for the treatment of rheumatoid arthritis and psoriasis
|
|
(a)
|
Our collaboration with Janssen AI on bapineuzumab, a potential treatment for mild-to-moderate Alzheimer’s disease, continues with four Phase 3 studies. In December 2010, Janssen AI confirmed that enrollment was complete for its two Phase 3 primarily North American studies (301 and 302), including the biomarker sub studies. The other two Phase 3 primarily international studies (3000 and 3001) continue to enroll. In April 2010, Johnson & Johnson announced that the two Janssen AI North American studies would be completed (last patient out) in mid-2012. We announced in May 2010 that we expect that the last patient will have completed our two primarily international 18-month trials, including associated biomarker studies, in 2014.
|
|
(b)
|
In March 2010, we and Medivation, Inc. announced that a Phase 3 trial of dimebon (latrepiridine) did not meet its co-primary or secondary endpoints. Subsequently, we and Medivation, Inc. agreed to discontinue the CONSTELLATION and CONTACT Phase 3 trials in patients with moderate-to-severe Alzheimer’s disease. The two companies continue to investigate dimebon's potential clinical benefit in the 12-month Phase 3 CONCERT trial in patients with mild-to-moderate Alzheimer’s disease. In December 2010, we and Medivation, Inc. announced that patient enrollment was completed on November 30, 2010, in the CONCERT study. In April 2011, we and Medivation, Inc. announced that the Phase 3 HORIZON trial in patients with Huntington’s disease did not meet its co-primary endpoints and that, as a result, development of dimebon in Huntington’s disease has been discontinued.
|
|
(c)
|
The atrial fibrillation (AF) program of the investigational drug ELIQUIS consists of two trials. First, the data from the Phase 3 AVERROES trial demonstrated that ELIQUIS significantly reduced the relative risk of a composite stroke or systemic embolism by 55% without a significant increase in major bleeding, fatal bleeding or intracranial bleeding compared with aspirin. Minor bleeding, however, was increased compared to aspirin. Second, the Phase 3 ARISTOTLE trial investigated ELIQUIS compared to warfarin for the prevention of stroke in approximately 18,000 patients with AF and at least one additional risk factor for stroke. In June 2011, we and BMS announced that ELIQUIS met the primary efficacy objective of non-inferiority to warfarin on the combined outcome of stroke (ischemic, hemorrhagic or unspecified type) and systemic embolism. In addition, ELIQUIS met key secondary endpoints of superiority on efficacy and on ISTH (International Society on Thrombosis and Haemostasis) major bleeding compared to warfarin. We submitted a regulatory application for stroke prevention in atrial fibrillation in Europe, which was validated for review by the EMA in October 2011. Our alliance partner, BMS, expects to have an accepted filing in the U.S. for this indication by the end of 2011.
|
|
(d)
|
Following requests by the FDA in 2010, we suspended and subsequently terminated worldwide the osteoarthritis, chronic low back pain and painful diabetic peripheral neuropathy studies of tanezumab. The FDA’s requests followed a small number of reports of osteoarthritis patients treated with tanezumab who experienced the worsening of osteoarthritis leading to joint replacement and also reflected the FDA’s concerns regarding the potential for such events in other patient populations. In December 2010, the FDA placed a clinical hold on all other anti-nerve growth factor therapies under clinical investigation in the U.S., including our study for chronic pancreatitis. Studies of tanezumab in cancer pain were allowed to continue. We continue to work with the FDA to reach an understanding about the appropriate scope of continued clinical investigation of tanezumab. In July 2011, we submitted our response to the “clinical hold” letter from the FDA, and we anticipate that an FDA Arthritis Advisory Committee meeting will be held to discuss the anti-nerve growth factor class of investigational drugs.
|
|
|
●
|
lower purchase accounting adjustments;
|
|
|
●
|
lower inventory write-offs in 2011; and
|
|
|
●
|
savings associated with our cost-reduction and productivity initiatives,
|
|
|
●
|
the unfavorable impact of foreign exchange of 8% in the third quarter of 2011 and 7% in the first nine months of 2011; and
|
|
|
●
|
the addition of King’s manufacturing operations.
|
|
|
●
|
the annual fee under the 2010 U.S. Healthcare Legislation beginning in 2011;
|
|
|
●
|
the addition of legacy King operating costs; and
|
|
|
●
|
the unfavorable impact of foreign exchange of 5% in the third quarter of 2011 and 3% in the first nine months of 2011.
|
|
|
●
|
savings associated with our cost-reduction and productivity initiatives.
|
|
|
●
|
savings associated with our cost-reduction and productivity initiatives.
|
|
|
●
|
higher charges related to our cost-reduction and productivity initiatives;
|
|
|
●
|
the addition of legacy King operations; and
|
|
|
●
|
the unfavorable impact of foreign exchange of 2%.
|
|
●
|
for our cost-reduction and 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; and
|
|
●
|
for our acquisition activity, we typically incur costs that can include transaction costs, integration costs (such as expenditures for consulting and systems integration) and restructuring charges, related to employees, assets and activities that will not continue in the combined company.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Transaction costs
(a)
|
$ | 5 | $ | –– | $ | 28 | $ | 13 | ||||||||
|
Integration costs
(b)
|
187 | 231 | 567 | 650 | ||||||||||||
|
Restructuring charges
(c)
:
|
||||||||||||||||
|
Employee termination costs
|
770 | 27 | 1,626 | 603 | ||||||||||||
|
Asset impairments
|
99 | 174 | 157 | 677 | ||||||||||||
|
Other
|
40 | 67 | 96 | 147 | ||||||||||||
|
Restructuring charges and certain acquisition-related costs
|
1,101 | 499 | 2,474 | 2,090 | ||||||||||||
|
Additional depreciation––asset restructuring
(d)
:
|
||||||||||||||||
|
Cost of sales
|
68 | 241 | 411 | 367 | ||||||||||||
|
Selling, informational and administrative expenses
|
39 | 27 | 69 | 190 | ||||||||||||
|
Research and development expenses
|
146 | 25 | 378 | 45 | ||||||||||||
|
Total additional depreciation––asset restructuring
|
253 | 293 | 858 | 602 | ||||||||||||
|
Implementation costs
(e)
:
|
||||||||||||||||
|
Selling, informational and administrative expenses
|
11 | –– | 11 | –– | ||||||||||||
|
Research and development expenses
|
8 | –– | 28 | –– | ||||||||||||
|
Total implementation costs
|
19 | –– | 39 | –– | ||||||||||||
|
Total costs associated with cost-reduction initiatives and
acquisition activity
|
$ | 1,373 | $ | 792 | $ | 3,371 | $ | 2,692 | ||||||||
| (a) |
Transaction costs represent external costs directly related to business combinations and primarily include expenditures for banking, legal, accounting and other similar services.
|
| (b) |
Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and systems integration.
|
| (c) |
From the beginning of our cost-reduction and transformation initiatives in 2005 through October 2, 2011,
Employee termination costs
represent the expected reduction of the workforce by approximately 57,800 employees, mainly in manufacturing and sales and research, of which approximately 41,000 employees have been terminated as of October 2, 2011.
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.
Asset impairments
primarily include charges to write down property, plant and equipment to fair value.
Other
primarily includes costs to exit certain assets and activities.
|
|
|
●
|
For the three months ended October 2, 2011, Primary Care operating segment ($473 million), Specialty Care and Oncology operating segment ($186 million), Established Products and Emerging Markets operating segment ($65 million), Animal Health and Consumer Healthcare operating segment ($30 million), Nutrition operating segment ($2 million), research and development operations ($47 million income), manufacturing operations ($47 million) and Corporate ($153 million).
|
|
|
●
|
For the nine months ended October 2, 2011, Primary Care operating segment ($606 million), Specialty Care and Oncology operating segment ($228 million), Established Products and Emerging Markets operating segment ($80 million), Animal Health and Consumer Healthcare operating segment ($44 million), Nutrition operating segment ($4 million), research and development operations ($426 million), manufacturing operations ($203 million) and Corporate ($288 million).
|
|
|
●
|
For the three months ended October 3, 2010, Primary Care operating segment ($14 million), Specialty Care and Oncology operating segment ($53 million), Established Products and Emerging Markets operating segment ($14 million), Nutrition operating segment ($1 million), research and development operations ($17 million), manufacturing operations ($161 million) and Corporate ($8 million).
|
|
|
●
|
For the nine months ended October 3, 2010, Primary Care operating segment ($1 million), Specialty Care and Oncology operating segment ($99 million), Established Products and Emerging Markets operating segment ($23 million), Animal Health and Consumer Healthcare operating segment ($33 million), Nutrition operating segment ($12 million income), research and development operations ($239 million), manufacturing operations ($970 million) and Corporate ($74 million).
|
| (d) | Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions. |
| (e) | Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and productivity initiatives. |
|
Costs Incurred
|
Activity
|
Accrual
|
||||||||||
|
(millions of dollars)
|
2005-2011 |
Through
Oct. 2,
2011
(a)
|
As of
Oct. 2,
2011
(b)
|
|||||||||
|
Employee termination costs
|
$ | 10,437 | $ | 7,720 | $ | 2,717 | ||||||
|
Asset impairments
|
2,465 | 2,465 | –– | |||||||||
|
Other
|
996 | 889 | 107 | |||||||||
|
Total restructuring charges
|
$ | 13,898 | $ | 11,074 | $ | 2,824 | ||||||
| (a) |
Includes adjustments for foreign currency translation.
|
| (b) |
Included in
Other current liabilities
($1.7 billion) and
Other noncurrent liabilities
($1.1 billion).
|
|
|
●
|
higher 2010 impairment charges ($1.5 billion (pre-tax) in the third quarter of 2010) related to certain intangible assets acquired as part of the Wyeth acquisition in the third quarter of 2010 (see below); and
|
|
|
●
|
a $701 million (pre-tax) charge for asbestos litigation related to our wholly owned subsidiary, Quigley Company, Inc., in the third quarter of 2010.
|
|
|
●
|
higher 2010 impairment charges ($1.7 billion (pre-tax) in the first nine months of 2010) related to certain intangible assets acquired as part of the Wyeth acquisition (see below).
|
|
|
●
|
the extension of the U.S. research and development credit, which was signed into law on December 17, 2010;
|
|
|
●
|
the decrease and jurisdictional mix of certain impairment charges related to assets acquired in connection with the Wyeth acquisition; and
|
|
|
●
|
the change in the jurisdictional mix of earnings.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Revenues
|
$ | 116 | $ | 176 | $ | 507 | $ | 545 | ||||||||
|
Pre-tax (loss)/income from discontinued operations
|
$ | (7 | ) | $ | 29 | $ | 78 | $ | 106 | |||||||
|
Provision for taxes on income
(a)
|
6 | 3 | 39 | 30 | ||||||||||||
|
(Loss)/income from discontinued operations––net of tax
|
(13 | ) | 26 | 39 | 76 | |||||||||||
|
Pre-tax gain/(loss) on sale of discontinued operations
|
1,695 | (12 | ) | 1,683 | (9 | ) | ||||||||||
|
Provision/(benefit) for taxes on income
(b)
|
367 | (1 | ) | 367 | –– | |||||||||||
|
Discontinued operations––net of tax
|
$ | 1,315 | $ | 15 | $ | 1,355 | $ | 67 | ||||||||
| (a) |
Includes a deferred tax expense of $13 million for the first nine months of 2011.
|
| (b) |
Includes a deferred tax expense of $162 million for the third quarter and first nine months of 2011.
|
|
●
|
senior management receives a monthly analysis of our operating results that is prepared on an Adjusted income basis;
|
|
●
|
our annual budgets are prepared on an Adjusted income basis; and
|
|
●
|
senior management’s annual compensation is derived, in part, using this Adjusted income measure. Adjusted income is one of the performance metrics utilized in the determination of bonuses under the Pfizer Inc. Executive Annual Incentive Plan that is designed to limit the bonuses payable to the Executive Leadership Team (ELT) for purposes of Internal Revenue Code Section 162(m). Subject to the Section 162(m) limitation, the bonuses are funded from a pool based on the achievement of three financial metrics, including adjusted diluted earnings per share, which is derived from Adjusted income. Beginning in 2011, this metric which is derived from Adjusted income will account for 40% of the bonus pool made available to ELT members and other members of senior management and will constitute a factor in determining each of these individual’s bonus.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
||||||||||||||||||
|
Reported net income attributable to Pfizer Inc.
|
$ | 3,738 | $ | 866 | * | $ | 8,570 | $ | 5,367 | 60 | ||||||||||||||
|
Purchase accounting adjustments––net of tax
|
1,264 | 1,247 | 1 | 3,878 | 4,933 | (21 | ) | |||||||||||||||||
|
Acquisition-related costs––net of tax
|
242 | 559 | (57 | ) | 1,144 | 1,996 | (43 | ) | ||||||||||||||||
|
Discontinued operations––net of tax
|
(1,315 | ) | (15 | ) | * | (1,355 | ) | (67 | ) | * | ||||||||||||||
|
Certain significant items––net of tax
|
891 | 1,695 | (47 | ) | 2,117 | 1,912 | 11 | |||||||||||||||||
|
Adjusted income
(a)
|
$ | 4,820 | $ | 4,352 | 11 | $ | 14,354 | $ | 14,141 | 2 | ||||||||||||||
| (a) |
The effective tax rate on Adjusted income was 30.9% in the third quarter of 2011, compared with 30.2% in the same period last year. For the first nine months of 2011 the effective tax rate on Adjusted income was 29.3%, compared to 30.7% in the same period last year. The changes in the effective tax rate on Adjusted income were primarily due to the extension of the U.S. research and development credit that was signed into law in December 2010, as well as a change in the jurisdictional mix of earnings.
|
| * |
Calculation not meaningful.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
% Incr./
(Decr.)
|
||||||||||||||||||
|
Earnings per common share––diluted
(a)
:
|
||||||||||||||||||||||||
|
Reported net income attributable to Pfizer Inc. common shareholders
|
$ | 0.48 | $ | 0.11 | * | $ | 1.08 | $ | 0.66 | 64 | ||||||||||||||
|
Purchase accounting adjustments––net of tax
|
0.16 | 0.15 | 7 | 0.49 | 0.61 | (20 | ) | |||||||||||||||||
|
Acquisition-related costs––net of tax
|
0.03 | 0.07 | (57 | ) | 0.14 | 0.25 | (44 | ) | ||||||||||||||||
|
Discontinued operations––net of tax
|
(0.17 | ) | –– | * | (0.17 | ) | (0.01 | ) | * | |||||||||||||||
|
Certain significant items––net of tax
|
0.11 | 0.21 | (48 | ) | 0.27 | 0.24 | 13 | |||||||||||||||||
|
Adjusted net income attributable to Pfizer Inc. common shareholders
|
$ | 0.62 | $ | 0.54 | 15 | 1.81 | $ | 1.75 | 3 | |||||||||||||||
| (a) |
EPS amounts may not add due to rounding.
|
| * |
Calculation not meaningful.
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Oct. 2,
2011
|
Oct. 3,
2010
|
||||||||||||
|
Purchase accounting adjustments
:
|
||||||||||||||||
|
Amortization, depreciation and other
(a)
|
$ | 1,422 | $ | 1,138 | $ | 4,146 | $ | 3,926 | ||||||||
|
Cost of sales, primarily related to fair value adjustments of
acquired inventory
|
289 | 487 | 1,086 | 2,564 | ||||||||||||
|
In-process research and development charges
(b)
|
–– | –– | –– | 74 | ||||||||||||
|
Total purchase accounting adjustments, pre-tax
|
1,711 | 1,625 | 5,232 | 6,564 | ||||||||||||
|
Income taxes
|
447 | 378 | 1,354 | 1,631 | ||||||||||||
|
Total purchase accounting adjustments––net of tax
|
1,264 | 1,247 | 3,878 | 4,933 | ||||||||||||
|
Acquisition-related costs:
|
||||||||||||||||
|
Transaction costs
(c)
|
5 | –– | 28 | 13 | ||||||||||||
|
Integration costs
(c)
|
187 | 231 | 567 | 650 | ||||||||||||
|
Restructuring charges
(c)
|
19 | 268 | 415 | 1,427 | ||||||||||||
|
Additional depreciation––asset restructuring
(d)
|
90 | 293 | 461 | 602 | ||||||||||||
|
Total acquisition-related costs, pre-tax
|
301 | 792 | 1,471 | 2,692 | ||||||||||||
|
Income taxes
|
59 | 233 | 327 | 696 | ||||||||||||
|
Total acquisition-related costs––net of tax
|
242 | 559 | 1,144 | 1,996 | ||||||||||||
|
Discontinued operations:
|
||||||||||||||||
|
Loss/(income) from operations––net of tax
|
13 | (26 | ) | (39 | ) | (76 | ) | |||||||||
|
(Gain)/loss on sale of discontinued operations
|
(1,328 | ) | 11 | (1,316 | ) | 9 | ||||||||||
|
Total discontinued operations––net of tax
|
(1,315 | ) | (15 | ) | (1,355 | ) | (67 | ) | ||||||||
|
Certain significant items:
|
||||||||||||||||
|
Restructuring charges––cost-reduction and productivity
initiatives
(c)
|
890 | –– | 1,464 | –– | ||||||||||||
|
Implementation costs and additional depreciation––asset
restructuring––cost-reduction and productivity initiatives
(e)
|
182 | –– | 436 | –– | ||||||||||||
|
Certain legal matters
(f)
|
132 | 701 | 657 | 843 | ||||||||||||
|
Certain asset impairment charges
(g)
|
105 | 1,468 | 582 | 1,668 | ||||||||||||
|
Inventory write-off
(h)
|
(1 | ) | 212 | 11 | 212 | |||||||||||
|
Other
(i)
|
2 | 32 | 26 | (32 | ) | |||||||||||
|
Total certain significant items, pre-tax
|
1,310 | 2,413 | 3,176 | 2,691 | ||||||||||||
|
Income taxes
|
419 | 718 | 1,059 | 779 | ||||||||||||
|
Total certain significant items––net of tax
|
891 | 1,695 | 2,117 | 1,912 | ||||||||||||
|
Total purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items––net of tax
|
$ | 1,082 | $ | 3,486 | $ | 5,784 | $ | 8,774 | ||||||||
| (a) |
Included primarily in
Amortization of intangible assets.
|
| (b) | Included in Acquisition-related in-process research and development charges. |
| (c) | Included in Restructuring charges and certain acquisition-related costs ( see Notes to Condensed Consolidated Financial Statements— Note 5.Costs Associated with Cost-Reduction and Productivity Initiatives and Acquisition Activity ). |
| (d) |
Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions.
|
|
For the third quarter of 2011, included in
Cost of sales
($68 million),
Selling, informational and administrative expenses
($17 million) and in
Research and Development expenses
($5 million). For the third quarter of 2010, included in
Cost of sales
($241 million),
Selling, informational and administrative expenses
($27 million) and
Research and development expenses
($25 million).
|
|
| For the first nine months of 2011, included in Cost of sales ($411 million), Selling, informational and administrative expenses ($41 million), and Research and development expenses ($9 million). For the first nine months of 2010, included in Cost of sales ($367 million), Selling, informational and administrative expenses ($190 million) and Research and development expenses ($45 million). | |
| (e) | Included in Selling, informational and administrative expenses ($33 million) and Research and development expenses ($149 million) for the three months ended October 2, 2011. Included in Selling, informational and administrative expenses ($39 million) and Research and development expenses ($397 million) for the nine months ended October 2, 2011. |
| (f) | Included in Other deductions––net. In the first nine months of 2011, primarily relates to charges for hormone-replacement therapy litigation. In both periods of 2010, primarily includes a charge for asbestos litigation related to our wholly owned subsidiary Quigley Company, Inc. |
| (g) | Included in Other deductions––net . In 2011 and 2010, primarily relates to certain Wyeth assets, including in-process research and development (IPR&D) intangible assets. |
| (h) | Included in Cost of sales . In 2010, primarily relates to unfinished inventory acquired as part of the Wyeth acquisition that became unusable after the acquisition date. |
| (i) |
Primarily included in
Other deductions––net
.
|
|
Nine Months Ended
|
||||||||||||
|
(millions of dollars)
|
Oct. 2,
2011
|
Oct. 3,
2010
|
Incr./
(Decr.)
|
|||||||||
|
Cash provided by operating activities
|
$ | 14,979 | $ | 5,196 | 9,783 | |||||||
|
Cash provided by investing activities
|
1,301 | 5,153 | (3,852 | ) | ||||||||
|
Cash used in financing activities
|
(14,357 | ) | (10,095 | ) | (4,262 | ) | ||||||
|
|
●
|
the significant income tax payments made in the first nine months of 2010 of approximately $11.5 billion ($10.0 billion more than in 2011) associated with certain business decisions executed to finance the Wyeth acquisition, including the decision to repatriate certain funds earned outside the U.S.; and
|
|
|
●
|
the timing of receipts and payments in the ordinary course of business.
|
|
|
●
|
net proceeds from redemption and sales of investments of $2.6 billion in the first nine months of 2011, which were used to finance our acquisition of King, compared to net proceeds from redemption and sales of investments of $5.6 billion in the first nine months of 2010, which were used for repayment of short-term borrowings and income tax payments in 2010; and
|
|
|
●
|
cash paid of $3.2 billion, net of cash acquired, for our acquisition of King in 2011 (see Notes to Condensed Consolidated Financial Statements
–
Note 3. Acquisition of King Pharmaceuticals, Inc.
),
|
|
|
●
|
proceeds of $2.4 billion received from the sale of Capsugel (see Notes to Condensed Consolidated Financial Statements
–
Note 4. Discontinued Operations
).
|
|
|
●
|
purchases of common stock of $5.8 billion in the first nine months of 2011, compared to purchases of $1.0 billion in the first nine months of 2010,
|
|
|
●
|
net repayments of borrowings of $3.9 billion in the first nine months of 2011, compared to net repayments of borrowings of $4.6 billion in the first nine months of 2010.
|
|
(millions of dollars)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Financial assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 3,706 | $ | 1,735 | ||||
|
Short-term investments
|
25,257 | 26,277 | ||||||
|
Short-term loans
|
184 | 467 | ||||||
|
Long-term investments and loans
|
9,468 | 9,747 | ||||||
|
Total financial assets
|
$ | 38,615 | $ | 38,226 | ||||
|
Debt:
|
||||||||
|
Short-term borrowings, including current portion of long-term debt
|
$ | 5,637 | $ | 5,603 | ||||
|
Long-term debt
|
35,399 | 38,410 | ||||||
|
Total debt
|
$ | 41,036 | $ | 44,013 | ||||
|
Net financial liabilities
|
$ | (2,421 | ) | $ | (5,787 | ) | ||
|
|
●
|
the working capital requirements of our operations, including our research and development activities;
|
|
|
●
|
investments in our business;
|
|
|
●
|
dividend payments and potential increases in the dividend rate;
|
|
|
●
|
share repurchases, including our plan to repurchase between approximately $7 billion and $9 billion of our common stock in 2011;
|
|
|
●
|
the cash requirements associated with our productivity/cost-reduction initiatives;
|
|
|
●
|
paying down outstanding debt;
|
|
|
●
|
contributions to our pension and postretirement plans; and
|
|
|
●
|
business-development activities.
|
|
(millions of dollars, except ratios and per common share data)
|
Oct. 2,
2011
|
Dec. 31,
2010
|
||||||
|
Cash, cash equivalents and short-term investments
(a)
|
$ | 28,963 | $ | 28,012 | ||||
|
Working capital
(b)
|
$ | 34,876 | $ | 32,377 | ||||
|
Ratio of current assets to current liabilities
|
2.25:1
|
2.13:1
|
||||||
|
Shareholders’ equity per common share
(c)
|
$ | 11.65 | $ | 10.96 | ||||
| (a) |
See Notes to Condensed Consolidated Financial Statements––
Note 9. Financial Instruments
for a description of assets held and for a description of credit risk related to our financial instruments held.
|
| (b) |
Working capital includes assets of discontinued operations and other assets held for sale of $122 million as of October 2, 2011 and $1.4 billion as of December 31, 2010. Working capital also includes liabilities of discontinued operations of $151 million as of December 31, 2010.
|
| (c) |
Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury shares and shares held by our employee benefit trust).
|
|
●
|
Success of research and development activities including, without limitation, the ability to meet anticipated clinical trial completion dates, regulatory submission and approval dates, and launch dates for product candidates;
|
|
●
|
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;
|
|
●
|
Speed with which regulatory authorizations, pricing approvals and product launches may be achieved;
|
|
●
|
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;
|
|
●
|
Ability to meet generic and branded competition after the loss of patent protection for our products or competitor products;
|
|
●
|
Ability to successfully market both new and existing products domestically and internationally;
|
|
●
|
Difficulties or delays in manufacturing;
|
|
●
|
Trade buying patterns;
|
|
●
|
Impact of existing and future legislation and regulatory provisions on product exclusivity;
|
|
●
|
Trends toward managed care and healthcare cost containment;
|
|
●
|
Impact of U.S. Budget Control Act of 2011 (the Budget Control Act) and the deficit-reduction actions to be taken pursuant to the Budget Control Act in order to achieve the deficit-reduction targets provided for therein;
|
|
●
|
Impact of U.S. healthcare legislation enacted in 2010—the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act––and of any modification, repeal or invalidation of any of the provisions thereof;
|
|
●
|
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 including, in particular, continued government-mandated price reductions for certain biopharmaceutical products in certain European and emerging market countries;
|
|
●
|
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, the risk of an adverse decision or settlement and the adequacy of reserves related to product liability; patent protection; government investigations; consumer, commercial, securities, environmental and tax issues; ongoing efforts to explore various means for resolving asbestos litigation; and other legal proceedings;
|
|
●
|
Ability to protect our 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, without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside of the U.S. that result from the enactment in August 2010 of the Education Jobs and Medicaid Assistance Act of 2010 and 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 challenging 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
|
|
●
|
Impact of acquisitions, divestitures, restructurings, product withdrawals and other unusual items, including (i) our ability to successfully implement our plans, announced on February 1, 2011, regarding the Company’s research and development function, including the planned exit from the Company’s Sandwich, U.K. site, subject to works council and union consultations; (ii) our ability to realize the projected benefits of our acquisitions of Wyeth; (iii) our ability to realize the projected benefits of our cost-reduction and productivity initiatives, including those related to the Wyeth integration and to our research and development function; and (iv) the impact of the strategic alternatives that we decide to pursue for our Animal Health and Nutrition businesses.
|
|
Period
|
Total Number of
Shares Purchased
(b)
|
Average Price
Paid per Share
(b)
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan
(a)
|
Approximate Dollar
Value of Shares That
May Yet Be Purchased
Under the Plan
(a)
|
|
July 4, 2011, through July 31, 2011
|
29,514,313
|
$20.18
|
29,474,600
|
$4,759,572,160
|
|
August 1, 2011, through August 28, 2011
|
39,525,190
|
$18.01
|
39,414,641
|
$4,049,644,440
|
|
August 29, 2011, through
October 2, 2011
|
44,117,666
|
$18.30
|
43,982,940
|
$3,244,724,625
|
|
Total
|
113,157,169
|
$18.69
|
112,872,181
|
| (a) | On January 23, 2008, we announced that the Board of Directors had authorized a $5 billion share-purchase plan (the 2008 Stock Purchase Plan) to be utilized from time to time. On February 1, 2011, we announced that the Board of Directors had authorized a new $5 billion share-repurchase plan (the 2011 Stock Purchase Plan). |
| (b) | In addition to purchases under the 2008 Stock Purchase Plan and the 2011 Stock Purchase Plan, these columns reflect the following transactions during the third fiscal quarter of 2011: (i) the surrender to Pfizer of 276,125 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock and restricted stock units issued to employees, and (ii) the surrender to Pfizer of 8,863 shares of common stock to satisfy tax withholding obligations in connection with the vesting of performance-contingent share awards issued to employees. |
|
1) Exhibit 12
|
-
|
Computation of Ratio of Earnings to Fixed Charges
|
|
|
2) Exhibit 15
|
-
|
Accountants’ Acknowledgement
|
|
|
3) Exhibit 31.1
|
-
|
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
4) Exhibit 31.2
|
-
|
Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
5) Exhibit 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
|
|
|
6) Exhibit 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
|
|
|
7) Exhibit 101:
|
|||
|
EX-101.INS
EX-101.SCH
EX-101.CAL
EX-101.LAB
EX-101.PRE
EX-101.DEF
|
XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
XBRL Taxonomy Extension Definition Document
|
|
Pfizer Inc.
|
|
|
(Registrant)
|
|
|
Dated: November 10, 2011
|
/s/ Loretta V. Cangialosi
|
|
Loretta V. Cangialosi, Senior Vice President and
Controller
(Principal Accounting Officer and
Duly Authorized Officer)
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|