PFIZER INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
(State of Incorporation)
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13-5315170
(I.R.S. Employer Identification No.)
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Large Accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
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Three Months Ended
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||||||||
(millions, except per common share data)
|
April 4,
2010
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Mar. 29,
2009
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||||||
Revenues
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$ | 16,750 | $ | 10,867 | ||||
Costs and expenses:
|
||||||||
Cost of sales(a)
|
4,306 | 1,408 | ||||||
Selling, informational and administrative expenses(a)
|
4,436 | 2,876 | ||||||
Research and development expenses(a)
|
2,226 | 1,705 | ||||||
Amortization of intangible assets
|
1,409 | 578 | ||||||
Acquisition-related in-process research and development charges
|
74 | – | ||||||
Restructuring charges and certain acquisition-related costs
|
706 | 554 | ||||||
Other (income)/deductions––net
|
414 | (57 | ) | |||||
Income from continuing operations before provision for taxes on income
|
3,179 | 3,803 | ||||||
Provision for taxes on income
|
1,146 | 1,074 | ||||||
Income from continuing operations
|
2,033 | 2,729 | ||||||
Discontinued operations – net of tax
|
2 | 1 | ||||||
Net income before allocation to noncontrolling interests
|
2,035 | 2,730 | ||||||
Less: Net income attributable to noncontrolling interests
|
9 | 1 | ||||||
Net income attributable to Pfizer Inc.
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$ | 2,026 | $ | 2,729 | ||||
Earnings per common share––basic:
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
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$ | 0.25 | $ | 0.41 | ||||
Discontinued operations––net of tax
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–– | –– | ||||||
Net income attributable to Pfizer Inc. common shareholders
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$ | 0.25 | $ | 0.41 | ||||
Earnings per common share––diluted:
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
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$ | 0.25 | $ | 0.40 | ||||
Discontinued operations––net of tax
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–– | –– | ||||||
Net income attributable to Pfizer Inc. common shareholders
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$ | 0.25 | $ | 0.40 | ||||
Weighted-average shares used to calculate earnings per common share:
|
||||||||
Basic
|
8,061 | 6,723 | ||||||
Diluted
|
8,101 | 6,753 | ||||||
Cash dividends paid per common share
|
$ | 0.18 | $ | 0.32 |
(a)
|
Exclusive of amortization of intangible assets, except as disclosed in Note 8B. Goodwill and Other Intangible Assets: Other Intangible Assets.
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(millions of dollars)
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April 4,
2010*
|
Dec. 31,
2009**
|
||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 1,759 | $ | 1,978 | ||||
Short-term investments
|
15,503 | 23,991 | ||||||
Accounts receivable, less allowance for doubtful accounts
|
13,611 | 14,645 | ||||||
Short-term loans
|
919 | 1,195 | ||||||
Inventories
|
10,132 | 12,403 | ||||||
Current deferred tax assets and other current assets
|
7,502 | 6,962 | ||||||
Assets held for sale
|
490 | 496 | ||||||
Total current assets
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49,916 | 61,670 | ||||||
Long-term investments and loans
|
12,081 | 13,122 | ||||||
Property, plant and equipment, less accumulated depreciation
|
21,651 | 22,780 | ||||||
Goodwill
|
42,648 | 42,376 | ||||||
Identifiable intangible assets, less accumulated amortization
|
64,480 | 68,015 | ||||||
Noncurrent deferred tax assets and other noncurrent assets
|
4,337 | 4,986 | ||||||
Total assets
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$ | 195,113 | $ | 212,949 | ||||
Liabilities and Shareholders’ Equity
|
||||||||
Short-term borrowings, including current portion of long-term debt
|
$ | 7,769 | $ | 5,469 | ||||
Accounts payable
|
3,028 | 4,370 | ||||||
Dividends payable
|
1 | 1,454 | ||||||
Income taxes payable
|
765 | 10,107 | ||||||
Accrued compensation and related items
|
2,060 | 2,242 | ||||||
Current deferred tax liabilities and other current liabilities
|
12,301 | 13,583 | ||||||
Total current liabilities
|
25,924 | 37,225 | ||||||
Long-term debt
|
38,281 | 43,193 | ||||||
Pension benefit obligations
|
6,119 | 6,392 | ||||||
Postretirement benefit obligations
|
3,239 | 3,243 | ||||||
Noncurrent deferred tax liabilities
|
17,460 | 17,839 | ||||||
Other taxes payable
|
8,338 | 9,000 | ||||||
Other noncurrent liabilities
|
5,670 | 5,611 | ||||||
Total liabilities
|
105,031 | 122,503 | ||||||
Preferred stock
|
58 | 61 | ||||||
Common stock
|
443 | 443 | ||||||
Additional paid-in capital
|
70,456 | 70,497 | ||||||
Employee benefit trusts
|
(89 | ) | (333 | ) | ||||
Treasury stock
|
(21,697 | ) | (21,632 | ) | ||||
Retained earnings
|
42,429 | 40,426 | ||||||
Accumulated other comprehensive income/(loss)
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(1,941 | ) | 552 | |||||
Total Pfizer Inc. shareholders’ equity
|
89,659 | 90,014 | ||||||
Equity attributable to noncontrolling interests
|
423 | 432 | ||||||
Total shareholders’ equity
|
90,082 | 90,446 | ||||||
Total liabilities and shareholders’ equity
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$ | 195,113 | $ | 212,949 |
*
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Unaudited.
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**
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Condensed from audited financial statements.
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Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Operating Activities:
|
||||||||
Net income before allocation to noncontrolling interests
|
$ | 2,035 | $ | 2,730 | ||||
Adjustments to reconcile net income before allocation to noncontrolling interests to net
cash (used in)/provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,051 | 1,008 | ||||||
Share-based compensation expense
|
138 | 71 | ||||||
Acquisition-related in-process research and development charges
|
74 | –– | ||||||
Deferred taxes from continuing operations
|
840 | 533 | ||||||
Other non-cash adjustments
|
319 | (296 | ) | |||||
Changes in assets and liabilities, net of acquisitions and divestitures
|
(11,817 | ) | (899 | ) | ||||
Net cash (used in)/provided by operating activities
|
(6,360 | ) | 3,147 | |||||
Investing Activities:
|
||||||||
Purchases of property, plant and equipment
|
(305 | ) | (253 | ) | ||||
Purchases of short-term investments
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(2,178 | ) | (17,724 | ) | ||||
Proceeds from redemptions and sales of short-term investments
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11,388 | 6,711 | ||||||
Purchases of long-term investments
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(858 | ) | (3,442 | ) | ||||
Proceeds from redemptions and sales of long-term investments
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1,127 | 889 | ||||||
Other investing activities
|
220 | 185 | ||||||
Net cash provided by/(used in) investing activities
|
9,394 | (13,634 | ) | |||||
Financing Activities:
|
||||||||
Increase in short-term borrowings
|
1,892 | 10,774 | ||||||
Principal payments on short-term borrowings
|
(3,663 | ) | (12,100 | ) | ||||
Proceeds from issuances of long-term debt
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2 | 13,392 | ||||||
Principal payments on long-term debt
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(9 | ) | (303 | ) | ||||
Cash dividends paid
|
(1,441 | ) | (2,133 | ) | ||||
Other financing activities
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8 | 5 | ||||||
Net cash (used in)/provided by financing activities
|
(3,211 | ) | 9,635 | |||||
Effect of exchange-rate changes on cash and cash equivalents
|
(42 | ) | (23 | ) | ||||
Net decrease in cash and cash equivalents
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(219 | ) | (875 | ) | ||||
Cash and cash equivalents at beginning of period
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1,978 | 2,122 | ||||||
Cash and cash equivalents at end of period
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$ | 1,759 | $ | 1,247 | ||||
Supplemental Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes
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$ | 10,547 | $ | 454 | ||||
Interest
|
792 | 84 |
·
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An amendment to the recognition and measurement guidance for the transfers of financial assets.
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·
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An amendment to the guidelines for determining the primary beneficiary in a variable interest entity.
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(millions of dollars)
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Amounts Recognized
as of Acquisition Date
(as previously reported)
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Measurement
Period
Adjustments
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Amounts Recognized
as of Acquisition Date
(as adjusted)
|
|||||||||
Working capital, excluding inventories
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$ | 16,342 | $ | –– | $ | 16,342 | ||||||
Inventories
|
8,388 | (167 | ) | 8,221 | ||||||||
Property, plant and equipment
|
10,054 | (171 | ) | 9,883 | ||||||||
Identifiable intangible assets, excluding
in-process research and development (a)
|
37,595 | (452 | ) | 37,143 | ||||||||
In-process research and development (a)
|
14,918 | (956 | ) | 13,962 | ||||||||
Other noncurrent assets
|
2,394 | –– | 2,394 | |||||||||
Long-term debt
|
(11,187 | ) | –– | (11,187 | ) | |||||||
Benefit obligations
|
(3,211 | ) | –– | (3,211 | ) | |||||||
Net tax accounts
|
(24,773 | ) | 761 | (24,012 | ) | |||||||
Other noncurrent liabilities
|
(1,908 | ) | –– | (1,908 | ) | |||||||
Total identifiable net assets
|
48,612 | (985 | ) | 47,627 | ||||||||
Goodwill
|
19,954 | 985 | 20,939 | |||||||||
Net assets acquired
|
68,566 | –– | 68,566 | |||||||||
Less: Amounts attributable to
noncontrolling interests
|
(330 | ) | –– | (330 | ) | |||||||
Total consideration transferred
|
$ | 68,236 | $ | –– | $ | 68,236 |
(a)
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The measurement period adjustments for Identifiable intangible assets reflect changes in the estimated fair value of certain acquired intangibles, principally in-process research and development assets, primarily to better reflect market participant assumptions about facts and circumstances existing as of the acquisition date. The measurement period adjustments did not result from intervening events subsequent to the acquisition date.
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·
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Amounts for intangibles and inventory, pending finalization of valuation efforts.
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·
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Amounts for legal contingencies, pending the finalization of our examination and evaluation of the portfolio of filed cases.
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·
|
Amounts for income tax assets, receivables and liabilities pending the filing of Wyeth pre-acquisition tax returns, including all required disclosures and documentation, as well as the receipt of information from taxing authorities which may change certain estimates and assumptions used.
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·
|
The allocation of goodwill among reporting units.
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Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Transaction costs(a)
|
$ | 9 | $ | 369 | ||||
Integration costs(b)
|
208 | 28 | ||||||
Restructuring charges(c)
|
489 | 157 | ||||||
Restructuring charges and certain acquisition-related costs
|
706 | 554 | ||||||
Additional depreciation––asset restructuring(d)
|
93 | 90 | ||||||
Implementation costs(e)
|
–– | 84 | ||||||
Total
|
$ | 799 | $ | 728 |
(a)
|
Transaction costs represent external costs directly related to effecting the acquisition of Wyeth and primarily include expenditures for banking, legal, accounting and other similar services. Substantially all of the costs incurred in the first quarter of 2009 were fees related to a $22.5 billion bridge term loan credit agreement entered into with certain financial institutions on March 12, 2009 to partially fund our acquisition of Wyeth. The bridge term loan credit agreement was terminated in June 2009 as a result of our issuance of approximately $24.0 billion of senior unsecured notes in the first half of 2009.
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(b)
|
Integration costs represent external, incremental costs directly related to integrating Wyeth and primarily include expenditures for consulting and systems integration.
|
(c)
|
Restructuring charges include the following:
|
Costs Incurred
|
||||||||||||||||||||
Three Months Ended
|
Activity
|
Accrual
|
||||||||||||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
2005-2010 |
Through
April 4,
2010(1)
|
As of
April 4,
2010(2)
|
|||||||||||||||
Employee termination costs
|
$ | 458 | $ | 135 | $ | 8,179 | $ | 5,276 | $ | 2,903 | ||||||||||
Asset impairments
|
6 | 18 | 1,458 | 1,458 | –– | |||||||||||||||
Other
|
25 | 4 | 735 | 631 | 104 | |||||||||||||||
Total restructuring charges
|
$ | 489 | $ | 157 | $ | 10,372 | $ | 7,365 | $ | 3,007 |
(1)
|
Includes adjustments for foreign currency translation.
|
(2)
|
Included in Current deferred tax liabilities and other current liabilities ($2.0 billion) and Other noncurrent liabilities ($1.0 billion).
|
(d)
|
Additional depreciation – asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions and are included in our condensed consolidated statements of income as follows:
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Cost of sales
|
$ | 13 | $ | 63 | ||||
Selling, informational and administrative expenses
|
60 | 6 | ||||||
Research and development expenses
|
20 | 21 | ||||||
Total
|
$ | 93 | $ | 90 |
(e)
|
Implementation costs in the first quarter of 2009 represent external, incremental costs directly related to implementing cost-reduction initiatives prior to our acquisition of Wyeth, and primarily include expenditures related to system and process standardization and the expansion of shared services. For the three months ended March 29, 2009, implementation costs are included in Cost of sales ($13 million), Selling, informational and administrative expenses ($40 million), Research and development expenses ($20 million) and Other (income)/deductions––net ($11 million).
|
(millions of dollars)
|
April 4,
2010
|
Dec. 31,
2009
|
||||||
Selected financial assets measured at fair value on a recurring basis (a) :
|
||||||||
Trading securities (b)
|
$ | 168 | $ | 184 | ||||
Available-for-sale debt securities(c)
|
23,787 | 32,338 | ||||||
Available-for-sale money market funds(d)
|
1,484 | 2,569 | ||||||
Available-for-sale equity securities, excluding money market funds(c)
|
243 | 281 | ||||||
Derivative financial instruments in receivable positions(e):
|
||||||||
Foreign currency swaps
|
400 | 798 | ||||||
Interest rate swaps
|
315 | 276 | ||||||
Foreign currency forward-exchange contracts
|
284 | 502 | ||||||
Total
|
26,681 | 36,948 | ||||||
Other selected financial assets(f):
|
||||||||
Short-term loans, carried at cost (g)
|
919 | 1,195 | ||||||
Held-to-maturity debt securities, carried at amortized cost(c)
|
642 | 812 | ||||||
Private equity securities, carried at cost or equity method (h)
|
858 | 811 | ||||||
Long-term loans, carried at cost(g)
|
782 | 784 | ||||||
Total
|
3,201 | 3,602 | ||||||
Total selected financial assets (i)
|
$ | 29,882 | $ | 40,550 | ||||
Financial liabilities measured at fair value on a recurring basis(a):
|
||||||||
Derivative financial instruments in a liability position(j):
|
||||||||
Foreign currency forward-exchange contracts
|
$ | 351 | $ | 237 | ||||
Foreign currency swaps
|
221 | 528 | ||||||
Interest rate swaps
|
73 | 25 | ||||||
Total
|
645 | 790 | ||||||
Other financial liabilities (k):
|
||||||||
Short-term borrowings, carried at historical proceeds, as adjusted(f), (l)
|
7,769 | 5,469 | ||||||
Long-term debt, carried at historical proceeds, as adjusted(m), (n)
|
38,281 | 43,193 | ||||||
Total
|
46,050 | 48,662 | ||||||
Total selected financial liabilities
|
$ | 46,695 | $ | 49,452 |
(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. Virtually 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 $93 million as of April 4, 2010 and $77 million as of December 31, 2009 of investments that use Level 1 inputs in the calculation of fair value. None of our financial assets and liabilities measured at fair value on a recurring basis are valued using Level 3 inputs as of April 4, 2010 or December 31, 2009.
|
(b)
|
Trading securities are held in trust for legacy Pharmacia severance benefits.
|
(c)
|
Gross unrealized gains and losses are not significant.
|
(d)
|
Includes approximately $1.2 billion of money market funds held in escrow to secure certain of Wyeth’s payment obligations under its 1999 Nationwide Class Action Settlement Agreement, which relates to litigation against Wyeth concerning its former weight-loss products, Redux and Pondimin (see Note 5G. Financial Instruments: Guarantee).
|
(e)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward-exchange contracts with fair values of $150 million and foreign currency swaps with fair values of $36 million as of April 4, 2010; and foreign currency swaps with fair values of $106 million and foreign currency forward-exchange contracts with fair values of $100 million at December 31, 2009.
|
(f)
|
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 as of April 4, 2010 or December 31, 2009.
|
(g)
|
Our short-term and long-term loans are due from companies with highly rated securities (Standard & Poor’s (S&P) ratings of mostly AA or better).
|
(h)
|
Our private equity securities represent investments in the life sciences sector.
|
(i)
|
The decrease in selected financial assets is primarily due to the use of proceeds of short-term investments for tax payments made in the first quarter of 2010, associated with certain business decisions executed to finance the Wyeth acquisition.
|
(j)
|
Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency forward exchange contracts with fair values of $157 million and foreign currency swaps with fair values of $72 million as of April 4, 2010; and foreign currency forward-exchange contracts with fair values of $122 million and foreign currency swaps with fair values of $3 million as of December 31, 2009.
|
(k)
|
The carrying amounts may include adjustments for discount or premium amortization or for the effect of interest rate swaps designated as hedges.
|
(l)
|
Includes foreign currency borrowings with fair values of $2.3 billion at April 4, 2010 and $1.1 billion as of December 31, 2009, which are used as hedging instruments.
|
(m)
|
Includes foreign currency debt with fair value of $754 million as of April 4, 2010 and $2.1 billion as of December 31, 2009, which is used as a hedging instrument.
|
(n)
|
The fair value of our long-term debt is $41.7 billion as of April 4, 2010 and $46.2 billion as of December 31, 2009.
|
·
|
Trading equity securities––quoted market prices.
|
·
|
Trading debt securities––observable market interest rates.
|
·
|
Available-for-sale debt securities––third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate curves.
|
·
|
Available-for-sale money market funds––observable prices.
|
·
|
Available-for-sale equity securities, excluding money market funds––third-party pricing services that principally use a composite of observable prices.
|
·
|
Derivative financial instruments (assets and liabilities)–– third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data. Where applicable, these models discount future cash flow amounts using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies. The credit risk impact to our derivative financial instruments was not significant.
|
·
|
Held-to-maturity debt securities–– third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable market data and credit-adjusted interest rate curves.
|
·
|
Short-term and long-term loans–– third-party model that discounts future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
|
·
|
Private equity securities––application of the implied volatility associated with an observable biotech index to the carrying amount of our portfolio and, to a lesser extent, performance multiples of comparable securities adjusted for company-specific information.
|
·
|
Short-term borrowings and long-term debt–– third-party matrix-pricing model that uses significant inputs derived from or collaborated by observable market data and our own credit rating.
|
(millions of dollars)
|
April 4,
2010
|
Dec. 31,
2009
|
||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 380 | $ | 666 | ||||
Short-term investments
|
15,503 | 23,991 | ||||||
Short-term loans
|
919 | 1,195 | ||||||
Long-term investments and loans
|
12,081 | 13,122 | ||||||
Current deferred tax assets and other current assets(a)
|
313 | 526 | ||||||
Noncurrent deferred tax assets and other noncurrent assets(b)
|
686 | 1,050 | ||||||
Total
|
$ | 29,882 | $ | 40,550 | ||||
Liabilities
|
||||||||
Short-term borrowings, including current portion of long-term debt
|
$ | 7,769 | $ | 5,469 | ||||
Current deferred tax liabilities and other current liabilities(c)
|
414 | 369 | ||||||
Long-term debt
|
38,281 | 43,193 | ||||||
Other noncurrent liabilities(d)
|
231 | 421 | ||||||
Total
|
$ | 46,695 | $ | 49,452 |
(a)
|
As of April 4, 2010, derivative instruments at fair value include foreign currency forward-exchange contracts ($284 million) and foreign currency swaps ($29 million) and as of December 31, 2009, include foreign currency forward-exchange contracts ($503 million) and foreign currency swaps ($23 million).
|
(b)
|
As of April 4, 2010, derivative instruments at fair value include foreign currency swaps ($371 million) and interest rate swaps ($315 million) and as of December 31, 2009, include foreign currency swaps ($774 million) and interest rate swaps ($276 million).
|
(c)
|
As of April 4, 2010, derivative instruments at fair value include foreign currency forward-exchange contracts ($351 million) and foreign currency swaps ($63 million) and as of December 31, 2009, include foreign currency forward-exchange contracts ($237 million) and foreign currency swaps ($132 million).
|
(d)
|
As of April 4, 2010, derivative instruments at fair value include foreign currency swaps ($158 million) and interest rate swaps ($73 million) and as of December 31, 2009, include foreign currency swaps ($396 million) and interest rate swaps ($25 million).
|
Years
|
||||||||||||
(millions of dollars)
|
Within 1
|
Over 1
to 5
|
Total as of
April 4,
2010
|
|||||||||
Available-for-sale debt securities:
|
||||||||||||
Western European and other government debt
|
$ | 9,157 | $ | 2,576 | $ | 11,733 | ||||||
Western European and other government agency debt
|
2,678 | 266 | 2,944 | |||||||||
Corporate debt(a)
|
996 | 1,885 | 2,881 | |||||||||
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association asset-backed securities
|
102 | 2,531 | 2,633 | |||||||||
Reverse repurchase agreements(b)
|
1,263 | –– | 1,263 | |||||||||
U.S. government Federal Deposit Insurance Corporation guaranteed debt
|
–– | 1,101 | 1,101 | |||||||||
Supranational debt
|
636 | 386 | 1,022 | |||||||||
Other asset-backed securities
|
33 | 125 | 158 | |||||||||
Certificates of deposit
|
52 | –– | 52 | |||||||||
Held-to-maturity debt securities:
|
||||||||||||
Certificates of deposit and other
|
636 | 6 | 642 | |||||||||
Total debt securities
|
$ | 15,553 | $ | 8,876 | $ | 24,429 | ||||||
Trading securities
|
168 | |||||||||||
Available-for-sale money market funds(c)
|
1,484 | |||||||||||
Available-for-sale equity securities, excluding money market funds
|
243 | |||||||||||
Total
|
$ | 26,324 |
(a)
|
Largely issued by above-investment-grade institutions in the financial services sector.
|
(b)
|
Very short-term agreements involving U.S. government securities.
|
(c)
|
Consisting of securities issued by the U.S. government and its agencies or instrumentalities and reverse repurchase agreements involving the same investments held.
|
Gains/(Losses)
|
||||||||
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4, 2010
|
Mar. 29, 2009
|
||||||
Derivative Financial Instruments in Fair Value Hedge Relationships
|
||||||||
Interest rate swaps
|
||||||||
Recognized in OID(a)
|
$ | –– | $ | (284 | ) | |||
Foreign currency swaps
|
||||||||
Recognized in OID(a)
|
–– | (1 | ) | |||||
Derivative Financial Instruments in Cash Flow Hedge Relationships
|
||||||||
U.S. Treasury interest rate locks
|
||||||||
Recognized in OID(a)
|
$ | –– | $ | (11 | ) | |||
Recognized in OCI(a), (b)
|
–– | (15 | ) | |||||
Reclassified from OCI to OID(a), (b)
|
–– | –– | ||||||
Foreign currency swaps
|
||||||||
Recognized in OID(a)
|
–– | –– | ||||||
Recognized in OCI(a), (b)
|
(438 | ) | (19 | ) | ||||
Reclassified from OCI to OID(a), (b)
|
(628 | ) | –– | |||||
Foreign currency forward exchange contracts
|
||||||||
Recognized in OID(a)
|
–– | –– | ||||||
Recognized in OCI(a), (b)
|
–– | 2 | ||||||
Reclassified from OCI to OID(a), (b)
|
1 | 10 | ||||||
Derivative Financial Instruments in Net Investment Hedge Relationships
|
||||||||
Foreign currency swaps
|
||||||||
Recognized in OID(a)
|
$ | 1 | $ | (2 | ) | |||
Recognized in OCI(a), (b)
|
11 | 53 | ||||||
Derivative Financial Instruments Not Designated as Hedges
|
||||||||
Foreign currency swaps
|
||||||||
Recognized in OID(a)
|
$ | 4 | $ | (5 | ) | |||
Foreign currency forward-exchange contracts
|
||||||||
Recognized in OID(a)
|
(890 | ) | (255 | ) | ||||
Non-Derivative Financial Instruments in Net Investment Hedge Relationships
|
||||||||
Foreign currency short-term borrowings
|
||||||||
Recognized in OID(a)
|
$ | –– | $ | –– | ||||
Recognized in OCI(a), (b)
|
31 | 110 | ||||||
Foreign currency long-term debt
|
||||||||
Recognized in OID(a)
|
–– | –– | ||||||
Recognized in OCI(a), (b)
|
16 | 158 |
(a)
|
OID = Other (income)/deductions––net. OCI = Other comprehensive income/(expense), a balance sheet account.
|
(b)
|
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/(expense) – Net unrealized gains/(losses) on derivative financial instruments. For derivative financial instruments in net investment hedge relationships and for foreign currency debt designated as hedging instruments, the effective portion is included in Other comprehensive income/(expense)––Currency translation adjustment.
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Net income before allocation to noncontrolling interests
|
$ | 2,035 | $ | 2,730 | ||||
Other comprehensive income/(loss):
|
||||||||
Currency translation adjustment and other
|
(2,747 | ) | (384 | ) | ||||
Net unrealized gains/(losses) on derivative financial instruments
|
134 | (23 | ) | |||||
Net unrealized gains/(losses) on available-for-sale securities
|
(15 | ) | 145 | |||||
Benefit plan adjustments
|
117 | 159 | ||||||
Total other comprehensive loss
|
(2,511 | ) | (103 | ) | ||||
Total comprehensive (loss)/income before allocation to noncontrolling interests
|
(476 | ) | 2,627 | |||||
Less: Comprehensive (loss)/income attributable to noncontrolling interests
|
(9 | ) | 2 | |||||
Comprehensive (loss)/income attributable to Pfizer Inc.
|
$ | (467 | ) | $ | 2,625 |
(millions of dollars)
|
April 4,
2010
|
Dec. 31,
2009
|
||||||
Finished goods
|
$ | 4,535 | $ | 5,249 | ||||
Work-in-process
|
4,233 | 5,776 | ||||||
Raw materials and supplies
|
1,364 | 1,378 | ||||||
Total inventories(a)
|
$ | 10,132 | $ | 12,403 |
(a)
|
The decrease in total inventories is primarily due to the inventory sold during the first quarter of 2010 that was acquired from Wyeth and had been recorded at fair value, as well as operational reductions and the impact of foreign exchange. Certain amounts of inventories are in excess of one year’s supply. These excess amounts are primarily attributable to biologics inventory acquired from Wyeth and recorded at fair value and the quantities are generally consistent with the normal operating cycle of such inventory. There are no recoverability issues associated with these quantities.
|
(millions of dollars)
|
Biopharmaceutical
|
Diversified
|
Other
|
Total
|
||||||||||||
Balance, December 31, 2009(a)
|
$ | 22,165 | $ | 173 | $ | 20,038 | $ | 42,376 | ||||||||
Additions
|
–– | 18 | 985 | (b) | 1,003 | |||||||||||
Other(c)
|
(570 | ) | (3 | ) | (158 | ) | (731 | ) | ||||||||
Balance, April 4, 2010
|
$ | 21,595 | $ | 188 | $ | 20,865 | $ | 42,648 |
(a)
|
The Other goodwill relates to our acquisition of Wyeth and is subject to change until we complete the recording of the assets acquired and liabilities assumed from Wyeth (see Note 3. Acquisition of Wyeth). The allocation of Wyeth goodwill among the Biopharmaceutical and Diversified segments has not yet been completed, but will be completed within one year of the acquisition date.
|
(b)
|
Reflects the impact of measurement period adjustments (see Note 3. Acquisition of Wyeth).
|
(c)
|
Primarily reflects the impact of foreign exchange.
|
April 4, 2010
|
December 31, 2009
|
|||||||||||||||||||||||
(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
|
$ | 68,416 | $ | (22,417 | ) | $ | 45,999 | $ | 68,870 | $ | (21,223 | ) | $ | 47,647 | ||||||||||
Brands
|
1,627 | (563 | ) | 1,064 | 1,637 | (535 | ) | 1,102 | ||||||||||||||||
License agreements
|
620 | (148 | ) | 472 | 622 | (119 | ) | 503 | ||||||||||||||||
Trademarks
|
107 | (69 | ) | 38 | 113 | (73 | ) | 40 | ||||||||||||||||
Other
|
425 | (228 | ) | 197 | 488 | (231 | ) | 257 | ||||||||||||||||
Total amortized finite-lived
|
||||||||||||||||||||||||
intangible assets
|
71,195 | (23,425 | ) | 47,770 | 71,730 | (22,181 | ) | 49,549 | ||||||||||||||||
Indefinite-lived intangible assets:
|
||||||||||||||||||||||||
Brands
|
12,462 | –– | 12,462 | 12,562 | –– | 12,562 | ||||||||||||||||||
In-process research and development (a)
|
4,178 | –– | 4,178 | 5,834 | –– | 5,834 | ||||||||||||||||||
Trademarks
|
70 | –– | 70 | 70 | –– | 70 | ||||||||||||||||||
Total indefinite-lived
|
||||||||||||||||||||||||
intangible assets
|
16,710 | –– | 16,710 | 18,466 | –– | 18,466 | ||||||||||||||||||
Total identifiable intangible assets(b)
|
$ | 87,905 | $ | (23,425 | ) | $ | 64,480 | $ | 90,196 | $ | (22,181 | ) | $ | 68,015 |
(a)
|
Decrease is primarily related to the impact of measurement period adjustments (see Note 3. Acquisition of Wyeth).
|
(b)
|
Decrease is primarily related to amortization of finite-lived intangible assets, the impact of measurement period adjustments (see Note 3. Acquisition of Wyeth) and the impact of foreign exchange.
|
Pension Plans
|
||||||||||||||||||||||||||||||||
U.S.
Qualified
|
U.S.
Supplemental
(Non-Qualified)
|
International
|
Postretirement
Plans
|
|||||||||||||||||||||||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
April 4,
2010
|
Mar. 29,
2009
|
April 4,
2010
|
Mar. 29,
2009
|
April 4,
2010
|
Mar. 29,
2009
|
||||||||||||||||||||||||
Three Months Ended:
|
||||||||||||||||||||||||||||||||
Service cost
|
$ | 94 | $ | 59 | $ | 8 | $ | 5 | $ | 60 | $ | 45 | $ | 22 | $ | 8 | ||||||||||||||||
Interest cost
|
191 | 119 | 19 | 13 | 111 | 78 | 54 | 30 | ||||||||||||||||||||||||
Expected return on plan assets
|
(202 | ) | (118 | ) | –– | –– | (112 | ) | (86 | ) | (8 | ) | (6 | ) | ||||||||||||||||||
Amortization of:
|
||||||||||||||||||||||||||||||||
Actuarial losses
|
38 | 57 | 7 | 8 | 17 | 6 | –– | 4 | ||||||||||||||||||||||||
Prior service costs/(credits)
|
–– | 1 | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (4 | ) | (1 | ) | ||||||||||||||||||
Curtailments and settlements––net
|
(33 | ) | 24 | (1 | ) | 7 | 1 | 2 | –– | 5 | ||||||||||||||||||||||
Special termination benefits
|
14 | 13 | 90 | –– | 1 | 1 | 6 | 12 | ||||||||||||||||||||||||
Net periodic benefit costs
|
$ | 102 | $ | 155 | $ | 122 | $ | 32 | $ | 77 | $ | 45 | $ | 70 | $ | 52 |
Three Months Ended
|
||||||||
(millions)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
EPS Numerator––Basic:
|
||||||||
Income from continuing operations attributable to Pfizer Inc.
|
$ | 2,024 | $ | 2,728 | ||||
Less: Preferred stock dividends––net of tax
|
1 | –– | ||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
2,023 | 2,728 | ||||||
Discontinued operations––net of tax
|
2 | 1 | ||||||
Net income attributable to Pfizer Inc. common shareholders
|
$ | 2,025 | $ | 2,729 | ||||
EPS Denominator––Basic:
|
||||||||
Weighted-average number of common shares outstanding
|
8,061 | 6,723 | ||||||
EPS Numerator––Diluted:
|
||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
$ | 2,024 | $ | 2,728 | ||||
Discontinued operations––net of tax
|
2 | 1 | ||||||
Net income attributable to Pfizer Inc. common shareholders
|
$ | 2,026 | $ | 2,729 | ||||
EPS Denominator––Diluted:
|
||||||||
Weighted-average number of common shares outstanding
|
8,061 | 6,723 | ||||||
Common-share equivalents: stock options, stock issuable under employee compensation
plans and convertible preferred stock
|
40 | 30 | ||||||
Weighted-average number of common shares outstanding and common-share equivalents
|
8,101 | 6,753 | ||||||
Stock options that had exercise prices greater than the average market price of our common
stock issuable under employee compensation plans(a)
|
366 | 475 |
(a)
|
These common stock equivalents were outstanding during the first quarters of 2010 and 2009, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.
|
·
|
Biopharmaceutical consists of the Primary Care, Specialty Care, Oncology, Established Products and Emerging Markets customer-focused units and includes products that prevent and treat cardiovascular and metabolic diseases, central nervous system disorders, arthritis and pain, infectious and respiratory diseases, urogenital conditions, cancer, eye diseases and endocrine disorders, among others. Biopharmaceutical’s segment profit includes costs related to research and development, manufacturing, and sales and marketing activities that are associated with the products in our Biopharmaceutical segment.
|
·
|
Diversified includes Animal Health products that prevent and treat diseases in livestock and companion animals, including vaccines, parasiticides and anti-infectives; Consumer Healthcare products that include over-the-counter healthcare products such as pain management therapies (analgesics and heat wraps), cough/cold/allergy remedies, dietary supplements, hemorrhoidal care and personal care items; Nutrition products such as infant and toddler nutritional products; and Capsugel, which represents our capsule products and services business. Diversified’s segment profit includes costs related to research and development, manufacturing, and sales and marketing activities that are associated with the products in our Diversified segment.
|
Three Months Ended(a)
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Revenues
|
||||||||
Biopharmaceutical
|
$ | 14,506 | $ | 10,102 | ||||
Diversified
|
2,141 | 691 | ||||||
Corporate/Other(b)
|
103 | 74 | ||||||
Total revenues
|
$ | 16,750 | $ | 10,867 | ||||
Segment profit/(loss)(c)
|
||||||||
Biopharmaceutical
|
$ | 7,912 | $ | 5,407 | ||||
Diversified
|
510 | 163 | ||||||
Corporate/Other(b), (d)
|
(5,243 | ) | (1,767 | ) | ||||
Total profit/(loss)
|
$ | 3,179 | $ | 3,803 |
(a)
|
Includes revenues and profit/(loss) from legacy Wyeth products and operations for the three months ended April 4, 2010. Revenues and profit/(loss) from legacy Wyeth products and operations are not included in the three months ended March 29, 2009. Prior-period amounts for Capsugel, which were previously classified in Corporate/Other, are now classified in Diversified.
|
(b)
|
Corporate/Other includes Pfizer Centersource, which includes contract manufacturing and bulk pharmaceutical chemical sales. Corporate/Other under Segment profit/(loss) also includes interest income/(expense), corporate expenses (e.g., corporate administration costs), other income/(expense) (e.g., realized gains and losses attributable to our investments in debt and equity securities), certain performance-based and all share-based compensation expenses, significant impacts of purchase accounting for acquisitions, acquisition-related costs, intangible asset impairments and costs related to our cost-reduction initiatives.
|
(c)
|
Segment profit/(loss) equals Income from continuing operations before provision for taxes on income. Certain costs, such as significant impacts of purchase accounting for acquisitions, acquisition-related costs and costs related to our cost-reduction initiatives are included in Corporate/Other only. This methodology is utilized by management to evaluate our businesses.
|
(d)
|
For the first quarter of 2010, Corporate/Other includes: (i) significant impacts of purchase accounting for acquisitions of $2.8 billion, including intangible asset amortization related to our acquisitions of Wyeth in 2009 and Pharmacia in 2003 and charges related to fair value adjustments of inventory acquired from Wyeth and sold during the period; (ii) restructuring and acquisition-related costs of $799 million, primarily related to our acquisition of Wyeth; (iii) all share-based compensation expense; and (iv) net interest expense of $410 million. For the first quarter of 2009, Corporate/Other includes: (i) significant impacts of purchase accounting for acquisitions of $546 million, including intangible asset amortization and other charges, primarily related to our acquisition of Pharmacia in 2003; (ii) acquisition-related costs of $397 million, primarily related to our acquisition of Wyeth; (iii) restructuring charges and implementation costs associated with our cost-reduction initiatives of $331 million; (iv) all share-based compensation expense; and (v) net interest income of $116.
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Biopharmaceutical products:
|
||||||||
Lipitor
|
$ | 2,757 | $ | 2,721 | ||||
Enbrel(a), (c)
|
802 | –– | ||||||
Lyrica
|
723 | 684 | ||||||
Effexor(a)
|
716 | –– | ||||||
Celebrex
|
570 | 564 | ||||||
Prevnar/Prevenar 7(a)
|
520 | –– | ||||||
Viagra
|
479 | 454 | ||||||
Xalatan/Xalacom
|
422 | 407 | ||||||
Norvasc
|
368 | 481 | ||||||
Zyvox
|
292 | 283 | ||||||
Prevnar/Prevenar 13(a)
|
286 | –– | ||||||
Zosyn/Tazocin(a)
|
264 | –– | ||||||
Detrol/Detrol LA
|
261 | 289 | ||||||
Sutent
|
259 | 202 | ||||||
Premarin family(a)
|
256 | –– | ||||||
Geodon/Zeldox
|
254 | 230 | ||||||
Genotropin
|
206 | 197 | ||||||
Chantix/Champix
|
189 | 177 | ||||||
Vfend
|
188 | 179 | ||||||
BeneFIX(a)
|
154 | –– | ||||||
Caduet
|
135 | 134 | ||||||
Aromasin
|
128 | 110 | ||||||
Zoloft
|
120 | 115 | ||||||
Revatio
|
114 | 113 | ||||||
Medrol
|
109 | 118 | ||||||
Cardura
|
107 | 107 | ||||||
Aricept(b)
|
107 | 95 | ||||||
Zithromax/Zmax
|
103 | 114 | ||||||
ReFacto/Xyntha(a)
|
90 | –– | ||||||
All other(d)
|
2,523 | 1,746 | ||||||
Alliance revenues (Enbrel (in the U.S. and Canada)(a), Aricept, Exforge, Rebif and Spiriva)
|
1,004 | 582 | ||||||
Total Biopharmaceutical products
|
14,506 | 10,102 | ||||||
Diversified products:
|
||||||||
Animal Health products(d)
|
846 | 537 | ||||||
Consumer Healthcare products(a)
|
663 | –– | ||||||
Nutrition products(a)
|
458 | –– | ||||||
Capsugel(e)
|
174 | 154 | ||||||
Total Diversified products
|
2,141 | 691 | ||||||
Corporate/Other
|
103 | 74 | ||||||
Total revenues
|
$ | 16,750 | $ | 10,867 |
(a)
|
Represents legacy Wyeth products for the three months ended April 4, 2010. Legacy Wyeth products are not included in the three months ended March 29, 2009.
|
(b)
|
Represents direct sales under license agreement with Eisai. Co. Ltd.
|
(c)
|
Outside the U.S. and Canada.
|
(d)
|
Includes legacy Pfizer and legacy Wyeth products for the three months ended April 4, 2010 and includes only legacy Pfizer products in the three months ended March 29, 2009.
|
(e)
|
Prior-period amounts for Capsugel, which were previously classified in Corporate/Other, are now classified in Diversified.
|
Three Months Ended(a)
|
||||||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
% Change
|
|||||||||
Revenues
|
||||||||||||
United States
|
$ | 7,314 | $ | 4,969 | 47 | |||||||
Europe
|
4,785 | 3,005 | 59 | |||||||||
Japan/Other Asia
|
2,659 | 1,738 | 53 | |||||||||
Canada/Latin America/Africa/Middle East
|
1,992 | 1,155 | 72 | |||||||||
Total Revenues
|
$ | 16,750 | $ | 10,867 | 54 |
(a)
|
Includes revenues from legacy Wyeth products for the three months ended April 4, 2010. Revenues from legacy Wyeth products are not included in the three months ended March 29, 2009.
|
·
|
higher amortization charges, primarily related to intangible assets acquired in connection with the acquisition of Wyeth, and the mix of jurisdictions in which those charges were incurred;
|
·
|
the write-off of the deferred tax asset of approximately $270 million related to the Medicare Part D subsidy for retiree prescription drug coverage, resulting from changes in the U.S. healthcare legislation enacted in March 2010 concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012;
|
·
|
the expiration of the U.S. research tax credit; and
|
·
|
the increase in non-deductible in-process research and development charges.
|
·
|
Overview of Our Performance and Operating Environment. This section, beginning on page 23, provides information about the following: our business; our performance during the first quarter of 2010; the anticipated impacts of the recently enacted healthcare legislation in the U.S.; our operating environment; and our strategic initiatives.
|
·
|
Acquisition of Wyeth. This section, beginning on page 26, discusses our 2009 acquisition of Wyeth and adjustments made in the first quarter of 2010 to the provisional allocation of the purchase price. For additional information see Notes to Condensed Consolidated Financial Statements––Note 3. Acquisition of Wyeth.
|
·
|
Revenues. This section, beginning on page 27, provides an analysis of our products and revenues for the first quarters of 2010 and 2009, as well as an overview of important product developments.
|
·
|
Costs and Expenses. This section, beginning on page 36, provides a discussion about our costs and expenses.
|
·
|
Provision for Taxes on Income. This section, on page 39, provides a discussion of items impacting our tax provision for the periods presented.
|
·
|
Adjusted Income. This section, beginning on page 39, provides a discussion of an alternative view of performance used by management.
|
·
|
Financial Condition, Liquidity and Capital Resources. This section, beginning on page 43, provides an analysis of our balance sheets as of April 4, 2010 and December 31, 2009 and cash flows for the first quarters of 2010 and 2009, as well as a discussion of our outstanding debt and commitments that existed as of April 4, 2010, and December 31, 2009. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future activities.
|
·
|
Our Financial Guidance for 2010 and Our Financial Targets for 2012. These sections, beginning on page 45, provide a discussion of our financial guidance for full-year 2010 and our financial targets for full-year 2012.
|
·
|
Forward-Looking Information and Factors That May Affect Future Results. This section, beginning on page 46, 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 results, operations and business plans and prospects. Such forward-looking statements are based on management’s current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. Also included in this section is a discussion of legal proceedings and contingencies.
|
Three Months Ended
|
||||||||||||
(millions of dollars, except per common share data)
|
April 4,
2010
|
Mar. 29,
2009
|
% Change
|
|||||||||
Revenues
|
$ | 16,750 | $ | 10,867 | 54 | |||||||
Cost of sales
|
4,306 | 1,408 | 206 | |||||||||
% of revenues
|
25.7 | % | 13.0 | % | ||||||||
Selling, informational and administrative expenses
|
4,436 | 2,876 | 54 | |||||||||
% of revenues
|
26.5 | % | 26.5 | % | ||||||||
Research and development expenses
|
2,226 | 1,705 | 31 | |||||||||
% of revenues
|
13.3 | % | 15.7 | % | ||||||||
Amortization of intangible assets
|
1,409 | 578 | 144 | |||||||||
% of revenues
|
8.4 | % | 5.3 | % | ||||||||
Acquisition-related in-process research and development charges
|
74 | –– | * | |||||||||
% of revenues
|
0.4 | % | –– | % | ||||||||
Restructuring charges and certain acquisition-related costs
|
706 | 554 | 27 | |||||||||
% of revenues
|
4.2 | % | 5.1 | % | ||||||||
Other (income)/deductions––net
|
414 | (57 | ) | * | ||||||||
Income from continuing operations before provision for taxes on income
|
3,179 | 3,803 | (16 | ) | ||||||||
% of revenues
|
19.0 | % | 35.0 | % | ||||||||
Provision for taxes on income
|
1,146 | 1,074 | 7 | |||||||||
Effective tax rate
|
36.0 | % | 28.2 | % | ||||||||
Income from continuing operations
|
2,033 | 2,729 | (26 | ) | ||||||||
% of revenues
|
12.1 | % | 25.1 | % | ||||||||
Discontinued operations––net of tax
|
2 | 1 | 35 | |||||||||
Net income before allocation to noncontrolling interests
|
2,035 | 2,730 | (26 | ) | ||||||||
% of revenues
|
12.1 | % | 25.1 | % | ||||||||
Less: Net income attributable to noncontrolling interests
|
9 | 1 | * | |||||||||
Net income attributable to Pfizer Inc.
|
$ | 2,026 | $ | 2,729 | (26 | ) | ||||||
% of revenues
|
12.1 | % | 25.1 | % | ||||||||
Earnings per common share––basic:
|
||||||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.41 | (39 | ) | ||||||
Discontinued operations––net of tax
|
–– | –– | –– | |||||||||
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.41 | (39 | ) | ||||||
Earnings per common share––diluted:
|
||||||||||||
Income from continuing operations attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.40 | (38 | ) | ||||||
Discontinued operations––net of tax
|
–– | –– | –– | |||||||||
Net income attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.40 | (38 | ) | ||||||
Cash dividends paid per common share
|
$ | 0.18 | $ | 0.32 |
*
|
Calculation not meaningful.
|
·
|
the inclusion of revenues from legacy Wyeth products of $5.3 billion, which favorably impacted revenues by 48%; and
|
·
|
the favorable impact of foreign exchange, which increased revenues by approximately $733 million, or 7%,
|
·
|
the net revenue decrease from legacy Pfizer products of $137 million, or 1%.
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4, 2010 vs.
Mar. 29, 2009
Increase/(decrease)
|
% Change
|
||||||
Enbrel (outside the U.S. and Canada)(a)
|
$ | 802 | * | |||||
Effexor(a)
|
716 | * | ||||||
Prevnar/Prevenar 7(a)
|
520 | * | ||||||
Prevnar/Prevenar 13(a)
|
286 | * | ||||||
Zosyn/Tazocin(a)
|
264 | * | ||||||
Premarin family(a)
|
256 | * | ||||||
Hemophilia family(a)
|
244 | * | ||||||
Sutent
|
57 | 28 | ||||||
Lyrica
|
39 | 6 | ||||||
Lipitor
|
36 | 1 | ||||||
Viagra
|
25 | 5 | ||||||
Geodon
|
24 | 10 | ||||||
Detrol/Detrol LA
|
(28 | ) | (10 | ) | ||||
Camptosar(b)
|
(71 | ) | (65 | ) | ||||
Norvasc(b)
|
(113 | ) | (23 | ) | ||||
Alliance revenues(a)
|
422 | 73 | ||||||
Animal Health products(a)
|
309 | 58 | ||||||
Consumer Healthcare products(a)
|
663 | * | ||||||
Nutrition products(a)
|
458 | * |
(a)
|
First quarter 2010 reflects inclusion of revenues from legacy Wyeth products.
|
(b)
|
Camptosar lost exclusivity in Europe in July 2009. Norvasc lost exclusivity in Canada in July 2009.
|
*
|
Calculation not meaningful.
|
·
|
expenses associated with the legacy Wyeth operations;
|
·
|
the impact of Wyeth purchase accounting adjustments on Cost of sales and Amortization of intangible assets;
|
·
|
higher restructuring charges and certain acquisition-related costs;
|
·
|
higher net interest expense, mainly due to the issuance of debt in connection with the acquisition of Wyeth, as well as lower interest income; and
|
·
|
an increase in the 2010 effective tax rate (see further discussion in the “Provision For Taxes On Income” section of this MD&A),
|
·
|
increased revenues, primarily reflecting the inclusion of revenues from legacy Wyeth products.
|
·
|
an increase, from 15.1% to 23.1%, in the minimum rebate on branded prescription drugs sold to Medicaid beneficiaries (effective January 1, 2010);
|
·
|
extension of Medicaid prescription drug rebates to drugs dispensed to enrollees in certain Medicaid managed care organizations (effective March 23, 2010);
|
·
|
expansion of the types of institutions eligible for the “Section 340B discounts” for outpatient drugs provided to hospitals meeting the qualification criteria under Section 340B of the Public Health Service Act of 1944 (effective January 1, 2010);
|
·
|
discounts on branded prescription drug sales to Medicare Part D participants who are in the Medicare “coverage gap”, known as the “doughnut hole” (effective January 1, 2011); and
|
·
|
a non-deductible annual fee payable to the federal government based on a company’s prior-calendar-year share of branded prescription drug sales to specified government programs (effective January 1, 2011, with the total fee to be paid each year by the entire pharmaceutical industry increasing annually through 2018).
|
·
|
Amounts for intangibles and inventory, pending finalization of valuation efforts.
|
·
|
Amounts for legal contingencies, pending the finalization of our examination and evaluation of the portfolio of filed cases.
|
·
|
Amounts for income tax assets, receivables and liabilities pending the filing of Wyeth pre-acquisition tax returns, including all required disclosures and documentation, as well as the receipt of information from taxing authorities which may change certain estimates and assumptions used.
|
·
|
The allocation of goodwill among reporting units.
|
% Change in Revenues
|
||||||||||||||||||||||||||||||||||||
World-
|
Inter-
|
|||||||||||||||||||||||||||||||||||
Worldwide(a)
|
U.S.(a)
|
International(a)
|
wide
|
U.S.
|
national
|
|||||||||||||||||||||||||||||||
April 4,
|
Mar. 29,
|
April 4,
|
Mar. 29,
|
April 4,
|
Mar. 29,
|
|||||||||||||||||||||||||||||||
(millions of dollars)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
10/09 | 10/09 | 10/09 | |||||||||||||||||||||||||||
Three Months Ended:
|
||||||||||||||||||||||||||||||||||||
Biopharmaceutical
|
$ | 14,506 | $ | 10,102 | $ | 6,607 | $ | 4,709 | $ | 7,899 | $ | 5,393 | 44 | 40 | 46 | |||||||||||||||||||||
Diversified
|
2,141 | 691 | 663 | 238 | 1,478 | 453 | 210 | 179 | 227 | |||||||||||||||||||||||||||
Corporate/Other(b)
|
103 | 74 | 44 | 22 | 59 | 52 | 39 | 100 | 13 | |||||||||||||||||||||||||||
Total revenues
|
$ | 16,750 | $ | 10,867 | $ | 7,314 | $ | 4,969 | $ | 9,436 | $ | 5,898 | 54 | 47 | 60 |
(a)
|
Reflects the inclusion of revenues from legacy Wyeth products for the three months ended April 4, 2010. Legacy Wyeth revenues are not included in the three months ended March 29, 2009. Prior-period amounts for Capsugel, which previously were classified as Corporate/Other, now are included in Diversified.
|
(b)
|
Includes Pfizer Centersource, which includes contract manufacturing and bulk pharmaceutical chemical sales.
|
Three Months Ended(a)
|
||||||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
% Change
|
|||||||||
Biopharmaceutical:
|
||||||||||||
Primary care
|
$ | 5,866 | $ | 5,322 | 10 | |||||||
Specialty care
|
3,521 | 1,463 | 141 | |||||||||
Established products(b)
|
2,786 | 1,615 | 73 | |||||||||
Emerging markets(c)
|
1,972 | 1,352 | 46 | |||||||||
Oncology(d)
|
361 | 350 | 3 | |||||||||
Total Biopharmaceutical
|
14,506 | 10,102 | 44 | |||||||||
Diversified:
|
||||||||||||
Animal Health products
|
846 | 537 | 58 | |||||||||
Consumer Healthcare products
|
663 | –– | * | |||||||||
Nutrition products
|
458 | –– | * | |||||||||
Capsugel
|
174 | 154 | 13 | |||||||||
Total Diversified
|
2,141 | 691 | 210 | |||||||||
Corporate/Other(e)
|
103 | 74 | 39 | |||||||||
Total revenues
|
$ | 16,750 | $ | 10,867 |
(a)
|
Reflects the inclusion of revenues from legacy Wyeth products for the three months ended April 4, 2010. Legacy Wyeth revenues are not included in the three months ended March 29, 2009. Prior-period amounts for Capsugel, which previously were classified as Corporate/Other, now are included in Diversified.
|
(b)
|
The legacy Pfizer Established Products unit was negatively impacted in the first quarter of 2010 by 5% due to the loss of exclusivity for Norvasc in Canada, offset by the favorable impact of the addition of Camptosar’s European revenues as well as the reclassification of revenues from South Korea.
|
(c)
|
Revenues from South Korea were included in the Emerging Markets unit in first-quarter 2009, but are included in the developed market units, as appropriate, beginning first-quarter 2010, which negatively impacted the legacy Pfizer Emerging Markets unit’s revenues by 5%.
|
(d)
|
Legacy Pfizer Oncology unit revenues in first-quarter 2010 no longer include Camptosar’s European revenues due to its loss of exclusivity in July 2009. The reclassification of those revenues to the Established Products unit negatively impacted the Oncology unit’s performance by 24% in first-quarter 2010 compared to the same period last year.
|
(e)
|
Includes Pfizer Centersource, which includes contract manufacturing and bulk pharmaceutical chemical sales.
|
*
|
Calculation not meaningful.
|
·
|
the inclusion of revenues from legacy Wyeth products of approximately $4.1 billion, which favorably impacted Biopharmaceutical revenues by 41%;
|
·
|
the weakening of the U.S. dollar relative to other currencies, primarily the euro, Australian dollar, Canadian dollar, and Brazilian real, which favorably impacted Biopharmaceutical revenues by approximately $617 million, or 6%, and
|
·
|
solid operational performance from certain legacy Pfizer products, including Sutent, Lyrica, Viagra and Geodon, and higher legacy Pfizer alliance revenues,
|
·
|
a decrease in operational revenues, of approximately $260 million, from certain legacy Pfizer products, including Norvasc and Camptosar, as a result of loss of exclusivity, as well as from Lipitor and Detrol/Detrol LA.
|
·
|
in the U.S., Biopharmaceutical revenues increased 40% in the first quarter of 2010 compared to the same period in 2009, primarily due to the inclusion of revenues from legacy Wyeth products of approximately $2.2 billion, which favorably impacted Biopharmaceutical revenues by 47%, which was partially offset by lower revenues from certain legacy Pfizer products of $322 million, or 4%, including Lipitor, Lyrica, Detrol and Celebrex, compared to the same period in 2009, as a result of continued generic pressures. Revenues from legacy Pfizer products also were adversely affected by increased rebates partly as a result of the impact of the U.S. Healthcare Legislation, and increased pricing pressures. These factors were partially offset by the solid performance from Geodon and legacy Pfizer alliance revenues in the first quarter of 2010; and
|
·
|
in our international markets, Biopharmaceutical revenues increased 46% in the first quarter of 2010, compared to the first quarter of 2009. The increase in revenues reflects the inclusion of operational revenues from legacy Wyeth products of $1.8 billion, which favorably impacted Biopharmaceutical revenues by 34%, higher operational revenues from legacy Pfizer products of $60 million, or 1%, and the favorable impact of foreign exchange on international Biopharmaceutical revenues of $617 billion, or 11%. The increase in operational revenues of legacy Pfizer products was due to operational growth from Lipitor, Lyrica, Sutent, Celebrex, Viagra and alliance products, partially offset by lower revenues from Norvasc and Camptosar, due to loss of exclusivity, among others.
|
·
|
the inclusion of operational revenues from legacy Wyeth products of approximately $1.2 billion, which favorably impacted Diversified revenues by 179%, primarily from the addition of the legacy Wyeth Consumer Healthcare and Nutrition operations, the operational revenue increase in legacy Pfizer Diversified businesses of 15% and the favorable impact of foreign exchange of 16%.
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Medicaid and related state program rebates(a)
|
$ | 306 | $ | 150 | ||||
Medicare rebates(a)
|
276 | 230 | ||||||
Performance-based contract rebates(a), (b)
|
649 | 605 | ||||||
Chargebacks(c)
|
814 | 486 | ||||||
Total
|
$ | 2,045 | $ | 1,471 |
(a)
|
Rebates are product-specific and, therefore, for any given year are impacted by the mix of products sold.
|
(b)
|
Performance-based contracts are with managed care customers, including health maintenance organizations and pharmacy benefit managers, which 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 inclusion of rebates and chargebacks related to legacy Wyeth products;
|
·
|
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; and
|
·
|
the impact of increased chargebacks due to competitive pricing factors,
|
·
|
changes in product mix, among other factors.
|
Three Months Ended
|
|||||||||
% Change
|
|||||||||
(millions of dollars)
|
April 4,
|
From Mar. 29,
|
|||||||
Product
|
Primary Indications
|
2010
|
2009
|
||||||
Lipitor
|
Reduction of LDL cholesterol
|
$ | 2,757 | 1 | |||||
Enbrel(a), (c)
|
Rheumatoid, juvenile rheumatoid and psoriatic arthritis,
plaque psoriasis and ankylosing spondylitis
|
802 | * | ||||||
Lyrica
|
Epilepsy, post-herpetic neuralgia and diabetic
peripheral neuropathy, fibromyalgia
|
723 | 6 | ||||||
Effexor(a)
|
Depression and certain anxiety disorders
|
716 | * | ||||||
Celebrex
|
Arthritis pain and inflammation, acute pain
|
570 | 1 | ||||||
Prevnar/Prevenar 7(a)
|
Vaccine for prevention of invasive pneumococcal disease
|
520 | * | ||||||
Viagra
|
Erectile dysfunction
|
479 | 5 | ||||||
Xalatan/Xalacom
|
Glaucoma and ocular hypertension
|
422 | 4 | ||||||
Norvasc
|
Hypertension
|
368 | (23 | ) | |||||
Zyvox
|
Bacterial infections
|
292 | 3 | ||||||
Prevnar/Prevenar 13(a)
|
Vaccine for prevention of invasive pneumococcal disease
|
286 | * | ||||||
Zosyn/Tazocin(a)
|
Antibiotic
|
264 | * | ||||||
Detrol/Detrol LA
|
Overactive bladder
|
261 | (10 | ) | |||||
Sutent
|
Advanced and/or metastatic renal cell carcinoma (mRCC)
and refractory gastrointestinal stromal tumors (GIST)
|
259 | 28 | ||||||
Premarin family(a)
|
Menopause
|
256 | * | ||||||
Geodon/Zeldox
|
Schizophrenia; acute manic or mixed episodes
associated with bipolar disorder; maintenance
treatment of bipolar mania
|
254 | 10 | ||||||
Genotropin
|
Replacement of human growth hormone
|
206 | 4 | ||||||
Chantix/Champix
|
An aid to smoking cessation
|
189 | 7 | ||||||
Vfend
|
Fungal infections
|
188 | 5 | ||||||
BeneFIX(a)
|
Hemophilia
|
154 | * | ||||||
Caduet
|
Reduction of LDL cholesterol and hypertension
|
135 | –– | ||||||
Aromasin
|
Breast cancer
|
128 | 16 | ||||||
Zoloft
|
Depression and certain anxiety disorders
|
120 | 5 | ||||||
Revatio
|
Pulmonary arterial hypertension
|
114 | –– | ||||||
Medrol
|
Inflammation
|
109 | (8 | ) | |||||
Cardura
|
Hypertension/Benign prostatic hyperplasia
|
107 | –– | ||||||
Aricept(b)
|
Alzheimer’s disease
|
107 | 12 | ||||||
Zithromax/Zmax
|
Bacterial infections
|
103 | (10 | ) | |||||
ReFacto/Xyntha(a)
|
Hemophilia
|
90 | * | ||||||
All other(d)
|
Various
|
2,523 | 45 | ||||||
Alliance revenues:
|
1,004 | 73 | |||||||
Enbrel (in the U.S. and Canada)(a),
Aricept, Exforge, Rebif and Spiriva
|
Inflammation (Enbrel), Alzheimer’s disease (Aricept),
hypertension (Exforge), multiple sclerosis (Rebif)
and chronic obstructive pulmonary disease (Spiriva)
|
(a)
|
Reflects the inclusion of revenues from legacy Wyeth products in the three months ended April 4, 2010.
|
|
Revenues from legacy Wyeth products are not included in the three months ended March 29, 2009.
|
(b)
|
Represents direct sales under license agreement with Eisai Co., Ltd.
|
(c)
|
Outside the U.S. and Canada.
|
(d)
|
Includes legacy Pfizer and legacy Wyeth products in the three months ended April 4, 2010 and includes only legacy Pfizer products in the first quarter of 2009.
|
*
|
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 and the best-selling prescription pharmaceutical product of any kind in the world. Lipitor recorded worldwide revenues of $2.8 billion in the first quarter of 2010, reflecting 1% growth compared to the same period in 2009. These results, in part, reflect the favorable impact of foreign exchange, which increased revenues by $148 million, or 5%, in the first quarter of 2010, compared to the same period in 2009. In the U.S., revenues were $1.3 billion or a decrease of 10% in the first quarter of 2010 compared to the same period in 2009. Internationally, Lipitor revenues in the first quarter of 2010 were $1.4 billion, or an increase of 14%, compared to the same period in 2009, with 12% due to the favorable impact of foreign exchange.
|
|
Excluding the favorable impact of foreign exchange, the decrease in Lipitor worldwide operational revenues in the first quarter of 2010, compared to the first quarter of 2009, was driven by a combination of factors, including the following:
|
|
o |
the continuing impact of an intensely competitive lipid-lowering market with competition from multi-source generics and branded products in the U.S.;
|
|
o |
increased payer pressure in the U.S.; and
|
|
o |
slower growth in the lipid-lowering market in the U.S. due, in part, to a slower rate of growth in the Medicare Part D population and, reflecting weak economic conditions, heightened overall patient cost-sensitivity in the U.S. and adoption of non-prescription treatment options,
|
|
partially offset by:
|
|
o |
operational growth internationally.
|
|
See the “Our Operating Environment––Industry-Specific Challenges” section of this MD&A for a discussion concerning the expected loss of exclusivity for Lipitor in various markets.
|
·
|
Enbrel, for the treatment of rheumatoid arthritis, juvenile rheumatoid arthritis, psoriatic arthritis, plaque psoriasis and ankylosing spondylitis, a type of arthritis affecting the spine, recorded worldwide revenues, excluding the U.S. and Canada, of $802 million in the first quarter of 2010. Enbrel revenues from the U.S. and Canada are included in alliance revenues. The approval of competing products for the treatment of psoriasis is expected to increase competition with respect to Enbrel in 2010.
|
|
We have exclusive rights to Enbrel outside the U.S. and Canada and co-promote Enbrel with Amgen Inc. (Amgen) in the U.S. and Canada. Our co-promotion agreement with Amgen expires in October 2013, and we are entitled to a royalty stream for 36 months thereafter, which is significantly less than our current share of Enbrel profits from U.S. and Canadian sales. Our rights to Enbrel outside the U.S. and Canada will not be affected by the expiration of the co-promotion agreement.
|
·
|
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 neuropathic pain, adjunctive treatment of epilepsy and general anxiety disorder (GAD) outside the U.S., recorded an increase in worldwide revenues of 6% in the first quarter of 2010 compared to the first quarter of 2009. Lyrica had a strong operational performance in international markets in the first quarter of 2010. In the U.S., revenues have been adversely affected by increased generic competition, as well as managed care pricing and formulary pressures.
|
|
See Part II––Other Information; Item 1. Legal Proceedings, of this Form 10-Q for a discussion of certain patent litigation relating to Lyrica.
|
·
|
Effexor XR (extended release capsules), an antidepressant for treating adult patients with major depressive disorder, GAD, social anxiety disorder and panic disorder, recorded worldwide revenues of $716 million in the first quarter of 2010. Effexor XR faces generic competition outside the U.S. In the U.S., Effexor XR faces competition from a non-AB-rated (i.e., not therapeutically equivalent) generic product. Pursuant to a 2005 settlement agreement related to certain patent litigation with Wyeth, Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries, Ltd. are permitted to launch generic versions of Effexor XR in the U.S. beginning July 1, 2010, subject to possible earlier launch based on specified market conditions or developments regarding the applicable patents rights, including the outcome of other generic challenges to such patent rights.
|
·
|
Celebrex, a treatment for the signs and symptoms of osteoarthritis and rheumatoid arthritis and acute pain in adults, experienced an increase in worldwide revenues of 1% in the first quarter of 2010 compared to the same period in 2009, primarily due to the favorable impact of foreign exchange partially offset by increased generic competition. Celebrex is supported by continued educational and promotional efforts highlighting its efficacy and safety profile for appropriate patients.
|
|
See Part II––Other Information; Item 1. Legal Proceedings, of this Form 10-Q for a discussion of certain product litigation relating to Celebrex.
|
·
|
Prevnar/Prevenar 7, our 7-valent pneumococcal conjugate vaccine for preventing invasive pneumococcal disease in infants and young children, recorded worldwide revenues of $520 million in the first quarter of 2010.
|
·
|
Viagra remains the leading treatment for erectile dysfunction and one of the world’s most recognized pharmaceutical brands after more than a decade. Viagra worldwide revenues in the first quarter of 2010 increased 5% compared to the same period in 2009. In the U.S., first quarter 2010 Viagra revenues decreased 2% compared to the same period in 2009 and, internationally, revenues increased 16% compared to the first quarter of 2009 due primarily to the favorable impact of foreign exchange.
|
|
See Part II––Other Information; Item 1. Legal Proceedings, of this Form 10-Q for a discussion of certain patent and product litigation relating to Viagra.
|
·
|
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 in the first quarter of 2010 increased 4% compared to the same period in 2009, primarily due to the favorable impact of foreign exchange.
|
·
|
Norvasc, for treating hypertension, lost exclusivity in the U.S. in March 2007. Norvasc also has experienced patent expirations in other major markets, including Japan in July 2008 and most recently Canada in July 2009. Norvasc worldwide revenues in the first quarter of 2010 decreased 23% compared to the same period in 2009.
|
·
|
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 in the first quarter of 2010 increased 3% compared to the same period in 2009, primarily due to growth in emerging markets and developed markets in Europe. Revenues have been adversely affected by a decrease in the number of patients treated for pneumonia and by increased generic competition in the U.S., as well as competition from recently launched agents in certain high-volume international markets such as the U.K.
|
|
See Part II––Other Information; Item 1. Legal Proceedings, of this Form 10-Q for a discussion of certain patent litigation relating to Zyvox.
|
·
|
Prevnar/Prevenar 13, launched in Germany in late 2009 and in the U.S. in early 2010 with ongoing launches in other markets in the first quarter of 2010 and beyond, is our 13-valent pneumococcal conjugate vaccine for preventing invasive pneumococcal disease in infants and young children, recorded worldwide revenues of $286 million in the first quarter of 2010. To date, Prevnar/Prevenar 13 has been approved in over 40 countries.
|
·
|
Zosyn/Tazocin, our broad-spectrum intravenous antibiotic, faces generic competition in the U.S. and certain other markets. It recorded worldwide revenues of $264 million in the first quarter of 2010.
|
·
|
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 in the first quarter of 2010 declined 10%, compared to the same period in 2009, primarily due to increased competition from other branded medicines.
|
·
|
Sutent is for the treatment of advanced renal cell carcinoma, including metastatic renal cell carcinoma (mRCC), and gastrointestinal stromal tumors (GIST) after disease progression on, or intolerance to, imatinib mesylate. Sutent worldwide revenues increased 28% in the first quarter of 2010, compared to the same period in 2009. We continue to drive total revenue and prescription growth, supported by cost-effectiveness data and efficacy data in first-line 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 access and healthcare coverage. As of April 4, 2010, Sutent was the best-selling medicine in the world for the treatment of first-line mRCC.
|
|
On April 7, 2010, the FDA requested that we revise the product labeling for Sutent to include information regarding the risk of hepatotoxicity as a boxed warning and convert the existing patient package insert to a Medication Guide for distribution to patients who are dispensed Sutent. The FDA also requested a risk mitigation, assessment, and communication plan to ensure that the benefits of Sutent treatment continue to outweigh the risks. Revised labeling for the product, which likely will include the addition of a boxed warning to prominently communicate this information, will be issued upon completion of discussions with the FDA.
|
|
Pfizer maintains a global safety database, monitoring all sponsored clinical trials and spontaneous adverse event reports. Hepatic failure has been uncommonly observed in clinical trials (0.3%) and post-marketing experience, consistent with the very low rate of hepatic failure observed in the clinical trials of Sutent used to support original registration in 2006. Over 80,000 patients worldwide have been treated with Sutent.
|
|
The risk-benefit profile of Sutent in both mRCC and second-line GIST has been well-established through large, randomized clinical trials evaluating its safety and efficacy. Sutent remains an important treatment option for these two difficult-to-treat cancers.
|
|
See Part II––Other Information; Item 1. Legal Proceedings, of this Form 10-Q for a discussion of certain patent litigation relating to Sutent.
|
·
|
Our Premarin family of products remains the leading therapy to help women address moderate to severe menopausal symptoms. It recorded worldwide revenues of $256 million in the first quarter of 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 recorded an increase in worldwide revenues of 10% in the first quarter of 2010 compared to the same period in 2009, due in part to continued growth in the U.S. antipsychotic market, recent U.S. approval for adjunctive bipolar maintenance therapy in adults, and the favorable impact of foreign exchange.
|
·
|
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 4% in the first quarter of 2010 compared to the same period in 2009, primarily due to the favorable impact of foreign exchange.
|
·
|
Chantix/Champix, the first new prescription treatment to aid smoking cessation in nearly a decade, has been launched in all major markets. Chantix/Champix worldwide revenues in the first quarter of 2010 increased 7% compared to the same period in 2009 due to strong performance in developed markets in Europe partially offset by the impact of changes to the product’s label and other factors. 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.
|
·
|
Vfend, as the only branded agent available in intravenous and oral forms, continues to build on its position as the best-selling systemic, antifungal agent worldwide. The overall global revenues of Vfend continue to be driven by its acceptance as an excellent broad-spectrum agent for treating yeast and molds. Vfend worldwide revenues increased 5% in the first quarter of 2010 compared to the same period in 2009, primarily due to the favorable impact of foreign exchange.
|
|
In October 2009, we settled a challenge by Mylan, Inc. (Mylan) and its subsidiary, Matrix Laboratories Limited (Matrix), to four of our patents relating to Vfend by entering into an agreement granting Matrix and another subsidiary of Mylan the right to market voriconazole (generic Vfend) tablets in the U.S. beginning in the first quarter of 2011.
|
·
|
BeneFIX and ReFacto/Xyntha are our state-of-the-art hemophilia products that offer patients with this lifelong bleeding disorder the potential for a near-normal life. It recorded worldwide revenues of $244 million in the first quarter of 2010.
|
|
See Part II––Other Information; Item 1. Legal Proceedings, of this Form 10-Q for a discussion of certain patent litigation relating to ReFacto and Xyntha.
|
·
|
Caduet, a single-pill therapy combining Norvasc and Lipitor, recorded virtually flat worldwide revenues in the first quarter of 2010 compared to the same period in 2009, primarily due to increased generic competition, as well as an overall decline in U.S. hypertension market volume.
|
·
|
Revatio, for the treatment of pulmonary arterial hypertension, recorded virtually flat worldwide revenues in the first quarter of 2010 compared to the same period in 2009, primarily due to increased competition.
|
·
|
Alliance revenues increased 73% in the first quarter of 2010 compared to the same period in 2009, due to the strong performance of Spiriva, Aricept and Rebif, as well as the inclusion of sales of Enbrel, a legacy Wyeth product, in the U.S. and Canada. We expect to lose exclusivity for Aricept in the U.S. later this year.
|
Recent FDA approvals:
|
||
PRODUCT
|
INDICATION
|
DATE APPROVED
|
Prevnar 13 Infant
|
Prevention of invasive pneumococcal disease in infants and young children
|
February 2010
|
Pending U.S. new drug applications (NDA) and supplemental filings:
|
||
PRODUCT
|
INDICATION
|
DATE SUBMITTED
|
Taliglucerase alfa
|
Treatment of Gaucher’s disease
|
December 2009
|
Sutent
|
Pancreatic neuroendocrine tumor
|
December 2009
|
Genotropin
|
Adult growth hormone deficiency (Mark VII multidose disposable device)
|
October 2009
|
Celebrex
|
Chronic pain
|
August 2009
|
Lyrica
|
Generalized anxiety disorder––monotherapy
|
June 2009
|
Geodon
|
Treatment of bipolar disorder––pediatric filing
|
October 2008
|
Spiriva
|
Respimat device for chronic obstructive pulmonary disease
|
November 2007
|
Zmax
|
Treatment of bacterial infections––sustained release––acute otitis media (AOM) and sinusitis––pediatric filing
|
November 2006
|
Viviant
|
Osteoporosis treatment and prevention
|
June 2006
|
Pristiq
|
Vasomotor symptoms of menopause
|
June 2006
|
Vfend
|
Treatment of fungal infections––pediatric filing
|
June 2005
|
Thelin
|
Treatment of pulmonary arterial hypertension (PAH)
|
May 2005
|
Regulatory approvals and filings in the EU and Japan:
|
|||
PRODUCT
|
DESCRIPTION OF EVENT
|
DATE APPROVED
|
DATE SUBMITTED
|
Lyrica
|
Approval in Japan for the treatment of pain associated with post-herpetic neuralgia
|
April 2010
|
—
|
Revatio
|
Application submitted in the EU for pediatric pulmonary arterial hypertension
|
—
|
February 2010
|
Apixaban
|
Application submitted in the EU for prevention of venous thromboembolism
|
—
|
February 2010
|
Xalacom
|
Approval in Japan for the treatment of glaucoma
|
January 2010
|
—
|
Prevenar 13 Infant
|
Application submitted in Japan for prevention of invasive pneumococcal disease in infants and young children
|
—
|
December 2009
|
Sutent
|
Application submitted in the EU for treatment of pancreatic neuroendocrine tumor
|
—
|
December 2009
|
Xiaflex
|
Application submitted in the EU for treatment of Dupuytren’s contracture
|
—
|
December 2009
|
atorvastatin calcium
|
Application submitted in the EU for type II variation for atorvastatin calcium (SORTIS and associated names) for pediatric hyperlipidemia/dyslipidemia
|
—
|
November 2009
|
Toviaz
|
Application submitted in Japan for overactive bladder
|
—
|
September 2009
|
Genotropin
|
Application submitted in the EU for adult growth hormone deficiency (Mark VII multidose disposable device)
|
—
|
September 2009
|
Lyrica
|
Application submitted in Japan for neuropathic pain
|
—
|
August 2009
|
Late-stage clinical trials for additional uses and dosage forms for in-line products:
|
|
PRODUCT
|
INDICATION
|
Eraxis/Vfend Combination
|
Aspergillosis fungal infections
|
Lyrica
|
Epilepsy monotherapy; post-operative pain; central neuropathic pain due to spinal cord injury; peripheral neuropathic pain
|
Macugen
|
Diabetic macular edema
|
Prevnar/Prevenar 13 Adult
|
Prevention of invasive pneumococcal disease in adults
|
Revatio
|
Pediatric pulmonary arterial hypertension
|
Sutent
|
Non-small cell lung cancer; prostate cancer; adjuvant renal cell carcinoma
|
Zithromax/chloroquine
|
Malaria
|
New drug candidates in late-stage development in the U.S.:
|
|
CANDIDATE
|
INDICATION
|
Apixaban
|
For acute coronary syndrome, the prevention and treatment of venous thromboembolism and prevention of stroke in patients with atrial fibrillation, which is being developed in collaboration with Bristol-Myers Squibb Company (BMS)
|
Aprela (Bazedoxifene-conjugated estrogens)
|
A tissue selective estrogen complex for the treatment of menopausal vasomotor symptoms
|
Axitinib
|
Oral and selective inhibitor of vascular endothelial growth factor (VEGF) receptor 1, 2, & 3 for the treatment of advanced renal cell carcinoma.
|
Bapineuzumab
|
A beta amyloid inhibitor for the treatment of Alzheimer’s disease being developed in collaboration with Janssen Alzheimer Immunotherapy Research & Development, LLC (Janssen AI), a subsidiary of Johnson & Johnson
|
Bosutinib
|
An src kinase inhibitor for the treatment of chronic myelogenous leukemia
|
Crizotinib (PF-02341066)
|
An oral ALK and c-Met inhibitor for the treatment of advanced non-small cell lung cancer
|
Dimebon (latrepirdine)
|
A novel mitochondrial protectant and enhancer being developed in collaboration with Medivation, Inc. for the treatment of Alzheimer’s disease and Huntington’s disease
|
Moxidectin
|
Treatment of onchocerciasis (river blindness)
|
Neratinib
|
A pan-HER inhibitor for the treatment of breast cancer
|
PF-0299804
|
A pan-HER tyrosine kinase inhibitor for the treatment of advanced non-small cell lung cancer
|
Tanezumab
|
An anti-nerve growth factor monoclonal antibody for the treatment of pain
|
Tasocitinib (CP-690,550)
|
A JAK-3 kinase inhibitor for the treatment of rheumatoid arthritis
|
·
|
purchase accounting charges of approximately $1.4 billion, primarily reflecting the fair value adjustments to inventory acquired from Wyeth in 2009 that was sold in the first quarter of 2010;
|
·
|
the addition of Wyeth’s manufacturing operations; and
|
·
|
the unfavorable impact of foreign exchange on cost of sales.
|
·
|
the addition of Wyeth’s operating costs; and
|
·
|
the unfavorable impact of foreign exchange.
|
·
|
the addition of Wyeth operating costs;
|
·
|
continued investment in the late-stage development portfolio; and
|
·
|
the unfavorable impact of foreign exchange.
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Transaction costs(a)
|
$ | 9 | $ | 369 | ||||
Integration costs(b)
|
208 | 28 | ||||||
Restructuring charges(c)
|
489 | 157 | ||||||
Restructuring charges and certain acquisition-related costs
|
706 | 554 | ||||||
Additional depreciation––asset restructuring(d)
|
93 | 90 | ||||||
Implementation costs(e)
|
–– | 84 | ||||||
Total
|
$ | 799 | $ | 728 |
(a)
|
Transaction costs represent external costs directly related to effecting the acquisition of Wyeth and primarily include expenditures for banking, legal, accounting and other similar services. Substantially all of the costs incurred in the first quarter of 2009 were fees related to a $22.5 billion bridge term loan credit agreement entered into with certain financial institutions on March 12, 2009 to partially fund our acquisition of Wyeth. The bridge term loan credit agreement was terminated in June 2009 as a result of our issuance of approximately $24.0 billion of senior unsecured notes in the first half of 2009.
|
(b)
|
Integration costs represent external, incremental costs directly related to integrating Wyeth and primarily include expenditures for consulting and systems integration.
|
(c)
|
Restructuring charges include the following:
|
Costs Incurred
|
||||||||||||||||||||
Three Months Ended
|
Activity
|
Accrual
|
||||||||||||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
2005-2010 |
Through
April 4,
2010(1)
|
As of
April 4,
2010(2)
|
|||||||||||||||
Employee termination costs
|
$ | 458 | $ | 135 | $ | 8,179 | $ | 5,276 | $ | 2,903 | ||||||||||
Asset impairments
|
6 | 18 | 1,458 | 1,458 | –– | |||||||||||||||
Other
|
25 | 4 | 735 | 631 | 104 | |||||||||||||||
Total restructuring charges
|
$ | 489 | $ | 157 | $ | 10,372 | $ | 7,365 | $ | 3,007 |
|
(1)
|
Includes adjustments for foreign currency translation.
|
|
(2)
|
Included in Current deferred tax liabilities and other current liabilities ($2.0 billion) and Other noncurrent liabilities ($1.0 billion).
|
(d)
|
Additional depreciation – asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions and are included in our condensed consolidated statements of income as follows:
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Cost of sales
|
$ | 13 | $ | 63 | ||||
Selling, informational and administrative expenses
|
60 | 6 | ||||||
Research and development expenses
|
20 | 21 | ||||||
Total
|
$ | 93 | $ | 90 |
(e)
|
Implementation costs in the first quarter of 2009 represent external, incremental costs directly related to implementing cost-reduction initiatives prior to our acquisition of Wyeth and primarily include expenditures related to system and process standardization and the expansion of shared services. For the three months ended March 29, 2009, implementation costs are included in Cost of sales ($13 million), Selling, informational and administrative expenses ($40 million), Research and development expenses ($20 million) and Other (income)/deductions — net ($11 million).
|
·
|
higher interest expense of $393 million in the first quarter of 2010, primarily associated with the $13.5 billion of senior unsecured notes that we issued in March 2009 and the approximately $10.5 billion of senior unsecured notes that we issued in June 2009, to partially finance the acquisition of Wyeth;
|
·
|
lower interest income of $133 million in the first quarter of 2010, primarily due to lower interest rates coupled with lower average cash balances; and
|
·
|
slightly higher charges for litigation-related matters,
|
·
|
higher royalty-related income.
|
·
|
higher amortization charges, primarily related to intangible assets acquired in connection with the acquisition of Wyeth, and the mix of jurisdictions in which those charges were incurred;
|
·
|
the write-off of the deferred tax asset of approximately $270 million related to the Medicare Part D subsidy for retiree prescription drug coverage, resulting from changes in the U.S. Healthcare Legislation enacted in March 2010 concerning the tax treatment of that subsidy effective for tax years beginning after December 31, 2012;
|
·
|
the expiration of the U.S. research tax credit; and
|
·
|
the increase in non-deductible in-process research and development charges.
|
·
|
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 2010, these metrics derived from Adjusted income account for (i) between 7% and 13% of the target bonus for ELT members and (ii) 33% of the bonus pool made available to ELT members and other members of senior management.
|
Three Months Ended
|
||||||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
% Incr./
(Decr.)
|
|||||||||
Reported net income attributable to Pfizer Inc.
|
$ | 2,026 | $ | 2,729 | (26 | ) | ||||||
Purchase accounting adjustments––net of tax
|
2,129 | 354 | * | |||||||||
Acquisition-related costs––net of tax
|
573 | 252 | 127 | |||||||||
Discontinued operations––net of tax
|
(2 | ) | (1 | ) | 35 | |||||||
Certain significant items––net of tax
|
156 | 333 | (53 | ) | ||||||||
Adjusted income(a)
|
$ | 4,882 | $ | 3,667 | 33 |
(a)
|
The effective tax rate on Adjusted income was 30.1% in the first quarter of 2010, relatively flat compared to 29.7% in the first quarter of 2009.
|
*
|
Calculation not meaningful.
|
Three Months Ended
|
||||||||||||
April 4,
2010
|
Mar. 29,
2009
|
% Incr./
(Decr.)
|
||||||||||
Reported net income attributable to Pfizer Inc. common shareholders(a)
|
$ | 0.25 | $ | 0.40 | (38 | ) | ||||||
Purchase accounting adjustments – net of tax
|
0.26 | 0.05 | * | |||||||||
Acquisition-related costs––net of tax
|
0.07 | 0.04 | 75 | |||||||||
Discontinued operations––net of tax
|
— | — | ||||||||||
Certain significant items––net of tax
|
0.02 | 0.05 | (60 | ) | ||||||||
Adjusted net income attributable to Pfizer Inc. common shareholders(a)
|
$ | 0.60 | $ | 0.54 | 11 |
(a)
|
Reported and Adjusted diluted earnings per share in the first quarter of 2010 were impacted by the increased number of shares outstanding in comparison with the first quarter of 2009 resulting primarily from shares issued to partially fund the Wyeth acquisition.
|
*
|
Calculation not meaningful.
|
Three Months Ended
|
||||||||
(millions of dollars)
|
April 4,
2010
|
Mar. 29,
2009
|
||||||
Purchase accounting adjustments:
|
||||||||
Amortization, depreciation and other(a)
|
$ | 1,417 | $ | 546 | ||||
Cost of sales primarily related to fair value adjustments of acquired inventory
|
1,350 | — | ||||||
In-process research and development charges(b)
|
74 | — | ||||||
Total purchase accounting adjustments, pre-tax
|
2,841 | 546 | ||||||
Income taxes
|
(712 | ) | (192 | ) | ||||
Total purchase accounting adjustments––net of tax
|
2,129 | 354 | ||||||
Acquisition-related costs:
|
||||||||
Transaction costs(c)
|
9 | 369 | ||||||
Integration costs(c)
|
208 | 28 | ||||||
Restructuring charges(c)
|
489 | — | ||||||
Additional depreciation––asset restructuring(d)
|
93 | — | ||||||
Total acquisition-related costs, pre-tax
|
799 | 397 | ||||||
Income taxes
|
(226 | ) | (145 | ) | ||||
Total acquisition-related costs––net of tax
|
573 | 252 | ||||||
Total discontinued operations––net of tax
|
(2 | ) | (1 | ) | ||||
Certain significant items:
|
||||||||
Restructuring charges––cost-reduction initiatives(e)
|
— | 157 | ||||||
Implementation costs––cost-reduction initiatives(f)
|
— | 174 | ||||||
Certain legal matters(g)
|
142 | 132 | ||||||
Other
|
40 | 10 | ||||||
Total certain significant items, pre-tax
|
182 | 473 | ||||||
Income taxes
|
(26 | ) | (140 | ) | ||||
Total certain significant items––net of tax
|
156 | 333 | ||||||
Total purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items––net of tax
|
$ | 2,856 | $ | 938 |
(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.
|
(d)
|
Amount relates to certain actions taken as a result of our acquisition of Wyeth. Prior to the acquisition of Wyeth on October 15, 2009, additional depreciation for asset restructuring related to our cost-reduction initiatives was classified as a certain significant item and included in implementation costs. For the first quarter of 2010, included in Cost of sales ($13 million), Selling, informational and administrative expenses ($60 million), and Research and development expenses ($20 million).
|
(e)
|
Represents restructuring charges incurred for our cost-reduction initiatives prior to the acquisition of Wyeth on October 15, 2009. Included in Restructuring charges and certain acquisition-related costs (see Notes to Condensed Consolidated Financial Statements—Note 4. Cost-Reduction Initiatives and Acquisition-Related Costs).
|
(f)
|
Represents implementation costs incurred for our cost-reduction initiatives prior to the acquisition of Wyeth on October 15, 2009. For the first quarter of 2009, included in Cost of sales ($76 million), Selling, informational and administrativeexpenses ($46 million), Research and development expenses ($41 million) and Other (income)/deductions––net ($11 million). Includes additional depreciation for asset restructuring of $90 million in the first quarter of 2009.
|
(g)
|
Included in Other (income)/deductions––net.
|
(millions of dollars)
|
April 4,
2010
|
Dec. 31,
2009
|
||||||
Financial assets:
|
||||||||
Cash and cash equivalents
|
$ | 1,759 | $ | 1,978 | ||||
Short-term investments
|
15,503 | 23,991 | ||||||
Short-term loans
|
919 | 1,195 | ||||||
Long-term investments and loans
|
12,081 | 13,122 | ||||||
Total financial assets
|
$ | 30,262 | $ | 40,286 | ||||
Debt:
|
||||||||
Short-term borrowings, including current portion of long-term debt
|
$ | 7,769 | $ | 5,469 | ||||
Long-term debt
|
38,281 | 43,193 | ||||||
Total debt
|
$ | 46,050 | $ | 48,662 | ||||
Net financial assets/(liabilities)
|
$ | (15,788 | ) | $ | (8,376 | ) |
(millions of dollars, except ratios and per common share data)
|
April 4,
2010
|
Dec. 31,
2009
|
||||||
Cash and cash equivalents and short-term investments and loans
|
$ | 18,181 | $ | 27,164 | ||||
Working capital(a)
|
$ | 23,992 | $ | 24,445 | ||||
Ratio of current assets to current liabilities
|
1.93:1
|
1.66:1
|
||||||
Shareholders’ equity per common share(b)
|
$ | 11.12 | $ | 11.19 |
(a)
|
Working capital includes assets held for sale of $490 million as of April 4, 2010, and $496 million as of December 31, 2009.
|
(b)
|
Represents total shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury shares and shares held by our employee benefit trusts).
|
·
|
income tax payments of approximately $10.5 billion, associated with certain business decisions executed to finance the Wyeth acquisition; and
|
·
|
the timing of receipts and payments in the ordinary course of business.
|
·
|
net proceeds from redemption and sales of investments of $9.5 billion in the first quarter of 2010, which were used for tax payments in the first quarter of 2010, compared to net purchases of investments of $13.6 billion in the first quarter of 2009 primarily reflecting the investment of proceeds from our issuance of $13.5 billion of senior unsecured notes in the first quarter of 2009.
|
·
|
net repayments of borrowings of $1.8 billion in the first quarter of 2010 compared to net borrowings of $11.8 billion in the first quarter of 2009 primarily reflecting the proceeds from our issuance of $13.5 billion of senior unsecured notes in the first quarter of 2009,
|
·
|
lower dividend payments in the first quarter of 2010 compared to the first quarter of 2009.
|
Full-Year 2010 Guidance
|
||||||
($ billions, except per share amounts)
|
Net Income(a)
|
Diluted EPS(a)
|
||||
Adjusted income/diluted EPS(b) guidance
|
~$17.0-$17.8
|
~$2.10-$2.20
|
||||
Purchase accounting impacts of transactions completed as of April 4, 2010
|
(6.4) | (0.79) | ||||
Acquisition-related costs
|
(2.5-2.9) | (0.31-0.36) | ||||
Reported Net income attributable to Pfizer Inc./diluted EPS guidance
|
~$7.7-$8.9
|
~$0.95-$1.10
|
(a)
|
Amounts do not assume the completion of any business-development transactions not completed as of April 4, 2010. Amounts exclude the potential effects of the resolution of litigation-related matters not substantially resolved as of April 4, 2010.
|
(b)
|
For an understanding of Adjusted income, see the “Adjusted Income” section of this MD&A.
|
Full-Year 2012 Targets
|
||||||
($ billions, except per share amounts)
|
Net Income (a)
|
Diluted EPS (a)
|
||||
Adjusted income/diluted EPS(b) targets
|
~$18.3-$19.1
|
~$2.25-$2.35
|
||||
Purchase accounting impacts of transactions completed as of April 4, 2010
|
(3.8) | (0.47) | ||||
Acquisition-related costs
|
(1.2-1.6) | (0.15-0.20) | ||||
Reported Net income attributable to Pfizer Inc./diluted EPS targets
|
~$12.9-$14.1
|
~$1.58-$1.73
|
(a)
|
Amounts exclude the potential effects of the resolution of litigation-related matters not substantially resolved as of April 4, 2010. Given the longer-term nature of these targets, they are subject to greater variability as a result of potential material impacts related to foreign exchange fluctuations; macroeconomic activity, including inflation; and industry-specific challenges, including changes to government healthcare policy, among others.
|
(b)
|
For an understanding of Adjusted income, see the “Adjusted Income” section of this MD&A.
|
·
|
Success of research and development activities;
|
·
|
Decisions by regulatory authorities regarding whether and when to approve our drug applications, as well as their decisions regarding labeling, ingredients and other matters that could affect the availability or commercial potential of our products;
|
·
|
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 products and product candidates;
|
·
|
Ability to meet generic and branded competition after the loss of patent protection for our products and 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. Healthcare Legislation enacted in 2010––the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act;
|
·
|
U.S. legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement or access, including under Medicaid, Medicare and other publicly funded or subsidized health programs; the importation of prescription drugs from outside the U.S. at prices that are regulated by governments of various foreign countries; direct-to-consumer advertising and interactions with healthcare professionals; and the use of comparative effectiveness methodologies that could be implemented in a manner that focuses primarily on the cost differences and minimizes the therapeutic differences among pharmaceutical products and restricts access to innovative medicines;
|
·
|
Legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access;
|
·
|
Contingencies related to actual or alleged environmental contamination;
|
·
|
Claims and concerns that may arise regarding the safety or efficacy of in-line products and product candidates;
|
·
|
Significant breakdown, infiltration or interruption of our information technology systems and infrastructure;
|
·
|
Legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability, patent protection, governmental investigations, ongoing efforts to explore various means for resolving asbestos litigation, and other legal proceedings;
|
·
|
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 tax obligations and changes affecting the taxation by the U.S. of income earned outside the U.S. that may result from pending and possible future proposals;
|
·
|
Changes in U.S. generally accepted accounting principles;
|
·
|
Uncertainties related to general economic, political, business, industry, regulatory and market conditions, including, without limitation, uncertainties related to the impact on us, our lenders, our customers, our suppliers and counterparties to our foreign-exchange and interest-rate agreements of weak global economic conditions and recent and possible future changes in global financial markets;
|
·
|
Any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. and other parts of the world and related U.S. military action overseas;
|
·
|
Growth in costs and expenses;
|
·
|
Changes in our product, segment and geographic mix; and
|
·
|
Impact of acquisitions, divestitures, restructurings, product withdrawals and other unusual items, including our ability to realize the projected benefits of our acquisition of Wyeth and of our cost-reduction initiatives.
|
●
|
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 May 2010, the Federal Circuit affirmed the decision of the special master in one 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 on April 14, 2010. Petitioners in each of these latter three test cases have filed an election to bring civil action.
|
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)
|
||||||||||||
January 1, 2010, through January 31, 2010
|
37,948 | $ | 19.02 | –– | $ | 5,033,723,295 | ||||||||||
February 1, 2010, through February 28, 2010
|
3,671,867 | $ | 18.28 | –– | $ | 5,033,723,295 | ||||||||||
March 1, 2009, through April 4, 2010
|
217,474 | $ | 17.86 | –– | $ | 5,033,723,295 | ||||||||||
Total
|
3,927,289 | $ | 18.26 | –– |
(a)
|
On June 23, 2005, we announced that the Board of Directors authorized a $5 billion share-purchase plan (the “2005 Stock Purchase Plan”). On June 26, 2006, we announced that the Board of Directors increased the authorized amount of shares to be purchased under the 2005 Stock Purchase Plan from $5 billion to $18 billion. On January 23, 2008, we announced that the Board of Directors authorized a new $5 billion share-purchase plan to be utilized from time to time. In the first quarter of 2010, we did not purchase any shares of our common stock. On May 4, 2010, the Company announced that it will purchase its shares as market conditions warrant.
|
(b)
|
These columns reflect the following transactions during the fiscal first quarter of 2010: (i) the surrender to Pfizer of 3,817,679 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock and restricted stock units issued to employees, (ii) the surrender to Pfizer of 63,759 shares of common stock to satisfy tax withholding obligations in connection with the vesting of performance-contingent share awards issued to employees, and (iii) the open-market purchase by the trustee of 45,851 shares of common stock in connection with the reinvestment of dividends paid on common stock held in trust for employees who were granted performance-contingent share awards and who deferred receipt of such awards.
|
1) Exhibit 3
|
-
|
Our By-laws, as amended April 22, 2010
|
2) Exhibit 10.1
|
-
|
Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors, as amended
|
3) Exhibit 12
|
-
|
Computation of Ratio of Earnings to Fixed Charges
|
4) Exhibit 15
|
-
|
Accountants’ Acknowledgement
|
5) Exhibit 31.1
|
-
|
Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
6) Exhibit 31.2
|
-
|
Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
7) 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
|
8) 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
|
9) 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: May 13, 2010
|
/s/ Loretta V. Cangialosi
|
Loretta V. Cangialosi, Senior Vice President and
Controller
(Principal Accounting Officer and
Duly Authorized Officer)
|